December 24, 1998    
This Date's Issues: 2531 •  • 

Johnson's Russia List
#2531
24 December 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Interfax: Lebed: Airstrikes 'Failure for Russian Diplomacy.'
2. Reuters: Primakov says Russia-West ties could cool off.
3. AFP: Russia limps into new year with little hope for relief.
4. Georgi Sturua: Re Jonas Bernstein on George Soros.
5. Yevgenia Albats: Re 2530-Bernstein/Soros Revelation.
6. Vlad Ivanenko Russian police.
7. Ira Straus: Banks.
8. Washington Post: Bill Richardson, Russia's Recession: The Nuclear 
Fallout.
9. Los Angeles Times: Alexander Yanov, Echoes of Serbia Resound in Moscow 
Russia: Western policies have generated only misery; have we forgotten the
constructive lessons of the Marshall Plan?
10. Moscow Times: Melissa Akin, START II Buried By Strikes On Iraq.
11. AFP: Russian Communist leader denounces "Zionist capital."
12. AP: Primakov: Russia Will Pay All Debts.]

*******

#1
Lebed: Airstrikes 'Failure for Russian Diplomacy' 

MOSCOW, Dec 17 (Interfax) - Krasnoyarsk territory governor Aleksandr
Lebed has called the U.S. and British attack on Iraq a failure for Russian
diplomacy."Now the U.S. will get its own Chechnya," he told Interfax on
Thursday. "The U.S. is a great power, and its Chechnya will be
appropriate," he said.Lebed said the Muslim world may unite against the U.S.

*******

#2
Primakov says Russia-West ties could cool off
By Mike Collett-White

ASTANA, Kazakhstan, Dec 23 (Reuters) - Russian Prime Minister Yevgeny Primakov
said on Wednesday recent U.S. and British air strikes on Iraq and prospects of
some former Soviet states joining NATO could cool Moscow's relations with the
West. 

But Primakov, who has been looking for new allies in Asia, ruled out sliding
back to the Cold War confrontation between Russia and the West. 

``A return to the Cold War in its classic form is not possible,'' Primakov
told reporters at the end of a two-day official visit to the Central Asian
state of Kazakhstan. 

``But at the same time a cooling in relations is possible, and everything now
depends on the United States and the countries of the West. The ball is in
their court.'' 

Russia has fiercely criticised last week's air strikes against Iraq, saying
they violated United Nations rules. 

``It is a very threatening situation which could destroy the entire system of
international relations.'' 

In an unusually strong reaction to the air strikes Russia recalled its
ambassadors from Washington and London for consultation. But the Foreign
Ministry said the ambassador to the United States, Yuli Vorontsov, flew back
to Washington on Wednesday. 

Primakov also reserved frosty rhetoric for NATO, reiterating Russia's
opposition to granting membership for any former Soviet republic. So far only
the three Baltic republics of Latvia, Estonia and Lithuania have said they
want NATO membership. 

``Our policy on the expansion of NATO is unchanged. We are against the
expansion of the North Atlantic Alliance,'' Primakov said. ``Russia may be
forced to take a number of measures if a country of the former Soviet Union
joins NATO.'' 

He did not specify what measures he had in mind. 

Russia has objected to NATO plans to grant full membership to some Eastern and
Central European countries. NATO brushed aside Russia's protests but agreed to
set up a bilateral committee with Russia to discuss their differences. 

Primakov, who has said the Russia would continue cooperation with NATO, is
pushing ahead with plans to diversify Russia's foreign policy by boosting
links with other big countries like India or China. 

During his visit to India earlier this week Primakov put forward the idea of a
strategic alliance between Russia, China and India. 

``It seems to me that the idea of such a triangle, where each corner is
connected with a different corner of bilateral relations, will lead to more
stability in the region and on the global level,'' he said in Astana. 

``We felt from the Indian side a desire to improve its relations with China,''
Primakov said. 

But the idea of three-way alliance met little enthusiasm in Beijing and New
Delhi. 

Both Primakov and Kazakh President Nursultan Nazarbayev supported greater
integration among Commonwealth of Independent States (former Soviet)
countries, although Kazakhstan has said it would take temporary measures to
limit the impact of the Russian financial crisis on its economy. 

Russia is Kazakhstan's dominant trade partner, and a key link between the
resource-rich ex-Soviet state of 16 million people and markets in Western
Europe. 

Nazarbayev said Russia would allow Kazakhstan to export more oil across its
territory next year, while Primakov said that the question of Russian
deliveries of military aircraft to Kazakhstan would be resolved in January. 

********

#3
Russia limps into new year with little hope for relief

MOSCOW, Dec 23 (AFP) - Russia limps into 1999 hurting from a ravaged economy
and with little hope that an irresolute Kremlin or its rich but offended
foreign friends will come up with a prescription to ease the pain.
A shattering August 17 debt freeze and de facto ruble devaluation split the
passing year into uneven halves of tranquillity and crisis.

The failed economy proved a ghostly foe that spooked the fighter in President
Boris Yeltsin and saw many rush to write his political epitaph.

The financial whirlwind that tore through Russia also sent foreign creditors
fleeing for cover and paved way for the country's first post-Soviet government
of leftists, assembled by a former spymaster who favors the cautious approach.

"Do not wait for quick results if you elect me," premier Yevgeny Primakov
uttered moments before lawmakers swept him into office in September. "Our
economy is in such a state that quick results are impossible."

Primakov let his aides debate a rescue package for two months before
initialling measures that discouraged the International Monetary Fund from
releasing blocked payments to balance Russia's hopelessly lopsided books.

The Fund flatly told Moscow it was tired of pouring billions of dollars into a
shrinking economy only to see the money re-emerge in off-shore banks. And
furious investors stung by the debt freeze said they were unlikely to return
here any time soon.

The crisis and a resulting power void left the country's regions scrambling
for autonomy. Even control of Russia's nuclear weapons stockpile came under
question when maverick general Alexander Lebed threatened to take over
administration of silos in Siberia's Krasnoyarsk.

And autumn delivered the country's worst grain harvest in more than four
decades, forcing Russia to swallow its pride and negotiate hefty food aid
packages with Europe and the United States.

The waters were muddied still further by Yeltsin. He brought down two
governments in just a few months for little apparent reason beyond personal
embarrassment over his inability to control events due to perpetual illness.

Yeltsin eventually tired of the blame game and delegated much of his vast
authority to Primakov, launching in the process a potentially bruising and
costly campaign to replace him 18 months before scheduled elections.

The front-runners in that race are likely to be determined next December when
Russia holds its first parliamentary elections since Communists and their
nationalist allies stormed the 1995 polls.

Top contenders include Moscow populist mayor Yury Luzhkov's Otechestvo
(Fatherland) party that has built up steam fast since its inception this
autumn. Lebed and liberal-opposition leader Grigory Yavlinsky of Yabloko also
hope that strong results in parliament will launch them into prominence in
2000.

These would-be president however can no longer rely on help from a band of
rich Russian entrepreneurs who pooled their media and financial resources to
carry an ailing Yeltsin into power in 1996.

Russia's financial crash took the wind out of most of these so-called
oligarchs and their banks. Thus rules by which politics are played here have
changed drastically as the Kremlin and its former financiers take a back-seat
role to regional barons who run their fiefdoms irrespective of Moscow dictats.

The oligarchs' ruin also means that Russia is ever more reliant on aide and
investments from abroad this winter.

The IMF has made any future assistance contingent on parliament adopting the
tightest budget in modern Russian history that would avoid the threat of
hyper-inflation following Moscow's decision this autumn to let loose its
printing presses.

But Primakov's government has drafted a spending plan which is based on a
stable ruble rate and a massive restructuring of foreign financial aide
payments that has yet to be agreed with Russia's creditors.

The Russian unit however is continuing its steady slide and is already
flirting with a dollar exchange rate forecast to last until the end of 1999.

Officials meanwhile admit Moscow only "stands a chance" of reaching agreement
on deferment of its liabilities.

"What agreement we reach with foreign creditors on debt restructuring will be
the determining factor next year," said Communist economics supremo Yury
Maslyukov. 

*******

#4
From: STURUA GEORGI-AGS010 <ags010@Europe2.mot.com> 
Subject: Re re George Soros comments 
Date: Wed, 23 Dec 1998 

Mr. Bernstein, 

1.All direct comparisons, however seductive they may be, are fraught with
simplifications. Though it is perfectly OK to appeal to the current US
experience in the rule of law and democracy but it is hardly relevant for a
present-day Russia. All observers of Russia, including those who are
Russians by origin, tend to forget one simple fact: developments in this
country totally negate its 1,000-year old traditions and norms. Russia has
abolished serfdom just slightly more 130 years ago out which it lived at
least 40 years under the most repressive regimes in the history of mankind. 
2.One usually does not admit it publicly but it is impossible to keep
immaculately white gloves on and succeed in politics. By success I mean
being able to implement one's goals and plans. Politics is not only an art
of compromise but also of keeping the rings around the collar less visible.
It is especially so in Russia where democratically elected parliament has
to be constantly restrained by the executive and media from legally
decreeing return to the good old days of Communism and the end of
democracy. Chubais, whom I do not want to exonerate from any wrongdoing,
simply turned to Gaidar as a knowledgeable, connected and reliable person.
Above all, Gaidar is a man of action who does not shy away from
responsibility for the decisions he makes. A rare quality in politicians,
especially again in Russia. Besides, it is not clear whether Soros was
right saying that Gaidar had been left to "mind the store", that is, the
Cabinet. Personally, I am very doubtful. 
3.I have nothing against when two skillful political players of the stature
of Gaidar and Soros act as middlemen to assist the Russian and US
Government in averting a total collapse of Russia. 
4.Finally, your comments struck me as if stolen from the lips of those who
in the murky world of Russian political infighting have lost (and on many
occasions) to Chubais and Gaidar or who do not conceal their envy of the
role those bright whiz kids play in the game of risk called "Let's Turn
Russia Into A Modern Society". Western analysts could and should do better. 

Regards, 
Georgi Sturua 

********

#5
From: "Yevgenia Albats" <albats@glasnet.ru>
Subject: Re: 2530-Bernstein/Soros Revelation
Date: Wed, 23 Dec 1998

Re Jonas Bernstein:
In regard to Gaidar, and Soros's call to him.
No, Gaidar was not a private citizen at that time. Starting mid March, and
all the way through August 19, Yegor Gaidar was an advisor on the economic
police questions to the then prime-minister Sergei Kirienko.
Therefore, the very base for your harsh conclusions is wrong and based on
the false information.

*******

#6
Date: Wed, 23 Dec 1998 
From: Vlad Ivanenko <vivanenk@julian.uwo.ca>
Subject: Russian police

Recent contributions to JRL have attracted attention to the gloomy state
of Russian law enforcement. While not being an expert in police related
issues, I have pondered over economic meaning of several questions.

The general impression is that Russian police so poorly protect citizens
that the victims consider reporting crimes to be meaningless. Why does not
Russia switch to the system under which local police chiefs are elected
like sheriffs? An elected official is presumably more accountable and
enjoys higher trust. The argument that local Mafia can get power in this
way does not look satisfactory. After all Texas rangers did not markedly
differ from outlaws but brought an embryo of law to the region.

The law on local governance stipulates centralization of police under the
supervision of the state with no police power granted to localities and
regions. Since the law is enacted and not widely challenged, status quo is
an apparent equilibrium with which both local and federal powers are
content. Moreover, the federal government seems to react sharply to any
local attempt to curb (at least on formal level) its capability to control
*power ministries*. What does the federal government gain from
centralization?

Presumably nothing, otherwise it would pay regularly to police officers.
Instead of paying, the federal government turns blind eye to implicit
taxation by which local police compensate itself for being not paid. There
are rumors that traffic inspectors fine the owners of imported cars (who
are presumably wealthier) more often than on average, SPb police officers
have learned how to prey on foreigners, some police protect swindlers,
etc. If what is stated before is correct, the federal government pretends
being in charge while is interested in keeping cost of pretense as low as
possible. The idea of pretense is either to aggrandize the federal
government (and then the hypothesis of Gaddy/Ickes of inflated economy to
justify inflated government expenditure gets credibility) or to preserve a
vestige of former political system (and not only Russian bureaucrats are
notorious for preserving outdated systems).

Why do not local governments hurry pressing for a change? Apparently,
there is a leverage that the local administration can exercise over police
(promotion of relatives in local government, grant of building rights,
subsidies in kind, etc.) that suffices for their purposes. Then, it is
against the interests of local elite to push for democratization in law
enforcement that would reduce their ability to influence local police.

In the light of above analysis it is hard to imagine who in Russia would
benefit from establishment of *fair play* in law enforcement. The initial
hope that Russian nouveaux riches would be induced to support the law to
secure their property did not come true. New Russians rely on private
protection more than on public police. That makes the situation with law
enforcement worse because the business of private protection recruits most
efficient officers out of police. The last power to mention is Duma that
seems to derive no benefit from present situation. It tried unsuccessfully
to obtain influence over *power ministries* last September but Duma is
apparently reluctant to democratize law enforcement bodies likewise.

Law enforcement is a public good that is clearly under-provided in Russia.
Some polls indicate that public demand for law enforcement is high: the
crime activity is the main concern for many citizens. The problem lies on
supply side with low solvent demand that does not justify the cost of
overhauling law enforcement system. Then, the situation will largely
persist up to the point when either significant middle class will come to
life demanding legal protection or a less costly system of law enforcement
will evolve. The last point calls for the simplification of existing law
and partial transfer of police responsibilities to local volunteers armed 
or not.

******

#7
From: Ira Straus <irastraus@aol.com>
Subject: Banks
Date: Wed, 23 Dec 1998

Dear David,

A brief trip back to Russia earlier this month convinced me more than ever of
the need for letting foreign banks do retail operations in Russia. I agree
with those on JRL who say Primakov's promise on this is, despite all its
limitations, the best reform news to come out of Moscow in years.

Sure, as the skeptics keep writing in to JRL, the banks are probably going to
be allowed to operate only in a half-hearted way, and probably will fall far
short of realizing their full potential for improving the situation (like
getting most of the $40b + in savings out from under the mattrasses, or
getting the $150b + in capital flight abroad to flow back in). But they can
still accomplish a lot. Cases in point:

A. A friend of mine is owed 300 pounds for an article of his published in
London. The London people wanted to send him a check for it. No, he protested!
What could he do with a check? There's no bank to deposit it in safely. Sure,
he could deposit it into a ruble account -- but the bank would probably covert
it into rubles at an old rate (6 or 10 rubles to a dollar) that's way below
the market value, taking away half or 2/3 of the value of the check right off
the bat. Even if he managed to get it converted at a fair market rate, the
value of the money could go down quickly as the ruble keeps depreciating. (You
have to keep in mind that 300 pounds is several months' living expenses for an
ordinary Russian, so he doesn't want to have to spend it all immediately.) The
only way for him to use the money without substantial depreciation is for
someone who happens to be flying over to Moscow from London to bring it to him
in cash, so he can exchange it piecemeal on the market when needed.
If there were a reputable foreign bank doing retail business in
Moscow, he could deposit the check into a dollar or pound sterling account,
and draw on it without substantial depreciation. What does he care, if maybe
it doesn't earn any interest (because the government won't allow the money to
be moved abroad for investment, and the local investment opportunities are too
risky)? Maybe he loses 5% or 10% a year in opportunity costs on interest; but
he avoids the 50% to 2000% inflation risk.

B. Friend B, from the USA-Canada Institute, has a small NATO grant, to write
up a plan of how Russia could join NATO. Same problem: how to receive the
Belgian francs, without losing most of it on the conversion rate or in
inflation? With a foreign retail bank operating in Moscow, NATO could transfer
the funds directly to his account in Moscow, where it would be denominated in
francs or dollars, with only the usual nominal couple percentage points of
transfer and conversion costs, and with a stably-valued account balance after
that; not any 50-70% ripoff for conversion into rubles or inflation.

C. Friend C's institute had its funds frozen for a couple months after August
17. It could barely continue any projects at all during that period. Now some
of the money is being unfrozen, hesitantly, and maybe with the same ripoff of
hard currencies being converted at old rates.

D. Friend D, a good fellow who has written for JRL from America, moved back to
Moscow this year. He brought with him most of his dollar savings. He deposited
his money in Moscow, not in one of those shady dollar accounts in Russian
banks that ended up frozen, but in a ruble account -- exchanged at what seemed
at the time to be an honest, stable rate of 6 rubles to the dollar. Then came
August 17 and his rubles lost 2/3 of their value.
What can one say of that? How could anyone proceed in a more honest
spirit about helping Russia -- moving there wholesale, sharing in the joys and
sufferings of the people? Good fellow that he was, he put his money where his
mouth was. And lost his shirt.
There's got to be a better way.

E. You've heard all the complaints about how we can't give any serious-scale
aid to Russia, because Russia doesn't have the infrastructure to absorb aid
properly, the money gets lost, no one knows where it disappears, it's stolen,
etc. etc. A big part of the meaning of this complaint is, simply, that there
is no good bank -- no bank that meets all the elementary criteria of being
honest, reliable, hard currency-based, with a sound ratio of assets and
performing loans to liabilities and bad loans, and transparent in its
accounting practices -- into which recipient persons and institutions can
deposit the money. Using Russian banks, funds can't be reliably transfered and
tracked without risking loss of a huge fraction of their value.

In view of all this, foreign banks doing retail deposit operations are
urgently needed in Moscow, even in the half-hearted terms Primakov is talking
about (e.g., with the restriction that all money deposited into them would
have to stay inside Russia). They would have a reasonable chance of
accomplishing the following results:

1. Russians would be able to receive and deposit money from abroad, without a
huge overhead of effort or a huge bankers' cut taken out of the money.

2. Assistance funds could be transfered, theft-free, and by a simple standard
procedure. No need for detailed negotiations in each case over how a
particular scheme might be set up for delivery of the funds or goods, and no
need to deduct a big slice for theft. 
Possibly this would lead to substantially bigger and better assistance
programs, as the experience with giving assistance becomes more positive for
the donor community. Of course, that depends on Western will. But once there
is a way, the will is easier to find.

3. Some of the $40b + would come out from under the mattrass, for safer
keeping in the bank.

4. Some of this deposited money would be used for investments in Russia.
Perhaps only a fraction of it would be invested, and most of it just held in
cash, to avoid undue risk to depositors; but at least the money would in
principle be readily available for whenever there are reasonable sound or safe
investments to be made. 

To be sure, even these effects could be undermined by further restrictive
regulations, or by crime and mafia pressures. But it seems that the more
likely outcome is to accomplish at least some of the above 4 points at this
time. 

Perhaps it's an irony that the Primakov government seems more capable of
delivering on what's needed for accepting Western assistance than were his
relatively westward-liberal oriented predecessors, to whom the West was
presumably happier about offering assistance. Irony or not, it's an area to be
working with him and building on what is feasible at this time.

The further hoped-for effects -- getting the money into full investment
circulation, getting it all out from under the mattrass, and attracting back
the capital flight from abroad -- depend upon moving on to a further stage of
permitting funds to flow freely in and out of the country. Then there will be
no fear of direct or indirect confiscation of funds deposited in the foreign
banks, and the funds will be able to go to the most competitive investments.
This doesn't exclude setting up an investment board at the bank which would
look first and foremost for investment opportunities in Russia; obviously the
bank should build, like banks everywhere, on local opportunities as learned
through local connections, as long as it does this subject to transparency and
to the availability of external competitive options so as to keep local
investments honest.

I can agree with the concerns of several writers on JRL about the obstacles to
a foreign bank in Moscow achieving its full hoped-for effects at this stage;
but that doesn't mean it won't work, merely that it will only work part-way at
this stage. That's enough to make a big difference. If the experience of it
proves positive, maybe there'll be some positive learning from it (a pretty
good thing after all the negative learning experiences these last years!) and
the rest can come with time.

Ira Straus
(Senior Associate, Program on Transitions to Democracy, GWU)
<irastraus@aol.com> 

*******

#8
Washington Post
December 23, 1998
[for personal use only]
Russia's Recession: The Nuclear Fallout
By Bill Richardson
The writer is secretary of energy. 

Russia's financial crisis has brought new urgency to U.S. efforts to help
Moscow tighten controls over weapons-grade nuclear materials and expertise.
Already, episodes involving unpaid guards and inoperative security equipment
have increased the risk of nuclear leakage to rogue states or terrorists.

The most disturbing incident reflecting the new pressures of economic hardship
on nuclear plant personnel took place in the closed city of Mayak, the major
plutonium reprocessing site, where tens of tons of weapons-usable plutonium
are stored. In September, a guard sergeant there ran amok, killing a number of
his counterparts before fleeing. He has yet to be apprehended. 

Our partnership with Russia to meet these growing security challenges has been
extraordinary. In cooperation with the U.S. Department of Energy, Russia is
selling the United States large quantities of weapons-grade uranium in non-
weapons-usable form -- 36 tons so far. It also is accepting our help to
improve protection and accounting of nuclear materials at some 40 nuclear
facilities, including highly classified sites.

In addition, Moscow has agreed to a U.S.-Russian program to render 50 tons of
weapons-grade plutonium in each country unusable for nuclear explosives. And
we are pursuing cooperative programs to engage Russian weapon scientists in
peaceful projects and facilitate the consolidation of Russia's nuclear weapons
complex. 

The Russian financial crisis has made this work more difficult -- but also
more important, since growing economic turmoil will increase incentives for
insiders at nuclear plants to sell material, or their services, outside
authorized channels. Our most urgent worry is that the economic blows are
affecting facilities' ability to protect and control nuclear materials.

We have learned, for example, of cases of guards at some civilian nuclear
sites not reporting for work and, in one extraordinary instance, electricity
to a nuclear installation being cut off for nonpayment of utility bills, which
obviously affected electricity-dependent security systems. 

So far we have no evidence that nuclear materials have been compromised.
Nonetheless, these are serious developments, and the Department of Energy's
task force on nuclear material security in Russia and the newly independent
states has been working hard to address them. 

My department's Materials Protection, Control and Accounting program, for
example, promotes "passive" security upgrades -- improvements that can work
even if guards are not available or if electricity goes out. Examples include
vault locks that become "fail-safe" if electricity is cut and that cannot be
opened unless two authorized individuals enter the appropriate codes, and
passive physical barriers, such as interlocking concrete blocks. Steps can be
as simple as bricking up vulnerable windows and redundant access points.

We also are intensifying efforts to consolidate materials into fewer, more
easily protected locations, although given the scale of the Russian nuclear
complex, it will be a number of years before we see significant results. 

But the question of operating expenses, such as guard salaries, is troubling.
The United States has never paid such expenses in the past, considering them
to be a Russian responsibility. Nonetheless, we are looking for ways to help
individual sites cope by providing winter clothing for some guards and
subsidizing several commissaries to ensure that guards are fed while on duty.
The costs are modest and clearly a worthwhile investment.

This summer, my department began a major new program with the Russian Interior
Ministry, the organization that provides guards at many Russian nuclear sites.
We are improving training and emergency response capabilities. We will use our
contacts with the ministry to underscore the importance of providing salaries
and other necessary items to guards.

The financial turmoil in Russia hampers our efforts to diversify the economies
of the 10 closed nuclear cities, and in particular to attract private
investment to them. In the coming six months, however, our newly launched
"Nuclear Cities Initiative" will lay the groundwork.

Three cities have been selected as flagships: two nuclear weapons design
complexes and a plutonium production center at Kranoyarsk-26. By next January,
leaders from these cities will have visited comparable "down-sized" nuclear
sites in the United States to learn how we have created civilian jobs there,
and teams of U.S. economic development specialists will have visited the three
Russian centers. 

In coming months Russia is going to need more help, not less, and we must be
ready to respond. Our two countries remain committed to reducing the threat
posed by the nuclear legacy of the Cold War.

*******

#9
Los Angeles Times
December 23, 1998
[for personal use only] 
Echoes of Serbia Resound in Moscow 
Russia: Western policies have generated only misery; have we forgotten the
constructive lessons of the Marshall Plan? 
By ALEXANDER YANOV
Alexander Yanov Is the Author of "The Russian Challenge and the Year 2000" and
"The Russian New Right."

It's hardly surprising that Western media keep missing important--and
troubling--political trends in Moscow; it just reflects our total
preoccupation with Russia's financial meltdown. 
Such predominance of economics might have been excused in the heady years
of President Boris N. Yeltsin's power. The trouble is that not just Yeltsin
but an entire era is fading from the picture. A new and dangerous one looms on
the horizon while we refuse to see its omens. One can't help but recall the
Western press of the early 1930s, still engrossed in the Weimar Republic's
financial agony, on the verge of the Nazi takeover of Germany. 
Some of the omens ignored by our media include, for instance, the
extraordinary visit to Russia of Vojislav Seselj, the vice premier of Serbia,
as well as his sensational appeal for a Slavic Union of Russia, Yugoslavia and
Belarus. Of course, Seselj is habitually called the "mad dog" of Serbian
nationalism, an "irreconcilable" next to whom even Slobodan Milosevic looks
like a peace-loving moderate. What's really important, though, is that in the
Russian city of Yaroslavl, Seselj's appeal was met with a standing ovation.
Missed as well was Belarus President Alexander G. Lukashenko's depiction of
Ukraine as a betrayer of the common Slavic cause. 
The main thing missed, however, was that Seselj and Lukashenko are
politicians, not amateur travelers. Unlike our media, they must have smelled
change in Moscow's political air. Why otherwise would they bother suddenly
forging an alliance with Russia's own "irreconcilables," the anti-Western
nationalists who worked hard for the last seven years trying to provoke a
confrontation with the West? It's a fact that, for all their ravings about the
Zionist conspiracy deliberately ruining Russia, these gentlemen were until now
of limited value to their Serb and Belarus brethren. With Yeltsin in the
Kremlin and lacking a credible and popular leader, they had no chance to
radically change Russia's foreign policy. Not any more, though, not when they
are rallying behind a formidable presidential contender: Yuri Luzhkov, the
mayor of Moscow. 
If so, their political program would seem to deserve some media scrutiny.
Especially the points that are of such concern to Seselj and Lukashenko: 
* The immediate Anschluss of Belarus (which for Russia would be the same
as Austria's consolidation with Germany in 1938). 
* The return to Russia of the Ukrainian city of Sevastopol (compare it to
Hitler's demand for the return of the city of Danzig on the eve of World War
II). 
* The creation of a Slavic Union of Russia-Belarus, Yugoslavia and the
Ukraine, which Lukashenko intends to lead. If the "treasonous" Ukrainian
leadership refuses to join the ranks, Seselj and Lukashenko will threaten a
civil war--10 million Russians, after all, live in Ukraine. 
So what happens if Luzhkov indeed wins the presidential elections? Given
that he is one of the most fervent champions of incorporating Belarus as well
as of the return of Sevastopol, some kind of Russian-Ukrainian confrontation
would certainly be in the cards. It's hard to imagine, if that occurs, the
U.S. not intervening on behalf of Ukraine. And here we see clearly what Seselj
and Lukashenko are up to--American intervention is all that the
"irreconcilables" need to turn Russia into a Serbia-in-the-making. 
There is no doubt in this case that Russia would be hopelessly ruined
economically, just as Serbia is. Yet, again like Serbia, Russia would be
fueled by an all-consuming "patriotic" fervor of imperial restoration. It's
easy to envisage what the emergence of such a nuclear mega-Serbia would mean
for us. Just imagine the mayhem that Iraq in the Middle East or Serbia in the
Balkans might create if allowed to operate with impunity behind a Russian
nuclear shield. 
To be sure, this is the worst case scenario. The Russian
"irreconcilables" may not in the end come to terms with Luzhkov--although it's
hard to see why they wouldn't. And Luzhkov himself may be defeated in the
elections (although it's hard to guess by whom). Still, it's hardly wise to
give him a helping hand by sticking to the course designed by the
International Monetary Fund, which generates only misery in Russia and
nationalist outrage and hostility toward the West. 
It's not too late to realize that what the West has been doing to Russia
in the last seven years is a carbon copy of what it did to Weimar Germany in
the 1920s. Should we be surprised, then, if identical policies produce
identical results? 
The whole thing looks even more bizarre when we recall that a remarkable
generation of Americans after World War II had already rejected those failed
Weimar policies of financial manipulation in favor of a solid strategy of
reconstruction of former enemies--a strategy crowned with success in both
Japan and in Germany. We didn't give them money then that could be stolen just
as it has been in Russia. We modernized their industries instead. 
Why not follow in the footsteps of George Marshall and Dean Acheson,
fashioners of the Marshall Plan? Why refuse to face the fact that radical
reform is needed, not just by Russia's economy but in our own policies as
well? 
First things first, however. Right now our main preoccupation in Moscow
must be to assure that in the next five years there is no Russian Milosevic in
the Kremlin--if only because there must still be a Russia after 2000 willing
to accept a reformed Western policy. 

*******

#10
Moscow Times
December 24, 1998 
START II Buried By Strikes On Iraq 
By Melissa Akin
Staff Writer

After years of cajoling by the United States, the Kremlin and more recently
the government of Yevgeny Primakov, the State Duma was just days from
ratifying the START II disarmament treaty, which slashes warhead levels in
both the United States and Russia. 

But the outrage provoked by last week's U.S. airstrikes on Iraq has
effectively closed that window of opportunity, analysts say. 

"There is no chance," Duma Deputy Alexei Podberyozkin, a Communist and former
proponent of ratification said by telephone Wednesday. "All moral and
political grounds [for ratification] have been drunk dry." 

The Duma may return to the treaty in a few months, but analysts warn that the
setback could have major consequences for disarmament. 

START II is a vital link in the chain of agreements that govern the efforts of
the Cold War archenemies to cut back their nuclear weapons. 

Russia's intransigence on START II could in a worst-case scenario provoke the
U.S. Senate to scuttle the 1960s Anti-Ballistic Missile treaty and encourage
other countries to abrogate key nuclear arms control treaties. 

START II was the only way to revive the nuclear disarmament process, said Alla
Yaroshinskaya, a member of President Boris Yeltsin's advisory council and an
arms-control analyst. 

"Since the ratification of START I, there has been no movement on
disarmament," Yaroshinskaya said. "And as long as Russia doesn't ratify START
II, the stagnation will continue." 

START II, ratified by the U.S. Senate in 1993, would cut the number of
warheads each side could have from 7,500 to 3,500. 

But Russia's Duma has long balked at ratifying START II, because it would cost
a lot to destroy excess weapons and also because the treaty prescribes
elimination of all land-based multiple warhead missiles. 

This suits the United States which can simply move warheads from multiple
warhead missiles and place them on its large fleet of single warhead missiles.

But Russia, by contrast, will have to build new single-warhead missiles - the
Topol-M - in order to match the United States. Russia cannot afford the cost. 

"It isn't real disarmament for the United States," said Alexander Pikayev with
the Moscow Carnegie Center. "For Russia it is re-armament." 

But the United States insists Russia must ratify the START II treaty and says
Russian concerns can only be addressed in a new START III treaty which it
promises to start negotiating as soon as START II is passed. 

One nightmare scenario for strategic analysts is that the U.S. Senate will use
the rejection of START II as an excuse to tear down the whole system of arms
control since the Cold War, especially the doctrine of "mutually assured
destruction" under which both sides know they will be destroyed in the event
of a nuclear war. 

The U.S. Senate has been pushing to abrogate the Anti-Ballistic Missile Treaty
which bans either side from producing weapons, such as Star Wars, that can
shoot down attacking missiles. 

The Senate is due to ratify a memorandum confirming Russia and three other
former Soviet republics as the heirs to the Soviet Union which signed the ABM
treaty. Given the problems with START II, the Senate could decide not to
ratify the memorandum, providing an excuse for abrogating the entire treaty. 

Nuclear experts say that the failure to approve START II could jeopardize
progress on some other treaties which have yet to be ratified. For example, it
could encourage India not to ratify the Comprehensive Test Ban Treaty or delay
an international ban on production of fissile materials - the stuff used to
make nuclear bombs - for which negotiations were begin in spring. 

By dramatically cutting stockpiles, START II and START could allow Russia and
the United States to set a clear lead on disarmament. 

But Yaroshinskaya warned that, without START II, countries like India, Israel
and Pakistan would try to boost their nuclear strength to give them leverage
in disarmament treaties. 

The treaty isn't dead yet, however. Some deputies, discussing a resolution to
condemn the U.S.-British strikes against Iraq, had considered including an
outright refusal to ratify the treaty. But this was not contained in the final
document and on Tuesday the treaty was put on the docket for spring 1999. 

First Deputy Prime Minister Yury Maslyukov, a Communist who had leaned on his
former Duma colleagues to ratify the treaty earlier this month, has renewed
his efforts and expects the treaty to be ratified "within the next several
weeks," his spokesman Anton Surikov said by telephone Wednesday. 

Roland Timerbayev, a former arms negotiator and ambassador to the United
Nations' nuclear regulatory body, said the loud protests from all factions in
the Duma hid support for disarmament and a determination to ratify the treaty
- eventually. "The Duma couldn't react otherwise to the strikes," he said. 

Even if START II remains dead, the United States will continue subsidizing
Russia's disarmament under the Nunn-Lugar program, originally planned to
support the START I treaty. 

In fact, Russia is already disarming unilaterally. It cannot afford to
maintain or replace its existing nuclear forces. Estimates vary but Timerbayev
gave a high estimate of about 2,000 warheads taken out of service in Russia
every year. That means Russia could soon be down to START II nuclear warhead
levels, even without formally signing the treaty. Some argue this should allow
the United States to make corresponding cuts. 

"Russia does more arms control than anyone else in the world," Timerbayev
said. 

******

#11
Russian Communist leader denounces "Zionist capital"

MOSCOW, Dec 23 (AFP) - Russian Communist party leader Gennady Zyuganov lashed
out Wednesday at Russian Jews, accusing them of benefiting from privatisation
and controlling the audiovisual media, the Interfax agency said.
In an open letter to the head of the presidential staff, Zyuganov attacked the
"aggressive and destructive role of Zionist capital in the collapse of the
Russian economy and the looting of the people's goods." 

He said the Russian people were asking "a legitimate question: how the key
positions in certain economic areas were essentially given to the people of a
single nationality."

In Russia, Jews are considered a nationality rather than an ethnic group.

Zyuganov, whose party has been dogged by anti-Semitic outbursts in recent
weeks, also accused Russia's Jews of controlling the country's audiovisual
media.

The letter was also addressed to the justice ministry, which has called upon
Zyuganov to qualify whether the recent anti-Semitic outbursts by Communist
Party members reflected the attitude of the party.

Zyuganov said: "Nobody has the right, while remaining a citizen of Russia, to
consider it a foreign country of residence and live as an internal emigre, to
the detriment of the state and for the profit of another state or
international corporation."

He added: "Our people are not blind, they cannot but notice that the
Zionisation of power in Russia has been one of the causes of its current
catastrophic condition, its massive impoverishment and the extinction of its
people."

Zyuganov's Communists are the main party in the lower house of parliament, the
Duma.

His comments follow earlier virulently anti-Semitic remarks by party deputies
Viktor Ilyukhin and General Albert Makashov.

Ilyukhin drew fire last week when he said: "There are too many Jews in
President Boris Yeltsin's entourage," calling for quotas of national groups --
including Jews -- in government offices.

In October, Makashov had issued a similar call for such quotas, saying there
were "at least a dozen kikes, shylocks and bloodsuckers" he would like to
"ship off to another world."

The Communist Party had refused to condemn Makashov's remarks although
Zyuganov issued a formal denial of any anti-Semitic current in the party in
November.

He said: "We are fighting against Russophobia and anti-Semitism, two totally
unacceptable phenomena." 

The recent resurgence of anti-Semitism in Russia, a year before general
elections, has draw sharp rebukes from political and religious leaders.

President Yeltsin, Orthodox Patriarch Alexis II and likely future presidential
candidates General Alexander Lebed and Moscow Mayor Yury Luzhkov have spoken
out against the trend.

A host of liberal politicians have also called for the Communist Party to be
banned, prompting Prime Minister Yevgeny Primakov to ask: "How do we ban a
party that holds a majority in the Duma?"

It is estimated there are today about 500,000 Jews in Russia. 

*******

#12
Primakov: Russia Will Pay All Debts
December 23, 1998
By VLADIMIR ISACHENKOV

MOSCOW (AP) -- Russia's prime minister said today that his country will repay
all its debts, but would need to restructure them because of the country's
economic crisis. 

``Russia will not declare default, we have no intention of declaring
default,'' Yevgeny Primakov said while visiting Kazakstan's capital, Astana.
``Russia will pay all debts, both internal and external.'' 

Russia faces $17.5 billion in foreign debts that fall due next year, but the
government has only earmarked $9.5 billion for foreign debt servicing and
wants to reschedule the remainder with creditors. 

After the latest economic crisis hit in August, the government stopped making
payments on $40 billion worth of treasury bills. Creditors regarded this as a
default, and restructuring negotiations are still underway. 

``Russia is interested in debt restructuring,'' Primakov said. 

The government badly needs new loans from the International Monetary Fund and
other lenders to pay off its debts. It has included $7.5 billion in foreign
loans in next year's proposed budget, although there's no guarantee they will
materialize. 

The World Bank on Tuesday promised to release a $400 million loan for repairs
and construction on Russia's vast road system, but said that it wouldn't
release $950 million in promised loans for economic restructuring, social
security and the coal industry until at least March. 

The IMF and other lenders say a sound federal budget is a key condition for
granting new loans. 

Parliament is generally supportive of Primakov's government and has indicated
that the budget could win approval this year without the lengthy, bitter
debates of recent years. 

However, there are still plenty of opponents. 

``The budget stands no chance to win approval in its current shape,'' Eduard
Rossel, the governor of the industrial Yekaterinburg region in the Ural
Mountains, told reporters today. 

He ruled out a quick passage of the budget, saying the government will have to
listen to regional leaders who don't want to see their share of the budget
cuts' demands. 

Primakov met with Kazak President Nursultan Nazarbayev today and agreed to
increase the amount of Kazak oil going through Russian territory and reduce
Russian railway tariffs for Kazak goods. 

``There are no problems in relations between Russia and Kazakstan,''
Nazarbayev said after meeting with Primakov. 

Relations are generally good, despite some tension in the past over the
alleged discrimination against ethnic Russians in Kazakstan and a dispute over
mutual debts. 

*******