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Johnson's Russia List


January 5 , 1999    
This Date's Issues: 3003  

Johnson's Russia List
5 January 1999

[Comment from David Johnson:
1. Moscow Times: David McHugh, Newspapers Look Back at '98 Bitterly.
2. Aviation Week and Space Technology: Paul Mann, Lengthening Shadows: 
Failing Russia, Flailing West.

3.Jamestown Foundation Monitor: RUSSIA AND UNITED STATES WANT TO START 

4. Mark David Mandel: Re JL#2534, Larissa G. Titarenko/Belarus.
5. Newsweek: Owen Matthews and Peter Annin, Cold, Hunger and Greed.
Can a new U.S. aid program prevail against the deadly forces of winter? 

6. International Herald Tribune: Sunanda K. Datta-Ray, Suppose Russia, 
India and China Could Really Get Together.

7. NTV: 'Big Money' Program Looks at Russia's Prospects in 1999.
8. Vlad Ivanenko: Lebed and Unspeakable. (Property rights).
9. Edwin Dolan: Responsibility for Russian Problems.]


Moscow Times
January 5, 1999 
Newspapers Look Back at '98 Bitterly 
By David McHugh
Staff Writer

Russia's leading newspapers saw out 1998 with bitter wisecracking about a
of economic collapse and speculation about what new political and economic
wonders 1999 may bring. 
A front-page cartoon in the irreverent Moskovsky Komsomolets spelled out
"1999" with rolls of toilet paper where the sheets were 100-ruble notes. 
"And remember," the paper wrote in a reference to the Aug. 17 ruble collapse
and domestic debt default, "there's 229 days left until Aug. 17, 1999." 
Izvestia joined the cackling by naming as their "oligarch of the year"
Alexander Smolensky, whose SBS-Agro went under, taking depositors' savings
with it. Man of the Year, in a more serious vein, was Prime Minister Yevgeny
Moskovsky Komsomolets named its Man of the Year former Prime Minister Sergei
Kiriyenko, who was at the helm when the ruble collapsed. Kiriyenko, the paper
said, came in first in reader phone polls, followed by Moscow Mayor Yury
Luzhkov and murdered liberal Duma Deputy Galina Starovoitova. 
President Boris Yeltsin took his share of lumps, with Noviye Izvestia
as its quotation of the year Yeltsin's widely mocked statement June 29 that
"There is no crisis." In bright blue figures just underneath that quote, the
paper offered its Number of the Year: 5.99, or the ruble exchange rate to the
dollar on Jan. 1, 1998; now it's around 21 to the dollar. 
Officialdom got its chance to offer assessments of the year, with Viktor
Chernomyrdin - who was fired by Yeltsin as prime minister, then failed in a
comeback try - offering the empty assessment in Nezavisimaya Gazeta that "the
year was hard, but we can't say it was successful or unsuccessful." 
Kiriyenko, who replaced Chernomyrdin in April for what seemed like 10
- actually a futile five months - poked fun at armchair quarterbacks who have
opined as to how he should have done things better. 
"Two chess masters are playing and a third walks up ... and says to one,
'Colleague, I would make the following move if I were you.' The other player
looks at the board and says, 'But that's an idiotic move.' 'As I said,'
replied the first, 'if I were you.'" 
Nezavisimaya made fun of the ballyhooed "Twelve Important Tasks of the
Government," issued by then First Deputy Prime Minister Boris Nemtsov two
governments ago and since then pretty much forgotten. They included tasks like
reforming the tax system and rationalizing utility rates. 
"We've Got So Much (Not) To Do in 1999," smirked the front-page headline.
"Happy New Year, Russia." 


From: (Paul Mann)
Date: Mon, 4 Jan 1999 
Subject: Lengthening Shadows: Failing Russia, Flailing West

Aviation Week and Space Technology
Decmeber 16, 1998
[for personal use only]
Editorial Comment
Lengthening Shadows: Failing Russia, Flailing West
by Paul Mann

[Russia] does not impress one by plenty or industry; it can't go on like
reforms are absolutely necessary. But how is one to carry them out, how is
to begin?
Ivan Turgenev
Fathers & Sons (1862)

We can only guess where the times are leading us. Countless events, known and 
unknown, seen and unseen, burst upon us everywhere, all at once, at every 
instant. They occur close by and far away, at our feet and beyond our grasp, 
inducing vertigo.
Who foresaw in 1960, or even 1990, that before 1991 was out, the giant 
Soviet empire would be dissolved peacefully by its own leaders, becoming a
mote in history's dustbin?
The future is unknowable because no one can account for what the late 
British philosopher Isaiah Berlin called "the immense variety of possible
behavior, the vast multiplicity of minute, undiscoverable causes and effects."
We predict the future with the same confidence we predict the weather,
even less success. The prevalence of fallibility and chance, the
conjunction of 
countless indeterminate variables, the simultaneity of distant events, the 
incalculable fluctuation of human passion, the tokens so faint and
ephemeral of 
any superintending design: these render prophecy a fool's errand.
Likewise, as the first post-Cold War decade nears its close, we are
insuperable conditions of the human estate make it infinitely difficult to
what, seen a hundred years from now, might prove the greatest conundrum of
age: whether the West did all it should to foster Russia's permanent break
a tormented past.
There are those who say, persuasively, that Russia is not America's to 
"save," anymore than China was in 1949. There are those who say that the West 
and the International Monetary Fund (IMF) are doing the maximum that is
and realistic, that it is only in the power of the Russians themselves to 
overcome their nation's mammoth systemic crisis. Russian national pride,
and mutilated as it is, would turn to vengeance and fury if the West sought
intervene wholesale in Russia's fateful attempt to weave an entire civil
from an historical fabric bereft of democracy and free enterprise, and
with isolation, medievalism, xenophobia, czar-worship (Russian proverb: "Only 
God and the czar know"), suspicion of the West, a communal way of life (the 
Russia of Peter the Great was an empire of tiny villages) and an entrenched 
barter economy. (In the 18th century, Russian diplomats were paid with
furs, not
cash. By some estimates, today's economy is 70%, even 80% barter).
The opposite line of thought contends that the West's free market
trumpeted ad nauseam to a prostrate ex-superpower, are a piece of monumental 
folly. The West tediously invokes the mythic "Invisible Hand" of market 
capitalism, confident it would liberate the motherland if only the senescent 
Boris Yeltsin would let it.
Instead, the West ought to pitch in, bare-knuckled and sleeves rolled
as Americans do at home when their neighbors are wiped out by a flood or a 
hurricane. Rather than piffling IMF loans, a 21st century version of the 
Marshall Plan should be established, custom-tailored to Russia's needs and 
girded with every safeguard against the depredations of organized crime. IMF 
bailouts are narrowly focused on fiscal discipline and austerity measures. By 
themselves, they are self-defeating in an upheaval of the magnitude Russia is 
experiencing. They ignore powerful political and social forces, as well as
influences of Russian history, culture and psychology, all of which must be 
taken into account in the larger scheme for a Russian convalescence and 
Of the utmost importance is the West's understanding that Russia is 
suffering from much more than a financial contagion of the kind IMF
medicine can
sometimes cure. No: we are witnessing the onset of an economic and social 
catastrophe so great "that we must now speak of another unprecedented 
development: the literal demodernization of a 20th century country,"
Stephen F. 
Cohen, professor of Russian studies at New York University, wrote recently in 
((in italics)) The Nation. We stand pat on IMF austerity measures as Russia 
enters "a tragic 'transition' backward to a premodern era." Leading Russian 
politicians such as Boris Fedorov hotly dispute this, insisting the
wreckage of 
the Soviet military-industrial complex can be thrown off with Russia's
Whoever is right, there are answers to Turgenev's plaintive questions 
nearly a century and a half ago about structural reform and where to begin.
long as Russia is struggling in good faith to right itself from capsizing,
West should be busy with emergency measures that are strategic in scope:
--Establish a $100 billion international Marshall Plan, shared
equitably by
the U.S., Europe and Japan. This amount is comparable in round numbers to the 
nearly $3 billion annually the U.S. alone expended from 1948 to 1952 on
recovery from the Nazis. Sen. Daniel Patrick Moynihan (D-N.Y.) says
should include technical assistance with tax collection, banking and stock 
exchanges and protection of individual and property rights. But, he
"without real short- and long-term financial assistance, none of this
assistance will be effective or, indeed, welcome." For its part, Western
should welcome its Eastern neighbors into the European Union, which would
them more secure than any military alliance can.
--Russia's recovery will take at least a generation, maybe two. Set up a 
multi-national Peace Corps comprising individuals from any nation that
wishes to
participate to assist Russia over the long-term. Involve the United Nations 
where appropriate, but keep bureaucracy and administration to a minimum.
should be arranged by the G-7 wealthy democracies in association with the 
European Union. This time, make the West's links to Russia permanent and
--The U.S. and NATO should begin acting as though the Cold War is no
the central reality of foreign policy. Get rid of the high political value
prestige that Washington and other world capitals still attach to nuclear 
weapons. Senate ratification of the Comprehensive Test Ban Treaty would be a 
major step in the right direction. "We have a simple choice: we can work
eventual nuclear disarmament or we can drift toward the only alternative, 
widespread nuclear proliferation," observes Amb. Thomas Graham, Jr. "A
world in 
which huge stockpiles of nuclear weapons and weapons-usable nuclear
material are
hoarded by legitimate governments as symbols of power and wealth is an 
invitation to nuclear proliferation and terrorism."
--Rethink nuclear deterrence. U.S. nuclear targeting and deployment 
doctrine remains almost indistinguishable from what it was in the Cold War.
American and Russian long-range nuclear missiles remain on hair-trigger
making Russia's weakened command and control more susceptible to a mistake, 
accident or miscalculation. "We must rethink what deterrence is in view of a 
Russian military officer manning a missile command [who] hasn't been paid in 
months and can't feed his family," warns former Sen. Sam Nunn, now with the 
Center for Strategic and International Studies. "There is a greater chance of 
nuclear weapons being used today by far than there was during the Cold War.
dangers have gone way up." Missiles should be taken off alert at once.
--Another point about Cold War hangovers: NATO expansion was a mistake, 
contributing to the persistence of the Cold War mentality in foreign policy. 
Don't compound it by inducting yet more countries beyond the three that will 
join the alliance next year. Further, the White House should deal with
desire for NATO to adopt a nuclear no first use policy, rather than rejecting 
the idea out of hand. The Warsaw Pact is moldering in its tomb and the role
nuclear weapons should be greatly diminished in world affairs, to promote 
nonproliferation. The White House should be engaged in NATO's no-first-use 
debate, not estranged from it. If China is worthy of U.S. "engagement,"
NATO is too.
--Crucial to the task of demilitarizing the Russian economy is
the world's largest inventories of weapons of mass destruction (WMD),
biological and chemical. The White House, the Pentagon, NATO, Japan and other 
allies should enunciate a multilateral security strategy whose supreme
tenet is 
that the theft, marketing and smuggling of WMD is the number one threat of
decade ahead. The seriousness and imminence of the threat should be raised at 
least to the level of a possible major regional war--a la the Korean
and the Persian Gulf--in U.S. national security strategy. Nunn would go
"I'd raise it one level higher than that. Regional threats come and go; this 
[WMD] threat will be around a long time," he said in an interview.
--If the long-stalled START 2 accord fails in the Russian Duma,
proceed to
START 3 nonetheless, but bypass the long negotiating process. Follow the 
U.S./Soviet precedent set by Presidents Bush and Gorbachev with tactical
weapons in the early 1990s--carry out unilateral, reciprocal and dramatic 
reductions. Whatever else happens, ex-Soviet strategic forces almost
will dwindle in the next 10 years to fewer than a thousand active nuclear 
warheads, owing to accelerating obsolescence and the intractable economic 
crisis. Coincidentally, America's unrivaled conventional military power
makes it
safe for Washington to undertake dramatic reductions as well. Big cuts are an 
international and a bilateral imperative. A destitute and bankrupt Russia, 
besieged by an ongoing revolution, could all too easily become what Harvard's 
Graham T. Allison calls a Home Depot-style "loose nukes" bazaar. This would
the worst proliferation nightmare in history--states, non-governmental
groups or
terrorists buying (('buying' in italics)) nuclear weapons instead of making 
them. By Allison's estimate, Iraqi President Saddam Hussein spent as much
as $9 
billion over a decade trying to make nuclear weapons. How much easier--and 
quicker--would it be to buy them from a Russia that is straining to keep its 
loose nukes secure but is 1) broke, and 2) alarmingly vulnerable to criminals 
who would leap at the chance to satisfy would-be customers like Osama bin
--The West should buy and take as much as possible--95%-plus--of
ex-Soviet arsenal of 30,000 nukes, and its stockpile of approximately 70,000 
weapon equivalents of plutonium and highly enriched uranium. Allison figures 
that might cost $10 billion, and urges the financing to be shared in thirds
Americans, Europeans and Japanese. (Tokyo has a direct security interest in
safe dismantling of Soviet nuclear submarines in the Sea of Japan.) Former 
Secretary of State James A. Baker 3rd collected $12 billion from Japan for 
Desert Storm, Allison notes. Nunn-Lugar nuclear disarmament funding expended 
since 1991 comes to about $2 billion; in the same period, the U.S. spent $7 
billion restraining Iraq. In other words, says Nunn, we've spent three
times as 
much on preventing Baghdad from developing a replacement WMD capability as we 
have on (('existing' in italics)) the existing ex-Soviet arsenal, whose
size and
vulnerability almost defy imagination.
What is most compelling about these reforms is that they will make for a 
much safer world, even if pessmists are mistaken that Russia is plunging
the depths of a Great Depression toward a catastrophe. Whatever history's 
verdict on Russia, nuclear deterrence will not last forever. Paradoxically,
Cold War standoff maintained a precarious equilibrium that contributed to the 
success of nuclear deterrence for half a century. But the Cold War is over,
bipolar stability it encouraged is gone. Can anyone confidently assume that 
deterrence will endure without end, when additional states appear on the
nuclear roster once every five years? 
From an historical perspective, says Allison, the fact that nuclear
have been used only twice in anger in the past half century is an anomaly, a 
piece of great good luck, "accounted for in part by the fact of the Cold
War. So
it's an anomaly that I would imagine is unlikely to persist in the next half 
century, if you were just an historian looking at the last thousand or 2,000 
Marguerite Duras, the French novelist, remarked some years ago, "There
is a
certain kind of pessimism that is the end of lying." Allison's warning is
kind of pessimism--the kind that says we had better stop kidding ourselves
the gravity of the disaster closing in every day in Russia, a disaster with 
potentially grievous consequences for nearly every human being on Earth. By
it is indisputable that there is no time to lose answering Turgenev's
about where to begin.


Jamestown Foundation Monitor
4 January 1999

apparent effort to thaw relations between Washington and Moscow, which grew
increasingly chilly as 1998 came to a close, Presidents Boris Yeltsin and
Bill Clinton held a forty-minute telephone conversation on December 30. It
was the first time that the two leaders had spoken since U.S. and British
air strikes on Iraq provoked furious denunciations from Moscow and led the
Kremlin to recall its ambassadors from Washington and London. Russian
lawmakers, meanwhile, cited the air attacks on Iraq as the reason for their
decision to postpone, once again, consideration of the START II strategic
arms treaty.

In reporting the December 30 conversation between Yeltsin and Clinton,
Russian sources focused on the Iraq issue and what they said were
admonishments which Yeltsin directed at Clinton for the U.S. and British
actions. According to a Russian presidential press release, Yeltsin had
"reiterated the firm view that the U.S. and British actions are unacceptable
from the point of view of international law, the UN Charter and the
principles of partnership and cooperation" (Itar-Tass, December 30).

White House National Security Council spokesman David Leavy, however,
suggested that Iraq had only been one of many topics the two presidents
discussed. He also emphasized that both sides had agreed on the need to
promote U.S.-Russian relations and to "move the common agenda forward in
1999"--despite enduring differences over Iraq. As part of that agenda,
Yeltsin reportedly reiterated his strong support for the START II treaty
(AP, Reuters, UPI, December 30).

Leavy's description of the Yeltsin-Clinton talks appeared to dovetail with
what some have suggested is Moscow's real attitude toward the Iraq crisis.
U.S. officials were quoted on January 2 as saying that, despite their very
public outrage over Iraq, Russian officials have made clear privately that
they do not want the issue to inflict serious harm on Russian-U.S. relations
(Reuters, January 2). That attitude is undoubtedly conditioned, at least in
part, on the fact that Moscow needs Washington's support to procure
much-needed financial assistance from the West.

As evidence of the Clinton administration's desire to maintain constructive
relations with Russia, the U.S. State Department announced on December 29
that Secretary of State Madeleine Albright will hold talks in Moscow from
January 25-27. In early December Albright had announced her intention to
visit Russia, but the ensuing crisis over Iraq--and the Russian Duma's
decision to postpone consideration of START II--had led to some speculation
that the Albright visit might be scrubbed. But, while a follow-up START III
treaty is now reportedly no longer on the agenda, Albright is expected to
discuss a number of key regional and bilateral issues with Russian leaders.
Those issues include the Iraq crisis, U.S. efforts to halt Russian-Iranian
nuclear and missile cooperation, the 1990 Conventional Forces in Europe
(CFE) treaty, and U.S. concerns about anti-Semitism in Russia (Reuters,
January 2).


Date: Mon, 4 Jan 1999
From: mark david mandel <>
Subject: Re JL#2534, Larissa G. Titarenko, "Who Will Be the Next
President of Izvestia's OGRB The United State of Russia and 

I am certainly no fan of Lukashenko, but I can't let the following phrase
-- so typical of liberal critics of the Lukashenko regime -- go by without
comment: "Economic benefits [of a union of Belarus and Russia] seem minimal
at best, if the idea is to raise Belarus to the level of economic reforms in
Russia." By what imaginable criterion can the Russian reforms be said to
have raised its economy to a "higher level" than that of Belarus? The great
majority of the Russian workers can only envy the economic situation of
their Belarussian counterparts, as miserable as that is: unemployment is
much lower, the employed actually get paid, and the average real wage in
industry is higher than in Russia. 
Repression aside, that is the precisely why the mainly liberal opposition
to Lukahsenko has been so unsuccessful: its lacks an economic programme
other than that which Yeltsin has applied to Russia from 1992 with such
disastrous results. It is also worth noting that the economic situation in
Russia would be much worse were it not for its wealth of natural resources,
especially oil. Belarus has virtually none, a fact that should not be
forgotten when comparing its the "level" of its economy with that of Russia.


International edition
January 11, 1999
[for personal use only]
Cold, Hunger and Greed
Can a new U.S. aid program prevail against the deadly forces of winter? 
By Owen Matthews and Peter Annin 

Joking and laughing, the deputy prime minister held up his pen for
everyone in
the room to see: a novelty-shop ballpoint emblazoned with dollar signs. Then,
with a flourish, he signed his name—Gennady Kulik—on a deal for the U.S.
Department of Agriculture to send Russia 3.1 million metric tons of American
grain, meat and other staple foods. The document was hardly a routine aid
agreement. According to the Russian Red Cross, the country's crash has left
millions of people near starvation this winter. Half the new U.S. food aid
will come as a gift from the Americans; the USDA says the other half is to be
purchased by the Russians with the help of a 20-year, $400 million loan—along
with a further loan of $62 million to help defray transportation costs. Not
everyone would extend such a line of credit to Moscow. Last week Russia missed
a $362 million payment on Soviet-era debts to commercial banks abroad. No
wonder Kulik seemed so tickled with the deal. 
The signing, just before Christmas, has given scant cheer to Elena Filonova.
Like many of her neighbors in the remote village of Goritsy, roughly 750
kilometers northeast of Moscow, the 67-year-old pensioner is asking how she
will survive. For the last three years the retired farm worker has not
received her monthly pension payments in full, on time or in cash. Last winter
she scratched by on the equivalent of less than $45 a month. Now the ruble's
plunge has cut the sum to $14. In past years she subsisted on potatoes from a
small farm plot she tends, but this year a blight swept the region. Yet
Filonova and her neighbors are almost lucky compared with some northerners. In
hundreds of hamlets and villages in the Arctic regions, shortages of food and
fuel have forced inhabitants to abandon their homes. There's no lack of food
near Filonova's home, in the market town of Kirillovo. Too bad she has no
money to buy it. 
And too bad she and millions of other desperate Russians can expect no
help from the U.S. deal. A small portion of the food—less than 500,000 metric
tons—is designated for hospitals, orphanages, nursing homes and the like. The
USDA says everything else will be sold in Russia at prevailing market prices.
Giving away or discounting more food would destroy Russia's farm sector by
driving down prices, USDA officials explain. But the deal is off to a shaky
start. The Russian government claims its prerogative to use the bulk of the
aid to feed its Army and its prison population. The Americans insist only
civilians are eligible. In any case the situation seems ripe for corruption.
"If the aid gets distributed to the needy, that's fine," says Leonid Kholod, a
former deputy minister of Agriculture. "But if it goes on the open market,
it's an invitation to steal." 
A source in the Russian Federal Prosecutor's Office says thieves ran riot
time the U.S. government donated food to Russia, during the brutal winter of
1991-92. Back then the giant grain merchant Roskhleboprodukt oversaw much of
the distribution process, and the Russian government promised the Americans
their food aid would not be sold. But in market stalls across Russia, flour,
sugar and rice were for sale in sacks clearly labeled GIFT OF THE PEOPLE OF
THE UNITED STATES. The prosecutor's office says much of the donated food was
diverted by middlemen for sale in Russia or "distributed" at bargain prices to
shell companies, which then exported it for resale abroad at huge profits.
These days wheat sells for $35 a ton in Russia—less than a third the going
rate on the international market. And the Russian government again named
Roskhleboprodukt as its distributor, ignoring U.S. objections and brushing
aside bids from other groups, including the Russian Red Cross. 
The USDA is vowing to prevent any massive ripoffs this time—a fine intention,
whether or not it's possible. The department is even sending in a special
anti-corruption team—a step unprecedented for a USDA-run aid project.
Unfortunately the team will consist of only four full-time employees. The plan
is to run spot checks on the distribution web while enlisting the help of
other representatives of the U.S. government, from trade officials to Peace
Corps volunteers, in monitoring other shipments. "We can't be absolutely sure
there won't be some small loss at the margins. It's not a perfect world," says
Chris Goldthwait, who oversees the department's food-aid programs. "But what
we can do is minimize the chances [for profiteers]. And we can have a system
in place that will at least give us an early warning if something is going
wrong." Michal Rutkowski, a Washington-based World Bank specialist on Europe
and Central Asia, says: "I think the U.S. Department of Agriculture has done a
tremendous effort on the front end to make sure the grain is not diverted." 
Critics of the deal have raised all sorts of objections. Some complain that
the real beneficiaries are U.S. farmers, not hungry Russians. "It's a question
of commerce, pure and simple," says Viktor Karpenko, who runs a collective
dairy farm not far from Goritsy. The massive shipments of U.S. food may
undercut Russia's agricultural sector, which is only now beginning to recover
from a long slump. Other critics, Kholod among them, say Russia should be
calling in Soviet-era loans to former satellites and allies, requiring that
the debts be paid in food rather than cash. Still others say the government is
overstating its food problems. According to official statistics, Russia's
latest grain harvest was 8 million tons below the official target. (To cover
the rest of the shortfall, the Russians are negotiating with the European
Union for an aid package roughly as large as the 3 million-ton American
agreement.) Despite the crop failure, the Russians exported more than 1
million tons of grain in 1998, and Kulik says he has no intention of
curtailing hard-currency sales of grain abroad. The relief agreement forbids
Russia to export commodities of the kind being sent in by the Americans. But
the rule makes exceptions for sales to mountainous areas like the Caucasus,
where the broken terrain makes modern, large-scale grain farming difficult.
"We don't want to create a food emergency in Azerbaijan or Georgia by
prohibiting grain exports to those regions," says Goldthwait. 
The actual profits are an almost minor worry. The deal requires that most of
the income be channeled into Russia's deficit-ridden pension system—one of the
nation's more transparent financial institutions. So if the agreement
succeeds, Elena Filonova may eventually get some benefit from it. She can't
expect actual deliveries of food, of course. But maybe, just maybe, her
monthly pension payments will start arriving closer to schedule—all $14 worth.


International Herald Tribune
January 5, 1999
Suppose Russia, India and China Could Really Get Together
By Sunanda K. Datta-Ray International Herald Tribune
The writer, a former editor of The Statesman in India, is an editorial
consultant with The Straits Times in Singapore. He contributed this comment to
the International Herald Tribune.

SINGAPORE - Russian Prime Minister Yevgeni Primakov's idea for a strategic
triangle linking his country with India and China, far-fetched though it may
sound, deserves serious consideration, even though it has not yet been
elevated to the status of a formal proposal.
First, it holds the promise of providing a counterweight in what is
becoming -
witness America's almost solitary pursuit of Operation Desert Fox against Iraq
- a dangerously unipolar world.
Second, it might succeed in subsuming some of the region's more sizzling
tensions. For example, Pakistan would have had less reason for reacting with
alarm to the Indian-Soviet defense agreement signed during Mr. Primakov's
recent visit to New Delhi if China, which is close to Pakistan, had been a
party to that agreement.
Politicians of India's governing party, who do not seem to realize that
spurts of anti-Chinese rhetoric sound suspiciously like an admission of
weakness or an attempt to whip up national hysteria, would also learn to be
more circumspect.
The global advantage of even a loose Moscow-New Delhi-Beijing axis would
be to
offer prisoners of the unipolar system another option. It might encourage the
emergence of other poles, in the Middle East or Latin America, and prompt
Europe to take a more independent line. Only a multipolar world can inject
some authority into a sadly marginalized United Nations, so that future
policing actions enjoy consensual support.
Of course, the Primakov plan flies in the face of conventional wisdom, which
argues in favor of an alliance between Japan and India, Asia's two major
democracies, both more than a little wary of China. It also carries a hint of
ganging up on the United States.
But Japan is unlikely to be drawn into any Asian strategic arrangement. And
Russia, China and India are all in far too great a need of American capital,
markets and influence to adopt an adversarial posture.
India knows, too, that the United States alone can restrain neighbors who
compound, if not create, many of its security headaches, external as well as
The most that a trans-Himalayan partnership would do, therefore, would be
compete with America without challenging it. By reducing tension in a fragile
part of the globe, it would lessen America's policing worries, which is
additional reason why Washington should welcome the idea.
In one form or another, the idea has been around for many years. Prime
Minister Jawaharlal Nehru hosted the first Asian Relations Conference with
great éclat in 1947, hoping that it would lead to tangible forms of
cooperation. But Nehru's vision was not always able to bridge the gulf between
philosophy and politics, and the governments represented at the conference
failed to live up to their commitments.
Now that the Cold War is over, the Soviet empire buried and President Boris
Yeltsin's Russia bound in a strategic partnership with President Jiang Zemin's
China, the time may have come to return to earlier thinking.
Beijing's response that although it ''pursues an independent foreign
policy of
peace'' it ''is ready to develop diplomatic relations with all countries in
the world'' does not altogether rule out the Primakov plan. The enigmatic
wording is probably shorthand for: Wait and see how the United States responds
to human rights and political dissidence in China and to the Taiwan question,
how the Japanese interpret their upgraded military ties with the Americans
(especially after Tokyo's unambiguous support for Desert Fox) and how India
shapes up as a nuclear power.
If both China and India adjust for the future, they will discover that their
common response to the U.S.-led strikes against Iraq indicated a shared Asian
psychology. Like Russia, they are also interested in Central Asia's vast oil
reserves, in Middle East peace, and in a stable Afghanistan not given over to
religious extremism.


'Big Money' Program Looks at Russia's Prospects in 1999 

31 December 1998

Presenter Igor Pototskiy devoted the "Big Money" program to what
prominent politicians and experts think about Russia's prospects in the
next year. Asked what major changes are expected in Russia in 1999,
moderate Communist State Duma deputy Aleksey Podberezkin assumed that the
government would not manage to overcome the decline in the economy until
May 1999. He also mentioned that the period between May and August would
be characterized by rising social and political tensions due to the
upcoming Duma elections in December 1999.
Answering the same question, Russian Regions State Duma group leader
Oleg Morozov and leading political expert Vyacheslav Nikonov both said that
no early elections and no changes in the constitution are to be expected
next year. Asked what the main factors in Russian political developments
will be in the next year, Nikonov named President Boris Yeltsin's health
and unexpected political moves by him. Morozov spoke about the role of
Prime Minister Yevgeniy Primakov, who will have to choose between staying
loyal to both the President and the Duma and entering the Duma election
campaign, which will turn everything upside down in Russian politics,
according to Morozov.
Podberezkin said that the main factor will be social and political
unrest due to the upcoming elections and the continuing economic crisis.


Date: Fri, 1 Jan 1999 
From: Vlad Ivanenko <>
Subject: Lebed and Unspeakable

Dear David:
Please, consider this contribution regarding Lebed and re-distribution of
property rights.
Thank you,
Vlad Ivanenko, Ph.D. candidate in economics
Univ. of Western Ontario

The discussion regarding Lebed seems to concentrate on the question of
whether he is the right man to wage a successful war on the oligarchs and
to redistribute their productive property (to do unspeakable). The need
for redistribution is taken for granted. The slogan "Rob the Robbers" is
in the air again. 
With the clear understanding of moral indignation that the behavior of
Russian nouveau riche brings about, it is still advisable not to fall into
the logical fallacy that the Harvard advisors to the Russian government
have found themselves recently. Recall their main argument for
1) since state owned enterprises (SOE) are less efficient than private
ones, economy becomes more efficient after privatization (we need
2) because the Russian government is hopelessly divided in competing
fractions, it cannot transfer SOEs to the most productive owners. Under
the circumstances, the firms should go to the most powerful bidders. They
happened to be people with the right connections (our privatization is
necessarily corrupt);
3) even if initial allocation of property rights is sub-optimal, market
forces single out the most efficient bidders. In time they buy out
property rights from initial holders (our corrupt privatization will turn
into incorrupt one in time).
Conclusion: the final result of a "dirty" privatization in Russia will be
the same as the outcome of the "clean" privatization in the UK under
The fallacy of the argument laid in the assumption that, after initial
"dirty" stage of privatization is completed, claimants become law
abiding citizens and DO NOT USE CONNECTIONS ANYMORE. Instead, they BUY OUT
former SOEs from happened-to-be owners. 
This is what did not come true in Russia: apart from few foreigners, who
risked to buy shares in Russian firms, the domestic bidders invested in
political connections hoping that the next government will redistribute
property in their favor. 
The problem is not that Russians are a "hopeless bunch of crooks" or, as
Danzer put it, "Russia is damned". The privatization was conducted in the
manner that was widely perceived as "unjust". This led to competition in a
"who outperforms in injustice" game (in quick and dirty enrichment due to
political connections). The law obedience, which the Harvard advisors rely
upon in their analysis, did not materialize.
Lebed feels intuitively that the game must be stopped. This is his appeal.
However, those JRL readers who believe that the oligarchs are to blame aim
their wrath on a wrong target.
Let us assume that the wish comes true and Lebed is on the helm. What
strategy does he have to stop the game? To crush the oligarchs materially?
The oligarchs are presumably the best playing according to dirty rules. 
But the game was not initiated by them and not only they play it. It is
useless to disqualify the best players inviting less successful ones to
continue. A custom inspector preying on shuttle traders or a policeman
abusing non-Moscow residents is a real robber baron (recall that the term
applied originally to the medieval settlers along the Rhine who imposed
arbitrary fees on travelers. Sounds like a custom inspector, eh?) Does
Lebed have any consistent strategy dealing with that type of little robber
Any re-assignment of property rights - including nationalization - has to
be perceived as "just" by the majority of Russians in order to be accepted
as "final". A nationalization of the oligarchs's property will not bring
law obedience to Russia if conducted in an arbitrary way by Lebed or
anyone else. At first the government should develop a simple and
unambiguous definition of legal property. Only then they can proceed with
re-assignment of assets.
This is what the Primakov's government seems to do looking for a


Date: Mon, 4 Jan 1999 
From: edwin dolan <>
Subject: Responsibility for Russian Problems

Responsibility for Russian Problems
Edwin G. Dolan, President, American Institute of Business and Economics

Russians are responsible for Russian problems. But remarkably many people
both in Russia and the West have not caught on.
Two recent contributions to JRL illustrate the failure to understand where
responsibilities lie. However, lest these two particular contributors bear
too much of the brunt of the following comments, I should add that a little
research into the JRL archive would find the same points illustrated time
and again.
Example No. 1 is Anatol Lieven, (see U.S. Can't Do Much About the Russian
Economy, JRL 3002). Despite the headline (which, following usual newspaper
practice, was presumably not penned by the author of the article), Lieven's
thesis seems to be just the opposite: That the U.S. should accept
significant responsibility for Russian policy.
Lieven is especially worried about the outcome of privatization in Russia,
which, "urged by countless Western policymakers" has been "disastrous"
because it has moved property into the hands of individuals who, rather than
invest in production, are more inclined to strip assets and move the
proceeds abroad. Did Western advisers advocate asset stripping and capital
flight? I don't recall any such advice. Did they fail to foresee that
Russians would pervert privatization from a scheme to promote economic
development into a scheme to rob their compatriots blind? Yes, many of them
did. But such a lack of foresight is hardly enough to shift responsibility
from the perpetrators of privatization scams to Western advisors.
Let's try a heroic thought-experiment. Suppose that Western advisors had
foreseen that privatization in Russia, unlike privatization elsewhere, would
lead not to rational management and increased investment but to massive
theft. Let's further suppose that these clear-eyed advisors had given the
following counsel to their Russian counterparts: "Yes, we know everyone all
over the world is on the privatization bandwagon, but don't try it here.
Privatization won't work in Russia. Please, keep everything nationalized."
What is more, let's heroically assume that Russian policymakers took this
advice and didn't privatize anything.
Are we to believe that continued state ownership would have resulted in
honest and efficient management of Russian industry? Are we to believe that
the same komsomol whiz-kids who carried out privatization would not have
been able to devise ways to strip assets from state-owned firms and move
them to their Cayman Island bank accounts? 
Actually, we don't have to rely entirely on thought-experiments, because
significant parts of Russian industry have remained (nominally) in
government hands. Let's consider how well they've been managed.
Take Gazprom, for example. Efficient? Its monopolistic mentality and refusal
to cooperate with independent producers have led to massive flaring of gas,
an economic, not to say environmental shame of great magnitude. Honest? Its
books are about as far from transparent as can be, and its record as a
taxpayer is anything but exemplary. The state, although a majority
stockholder, has signed away its rights and let the company's management run
the firm pretty much as it sees fit for the benefit of whomever it sees fit.
Or take the example of ORT television, another company with majority state
ownership. Again, the state has not used its majority ownership rights to
generate revenue for the budget. It has not, for example, interfered with
the practice of channeling all advertising through a monopoly private agency
with unlimited power to divert revenue into who knows whose pockets, leaving
ORT itself on the verge of bankruptcy. Again, rather than actively
exercising its ownership rights, the state has by all reports been content
to allow the station to be run by a private minority stockholder, one of the
richest men in Russia, just so long as the station continues to give
political support to the party in power.
To be sure, Western cheerleading about the "success" of privatization has
sometimes been naive, but this should not confuse the point that it is
Russians who have been stealing Russia's national wealth, nor the point that
had privatization not been tried, other ways would have been found to
accomplish the same objective for the benefit of the same individuals.
For example No. 2 of misplacement of responsibility, let's turn to Dmitrii
Gusev, a student at Indiana University (JRL 2538). Gusev's thesis is that
the West is responsible for Russia's problems not because of misguided
attempts to make Russia strong, but because of sinister efforts to make
Russia weak by knowingly backing a bunch of bandits who could be relied on
to do the West's dirty work for it. It is noteworthy that this view is
widely shared not just among provincial Russian know-nothings, but among
Russian students, academics, and business people who have extensive contact
with Westerners.
There are two problems with Gusev's thesis. The first is that it assumes
that Westerners and Russians think alike about national self-interest. The
Russian idea is that a country is strong and secure when it is hated and
feared by neighbors who are themselves weak. The Western idea is that a
country is strong and secure when it can build a partnership based on mutual
commercial and strategic interests with neighbors who are themselves strong
and secure. Starting from the Russian conception of national security, Gusev
and others like him seem to reason as follows: If it were we (Russia) who
had just won the cold war, we would of course want to rig things so that
they (the Americans) were weakened and fragmented to the greatest possible
degree. Therefore, that must be what they (the Americans) want since it is
they who won the cold war. 
The second problem with the thesis that Russia's problems stem from a
Western plot to hand its government over to bandits is that it exaggerates
the degree to which the West has anything to say about who governs Russia.
The real reason that Russia is governed by bandits is that ordinary Russians
tolerate such a state of affairs. If Western influence on Russia has had any
influence at all, its basic thrust has been to encourage the mechanics of
democracy--elections, a free press, and so on. These efforts have met
relatively little resistance. The Russian government has not found it
necessary to resort to rigging elections or suppressing political dissent in
the manner of, say, Kazak or Azerbaijani rulers. Instead, it has been able
to rely on the fact that Russians, even given the vote, even given a
relatively free press, even given the right to demonstrate in the streets,
even given the right to form free trade unions, and even given all the other
formal rights of a democracy feel no sense of responsibility for the way
their country is governed. But it is their very refusal to assume
responsibility for which they must be held responsible.
Our Moscow business school, the American Institute of Business and
Economics, attracts many talented and energetic students who are willing to
take responsibility for their own economic well-being and that of their
families. But even they draw a line between their personal well-being and
their country's political well-being. They are fatalistic and apathetic
about politics. They don't vote, they don't even organize to protest
political evils like military conscription that directly touch their own
lives. They seem to regard the fact that their country is governed badly as
a given, like Russia's harsh climate.
None of this constitutes a plea for Western disengagement from Russia.
Realistic collaboration on specific problems of mutual interest (nuclear
safety, education, environment) should certainly remain on the agenda. But
once and for all let's scrap the idea that Russia's problems are our fault.

+ Edwin G. Dolan, President +
+ American Institute of Business and Economics +
+ An American MBA program in Moscow +
+ +


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