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

Johnson's Russia List


December 21, 1998    
This Date's Issues: 2528    

Johnson's Russia List
21 December 1998

[Note from David Johnson:
1. Reuters: Voting ends in bitter St Petersburg election.
2. Christian Science Monitor: Fred Weir, Can aid satisfy hungry

3. The Hindu (India): Halt of action temporary, says Primakov.
4. Ben Aris:: Virtual law enforcement.
5. Boston Globe: David Filipov, Russians look at US political scene 
with amusement, envy.

6. Reuters: Russia's secret policemen celebrate anniversary.
7. Bloomberg: Moscow Mayor Luzhkov Aims for Presidency: Bloomberg 

8. Sovetskaya Rossiya: Vasiliy Safronchuk, The Distorting Mirror of 
the Oligarchy. Have the "Gods" Perished? ("Demise" of Oligarchy 

9. Moscow Times editorial: Russia Gets Little From Fury on Iraq.]


Voting ends in bitter St Petersburg election
By Konstantin Trifonov

ST PETERSBURG, Russia, Dec 20 (Reuters) - Voting ended peacefully in a local
election in Russia's second city of St Petersburg on Sunday after a bitter
campaign marked by the murder of a prominent democrat. 
Liberals hoped to win a large number of seats in the former tsarist
legislative assembly in the second round of voting after a strong showing in
the first round on December 6. 
Election officials reported no major irregularities and said after polling
stations closed at 10 p.m. (1900 GMT) that at least 30 percent of the city's
3.7 million electorate had voted. Provisional results were expected on Monday.
The two-candidate run-offs, held in constituencies where no candidate won an
absolute majority in the first round, took place a month to the day after
Galina Starovoitova was gunned down in a contract killing. 
A member of Russia's lower house of parliament, she was a leading
supporter of
President Boris Yeltsin in the early 1990s and remained a critic of the
Communist Party until her death. 
A bloc backed by Starovoitova's Democratic Russia party made only a modest
showing in the first round. But the Yabloko social democrats, led nationally
by likely presidential candidate Grigory Yavlinsky, emerged in the strongest
The party's local leader was among six candidates elected outright in the
first round. Among the 88 candidates involved in run-offs for the remaining 44
districts, there were 24 Yabloko members and 22 supporters of Yavlinsky's ally
Yuri Boldyrev. 
Only 10 of the remaining candidates on Sunday were Communists. Most of the
rest were independents. 
Starovoitova's killing prompted some prominent liberals, including two
right former prime ministers and former finance minister Anatoly Chubais, to
bury the differences that have plagued them and begin forming a new right-wing
However, Yavlinsky, who has remained firmly in opposition to Yeltsin and
a more centre-left view, has refused to have anything to do with the new bloc.
He accuses its leaders of responsibility for recent economic failures. 
Campaigning for the second round of the St Petersburg election was markedly
more muted than the first, which was marred by intimidation, dirty tricks and
gang warfare. 
Liberals accused many of the candidates of links to mafia-style criminal
groups whose activities have turned the second city into the reputed ``crime
capital'' of Russia. 
A variety of irregularities included alleged vote buying and the
appearance on
ballot papers of a host of decoy candidates bearing the same or similar names
as leading contenders. 
Confirmation of gains for liberals in St Petersburg would be a boost at
a time
when they are at their lowest ebb since 1991. 
But St Petersburg, like Moscow, is a traditional stronghold of Russian
liberalism and the results may not prove much of a guide to the country's
parliamentary election, due late next year, or to the presidential election
due in 2000. 


Christian Science Monitor
December 21, 1998 
[for personal use only]
Can aid satisfy hungry Russia? 
Fred Weir, Special to The Christian Science Monitor 

MOSCOW -- Christmas always comes late to Russia, where the holiday falls on
Jan. 7. But now there seems little to celebrate. A combination of disasters
has pushed many vulnerable Russians - the poor, aged, displaced, and
disabled - over the line that separates subsistence from possible starvation. 
American officials say a $625 million food-aid package should be
finalized this week. Russia's government has welcomed the assistance. But
many analysts warn that without effective monitoring, it may only end up
boosting corruption and hastening the decline of Russian agriculture. 
This fall the country brought in its worst grain harvest in 45 years,
while the financial crisis that began in August has caused a plunge in food
imports, sending prices skyward. According to the State Statistics
Committee, 44.3 million Russians, nearly a third of the population, live
below subsistence level.
"There are masses of people who could be in trouble this winter, due to
poverty or because they live in remote regions," says Viktor Levashov, with
the Institute for Social and Political Studies in Moscow. 
The United States has put together a package that involves a gift of
100,000 tons of foodstuffs and 1.5 million tons of grain. There are also
easy credit terms to help Russia buy a further 1.5-million tons of US
commodities, including corn, soybeans, rice, beef, and pork.
"Good news for the Russian people, who might otherwise face the
possibility of food shortages this winter," Christopher Goldthwait, general
sales manager of the US Department of Agriculture's foreign service, said
last week. "And it is good news for America's farmers and ranchers, who are
facing economic hardships related to large supplies and low prices," he added.
But Russian experts, pointing to the fiasco of Western food aid to
Russia in the early 1990s, say pitfalls remain. 
"There are no guarantees that the aid directed to institutions like
schools and orphanages will not be stolen, just as it was in 1991-92," says
Mr. Levashov. 
This time, the largest portion of the aid will be sold by the Russian
government to commercial firms, who will be expected to distribute it at
affordable prices in the markets of hard-hit regions. Critics point out,
however, that the Russian official overseeing the sale, Deputy Prime
Minister Gennady Kulik, is the same person who supervised the disastrous
1991-92 effort. 
Goldthwait said the Russian government has provided a plan for aid
distribution and the US will have its own staff of traveling observers.
"Certainly we have heard that there is a danger that some individuals may
profit unduly," he said. "We are very much concerned about that, which is
why we take distribution and monitoring very seriously."
In the longer term, some experts argue assistance only serves to
undermine Russia's faltering efforts to feed itself. 
"Russia can produce food, we have a lot of capacity," says Vilen
Perlamotrov, an economist with the independent Institute of Market Problems
in Moscow. "This crisis is a warning to us to solve the underlying problems
with our agriculture, and not to repeat the mistakes of the past."
Russian farming has languished since the 1991 demise of the USSR, a
victim of declining state subsidies, competition from cheap foreign
imports, and a skewed price structure that keeps manufactured goods far
more expensive than agricultural products.
"The kind of aid we really need from the West is support and investment
in Russian agriculture," says Levashov.


The Hindu (India)
21 December 1998
Halt of action temporary, says Primakov 
[for personal use only]
By Our Special Correspondent 
NEW DELHI, Dec. 20. 

The Russian Prime Minister, Mr. Yevgeny Primakov, arrived here today to
give a
long-term direction to political, military and economic ties against the
backdrop of the U.S. bid to redraw the strategic map of the Persian Gulf. 
Highly-placed sources point out that the U.S. attacks on Iraq will influence
the drift of political discussions during Mr. Primakov's two-day visit. New
Delhi and Moscow see the attacks as an attempt by Washington to undermine
multilateralism and discourage the emergence of a genuinely multipolar world.
Both are committed to the dispersal of power and influence across the globe
and envisage a powerful role for a reformed United Nations in the
international system. 
The Russian dignitary made this clear on arrival when he said that Moscow
``categorically opposed to the use of power in Iraq. Though the use of force
has ended, our basic position has not changed - the use of power should be
with the consent of the U.N. Security Council''. Mr. Primakov said the halt in
U.S.- British strikes was ``only temporary''. The Russian premier, who arrived
in a special Russian IL-62 plane, was received at the airport by the External
Affairs Minister, Mr. Jaswant Singh, the Foreign Secretary, Mr. K. Raghunath,
and the Indian Ambassador to Moscow, Mr. S. K. Lambah. 
In the light of the U.S. action, Mr. Primakov's visit provides an
to India and Russia to discuss a possible joint role in preserving the
strategic autonomy in key areas which are of direct relevance to them,
according to sources. Developments in the Persian Gulf, Afghanistan, Central
Asia and South Asia are likely to be discussed at considerable length either
during the Russian Premier's one-on-one talks with the Prime Minister, Mr. A.
B. Vajpayee, or in the delegation level discussions tomorrow evening. 
A stable Persian Gulf is crucial for both countries, given the fact that the
area is the hub of global energy supplies. India and Russia also share a
common interest in developments in Afghanistan where the Taliban's dominance
threatens resource-rich Central Asia-an area of special interest to Moscow.
Central Asia and especially the Caspian Sea region is rich in oil and gas
deposits and the spread of radical influences to this region can undercut
Moscow's long-term plans for safeguarding its energy security. 
Islamisation of the region also has direct security implications for Moscow.
Russia has deployed 30,000 troops in Tajikistan, on Afghanistan's borders as a
preventive measure. A breach of the borders of Tajikistan on Russia's southern
flank can endanger the Russian mainland. 
India is also concerned about the spread of extremism from Afghanistan to
Central Asia. 
The control of Afghanistan by the Taliban, which is backed by Pakistan, has
negative security implications for Jammu and Kashmir. 


Date: Sun, 20 Dec 1998 
From: (ben aris)
Subject: virtual law enforcement

I would like to add some observations to those of Ray Finch (JWL #2524/5)
on Russia's "virtual law enforcement."

Daily Telegraph Saturday 12 December 1998
FOREIGNERS visiting St Petersburg, Russia's most popular tourist
destination, have fallen victim to a string of attacks by the local
A number of complaints have been registered at foreign consulates from
westerners visiting or working in St Petersburg who say they have been
picked up by the police, beaten and robbed. Few have complained to the
Russian authorities for fear of retribution.
An official at the British consulate said: "It is always three policemen
together. They try to take your passport. If you protest, they bundle
you into the car and take you to the police station on trumped up
charges. What they want is money."
Several Britons have been accosted and accused of being drunk, even if
they have had only a few drinks. The policemen usually demand bribes of
up to 200 to release their victims. Such sums are 10 times what the
average policeman earns in a month. So the temptation to supplement the
income by picking on foreigners is huge.
Robbing westerners is simply another side of the widespread Russian
phenomenon of police protection rackets. Officers frequently demand
money from local businesses for "security". Despite numerous official
campaigns against corruption, few policemen have been convicted of
abuses. The government turns a blind eye to such practices because it
has enough trouble already paying police salaries on time.
In one recent incident in St Petersburg a sober British businessman was
forced to pay several hundred dollars. In another the police slapped a
businessman who tried to take his passport back.
The most serious case involved a German businessman and his Russian
girlfriend. The police, who claimed that they were looking for drugs,
forced the couple into a car and drove them to the local police station.
The man was beaten and his girlfriend threatened with rape.
They were released next day only after the man signed a statement saying
he had been treated in accordance with the law. According to sources
familiar with the case, the police took 1,000 from his wallet before
returning it. He left the country the next day.

Since I wrote this I have made some more enquiries. The police in St
Petersburg have not received a pay rise in the last six months despite the
devaluation and soaring inflation. They were underpaid before.
According to consulate officials in St Petersburg, all the attacts are
based in one small part of the city -- mostly on the corner of Gribodeova
and Nevski -- and those detained are always taken to the same police
station. It seems that one district has taken to preying on foreigners, and
it is probably just three policemen that are behind all the attacts.
The police authorities agree and have passed on pictures of who they think
are the likely suspects, but the foreigners involved have been reluctant to
file complaints as they fear retribution.


Boston Globe
20 December 1998
[for personal use only]
Russians look at US political scene with amusement, envy 
Communists charge Yeltsin with dire crimes
By David Filipov

MOSCOW - As the US Congress impeached President Clinton on charges of lying
under oath and obstruction of justice yesterday, Russians reacted with a
mixture of disbelief, envy, and humor. 
Like Clinton, their president, Boris N. Yeltsin, is also being
investigated by
Russian lawmakers for potentially impeachable offenses. But many Russians have
trouble understanding what Clinton did so wrong that he deserves to lose his
To see why, it helps to compare the accusations against the two presidents.
While Clinton is charged with witness tampering and lying under oath, Yeltsin
faces charges of treason, genocide, and illegal use of military force. But few
Russians believe Yeltsin will be forced from the presidency. 
While both cases have caused controversy and ugly partisan political
the impeachment procedure designed by the founding fathers is fairly
straightforward: A vote in the House, a vote in the Senate. 
Russia's 1993 constitution, tailored to meet Yeltsin's requirements after he
crushed Parliament with tanks, makes it extremely complicated to remove the
president from office. 
If the panel recommends impeachment, two-thirds of the Duma must approve the
motion for it to go to the Supreme Court, whose judges have mostly been
nominated under Yeltsin. Then the motion goes to the Constitutional Court. If
the judges approve the accusation, two-thirds of the 189-seat upper house must
vote in favor for Yeltsin to lose his job. 
''It is clear this impeachment is going nowhere,'' ultranationalist lawmaker
Vladimir Zhirinovsky said last week. 
But beyond procedural barriers, there is a deeper issue that reflects
Russians' longstanding, and well-justified, distrust of their leaders. No one
here really expects good government, and no one expects their leaders to be
good. That goes especially for the aging, unpopular Yeltsin, whose health has
been so bad in recent years that many people have stopped feeling anger toward
a man who, they feel, has often let them down. They are just waiting for him
to die. 
''Let's give the Americans our president and we'll take theirs,'' went one
joke that made the rounds. ''We'll guarantee that Yeltsin won't be able to
cheat on his wife.''
Yesterday, some Muscovites picked up on that theme in answer to questions
about the US impeachment. 
''If I found out Yeltsin had a mistress, I'd take that as a sign he is
alive and well,'' said Andrei Kudrin, a Moscow TV producer. ''If he lied about
it under oath and tried to stop an investigation, I'd take that as a sign that
he was his usual self.''
The impeachment panel set up by the State Duma, the lower house of the
Parliament, is investigating Yeltsin on charges that he committed treason by
instigating the 1991 collapse of the Soviet Union. The panel says he illegally
used force when he ordered the military assault on Parliament in 1993 that
claimed more than 150 lives. The panel says that Yeltsin instigated the war in
Chechnya in 1994 that claimed more than 100,000 lives. And last week, the
panel looked into whether Yeltsin committed genocide by his economic policies
that some lawmakers say led to the deaths of 4 million Russians. 
Except for Chechnya, these charges are almost exclusively the property of
Communists who dominate the Duma. Knowing that they cannot force Yeltsin out
of power, the Communists have chosen to use the impeachment proceedings as a
place to air their complaints, analysts say. 
Last week, the impeachment took an ugly turn when a senior Communist, Viktor
Ilyukhin, suggested that Russia's population would not have declined by 4
million people over the seven years of Yeltsin's presidency if he had not
employed so many Jewish advisers. 
''The proceedings have turned into a discussion club for the hatemongers,''
said Masha Gessen, chief correspondent of the liberal magazine Itogi.
''Instead of serving the rule of law, this is making a warped joke out of
That leads to another problem. While US congressmen yesterday often debated
the intent of the founding fathers, in Russia, there is no consensus on who
the founding fathers are. Should they include Communist-era heroes? 
The Duma recently voted to restore the statue of Felix Dzerzhinsky, the
founder of the secret police that became the KGB. Yesterday, a school in the
Urals city of Chelyabinsk put up a monument to Josef Stalin, whose Great
Terror purges caused 20 million Soviet deaths. 
Yeltsin is so weak now, the issue is not how to oust him, but the race to
replace him. His presidency ends in the year 2000, but candidates have begun
campaigning, just in case Yeltsin cannot complete his term. 
Yesterday, one of the potential front-runners, Mayor Yury Luzhkov of Moscow,
appealed to Russians to unite behind his new movement, Fatherland. Speaking to
a congress of more than 1,000 supporters, Luzhkov called for a stronger
military and a stronger state role in the economy. 
As for the radical market reforms advocated by Yeltsin's governments from
until Russia's economic crash last August, Luzhkov remarked: ''The experiment
is over.''
A delegate to Luzhkov's congress, Yury Kon, said it was right to impeach
Yeltsin, but impossible. He expressed respect for the US system but not its
decision yesterday. 
''America has good laws, but I feel sorry for Clinton,'' Kon said. ''He's
a bad president.''


Russia's secret policemen celebrate anniversary
By Alastair Macdonald

MOSCOW, Dec 20 (Reuters) - Russia's secret police and spy agencies, marking
the 81st anniversary on Sunday of their founding during the Bolshevik
revolution, lamented what they called past tragedies and pledged to defend
But, in a sign of disillusion with the hardships that have come with
democratic market reforms, communists gathered outside Moscow's former KGB
headquarters to demand the restoration of a monument to its founder which
jubilant crowds toppled in 1991. 
``There have been both glorious and tragic pages in the history of the
security organs,'' the head of the Federal Security Service (FSB), the KGB's
main successor, said in a televised address to mark the official Security
Organs Day. 
``The participation of the OGPU, NKVD and MGB in mass repressions from the
1930s to the early 1950s was a genuine tragedy for all our people and for the
security organs themselves,'' a grim-faced Vladimir Putin said in a 10-minute
speech. He was referring to the predecessors of the KGB under dictator Josef
``We have no right to ever forget that,'' he added. 
Looking to the future, he said the FSB saw a valuable role for itself in the
new democratic Russia by becoming ``an insurmountable barrier on the path back
to the grim past.'' 
``We must recognise that the only guarantee of this must be not an
irresponsible shake-up of such important elements of the state mechanism as
the security organs but the comprehensive reinforcement of the democratic
institutions of the new Russia.'' 
Putin claimed credit for his staff in fighting, sometimes at the cost of
lives, a wave of organised crime, corruption, political terrorism and
extremism that has washed over Russia since the collapse of the Soviet Union
at the end of 1991. 
A spokesman for the SVR, the foreign intelligence branch formerly headed by
Prime Minister Yevgeny Primakov, said its agents were devoting more effort to
economic information. 
President Boris Yeltsin, who spoke at a gala concert in the Kremlin on
for security officers, praised their work and said, despite past errors, they
were among the world's best. 
``In the history of the security organs there have been many sad and even
tragic pages, but there have also been hundreds of brilliant operations of
which many special services around the world can be envious,'' said the
president, who was harassed by the KGB after being expelled from the Soviet
Politburo in 1987. 
Praising the present leadership of the security agencies, Yeltsin called on
them to continue their work in defending the rule of law and battling serious
crime and political extremism. 
An upsurge in extremist politics, including a row over anti-Semitic
remarks by
Communist members of parliament, has been blamed by critics on the worsening
state of the economy. 
On Saturday, a school in the Urals returned a bust of Stalin to a place of
honour, angering local liberals in what a Russian television station was the
first such restoration since 1991. On Monday, Communists will mark the 119th
anniversary of his birth. 
On Sunday, several dozen supporters of hardline communist groups gathered
under red flags in front of the FSB headquarters on Moscow's Lubyanka Square
to demand the restoration there of a statue to secret police founder Felix
On December 2, the Communist-led parliament enraged human rights
activists and
former victims of KGB repression by voting to demand the Moscow city
authorities restore Dzerzhinsky's monument, which was hauled down by pro-
democracy crowds in 1991. 
Mayor Yuri Luzhkov has refused to re-erect the imposing column to
who created the VChK or Cheka on December 20, 1917, and oversaw the bloody
elimination of those who sought to block the Bolsheviks' rise to power. 
``Dzerzhinsky was a pure soul, he worked for the people,'' one elderly
demonstrator, Fyodor Ivanovich, said. ``We wept when they pulled him down,''
another, Eleanora, said. ``The democrats have inflicted such horrors on the


Moscow Mayor Luzhkov Aims for Presidency: Bloomberg Profile

Moscow, Dec. 20 (Bloomberg) - When the Russian ruble plunged 60 percent
against the dollar in August and September, Moscow Mayor Yuri Luzhkov imposed
citywide price limits on staple foods, defying federal policy. When December
came, he mandated holiday cheer, ordering Moscow businesses to put up
Christmas decorations. 
Luzhkov, 62, is counting on Moscow's image as an island of joy and
in the midst of Russia's worst economic decline in four years, to catapult him
into the presidency. This weekend, about 1,500 delegates from 62 of 89 Russian
regions crowded a hall in downtown Moscow to found a new political party,
Otechestvo, or Fatherland, and voice support for its founder, Luzhkov. 
Luzhkov's critics charge that Moscow's apparent prosperity is a thin veneer
that already is threatening to crumble. 
``Luzhkov really needs presidential elections much earlier than in June
as scheduled,'' said Andrei Ryabov, a political analyst with the Carnegie
Foundation in Moscow. ``He is selling the image of reforms in Moscow -- a
hybrid of market economy and state paternalism. But this house of cards is
being tested by the financial crisis and may collapse if the crisis deepens.''
For now, Luzhkov's reputation is that of a leader who gets things done --
his supporters say that Moscow's newly-paved, neon- lit avenues, its efficient
subway, its ever-expanding skyline and its well-stocked store shelves support
this reputation. 

Soccer Player 

An avid soccer player, Luzhkov's other favorite weekend activity is visiting
the city's multitude of construction projects, entourage in tow, for tours of
Luzhkov's message is one of national pride, which has been battered by a
series of economic and political crises over the past few years. The latest,
following Russia's default on its domestic debt in August, has driven up
prices and pulled down the ruble, wiping out Russians' savings and leading to
an exodus of investors. 
``We must understand why Russia lost the status of a great power and got the
shameful status of a debtor,'' Luzhkov said at his party's weekend meeting. 
The capitalist reforms of the past seven years, which have enriched a few
while leaving millions of workers struggling have been a dangerous
``experiment,'' Luzhkov said. 
``Russia had been overtaken by Western doctrines, alien to our culture,''
Luzhkov said. ``Now, dear sirs, the experiment is over.'' 
Yet it was the very reforms that he rails against that transformed Moscow
the bustling center of commerce that it is today. Russia's new middle class
worked for Moscow-based banks and brokerages and in the Moscow headquarters of
Russia's most successful companies, mainly in the oil, gas and metals
businesses. While these companies were paying city taxes, the city itself has
been investing in unprofitable businesses. 

500 Companies 

Moscow owns stakes in more than 500 companies, of which 260 companies are
controlled by the city. City-owned companies include unprofitable car
factories AO ZIL and AO Moskvitch, which are surviving on the city's subsidies
and loans. The city has made loans of 240 million rubles ($11.7 million) to
ZIL alone. 
Luzhkov, whose family has lived in Moscow for several generations, won the
mayor's office in 1996 by a landslide vote of almost 90 percent. 
By then, he had been involved in running Russia's capital for nine years
-- as
deputy head of the city administration, first appointed by the city assembly,
and then re-appointed by Moscow's first popularly elected mayor, Gavriil
When he was elected Moscow's mayor, Luzhkov also earned a position in the
parliament's upper chamber, thus raising his profile nationwide. 

Launch Pad 

In October, Luzhkov said he's considering a bid for president in the next
election, currently scheduled for 2000. President Boris Yeltsin, who is
serving a second term, has said he won't seek reelection. Other likely
contenders for the job include retired General Alexander Lebed, the governor
of the Krasnoyarsk region. Lebed also imposed price controls in his region in
an attempt to eliminate inflation by decree. 
Catapulting Luzhkov into the Kremlin is the main goal of his Fatherland
According to polls, Luzhkov is supported by about 14 percent of voters. The
percentage, though relatively low, gives the Moscow mayor a strong chance of
emerging from a crowded field to make it into the second round of elections.
In a head-to-head race with any potential contender, including Communist Party
leader Gennady Zyuganov, the front-runner, in a second round vote, current
polls show Luzhkov would win. 
Luzhkov's nationwide popularity defies a general tendency among Russians
the provinces, who are traditionally wary of Muscovites they consider affluent
and arrogant. 
``People don't like Muscovites but they do want to live like the people in
Moscow,'' said Vyacheslav Novikov, head of the Center for Strategic Studies in
Krasnoyarsk, a Siberian city four time zones east of Moscow. ``They want
Luzhkov for themselves.'' 

Shaky Miracle 

Russia's current financial crisis, precipitated by the federal government's
inability to service its debt or support the currency, is shining a harsh
light on Luzhkov's showcase city of Russian capitalism. Now that the stock and
bond markets based in Moscow have collapsed, and many foreign banks have
closed offices or fired most of their employees, Moscow's image is in danger
of being tarnished. 
``Moscow had the lion's share of foreign capital when it was arriving,''
Sergei Volobuyev, an economist at Credit Suisse First Boston in Moscow. ``The
departure of foreign money is hurting the city more than other Russian
The ruble's 69 percent plunge since mid-August has slashed companies'
-- and those of the city. 
The Moscow government reported a 3.9 billion ruble ($191 million), or 10.3
percent, shortfall in revenue for the first nine months of 1998. The city has
been repeatedly recalculating the 1999 budget since October, and the budget
will likely be approved no earlier than in January, said Oleg Muzyrya,
chairman of the city assembly's budget committee. 
The latest draft keeps the budget balanced, with both revenue and
expenses at
57 billion rubles, or about one-third of the dollar value of this year's
budget parameters. 
Meanwhile, the city will have to pay $210 million during the next year to
service its international loans and 1 billion rubles to repay a municipal
``This isn't a disastrous situation but this is a situation worth
said Margot Jacobs, banking analyst at United Financial Group in Moscow. 
Cutting support to Moscow companies, as well as reducing social spending,
cost Luzhkov many potential votes, the Carnegie Foundation's Ryabov said. 
The mayor hopes to transcend the economic crisis, convincing Russians
steps are needed restore Russia's position as superpower. 


"Demise" of Oligarchy Disputed 

Sovetskaya Rossiya
8 December 1998
[translation for personal use only]
Article by Vasiliy Safronchuk under the rubric "Overview":
"The Distorting Mirror of the Oligarchy"
Have the "Gods" Perished?

In recent weeks, especially after the
collapse of the ruble and exacerbation of the financial crisis, certain
"democratic" publications have begun to lament the fate of Russia's leading
oligarchs. Issue No 9 of the monthly journal Sovershenno Sekretno
published by the Borovik clan of abusers of our Soviet past contains an
article entitled "The Death of the Gods." It is a kind of obituary of the
Russian oligarchs Potanin, Berezovskiy, Gusinskiy, Khodorkovskiy,
Smolenskiy, and Aven. They are portrayed as innocent victims of the
Russian and world financial crises. I am not offended by the Boroviks for
taking the idea and diagram of the oligarchy from my essays in Sovetskaya
Rossiya published in 1996-1998. The weekly Argumenty i Fakty does the same
thing as the Boroviks and in issues 46 and 47 publishes Olga
Kryshtanovskaya's essay "The Death of the Oligarchy." "The oligarchs, who
only yesterday were all-powerful, now seem to have vanished in Russia's
social space. Where are they? What is wrong with them?" she asks. The
author says: "The systemic crisis in Russia means the death of the
financial oligarchy. Their banks have been ruined. The mass information
media are unprofitable, and oil is getting cheaper on the world market. 
All the foundations of economic prosperity have been undermined."
To paraphrase Mark Twain's well-known saying, one can say that the
rumors of the death of the Russian oligarchy are clearly exaggerated. Yes,
to some degree their positions have been weakened. The oligarchy's
banks—ONEKSIMbank (Potanin), MOST-bank (Gusinskiy), Menatep
(Khodorkovskiy), and SBS-Agro (Smolenskiy)—proved to be insolvent. 
But Gerashchenko rushed to help them, and after regrouping they held on. 
During the rescue operation, the oligarchy's banks sent some of their
depositors off to the state's Sberbank (SB), and now they will get their
deposits back through the Central Bank, which is the SB's main shareholder.
Meanwhile, these banks, as we know, were active players on the GKO
[treasury bill] and OFZ [federal loan bond] market and skimmed off tens of
billions of dollars on operations involving them; the bulk of that money
has settled in the oligarchs' anonymous accounts abroad. The oligarchs'
banks were the ones that exhausted the Central Bank's hard currency
reserves this past summer and caused the ruble to collapse. During the
recent negotiations between deputy minister of finance M. Kasyanov and a
delegation of creditor banks headed by Deutsche Bank, the latter announced
that large Russian banks could easily have settled with them by using their
foreign accounts. But the Potanins, Gusinskiys, Khodorkovskiys, and their
ilk prefer that the Russian state settles accounts for them.
Yes, while stock prices were crashing on Russian exchanges, the quoted
price of large oil extracting and mining and metallurgy companies
controlled by the oligarchy fell several-fold. But as we have repeatedly
noted, a drop in the paper value, that is to say the fictitious value, of
these companies certainly does not mean that their real value dropped. It
is naive to think that Gazprom, Norilsk Nickel, Sidanko, Sibneft, LUKoil,
the Tyumen Oil Company, Svyazyinvest, and other giants of Russian industry
all together are worth $8-10 billion today. But yet, that is the amount at
which the exchange now assesses them!

The Oligarchs and the Mass Information Media

But the place where the
oligarchy's positions did not waver one iota was on the information market.
True, even here there were difficulties: paper, other processed and raw
materials, and printing equipment got more expensive, income from
advertising dropped, and so forth. The oligarchs' control over the
electronic and printed mass information media, however, was not only
preserved but even increased. Let us take television. The ORT [Public
Russian Television] channel is controlled by Berezovskiy's co-comrades,
just as it used to be. Forty-six percent of ORT stock belongs to his
LogoVAZ and ORT-Consortium of Banks, which includes Alfa-bank, Menatep,
United Bank, SBS-Agro, and Capital Savings Bank. As practice shows, that
is certainly enough for control, since the state, which has a 51 percent
stake, acts the part of "Sleeping Beauty." The point is that, according to
the ORT charter, to adopt important decisions they must have a two-thirds
majority and even a three-quarters majority of votes, and Berezovskiy
together with the consortium can block any decision they do not like and
impose the one they need. Since the oligarchy's banks have been
experiencing financial difficulties recently, ORT has also found itself
The NTV [National Television] channel continues to be firmly in
Gusinskiy's hands, although he in fact surrendered 30 percent of the
channel's stock to Vyakhirev's Gazprom this year. He also owns the radio
station Echo of Moscow. Despite the fact that Russia is sitting in a deep
hole of hard currency debt, Gusinskiy "found" $150 million to launch his
Bonum-1 communications satellite with an American Delta-2 rocket from the
space port in Florida. The satellite was built by the American Hughes
Space and Communications Company and will provide 30 channels for NTV-Plus.
Gusinskiy proudly disclosed that he had "broken" the state monopoly on
satellite broadcasting. He also claims that he did not borrow any money
from anybody to do so. But he is deceiving the people. The satellite was
launched with a hard currency loan of $132 million borrowed from the
American Export-Import Bank and Vneshekonombank. The loan was received for
10 years at a high interest rate. Meanwhile, the Russian Space Agency is
expiring from lack of orders. The Russian Space Agency management has a
right to file suit against Gusinskiy for having American companies
manufacture and launch the satellite.
The third television channel, TV-Tsentr, is part of the Sistema
financial-industrial group that belongs to Moscow mayor Yu. Luzhkov. V.
Yevtushenkov, the chairman of the Sistema board of directors, is the
mayor's advisor and a member of the Moscow government. He also heads the
board of directors of TV-Tsentr. Novaya Gazeta, which on 12 October
published a detailed essay on Sistema, disclosed that Yevtushenkov and
Luzhkov are related by marriage--they are married to sisters. 
Incidentally, the disagreements between Luzhkov and Chubays over
privatization, which are being fanned by the mayor himself, are more
tactical in nature. The Chubays voucher program was simply an obstacle on
the path to converting real estate and Moscow enterprises into joint stock
companies and selling them off Luzhkov-style. The newspapers reported that
Luzhkov's Sistema intended to order a satellite from the American Lockheed
Company for broadcasting on the TV-Tsentr channel throughout Russia.
Berezovskiy's LogoVAZ and Alekperov's LUKoil are the largest
shareholders of TV-6 channel. The RTR [Russian Television and Radio
Company] television channel is formally a government channel. But in fact
it is the channel of the president and his administration.
Things are no better with the printed mass information media either. 
The controlling block of "black" Izvestiya belongs to that same Alekperov;
while 40 percent of Komsomolskaya Pravda belongs to ONEKSIMbank (Potanin)
and Gazprom (Vyakhirev); Gusinskiy owns the newspaper Segodnya; the
controlling block of stock of Nezavisimaya Gazeta is in Berezovskiy's
hands; SBS-Agro controls Kommersant Daily; Vechernyaya Moskva is part of
the Moscow bank group, which in turn is part of the Luzhkov system; 70
percent of Literaturnaya Gazeta's stock is in the hands of the Menatep
bank, and so forth. Berezovskiy is the largest shareholder in the weekly
Ogonek, Gusinskiy owns the weeklies Sem Dney and Itogi (the latter in
shares with the Washington Post and Newsweek), and so on. This list of the
oligarchy's printed publications could go on forever.

Must the One Who Pays the Piper Name the Tune?

But that is already
sufficient to picture the oligarchy's degree of influence on the mass
information media. Its domination in the electronic mass information
media, on radio and television, is especially pernicious. The Kiselevs and
Dorenkis and others of their ilk have really screamed about the State
Duma's attempts to establish public control over television broadcasting. 
They are howling about the assault on "freedom of the press," "introduction
of censorship," "suppression of criticism," and so on and so forth. But
there is not one country in the world that does not have public control
over television broadcasting. In the United States, for example, at the
very dawn of television, a system of strict control by the Congress and the
government was developed. Beginning in the 1950s, U.S. Senate committees
have conducted regular hearings on limiting monopoly trends in television. 
The leaders of the main companies, CBS, NBC, and ABC, are invited to them
and subjected to the toughest questioning. The American commission on
limiting monopolies is involved in this too. Back in the 1950s, it stopped
the attempts of television companies to monopolize the rights to film
production. In the late 1950s, the U.S. Federal Trade Commission and the
Department of Communications took a number of steps to limit unscrupulous
advertising and programs promoting crime, violence, sex, and so forth. In
April 1974, on the recommendation of the Senate Communications Committee,
the main U.S. TV channels took off several programs that promoted violence
and sex and replaced them with so-called "family programs." Every year the
U.S. Congress allocates tens of millions of dollars in the federal budget
to finance educational programs. This money is distributed among the
States and educational institutions for free access to the air.
In England control over commercial television is charged to the
Administration for Affairs of Independent Television (AIT), which was
created back in 1954. A parliamentary act charges AIT with the duty of
"providing, in addition to the state BBC, television services of equally
high quality in terms of both the technical aspect of programs and their
content, and watching to make sure that programs do not include anything
that offends good taste or the demands of morality or even could serve as
inducement or incitement to crime." In the early 1960s, there was a
special commission on affairs of private television operating in England. 
Its report relentlessly criticized commercial television for vulgarity and
baseness and recommended, among other steps, that the work of compiling
programs be transferred to AIT. The 1964 law on television established a
special tax on television advertising.

Do We Need the Opinions of the Kiselevs, Svanidzes, and Others Like Them?

The behavior of our announcers and moderators is altogether
disgraceful. "Earning" tens of thousands of dollars a month, they allow
themselves to shamelessly impose views that suit the oligarchy on millions
of television viewers and essentially "zombify" the citizens. But the duty
of announcers is just to lay out the facts in a well-modulated voice and
allow viewers to evaluate them. We certainly do not need their illiterate
comments. In the same way, moderators are only supposed to bring members
of the government, politicians, and other prominent public figures and
experts onto the air, organize debates among them, and give television
viewers a chance to decide with whom they agree or do not agree. There is
good reason that a television moderator in the West is called an anchor
When I was working at the USSR representative office at the United
Nations during the Cold War years, I was sometimes, especially in the
period when relations between the Soviet Union and the United States had
deteriorated, invited to ABC and other channels to argue with American
Sovietologists. Even when the discussion became heated, the moderators
demonstrated the utmost tact to ensure that the disputes stayed within the
limits of propriety and themselves allowed no hostile comments.
But our Kiselevs and Svanidzes do everything the opposite way:
hard-line anticommunists and abusers of the Soviet past are invited onto
the air and allowed to throw mud at the State Duma and the people's
patriotic opposition for hours; they fawn and cringe before the powers that
be. But when the leaders of the opposition are invited, they are not
allowed to open their mouths without a sarcastic retort, they are
constantly interrupted, and crude and tactless behavior is permitted. The
Kiselevs and Svanidzes outwardly try to copy the elements of American
television: they puff out their cheeks gravely, pause meaningfully, and so
forth. But the distance between the Americans and them is like the
distance from here to China.


Moscow Times
December 19, 1998 
EDITORIAL: Russia Gets Little From Fury on Iraq 

Russia should spend more time thinking about its own nationalist
interests in
responding to the United States' attack on Iraq. 
The rights and wrongs of U.S. actions are debatable. It is true that the
United States is sidestepping the United Nations and establishing an
unsettling precedent for unilateral intervention in countries it doesn't like.
The impeachment issue also weakens the U.S. case. Russia is right to raise
these points. 
But Russia ignores the justification for the attacks on Iraq. It is a matter
of record that Saddam Hussein is trying to develop weapons of mass destruction
and he too has flouted the authority of the United Nations. 
Rather than taking an angry stand on one side of this abstract debate on
international law, Russia should be looking at what it has to lose or gain in
the current crisis. 
U.S. intervention in Iraq is a worrying precedent but it is certainly not a
threat to Russia. The countries who are endangered are rogue states like
Serbia, Libya and North Korea. Although Russia tries to pretend it has some
interest in protecting these countries, this is nonsense. They are almost
irrelevant to Russia in economic or military terms. 
Russia may imagine it is scoring some indirect diplomatic points by stamping
its feet, but the opposite is the case. The United States and Britain will
just shrug off Russia's antics. By making a fuss, Russia is just confirming
its weakness and loss of superpower status. 
The inevitable sequel will be a Russian climbdown, as Russia realizes its
vital interests involve developing ties with the West. The Russian ambassadors
will return to Washington and London probably sooner than later. 
For the fact is that Russia does now desperately need the West as the
government itself sheepishly admits. Russia desperately needs money from the
International Monetary Fund over which Washington has a veto. Russia claims
that it also is in desperate need of U.S. food aid, although the need for some
of the aid being negotiated is questionable. 
The only practical thing Russia can do to annoy the West will be delay
of the START II disarmament treaty. But the United States knows that Russia
needs the treaty if it is to keep any kind of strategic parity. 
The only rationale for the Russian government's hullabaloo over Iraq is that
it wants to avoid a confrontation with the State Duma over foreign policy.
Perhaps these hysterics will secure the passage of the budget and a few tax
laws. Is it worth it? 



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