Center for Defense Information
Research Topics
Television
CDI Library
Press
What's New
Search
CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

November 4, 1998    
This Date's Issues: 2458 2459  



Johnson's Russia List
#2459
4 November 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Radiostantsiya Ekho Moskvy: Russian Premier: Yavlinskiy Out To 
Discredit Government.

2. Forbes: Paul Klebnikov, Who will be the next ruler of Russia? 
The slick city boss, or the rough-edged populist general? 

3. RFE/RL: Charles Fenyvesi, Washington Journal: CIS Seen As Problematic
Peacekeeper.

4. Itar-Tass: Poll Shows 5% of Russians Support West Over Kosovo Issue.
5. Bloomberg: U.S. Says 'Commitment' on Caspian Pipeline Route Acceptable.
6. Helsinki's Helsingin Sanomat: Kari Raisanen, "Educated Russians Have 
Almost Had Enough. More And More Young Russians Want To Move Abroad After
Fatherland Failed To Meet Their Expectations."

7. Financial Times (UK): John Thornhill, RUSSIA: Pretenders to the 
presidency. As Yeltsin fades, a centre-left coalition is emerging as the 
country's main political force.

8. AP: Parliament Seeks Report on Yeltsin.]

******

#1
Russian Premier: Yavlinskiy Out To Discredit Government 

Radiostantsiya Ekho Moskvy
31 October 1998
[translation for personal use only] in Russian 1605 GMT

There have been further developments in the disagreement over a recent
controversial statement made by the Yabloko [movement] leader [Grigoriy
Yavlinskiy, who said in a recent London Daily Telegraph interview that the
present Russian Government was corrupt]. [Prime Minister] Yevgeniy Primakov
today accused Yavlinskiy of having in effect launched a campaign to
discredit the Russian government. He believes actions of this kind are
aimed at making sure that the International Monetary Fund does not disburse
the next installment of its loan to Russia.
Meanwhile, the Yabloko leader has said he is prepared to name the
corrupt officials, even though he is certain that this is the remit of the
Prosecutor-General's Office and law enforcement bodies. Yavlinskiy
reiterated that he would send an inquiry to the government, listing
specific facts and names, within the next few days. He also promised that
the inquiry would be published.

*******

#2
Forbes
November 16, 1998
[for personal use only]
Who will be the next ruler of Russia? 
The slick city boss, or the rough-edged populist general? 
By Paul Klebnikov 

THE PARKING LOT of the fancy tennis club is cluttered with $150,000
Mercedes sedans, each of which costs more than the average Russian could
hope to earn in a lifetime. Thuggish-looking bodyguards swarm in the
darkness. Inside, the playing courts are empty, but several dozen important
men chat nervously among themselves. They are an eclectic mix: trade union
bosses, bankers, pols, government ministers, ethnic chieftains. 
Then he comes. 
Yuri Luzhkov, mayor of Moscow, strides into the club, trailed by guards and
a small army of hangers-on. He is more than mayor—he is the city's
virtually unchallenged dictator. 
A stocky, pugnacious 62-year-old, Luzhkov is in tennis gear, a purple
bandanna around his head. It is his birthday—but this is theater more than
a birthday party. The boss is here to show the troops how vigorous he is.
Against a pair of former tennis champs Luzhkov plays a fierce game. The
attending courtiers cheer his every shot. 
No surprise: Luzhkov wins. 
After the match, Luzhkov emerges from the shower room dressed in an
immaculately tailored suit. Sycophants thrust bouquets and gifts at him.
Rich bankers sidle up to mutter their respects, and thrust on his
attendants shopping bags from fancy French boutiques. "Do not forget us,
your loyal friends," one of them implores. 
Russia's next presidential elections are scheduled for the summer of 2000,
but Boris Yeltsin, far gone to booze and ill health, may not last out the
rest of his term—in which case elections must be held within six months.
The tennis club courtiers are kowtowing to the man they expect will be the
next president of Russia, perhaps more than president—czar, almost. 
Russia has dismantled communism but has not erected anything lasting in its
place. Yeltsin is a pitiful, weak figure, incapable of bringing order out
of chaos. This stocky Moscow politician, Luzhkov, could be the man on
horseback many Russians pray for. 
But Luzhkov is not every Russian's candidate. Standing between him and
power is General Alexander Lebed, a popular and populist figure who
currently serves as elected governor of Siberia's giant Krasnoyarsk region. 
From his modest Moscow surroundings you wouldn't realize that Lebed is a
powerful rival to Luzhkov. To interview Lebed, FORBES went one evening to a
large, rather nondescript building across from Moscow's famous Tretyakov
Gallery. The Lebed campaign leases several rooms on the second floor. No
fancy meeting rooms here—just cheap linoleum and fluorescent lighting. The
offices are empty except for a disheveled security guard. "Please wait
here," he says. "The general will be arriving shortly." 
We wait. Suddenly in the darkened windows, there is the sound of powerful
motors. A black Volvo pulls up, followed briskly by a black Chevy Suburban.
Inside the Volvo, General Lebed sits grimly in the darkness. He is in a bad
mood. A week ago he was passed over for the post of prime minister, and his
only power base is a remote and frigid Siberian province. 
Early in the interview he complains about his rival's high-handedness.
"Luzhkov is trying to evict us," growls Lebed in his rumbling, low-pitched
voice. "The building has been declared an architectural monument and we've
been told we have to go." 
In person, Lebed is much more impressive than his surroundings. "Russia has
long been sick with symptoms of a dinosaur—a huge body and tiny head," he
begins in a slap at domination of the country by Moscow, his chief rival's
base. "By the time a signal from the head passes through the body and
reaches the tail, it is already time to turn in the other direction." 
Lebed says that Moscow ruled in the past by controlling patronage. "The
political system has always been based on one principle: the distribution
of favors," he told FORBES earlier this year. "But there are very few
favors left to give. The different regions of Russia are spinning off from
the center." 
In almost every way, these powerful rivals are a study in contrasts. 
Lebed is a soldier and a hero to a certain segment of the Russian
population. A paratroop general, he participated in some of the biggest
battles of the Soviet Union's war in Afghanistan. He later led his
paratroops in bloody suppressions of ethnic uprisings in the U.S.S.R.'s
southern republics. 
But Lebed earned his democratic credentials in 1991, when he saved the
Gorbachev regime from a coup by Communist hard-liners. His paratroopers
were ordered to Moscow to help overthrow Gorbachev, but Lebed switched
sides and joined Boris Yeltsin in support of the reformers. 
Running as an independent in 1996, Lebed won a surprising 15% of the vote,
and in the second round threw his support behind Yeltsin against the
Communist candidate. A grateful Yeltsin appointed the general his chief of
national security. Lebed distinguished himself by negotiating an end to the
disastrous war in Chechnya. 
Four months after he was appointed, Lebed was fired. The blunt soldier
refused to hold his tongue about the rape of the nation's assets by the
kleptocrats surrounding Yeltsin. Lebed is no diplomat. He chose exile to
compromise. 
Luzhkov would be unlikely to make that stark, either/or choice. He is a
consummate politician. Under his iron-fisted rule Moscow has become an
oasis of prosperity in a ravaged nation. In 1996 Luzhkov was reelected
mayor with 90% of the vote. Whereas Lebed clashed with the kleptocrats,
Luzhkov coexists with them in the Russian capital, but makes them cough up
big money in return. You could say that Luzhkov not only rules Moscow—he
owns it as well. 
Here, privatization proceeds according to his rules, not those of the
Yeltsin government. You want government property here, you pay real money
for it. And Luzhkov decides how the money should be spent. 
Several days after the birthday on the tennis courts, Forbes met with
Luzhkov in the mayor's opulent office. He explained why the city government
has retained so much economic control: 
"We say that privatization is necessary to create new owners who will
manage the factories better than the old, but that is possible only if the
factories are sold for real money, so the new owner has to work to make a
return on his investment." 
As communism collapsed, Luzhkov simply grabbed many of the best Moscow
enterprises and properties for the city government. He has assembled a
great business empire with more than half the working population of Moscow
directly—or indirectly—on the municipal payroll. 
The City of Moscow owns and operates two big auto plants, an oil company,
several big construction firms, part of the local phone and electric
utilities, a TV network, two fast food chains (including part of the local
McDonald's), dozens of food processing plants, several big hotels, and
hundreds of shops and restaurants. 
Real capitalism this may not be, but it keeps Moscow solvent while the rest
of the country is bankrupt. The city gets more than $1 billion annually
from renting or selling its properties; its rental revenues alone are 14
times greater than the rents the Russian government gets from its holdings
all over the country. 
If Luzhkov becomes president, expect some renationalization of recently
privatized businesses. He favors, for example, renationalizing the vodka
monopoly privatized early in the Yeltsin era. Profits from the sale of
vodka accounted for 23% of government revenues in Soviet days and once
again could be a pillar of state finance. 
Luzhkov says he doesn't believe in price controls, but favors a highly
interventionist government policy to spur Russia's industrial revival. He
wants to use the government's position as monopoly supplier of electricity,
gas and rail transport to run those businesses—at a loss, if necessary—in
order to bring down the basic costs of living and doing business. No free
trader, he advocates tariffs to protect inefficient Russian industries. 
And he has a sophisticated understanding of finance. Consider his
suggestion for dealing with the debt default that has left foreigners with
$12 billion of worthless Russian T-bills. Luzhkov suggests renationalizing
oil and metals companies that were sold for a song and offering shares in
them to the foreign banks in a debt-for-equity swap. 
You can see why the bankers and oligarchs kowtow to this man. He
understands their game. He cites the chemicals institute where he began his
career: The institute, which employed scores of skilled technicians, was
auctioned off for just $200,000. "The new owner," recalls Luzhkov, "simply
fired everybody and is renting out the premises for $500,000 a year." 
Luzhkov's election could be bad news for the plutocrats who virtually stole
the best assets of the old Communist government. You can bet that he
would—as he has in Moscow—make them cough up taxes and become at least
somewhat accountable for the way they run their business. But Luzhkov is a
pragmatist. As he put it to Forbes: "We have to have a flexible policy. If
an enterprise is working well and improving itself, don't touch it. Forget
about how the new owner obtained it." 
What about General Lebed and the kleptos? While he has been scathing about
the way a handful of people have plundered the country, he may end up in
bed with some of the kleptocrats. To run for president, Lebed needs lots of
money and media coverage. Only the kleptocrats can supply him with what he
needs. And they may figure that his relative ignorance of economics will
make him more pliable than the sophisticated Luzhkov. 
One oligarch who has placed his bets on General Lebed is the notorious
Boris Berezovsky, the billionaire car dealer turned oil-and-TV magnate who
once tried to sue Forbes for writing about his illicit activities. Lebed is
uncomfortable with the association—but does not deny it. "Berezovsky didn't
give a single ruble to my campaign," Lebed says scornfully. "He only
declared his support." 
But when was the last time you met Berezovsky? "Today," Lebed admits. "We
discussed the shipment of oil into Krasnoyarsk. Sibneft [a Berezovsky
property] is the main supplier." 
"Lebed and Berezovsky are travelling in the same railroad car, but they are
getting off at different stops," quips Alexander Treshchov, a former
military attorney who now serves as Lebed's unofficial ambassador to the U.S. 
Treshchov's qualification might be persuasive but for this: Lebed has
publicly declared he would not crack down on Berezovsky and his fellow
kleptocrats. "We need to declare an amnesty on all flight capital," Lebed
says. "To redivide property today would mean unleashing civil war." 
The bottom line probably is this: No matter which man wins the presidency
of Russia, compromise with the kleptocrats is inevitable. Unjust though it
may seem, their money and control of the media makes them hard to dislodge.
Nevertheless, the next president is not going to let them get away with
murder—literally in some cases—the way Yeltsin has. 
It is easier to see how Luzhkov would run the country than how Lebed would.
You need only observe how Luzhkov rules Moscow. 
A product of the old Soviet bureaucracy, Luzhkov was a chemicals industry
manager in 1987 when he was tapped by Boris Yeltsin—then Moscow's Communist
party boss—to keep the city supplied with fruit and vegetables. 
Produce warehouses were prime breeding grounds for black-market fortunes. A
shipment of apples or melons would arrive from the provinces in fine
condition. But crooked bureaucrats would declare half the produce spoiled.
They would sell the "spoiled" goods to a private trader who would then sell
them to traders at full price. This was typical of the cynical relationship
between corrupt bureaucrats and unscrupulous businesspeople that has
reduced Russia to its present low state. 
Luzhkov didn't so much end the corruption as manage it. He built new
warehouses for the produce and saw to it that the shops were well stocked,
but he didn't ask too many questions about how the goods got there. 
In the late 1980s Luzhkov was placed in charge of developing Moscow's new
network of cooperatives, joint ventures and other small private businesses.
That gave him an opportunity to build the city government, officially and
unofficially, into a lucrative business conglomerate whose profits and
resources he could tap. Like an old-line U.S. political boss (and rather
unlike the new financial bosses of Russia), he saw to it that a good part
of the loot would be spent to benefit the city and its citizens. Under his
regime public works have flourished and Moscow is a prosperous place,
compared with the rest of the country. 
Luzhkov went out of his way to bring in foreign capital. Under him, the
city has attracted $12 billion in direct investment and credits, the lion's
share of all such funds invested in Russia. The city is home to some 5,000
foreign companies and joint ventures. 
Luzhkov likes to refer to himself as a khoziaistvenik (business manager).
He is visibly at ease discussing business plans and financial flows. Unlike
most Russian managers, he has a good head for facts and figures. Even more
unusual for a Russian, he neither smokes nor drinks. 
To attract foreign money Luzhkov gives it protection against the frequently
capricious actions of the bureaucracy. Five years ago Japanese trading
company Seio Corp. spent $30 million to build a modern office building on
the Moscow River. This summer Russian tax authorities decided that Seio had
violated some obscure currency regulations in repatriating some of its
profits and fined the company $1.5 million. Seio turned to Luzhkov. The
mayor saw to it that the fine was revoked. When you buy protection from
Luzhkov, Inc. you buy genuine protection. 
At a time when the Russian government and Russian banks are defaulting on
debts, Moscow is current with its payments to foreign lenders. 
What's the secret of Luzhkov's success? Simply understanding the brute fact
that possession is nine-tenths of the law. He has managed to grab some of
Russia's best real estate and most lucrative sources of tax revenue. 
Most of the biggest Russian companies pay their taxes in Moscow—and most of
the money never leaves the city. Consider Gazprom, the gigantic natural gas
utility. It pumps its gas from Western Siberia, pipes it across the length
of European Russia and sells it in Germany, Italy and France. Gazprom pays
its taxes in Moscow and there most of the money stays. 
It is as though all the money raised by New York City's investment bankers
stayed on the island of Manhattan rather than being spread out across the
50 states. Or as if the city of Washington kept most of the tax revenues
raised by the federal government. 
Like a Tammany boss of old, Luzhkov can claim credit for making his town
prosperous. He can't make any claim on behalf of law and order, however.
Moscow seems like a cross between Las Vegas and Dodge City— prostitutes,
garish advertising, casinos, shoot-outs on the streets. The Russian police
estimated several years ago that half the Russian banks were linked to
organized crime. 
Instead of busting the mafia, Luzhkov taxes it. The mobsters made their
money in the informal economy? Well, let them pay taxes informally, too.
Luzhkov has managed to tap even the shadiest Russian businesses for
hundreds of millions of dollars to finance his civic projects. 
One of the most visible is the Cathedral of Christ the Savior, blown up by
Stalin in 1931. Luzhkov has restored it as an immense edifice, on top of a
sprawling new underground office complex. The construction process itself
was inspiring to a demoralized Russia: The men could be seen working three
shifts a day, six or seven days a week. It may end up costing as much as $1
billion. 
The financing of the cathedral is interesting. Half of the funds were
"contributed" by big business; almost all of Russia's 200 largest banks
felt obliged to kick in. Another chunk came from Moscow's retailers,
restaurants and casinos, as well as local construction companies donating
free labor and materials. A quarter of the funds ($80 million, according to
the low official estimates) have come from "nonbudget revenues." 
Nonbudget revenues? Forbes asked a Moscow official what that meant. He
volunteered to explain, provided we let him remain anonymous. "Take the
rental revenues of a Moscow-owned office building," he says. "The official
revenues noted down in the government budget are $50/square foot, but the
actual revenues are $90/square foot. That difference—$40/square foot—is a
'nonbudget revenue,' which is then directed to the Cathedral." 
Muscovites are well-off by Russian standards. Most have bought themselves
new refrigerators, TVs, perhaps even a secondhand European car. With his
mixed capitalist/Tammany Hall/socialist economy, Luzhkov has kept housing
and energy prices low. 
Luzhkov runs Moscow on a two-tier basis. Apart from the $8 billion official
budget, there is an "unofficial" budget, where revenues from city-owned
businesses and buildings get directed to construction of new apartment
blocks, schools, shopping malls, stadiums and roads. Moscow officials put
the size of this budget at about $4 billion. Most people think it's a lot
bigger than that. 
Luzhkov's most ambitious project is Moscow's new financial district, known
as Siti (as in "the Siti of London"). The 280-acre project is expected to
cost $8 billion and be crowned by the 115-floor Russia Tower, designed by
Chicago architects Skidmore, Owings & Merrill. The Siti will take 10 to 30
years to complete. 
Luzhkov can campaign for president as the guy who gets things done. 
How will that play in the rest of the country? Perhaps not well. "In Soviet
times," General Lebed says, "the city streets were lined with tall green
fences. From the outside everything looked neat, but behind the fences was
all the squalor. Today Moscow is such a green fence." 
The people on the good side of the green fence will obviously vote for
Luzhkov. How about the people on the other side? Says Lebed: "On the one
hand, there's the whole political apparatus, big business, mass media and
that megalopolis, Moscow. On the other hand, there is all the rest of
Russia." 
"Luzhkov is a good city manager, but he does not have clout in the
provinces," agrees Rem Vyakhirev, chairman of natural gas monopoly Gazprom. 
What Vyakhirev says counts. Gazprom provides highly subsidized heat to most
of Russia's cities and towns in the bitter arctic winters. It has lots of
money and plenty of political clout. At the moment, Gazprom officially
endorses former premier Viktor Chernomyrdin for president—but this old
bureaucrat is a nonstarter as a candidate. Gazprom has not declared itself
for either Lebed or Luzhkov, but Gazprom's man, Chernomyrdin, has recently
been cozying up to General Lebed. 
The notoriously unreliable Russian opinion polls show Luzhkov and Lebed
neck and neck, each with approval ratings of about 17%. Lebed has his
strengths: Most Russians hate Moscow and all it stands for, and Lebed is a
man of the provinces. He is a protest candidate in a country with a lot to
protest about. 
But Luzhkov looks to Forbes like the favorite at this point. As Mussolini
made the trains run on time, never mind the cost, so Luzhkov gussied up
Moscow, never mind the cost. He can sell himself as the guy who gets things
done in a country where not much is getting done. Moreover, Luzhkov has a
huge political machine, well greased with patronage, and no one gets in
line more quickly than Russians when they see a big authority coming down
the road. 
Which of the two would do the most for Russia—and, through Russia, for the
world? Each has his strengths and his weaknesses. 
Lebed is a blunt, sincere man. Like a good military commander who takes
care of his men, he is concerned with the welfare of his constituents: He
is both a populist and something of a sentimentalist. In an interview with
Forbes, General Lebed suddenly begins to speak of the fate of Russia's huge
convict population. 
"There has never been an effort to rehabilitate people in prisons, where
they are kept worse than cattle," he says. "You enter the prison system as
a man and you leave it either as an animal or as excrement." 
There's real sincerity in his voice when he says: "We have to prevent the
country from exploding and falling apart." 
True, but Lebed has little political and administrative experience. He
lacks any real team of advisers. His political party—People's Republican
Party—is almost invisible except for its leader. Except for Berezovsky, he
has few big-money backers. While Berezovsky has apparently taken out an
insurance policy with the former general, most of the kleptocrats seem
reluctant to anger Luzhkov. In fact, the powerful mayor has little need of
their support—he has his own financial and media empire. 
On some issues both General Lebed and Mayor Luzhkov agree. Both walk
gingerly around the unpopular issue of allowing private ownership of
land—they say it should be introduced gradually, on the local level. Both
are scathing about the reforms that misfired and created an even worse mess
than communism was. A superpower a decade ago, Russia today is counting on
international handouts to feed its people. Much of the population is clad
in rags; in some provincial towns, people eat dog food for protein. Without
decent food or medicine, Russian male life expectancy declined by seven
years between 1988 and 1995. There has been an epidemic of suicides among
army officers ashamed that they could not feed their families. 
Yet here is a vast, potentially rich country with a talented population.
Whichever of these flawed leaders wins—Lebed or Luzhkov—he will be a vast
improvement over the present leaderless chaos. Look for no neat solutions,
but Russia has nowhere to go but up. After the coming election—nasty though
it will be—the winner has a real chance to get Russia back on its feet. 

********

#3
Washington Journal: CIS Seen As Problematic Peacekeeper
By Charles Fenyvesi

Washington, 3 November 1998 (RFE/RL) -- The Commonwealth of Independent States
is not viewed as an ideal partner for United Nations peacekeeping operations,
according to a new book published by the U.S. National Defense University. 
Longtime political-military analyst William Lewis and retired Ambassador
Edward Marks say in their book, "Searching for Partners: Regional
Organizations and Peace Operations," that too many people perceive CIS "as a
facade for Moscow's true imperial ambitions." 
And they suggest that this perception, widely held by American security
analysts and in some cases grounded in reality, severely limits the CIS's
ability to perform a regional peacekeeping. 
As a result, the United Nations has been more reluctant to allow CIS forces to
wear the UN blue helmets than it has with other regional groupings. And in one
case, the UN directly refused a CIS request that it be allowed to operate as a
UN-sanctioned force. 
In order to access the adequacy of this view and to consider whether the CIS
might be able to play a more active role in the future under UN auspices,
Lewis and Marks studied the 20 regional organizations around the world that
the UN has considered at one time or another as potential partners. They range
from NATO and the Organization of American States to less familiar groups,
such as the Southern African Development Community and the South Asian
Association for Regional Cooperation. 
On the basis of this study, Lewis and Marks conclude that the CIS has one
serious obstacle compared to other groupings. For the moment at least, any CIS
peacekeeping effort almost certainly will be overly dependent on Russian
resources and thus appear to be an instrument of Russian policy rather than,
as in virtually all other cases, a collective undertaking. And in a region
where many of the post-Soviet states remain still "shaky," such Russian
efforts are typically and understandably viewed with both skepticism and
alarm. 
Indeed, the authors appear to share that view. They refrain from passing
judgment on the Russian involvement in Abkhazia and Tajikistan, two places
where Russian troops have played a major role. But they conclude with the
warning that Chechen war showed just how dangerous things may be for everyone
if Russia "continues to stir up conflicts and ethnic animosities in the region
beyond its borders." 
But if the authors are skeptical about the role of the CIS as a peacekeeper,
they argue that regional groupings must play an expanding role as the
international community attempts to deal with small conflicts before they grow
large. 
They note that the UN undertook more than a dozen peacekeeping operations
between 1988 and 1993 which involved more than 70,000 personnel and cost more
than 3 billion dollars a year. By itself, Lewis and Marks say, the United
Nations cannot bear this burden and thus will have to turn to regional
groupings of states for assistance. 
And they quote with approval Winston Churchill's observation at the time when
the UN was created that only regional associations "august but subordinate" to
the UN would allow the international body to succeed. 

*******

#4
Poll Shows 5% of Russians Support West Over Kosovo Issue 

Moscow, October 30 (Itar-Tass) -- An opinion poll conducted in Russia
by the national "Public Opinion" fund on October 17 proved to a rather wide
awareness of the developments in Kosovo. A total of 84 percent of the
participants in the poll claimed they knew what was going on there. At
that, 68 percent of the respondents said they were concerned over the
possible armed conflict in Kosovo, and only 15 percent of those involved in
the poll proved indifferent to the problem.
The results of the poll showed that 54 percent of the respondents
supported Yugoslavia. Only 5 percent of the participants in the poll said
they approved of the position taken by the West.
Sociologists say the Russians tend to approve of a compromise as the
best way to settle the conflict. The respondents made it clear they wanted
Russia's involvement in the settlement be restricted to diplomatic efforts
only. A total of 69 percent of the participants in the poll believed
Slobodan Milosevic was right making concessions to the West to avoid the
military interference. Russia's diplomatic efforts to avert a military
conflict in Kosovo proved to enjoy the backing of 70 percent.
The poll was taken of 1500 city and rural residents in different
regions of Russia.

*******

#5
U.S. Says 'Commitment' on Caspian Pipeline Route Acceptable

Washington, Nov. 3 (Bloomberg) -- The U.S. may be willing to compromise its
stance on a $3.5 billion oil pipeline from the Caspian Sea to western markets,
accepting a commitment from oil companies that a U.S.-backed pipeline route
will eventually be built. 
The move marks the change from Clinton administration's insistence that the
first major pipeline in the region run from the Azeri port of Baku to the
Turkish port of Ceyhan, on the Mediterranean. 
Ambassador Richard Morningstar, the administration's special advisor on
Caspian issues, said the U.S. would accept a statement from the companies
supporting the Baku-Ceyhan pipeline as the best route, with a clause that the
companies will build the pipeline if oil volumes are high enough to make the
project economically viable. 
``Now is the time to take the issue out of the public limelight that it's been
in for the last few months,'' Morningstar said at the Carnegie Endowment for
International Peace in Washington. ``The companies and the countries should
get down to work to resolve the commercial issues.'' 
The Azerbaijan International Operating Company, a 12-company group including
British Petroleum PLC and Amoco Corp., is expected to decide Nov. 12 whether
they will chose the Baku- Ceyhan route or a shorter, cheaper pipeline from
Baku to the Georgian Black Sea port of Supsa. 

*******

#6
Educated Russians Weigh Leaving 

Helsinki's Helsingin Sanomat in Finnish
29 October 1998
[translation for personal use only]
Article by Kari Raisanen: "Educated Russians Have Almost Had
Enough. More And More Young Russians Want To Move Abroad After
Fatherland Failed To Meet Their Expectations"

According to an old belief, a Russian can endure cold winters, food
shortage and lines in shops.
The world has changed. According to the latest study of attitudes, at
least young, well-educated Russians have just about had enough.
"Every generation in Russia has been financially disappointed. Young,
well-educated professionals are now the group that probably lost the most
in the economic crisis. More than others, they had faith in the economy
and Russian banks," Managing Director Eeva-Liisa Ylalahti notes.
Ylalahti believes that educated young people are clearly more ready
than before to move abroad. It is more and more difficult for them to
believe that the fatherland can meet their expectations. According to
Ylalahti, the trend is worrisome, for the young people were the most eager
to support the reforms in the country.

Russia Needs Strong Leader

Ylalahti is working in the Finnish enterprise of MDC Rise
International, which is conducting studies of attitude, besides Finland, in
the former Soviet Union. Russia is different from the other objects of
study because there the study concentrates only on cities. There are two
annual polls, one of which is concentrating on Moscow and one on other
large cities.
In Russia, the research results have undergone an exceptional change
during the 1990s. Three years ago it was obvious that the faith in
economic reforms and market economy was growing. However, disappointments
have left their marks, and today more and more people miss law, order and
strong leaders to guide them through the trials.
"The idea of taking the economic models from the west did not work. 
On the other hand, there is no return to the old system. A completely new
social structure would probably be necessary," Ylalahti notes.
According to her, it is clear that in the crisis the old Soviet times
have started to look more and more tempting. "In those days the basic
issues were in order-job, education, health care and nutrition," Ylalahti
says.
The narrower middle class is trying to hang on to its identity. To
them, western brand- name products are still important, even if they could
not buy them any longer. One of the people interviewed said that the real
panic comes when the brand-name products disappear from the stores.

National Feeling Strengthening

During the last years the significance of being a Russian has grown. 
Western companies have understood the change, and, for example, the
American hamburger chain McDonalds has started to use Cyrillic alphabet in
Russia.
Ylalahti praises the Finnish company Hartwall, which has purchased
breweries in the country while holding to the traditional Russian brands of
beer. According to Ylalahti, Hartwall has succeeded better than many of
its competitors that are marketing western brands of beer.
The study reveals that Russians, nevertheless, have a lot in common
with at least one western nation. Family still has an exceptionally
esteemed and prominent role in Russia and in Italy. 

*******

#7
Financial Times (UK)
4 November 1998
[for personal use only]
RUSSIA: Pretenders to the presidency
As Yeltsin fades, a centre-left coalition is emerging as the country's main
political force, says John Thornhill.

Boris Yeltsin has so dominated Russia that for the past seven years
almost all public life has revolved around him. It is not merely that he
blotted out any politician who trespassed too far into the presidential
limelight. More important, he polarised the country so that all other
politicians have been forced to orient themselves around him: broadly, in a
crisis, you were either for Mr Yeltsin or against him. It was the defining
feature of political life.
But it is no longer true. With Mr Yeltsin recuperating from "nervous
exhaustion" at a seaside retreat, the 67-year-old president is not a focal
point of other people's concerns. In the short term, the consequences are
relatively predictable. Last week, the Kremlin confirmed what many had long
suspected: the day-to-day management of the world's biggest country has
passed into the hands of Yevgeny Primakov, the adroit and politically
cautious prime minister.
But the longer term consequences are perhaps more intriguing. Freed from
Mr Yeltsin's thrall, Russia's politicians - and especially its future
presidential contenders - are starting to define themselves anew.
The past few months have been filled with a flurry of activity from
Russia's fractious political groupings. These could change the fundamental
orientation of Russian politics as soon as Mr Yeltsin's term expires in the
summer of 2000 - if not before. And of all the developments, the fitful
evolution of a broad centre-left alliance has been by far the most significant.
This bloc's supporters span a broad array of Communists, trade unionists,
and nationalists.
From the left, Russia's largest political force, the Communist party
under Gennady Zyuganov, has regrouped its forces and rethought its philosophy.
In the centre, General Andrei Nikolayev, the former head of the federal
border guards turned telegenic nationalist MP, has been busily marshalling
the country's moderate trade unionists and Social Democrats, signing them up
to his Union of People's Power and Labour.
An influential MP, Alexei Podberyozkin, compares the strategy of this
putative centre-left alliance to two armies converging on the same, distant
field.
Certainly, these forces could be powerful electorally if they really
combined. The bloc's supporters exultantly predict they will win 70 per cent
of the vote at the next parliamentary elections in December 1999. That would
ensure whoever is their general would vault into the Kremlin the following
year in the presidential election. That figure could well be Yuri Luzhkov,
Moscow's ambitious mayor. Many political observers believe the bloc could
form the national power base for Mr Luzhkov, who has long been greedily
eyeing the presidency. After conspicuously flirting with the Communists in
recent weeks, he has also been tipped as the most likely single presidential
candidate from this centre-left grouping.
With so much at stake, it is all the more important to understand what
this centre-left alliance is really like, what it stands for, whether it has
a coherent policy and how united its members are.
Konstantin Borovoi, a prominent liberal MP, argues the centre-left
alliance is just a grouping of political opportunists which lacks any
coherent plan of action, other than a vague hankering after the failed
Soviet policies of the past. "It is an artificial attempt to create a
political force without a political idea," he claims. "You might just as
well have a party of sportsmen."
Mr Podberyozkin, who is the leader of the nationalist Spiritual Heritage
movement, which has played an important role in trying to make the
opposition something more than merely anti-Yeltsin, dismisses the claim.
Like much of the rest of Europe, he says, Russia is embarking on its own
quest for a "middle way".
"The future will not be about communism or liberalism or social
democracy. Instead there will be a search for new political methods and at
the same time a return to our traditional roots and heritage," Mr
Podberyozkin explains in his office, decorated with icons and littered with
pamphlets explaining the workings of investment funds.
"But the most important development is that we have had a revolution in
social consciousness and now the left idea is dominant. I am therefore 100
per cent sure that the centre-left will win," he says. In other words, much
of the centre-left's appeal lies in the current popular reaction against
market reform. Given how widespread the reaction is, that is a solid base on
which to rest a public appeal, though it is vulnerable to a further swing in
public mood if the current government brings about further economic chaos.
After all, the centre-left's policies, do not sound all that different from
Mr Primakov's, at least as Mr Podberyozkin recounts them.
In his view, the four defining beliefs of the centre-left bloc are:
strengthening the social welfare net; increased state regulation of the
"irresponsible" market economy; a return to traditional and national values;
and the priority of education and culture.
In seeking to ally itself with political forces in the centre, the
mainstream of Russia's Communist party has moved a long way from its
Marxist-Leninist roots. In a recent interview with the Financial Times, Mr
Zyuganov, the party's leader, displayed a remarkable ideological eclecticism
saying he personally drew inspiration from figures as varied as Charles de
Gaulle, Stalin, and Tsars Alexander I, II, and even III (who has been
demonised by most Communists as the executioner of Lenin's elder brother).
Mr Zyuganov's latest tome, The Geography of Victory, which he hands out
to visitors, contains barely a mention of Lenin but expounds at length on
Russia's unique historical mission. He speaks in favour of freedom of speech
and religion, a multi-party democracy, and Chinese-style economic reforms,
preserving a strong role for the state while allowing private trade to
flourish beneath.
Mr Zyuganov has had kind words to say about Mr Luzhkov. The Moscow mayor
was a "well-known and authoritative man" who had shown his ability to manage
Russia's biggest city, the Communist party leader claimed. "We support the
idea of a coalition," Mr Zyuganov said. "The coalition should suggest not
only a candidate for presidency, but a whole team, which would include a
vice-president, a prime minister, and other key ministers."
He has good reason to seek such an alliance. Moderate party strategists
argue that unless the Communists broaden their political base they will be
doomed to perpetual opposition. Although the party can count on a core of
support - perhaps 20 per cent of the electorate - it cannot by itself win
enough votes to claim the presidency. In the presidential elections in 1996,
Mr Zyuganov conspicuously failed to win many "cross-over" voters from other
parties and was crushed by Mr Yeltsin in the second round. It would be
better to link up with a potentially powerful presidential candidate, such
as Mr Luzhkov, than to remain forever on the political sidelines.
From Mr Luzhkov's perspective, there is an equally compelling electoral
logic to trying to corral the Communists behind his cause. The Moscow mayor
has proved his appeal in the capital, winning more than 90 per cent of the
vote in the 1996 mayoral elections. But he remains weak in the rest of
Russia. The backing of the Communist party would bolster his support across
the country at a stroke. Mr Luzhkov's arguments for an end to untrammelled
capitalism, the return to a strong, interventionist state, and an assertive
foreign policy, are close to much modern-day Communist rhetoric.
Yet, however strong the electoral calculus, the creation of a centre-left
bloc is far from a done deal. Mr Zyuganov's bridge-building strategy
received something of a rebuff at a meeting of the Communist party
leadership last week. The party plenum, which still dictates official
policy, concluded that the Communists should contest the 1999 parliamentary
elections under their own banner. Hardline Communists still remember, with
great bitterness, Mr Luzhkov's role in supporting Mr Yeltsin's bloody
suppression of the Soviet-era parliament in October 1993.
Many radical Communists also criticise Mr Zyuganov's conciliatory style
of leadership. "I do not consider the Communist party leadership to be real
Communists," says Rafik Aliev, chief research fellow at the Moscow State
Institute for International Relations. "They think that reform can improve
what has already been created. It is not possible to be a revolutionary if
you drive to work in a Mercedes and have a big flat and a dacha."
More generally, Russia's political landscape is changing with bewildering
speed. Alliances rarely last all that long in such a world. Many political
calculations are already being thrown askew by the emergence of Mr Primakov
as a serious presidential contender in his own right. The prime minister is
a centre-left figure himself and the supporters of the Communist party could
easily ally themselves behind him. But in fact he draws support from across
the political spectrum, including many reformers, so the Communist
leadership might not necessarily want him as their candidate. Anyway, he
would seriously spoil Mr Luzhkov's presidential pitch.
Even so, compared with their opponents, the centre-left looks like a
model of disciplined organisation. Grigory Yavlinsky, the leader of the
liberal Yabloko party, has strong - though narrow - electoral appeal but
seems disinclined to ally himself with anyone else. Alexander Lebed, the
former general turned governor of Krasnoyarsk, is a great populist but is
widely viewed as a loose cannon. Some of Russia's most powerful bankers even
appear to be toying with the idea of running Nikita Mikhalkov, the handsome
and staunchly anti-Communist film director and actor, who would, they
believe, win the hearts and votes of every Russian woman.
That looks rather like a sign of desperation. Unless Russia's
centre-right forces move towards their own united platform in short order,
they risk losing the argument about Russia's political future by default.

*******

#8
Parliament Seeks Report on Yeltsin
November 4, 1998

MOSCOW (AP) -- Communists and other hard-liners in the Russian parliament
sought an official report on Boris Yeltsin's health while the president
recuperated today at a Black Sea resort. 
Parliament's lower house, the State Duma, asked the presidential doctors
to give a detailed account of Yeltsin's condition. The lawmakers are
expected to follow up Thursday, when they consider a bill that would require
the president to undergo a medical exam and hand the results to parliament. 
However, the bill faces an uphill battle because Yeltsin would have to
approve it before it becomes law, and he's almost certain to veto the measure. 
Yeltsin has ignored opposition attacks and insisted he will serve out his
term, which lasts until the middle of the year 2000. The president and his
doctors say he has no serious health problems, and his current ailment is
described as fatigue and high-blood pressure. 
Communist leader Gennady Zyuganov says a medical inspection would reveal
that the president was incapable of performing his duties. 
Zyuganov has spoken about Yeltsin's drinking habits in extremely blunt
language in the last few days, and he kept up his attacks today. 
``You would consider me mad if I suggest that you board a plane with a
drunk and incapacitated first pilot,'' Zyuganov said at a news conference
today. ``I feel pity for him (Yeltsin), he destroyed his health with his own
hands.'' 
Yeltsin has denied opposition claims that he has a drinking problem. 
Meanwhile, presidential aide Oleg Sysuyev said today that Yeltsin would
outline his ``new political role'' in a speech to parliament early next year. 
Sysuyev, who was in France, reiterated that the president would
concentrate on political issues and allow his Cabinet to deal with economic
matters, the Interfax news agency reported. 

*******






Return to CDI's Home Page  I  Return to CDI's Library