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26 January 1999
[Note from David Johnson:
1. Reuters: Russia Claims Progress in Search for World Role.
2. Itar-Tass: Moral Degradation Cause of Crime Deputy Interior Min.
3. Reuters: Russian military says Y2K bug a problem, U.S. helps.
4. Reuters: Albright, Primakov try to narrow gap in ties.
5. Russell Bova: democracy and culture.
6. Nat Moser: Re Caspian oil /Soviet oil industry.
7. Amy Knight: Letter to NYT about The Haunted Woods.
8. Itar-Tass: Kremlin, Opposition Fight for Election Commission Head.
9. The Independent (UK): Phil Reeves, Russians fight political battle
of the busts.
10. The New Republic: Chrystia Freeland, Idle Speculation. Did George
Soros really kill the ruble?
11. Baltimore Sun: Liz Atwood, Emigres keep Russia alive.]
Russia Claims Progress in Search for World Role
MOSCOW, Jan. 25, 1999 -- (Reuters) Russia claimed progress on Friday in
carving out a new role in the post-Cold War world despite its economic
troubles and what it regards as U.S. attempts to sidestep its veto in the U.N.
Foreign Minister Igor Ivanov, in an annual foreign policy review, told
reporters President Boris Yeltsin remained in full command throughout his
repeated illnesses and said relations with Washington were constructive in
spite of recent rows.
"Last year, Russia managed not only to retain its status as a key player in
the international arena but to strengthen it," said Ivanov, a deputy to
Yevgeny Primakov until Yeltsin made Primakov prime minister in September.
"Naturally, our opportunities were also affected by domestic economic
problems," he said, referring to the collapse of state finances last August
which brought down the previous government.
But he added: "Most countries recognize they cannot resolve today's major
problems without Russia's direct participation."
Moscow is a long way from regaining the influence it had a decade ago, when
its nuclear arsenal put it on a par with the West. Washington rubbed that in
last month when it launched air strikes against Iraq not only in defiance of
Russia but, the Kremlin said, without even telling the Russians about it.
Incensed, Moscow briefly recalled its ambassador from Washington,
had not done since the Cold War.
"Air strikes on Baghdad were a serious mistake and only made things worse.
That is clear to everyone now," Ivanov said.
He also used strong language to repeat Moscow's opposition to the Western
powers using force against its traditional Yugoslav Serb allies in Kosovo. He
said they would risk triggering "a new war in the Balkans" if they did.
Keen to play on suspicion among other leading powers, such as China and
France, of the pre-eminent role now played by the United States following the
collapse of communism, Moscow has pressed for a "multi-polar world" in which
other major players can provide a balance to offset potential U.S. hegemony.
A key element in Moscow's strategy is the veto on the U.N. Security Council,
which it inherited from Cold War structures that gave the five first nuclear
powers blocking rights.
Russia now jealously promotes a Security Council monopoly on international
military intervention and reserves its harshest criticisms for what it regards
as U.S. and NATO attempts to circumvent it.
"The world has faced a difficult choice -- what comes first, the right of
might or the might of right? The U.N. Charter or the will of certain
countries?" Ivanov said.
"A multi-polar world has been emerging and its poles have been strengthened.
But not without problems. Some have still wanted to drive the world into a
narrow framework, which runs counter to the right of countries to effectively
participate in the adoption of decisions on issues of mutual interest."
"Only the Security Council has the right to authorize the use of force,"
Ivanov said. "Any attempt to bypass the Security Council could...cause chaos
in international relations."
At the same time, however, he was at pains to stress that relations with the
United States were broadly positive.
"You mustn't judge Russian-American relations just through the prism of
disagreements," he said, adding that next week's Moscow visit by Secretary of
State Madeleine Albright could give a new boost to cooperation.
Among the issues to be discussed would be suggestions from Washington this
week that the 1972 Anti-Ballistic Missile (ABM) Treaty might be revised.
Ivanov flatly rejected that idea.
He also denied that Yeltsin's latest spell in hospital -- this time with an
ulcer -- was hobbling Russian diplomacy, even though he has had to put off
another foreign trip, to France.
"There's no way any illness, which is normal for any person, is reflected in
the president's (foreign policy) activity," he said. "The president is fully
aware of all foreign policy measures...and has full and permanent control."
Moral Degradation Cause of Crime Deputy Interior Min.
MOSCOW, January 25 (Itar-Tass) - Moral degradation is one of the main
causes of the spread of crime. This was stated by Russian Deputy Interior
Minister, Colonel-General Valery Fyodorov in his remarks at the Christmas
readings at the Interior Ministry's Academy in Moscow on Monday. The
readings are held on the theme "Spirituality, law and order, morality".
Fyodorov also noted that society's morality is threatened by "a vacuum in
the spiritual and ethical area" which, in its turn, results in "the loss of
a sense of the value of work".
The general cited crime rate for last year. As many as 218 thousand
women, 135 thousand minors and 103 thousand pupils and students were
registered in Russia in 1998 as having committed crimes.
Fyodorov believes that it is only by pooling the efforts of all the
strata of society that the situation can be remedied. He emphasised the
need of combating such antisocial phenomena as alcoholism and drug abuse.
The interior minister's information shows that 30 per cent of crimes last
year were committed in the state of drunkenness and another ten percent of
crimes under the influence of drugs.
The Christmas readings have been conducted at the Russian Academy of the
Interior Ministry every year since 1996. The forum usually attracts leading
politicians, workers in the arts, clergymen, military commanders. Present
at the current readings were Russian human rights commissioner Oleg
Mironov, supreme mufti Talgat Madzhudin, entertainer Makhmud Esambayev and
film director Eldar Ryazanov.
Russian military says Y2K bug a problem, U.S. helps
By Andrei Shukshin
MOSCOW, Jan 25 (Reuters) - Russia's Defence Ministry admitted on Monday it
considered the millennium computer bug a problem and a Pentagon official said
a U.S. delegation planned to go to Moscow next month to discuss the issue.
``There is a problem and we are working on it,'' a ministry spokesman said,
referring to a fault in which computer software first developed in the 1960s
and 70s fails to recognise the year 2000 and thinks it is back in 1900.
It was not clear where exactly the problem was or whether there was any snag
in the strategic missile command system, where, as some American officials and
experts fear, a computer glitch might provoke an accidental nuclear alert.
Defence Minister Igor Sergeyev, a former head of strategic command, last
brushed aside concerns about the problem saying Russian nuclear missile
systems were bug-free as they used ``special computer technology.''
The spokesman could not deny or confirm an Interfax news agency report which
quoted ministry sources as saying a group of Pentagon experts would be in
Russia from Feb. 10-12.
In Washington, a Pentagon spokeswoman confirmed a U.S.
delegation was expected to visit Russia mid-February to share information
about millennium bug problems.
``The composition and agenda of this group has still not been worked out but
we are interested in talking to the Russians about the Y2K matter,'' the
``My understanding is that the discussions are a follow-on with regard to
nuclear early warning system and to share information that we have learned
from fixing our own Y2K problem,'' she added.
Interfax said the U.S. experts were due to visit Russia's army headquarters
and strategic nuclear missile sites to inspect, among other things, the
nuclear attack detection systems.
When the United States last year offered expertise and ideas to help Russia
handle the issue, Moscow told Washington there was no problem.
Interfax said the visiting delegation would this time discuss possible
financial aid to Moscow to combat the bug.
U.S. officials have said the bug could blank out command computers and panic
officers into suspecting an enemy first strike, thus, in the most extreme
scenario, causing an unintended launch.
Russia has been criticised by the United States for being slow to react
millennium bug and risking not completing necessary adaptations in time by the
end of this year. But it has shown signs recently of taking the situation more
On Friday, Prime Minister Yevgeny Primakov approved the creation of a
government commission to combat the threat.
The commission will combine efforts by central and local government, the
Central Bank, state and private organisations to ensure computers do not
malfunction at the turn of the century.
FOCUS-Albright, Primakov try to narrow gap in ties
By Jonathan Wright
MOSCOW, Jan 26 (Reuters) - The atmosphere was warm when Yevgeny Primakov
hosted Madeleine Albright for dinner late on Monday, but their table chat
touched on some chilly topics.
The U.S. secretary of state, on a Moscow visit during an unusually awkward
period in relations between the former Cold War foes, met the Russian prime
minister to narrow differences that range from Kosovo to Iraq and from
missiles to money.
The supper, in a wood-panelled dining room at Moscow's government
headquarters, was overshadowed by reports that a U.S. air attack on Iraq may
have hit a residential neighbourhood, by word of fresh killings in
Yugoslavia's Kosovo province and by a rows over arms control and nuclear
Many Russians say Washington is simply ignoring Moscow as it looks to deal
with international crises on its own. A senior U.S. official acknowledged that
there was an impression that Russians, at least, see the bilateral
relationship as troubled.
``The secretary said she was struck by the accumulation of issues that were
preoccupying the Russians, leading them to ask if there had been a change in
U.S. policy towards Russia,'' he told a briefing after Albright's dinner with
``The secretary replied in all meetings that she had come to understand the
need to address this accumulation, how to lower the temperature of the
rhetoric you hear and put issues that can become political footballs into a
serious process of discussion,'' he said.
Foreign Minister Igor Ivanov, who met Albright earlier on Monday said: ``We
are sure the upshot of her visit will be not only a narrowing of our positions
on many international problems but also a new impulse to the development of
A U.S. official described the Ivanov-Albright talks as ``cordial'' and said
the two ``were in problem-solving mode.''
But at separate meetings Albright received earfuls of complaint from a
of Russian leaders, including the Communist speaker of the State Duma (lower
house of parliament), Gennady Seleznyov, and powerful Moscow Mayor Yuri
Seleznyov told reporters he had informed Albright of reports of civilian
deaths in Monday's strike on Iraq, but the secretary made no reply. He also
said U.S. strikes last year had set back efforts to have the Duma ratify the
START-2 arms treaty.
A State Department spokesman told reporters Luzhkov had questioned
Iraq, Kosovo and other sore points. ``It was quite cordial but I think there
was very little ground given on either side,'' the spokesman said.
Albright was also due to meet two other likely presidential candidates --
liberal leader Grigory Yavlinsky and regional governor Alexander Lebed -- on
President Boris Yeltsin, in hospital with a stomach ulcer, did not speak to
Albright by telephone on Monday, although State Department spokesman James
Rubin said such a conversation could take place on Tuesday.
Speaking to reporters en route to Moscow, Albright had acknowledged
differences had accumulated since her last visit in September but denied ties
were in crisis or that the United States should respond by trying to contain
``I do not see this as some kind of critical point in our relations,'' she
said. ``Containment would be a totally counter-productive move. The whole
point is to engage Russia.''
In addition to Kosovo and Iraq, Washington and Moscow are at odds over
American accusations Russia leaked arms technology to Iran. Washington has
also antagonised Moscow by announcing plans to develop a nuclear missile
defence system, perhaps threatening the 1972 Anti-Ballistic Missile (ABM)
The two countries also disagree over how to adjust the Conventional
Europe (CFE) agreement to account for NATO's eastward enlargement later this
And Primakov's government has accused Washington of giving Russia years
Yet Albright played down the points of dispute.
She said there was no question of withdrawing from the ABM treaty despite
plans to boost spending on a National Missile Defence which might eventually
violate the pact as it stands.
As Albright held talks, a senior Russian Defence Ministry official accused
Washington of breaching the terms of the ABM treaty and the 1991 START-1
nuclear arms reduction accord.
Itar-Tass news agency quoted Colonel-General Leonid Ivashov, the often
outspoken head of international cooperation at the ministry, as saying the
United States was not complying with the terms of the two treaties and was
exaggerating the threat posed by rogue states in order to justify its actions.
Rubin dismissed Ivashov's comments. ``We absolutely don't agree with his
accusation. The United States is in full compliance (with the treaties),'' he
Date: Mon, 25 Jan 1999
From: Russell Bova <firstname.lastname@example.org>
Subject: democracy and culture
The debate on the subject of culture and democracy that has taken place in
JRL is a very interesting and important one. Patrick Armstrong's point
(#3022) that an extreme cultural determinism fails to account for cultural
change is an important one to make. At the same time, Michael Mihalka
(#3027) is also right to point out that short-term patterns of democratic
progress in the post-communist world do seem roughly to follow
"civilizational" lines. They may both be right insofar as the question is
perhaps best posed not as one which asks "Can cultures change and evolve?"
(the answer clearly seems to be yes) but rather "Do they change at the
same pace?" and "Do they necessarily evolve along the same path and in the
same direction?" Posed in these ways, it is possible to reconcile the
assumption of cultural change with a cultural interpretation of the short-
term patterns of post-communist political development witnessed thus far.
The post-communist world is an interesting laboratory for testing
Fukuyama's notion of a "universal history" against Huntington's view of a
world of multiple civilizational histories. Perhaps the most
interesting relationship to watch here is that between culture, economics,
and democratic development. As of now, the more democratic regimes in the
post-communist world tend to be those that are both relatively developed
economically and in closer cultural proximity to Western Europe. Whether
it is culture or economics that proves to be more important & what is the
relationship between those two variables are questions that cannot be
answered definitively with respect to post-communist states at this point
in time. In the meantime, however, one should not be too quick to dismiss
the cultural factor. Though it is in many ways a politically sensitive
issue, it is an issue that needs to be examined and debated in the context
of the post-communist experience.
Associate Professor of Political Science
Carlisle, PA 17013
Date: Monday, 25 January 1999
From: Nat Moser <email@example.com>
Subject: Re: Caspian oil /Soviet oil industry - questions by Richard
Hellie in 3022
In answer to your questions about Caspian oil, it was well-known during the
Soviet era that there were substantial oil reserves in this area (although
to this day the size of these is unclear: current estimates vary from 20bn
barrels to 200bn barrels). Your assumption, that if it was known about
these reserves a decade ago they were not developed because Moscow was
reluctant to pour resources into "non-Russian areas," may well have been
relevant. However, there was also an important strategic reason that
inhibited their development: this particular "non-Russian" area also
happened to be located very close to a member of NATO (Turkey).
Furthermore, the Soviet oil industry was not technically capable of
large-scale exploitation of these offshore deposits. Although there were
offshore rigs in the immediate area around Baku, the industry lacked the
sophistication to explore and produce from the deeper fields further
afield. Even with contemporary western technology several of the
international consortiums currently investigating the area have been
disappointed by the quantities of oil and condensate they have discovered.
So far, two have announced they are closing-down having failed to find
commercial levels of oil in their respective offshore exploration blocks.
More generally, you raise the points that, 'the late (Brezhnev-on) Soviet
Union managed to hold only as long as it did because of the Samotlor oil
field, and in the early 1990s a number of "specialists" were quoted as
saying that the Soviet Union would not have collapsed at that time had
"another Samotlor oil field" been found.' In fact, it could be argued that
another such energy resource was found - in the huge Urengoi and Yamburg
gas fields - and natural gas became increasing important to the economy as
these were exploited during the 1980s. Overall though, just as important as
developing more sources of supply, the problems of poor production
practices in the energy sector, which resulted in high costs - at a time
(mid-1980s) when world oil prices had fallen substantially - and
inefficient and undisciplined energy consumption, needed addressing. Not
only was the Soviet command economy incapable of this task, but it was
itself the cause of the problems in the first place.
From: AKnight703@aol.com (Amy Knight)
Date: Sun, 24 Jan 1999
Subject: Letter to NYT about The Haunted Woods
I wrote a letter to the New York Times Book Review a couple of weeks ago
about the review of the book The Haunted Woods. Today they published some
letters about the review, but mine was not included. Because I made some
additional points that did not come up and that deserve attention, I am
wondering whether you would be willing to put the contents of what I wrote on
the List. I think your readers would be interested because this is a book
that has provoked controversy! Thanks, Amy Knight
January 10, 1999
The New York Times Book Review
229 West 43rd Street
New York, N.Y. 10036
To the Editor:
In his review of "The Haunted Wood" (Jan. 3), Joseph Persico praises
the authors, Allen Weinstein and Alexander Vassiliev, for providing "proof
of the guilt of certain Americans whose spying for the Soviet Union has
been the subject of debate for over half a century." But he neglects to
point out that this "proof" rests largely on evidence handed over to the
authors by former officials of the West's main adversary for decades--the
Soviet KGB. Mr. Persico says that the Russian Intelligence Service
"allowed the authors access to thousands of secret documents.," when in
fact Mr. Weinstein, who apparently does not know the Russian language,
admits in his introduction that he never saw any of the KGB documents.
What he saw were summaries and translations done by Mr. Vassiliev, about
whom we know nothing except that he used to work for the KGB and now is a
journalist in the West.
Judging from the numerous errors that crop up in the book, neither of
the authors is an expert on the history of Soviet intelligence. Thus, for
example, the authors identify Lavrentii Beria as the head of the NKVD from
1938 to 1953, although he left his NKVD post in 1946. They cite a "NKGB
memorandum dated October 1, 1948," although the NKGB did not exist in
1948. It was replaced by the MGB (Ministry of State Security) in early
1946. And they refer to a memorandum from the "KGB's Information
Committee, dated March 1, 1951," despite the fact that the KGB was not
established until 1954. It is difficult to understand how mistakes like
this occurred (and there are many more), given that original documents
were supposedly being cited.
Mr. Persico dismisses the possibility that the files were fabricated on
the grounds that Russian intelligence officials had no motivation to do so.
But what about the undisclosed sums of money that Random House paid them
for coming up with materials that would tantelize American readers? And
what about the favorable publicity that the Russian Intelligence Service
gets from this book, which portrays its predecessor agencies as highly
successful in their struggle to recruit American defectors?
It is of course possible that all the materials cited by the authors
are authentic, but the point is that we as readers have no way of finding
out, since these documents are not available to us. To be sure, the
authors substantiate some of the references to KGB files with information
from the so-called Venona cables (Soviet transmissions intercepted and
de-coded by the Americans), but the majority of the source notes refer only
to abstract KGB file numbers. Given the grave implications of what the
book says about American citizens, its documentation should be based on
more solid ground.
Kremlin, Opposition Fight for Election Commission Head.
MOSCOW, January 25 (Itar-Tass) - Nearly a year before parliamentary
elections in Russia the Kremlin and its opponents have begun to fight for
the seats in the Central Election Commission /VTsIK/ as the mandate of its
current members expires on March 21. Moscow mayor Yuri Luzhkov has
reportedly blocked with the communists in the State Duma and wants
ex-prosecutor of the capital Gennady Ponomarev to become the chairman of
The main struggle will definitely focus on the post of the VTsIK
chairman. Eight out of 15 votes of VTsIK members are necessary to appoint
the chairman who will head the commission at the 2000 presidential
elections as well.
The Kremlin and both chambers of the parliament delegate five commission
members each which means that none of them can definitely guarantee itself
the post of the chairman.
However, the Kremlin has an advantage as it has five votes in the
commission and needs to win over another three to keep current chairman
Alexander Ivanchenko in place.
The ten candidates from the State Duma and the Federation Council have
not been determined yet. "At present political forces are clashing for the
candidates from both chambers", a reliable source in the lower house told
Tass adding that "an absolutely clear link emerged between the leftist
forces and Yuri Luzhkov" who heads the "Otechestvo" /Fatherland/ movement.
"The leftists want jointly with Luzhkov to ensure themselves the
necessary eight votes", the source said and stressed that this would be "a
very difficult task".
It was earlier agreed that each of the four leading State Duma factions
/the communists, the Liberal-democrats of Vladimir Zhirinovsky, the Our
Home is Russia /NDR/ and Yabloko of Grigory Yavlinsky/ will name one member
each. The fifth will be proposed jointly by such groups as the "People's
power", the agrarians and the "Russian regions".
However, the communists "decided to deceive them all", the source said
and explained that as the communists comprise the biggest faction, they
would like to name three VTsIK members, but not one. "They will thus let
the Yabloko, LDPR and NDR down", he added.
Upon learning the news, leader of the "Russian regions" group Oleg
Morozov warned that he would also name a candidate by himself. So far he
and the agrarians have agreed on a joint candiate - Viktor Vishnyakov who
is currently a member of the Duma committee on international affairs.
However, the "People's power" group proposes prosecutor Ponomarev. "This
is done on a Moscow submission as Ponomarev is clearly a man of Luzhkov",
the source commented, adding that "the communists have definitely agreed
with the mayor of Moscow and plan to make Ponomarev the chairman of the
However, the communists will succeed only if other factions lose control
over the situation.
"They will definitely try to cut communist attempts short, but the brawl
will be big", the source said adding that current VTsIK chairman Ivanchenko
clearly understands that.
"In talks with representatives of other factions he asks them to block
Ponomarev and Vishnyakov", he said.
In public Ivanchenko expresses hope that VTsIK will "preserve succession"
The Independent (UK)
January 24, 1999
[for personal use only]
Russians fight political battle of the busts
>From Phil Reeves in Moscow
EVERY working morning for the last fortnight, two dozen men and women have
crossed Moscow's snowbound streets to spend the day in a grubby corridor
staring at a closed courtroom door. They do this because they are, in their
own eccentric way, angry. As they settle down for another dreary day of
reading newspapers, they unfurl posters bearing the legend "Free Andrei
Andrei Sokolov makes an unusual martyr. He is a 20-year-old unemployed
baker, one of millions of urban youths whose disillusion with the nation's
kleptocratic system prompted a search for other solutions. His answer -
shared by some of his dishevelled supporters, but unusual among the young -
was to become a radical Bolshevik.
When a memorial to the last tsar, Nicholas II, appeared in Moscow, he was
outraged. At 4am one day, he blew it up, using a cocktail of explosives
made from fireworks. It was, he said later, his revenge against a "bloody
tyrant". Experts estimated the cost of repairs at more than $10,000
(£6,250). Thus, Sokolov has spent the last 18 months in custody in Moscow's
feared Lefortovo prison, before being tried on terrorism charges in a court
closed to the public.
"They want to frighten people," said Viktor Pichuzhkin, a grizzled,
black-robed Orthodox cleric bearing a large cross, an icon, and the
nickname "Red Priest" because, although a man of God, he is also a
passionate Leninist. "I don't blame Andrei for anything. What he did was
very small, and was only meant to get public attention."
The case reflects the eagerness of Russia's security services to clamp down
on political unrest, a strategy that will surely harden as the country's
economic depression deepens. But it also strikes to the heart of another
peculiar national characteristic, baffling to the average Western European.
Monuments really matter here. The Stalinist passion for projecting ideology
on to hideous monolithic public sculptures has fused with an older
attachment to icons. Russia's rifts - between liberal democrat and Slavic
nationalist, monarchist and Soviet - are too tangled, too deep, and have
run too long, to be resolved by words. The battle has become crude, waged
over symbols - often with real weapons. Erect them or violate them at your
A few days ago, the ardently royalist sculptor Vyacheslav Klykov provoked
the ire of Communist extremists by unveiling his third statue to Nicholas
II, in the village of Podolsk, 25 miles from Moscow. His first two were
blown to smithereens by tsar-hating bombers. This time, he plans to have
Cossacks guard his work.
Memories are still fresh of Moscow's horrified reaction in 1996 when they
first saw the enormous statue to Peter the Great (who hated the city) near
the Kremlin. It was later found to be wired for detonation - a crime police
blamed on young Communists.
"Monuments are almost sacred to us," said Ekaterina Sviridova, 23, a
comrade of Mr Sokolov's. "They live in the heart. Even when we are
starving, you will find people collecting money to put up a memorial to
Officials complain that Moscow is awash with small, unauthorised tombs to
victims of cars crashes and murders. The mafia recently erected a five-foot
stone memorial to two of its leaders, who died in a shoot-out. When the
authorities objected, they received threatening phone calls. It was
eventually cleared away by city workers hiding behind the wheel of a crane.
But one monument above all others is the focus of acrimonious political
dispute. Shortly before Christmas the Communists in parliament won a
non-binding vote to restore the founder of the Soviet secret police to his
pedestal outside the Lubyanka, the old KGB headquarters.
The hardliners among them have never recovered from the day, in August
1991, when an ecstatic crowd watched the statue of Felix Dzerzhinsky being
winched away. It now stands in obscurity in a sculpture garden opposite
The left view Dzerzhinksy's rehabilitation as a step in their march back
from the shame of Soviet collapse. But non-Communists - mindful that
Dzerzhinsky founded the Cheka, the murderous executioners of Soviet terror
- are horrified. "Dzerzhinsky is one of the most horrible butchers in
history," said Yuli Ribakov, a democrat. "How can we possibly reinstate his
statue in the centre of the Russian capital?"
In a reasonable society that question should not need to be asked. But
Russia is not reasonable. That much the hotheaded Sokolov has discovered:
last week he was sentenced to four years in prison.
The New Republic
February 8, 1999
[for personal use only]
Did George Soros really kill the ruble?
By Chrystia Freeland
Chrystia Freeland has just completed four years as Moscow bureau chief for
The Financial Times and is writing a book about the birth of Russian
When the Russian economy dropped off a precipice this summer--with the
simultaneous devaluation of the ruble and default on government debt--the
conspiratorially inclined immediately began to wonder if someone had given
it a push. A natural suspect was George Soros.
For one thing, the financier and philanthropist already had an
international record of similar high-octane activities. In September 1992,
he bet massively against one of the most august central banks in the world,
the Bank of England, gambling that the British authorities would lose their
battle to keep the pound within the European exchange-rate mechanism. On
Black Wednesday, Soros won his wager, earning $1 billion for his
funds--along with the icy resentment of much of the British establishment,
which dubbed him The Man Who Broke the Bank of England.
Five years later, as the Asian crisis ravaged the region's erstwhile tiger
economies, Soros again found himself the target of a nation's rage.
Horrified by the abrupt collapse of his country's boom, Mahathir Mohamad,
Malaysia's prime minister, blamed the financial reversal on Asia's most
outspoken foreign investor. He reviled Soros as a "moron" who is one of a
pack of ruthless, "immoral" financial speculators who had brought down the
economies of a continent for sordid personal gain.
In the summer of 1998, when the Asian economic tsunami swept across the
Siberian plains into Russia, Soros seemed to be at it again. He had the
opportunity: he was one of the biggest foreign investors in Russia's
nascent market economy. He had the means: he was the world's most infamous
currency speculator. He had the necessary amoral mindset with regard to his
business decisions: "I am basically [in business] to make money," he told
CBS's "60 Minutes" last December. "I cannot and do not look at the social
consequences of what I do." And, most suspiciously of all, he had very
publicly left his fingerprints all over the scene.
On August 13, just four days before the Russian government made its fateful
decision to let the ruble go into free fall against the dollar, Soros wrote
a letter to The Financial Times predicting the imminent demise of the
Russian national currency. The "meltdown" in Russian financial markets had,
he decreed, "reached the terminal phase." The only solution was a swift,
controlled devaluation of the ruble, followed by the introduction of an
Argentina-style currency board, backed by foreign credits, to secure the
Russian currency at its new level. Barring such radical measures, Soros
warned, Russia would be wracked by the "devastating" effects of either
"default or hyper-inflation."
Over the next 96 hours, Soros proved to have been horribly prescient.
Confidence in Russia's already anemic markets began to hemorrhage, and on
August 17 the Russian government surrendered, announcing a devaluation of
the ruble, a default on its ruble-denominated treasury bills, and a
moratorium on debt payment by commercial banks. Pundits, particularly in
the West, were quick to accuse Soros of orchestrating--and benefiting
from--the crisis he had so conveniently foretold. The London Independent
warned that Soros's "self-fulfilling" prophecies should be treated with
"utmost suspicion" and cautioned that he might be "talking his book." The
Times of London was more specific, speculating that Soros had cashed in on
the ruble collapse by taking advantage of its knock-on effect on other
economies: "Market analysts think that the Soros funds cannily sold huge
quantities of dollars against the mark, profiting handsomely as the
Nor has Soros's reputation escaped unscathed in Russia, a country not
unaccustomed to blaming foreign financiers, particularly prominent Jewish
ones, when things go wrong. "In the popular consciousness, he is devil
number two, right after Anatoly Chubais [the architect of Russia's mass
privatization drive]," Mikhail Berger, editor of Segodnya, a liberal Moscow
daily, told me.
But, beyond the reflexive accusations, the real surprise in Russia is not
the patina of public resentment of George Soros. It is, on the contrary,
how gentle and unconvinced the finger-pointing is. Apart from a few rabid
Communist tabloids and the odd xenophobic loudmouth at the bazaar, attacks
on Soros are rare. Thoughtful Russians in business, politics, and the press
uniformly insist that Soros is not to blame for Russia's ills. Moscow's
levelheadedness is a sober counterpoint to the fevered speculation in the
West. What is more, the Russians are probably right.
Voicing the Russian media consensus, Berger insisted: "His letter [to the
FT] did not start the crisis; it merely coincided with it. No serious
person thinks it was actually his fault."
Russian businessmen, deflated from billionaires into bankrupts by the
meltdown, are equally disinclined to pin the blame on the global financial
markets' favorite bogeyman. "No, no, no, not at all," Kakha Bendukidze, a
leading industrialist and unblushing Russian nationalist, erupted when I
asked him if Soros had pulled the trigger on the ruble this summer. "You
don't need to make him into a devil. This crisis began in 1995, when the
government began to artificially prop up the ruble, not in 1998. Everything
that happens in our country is the result of accident and our own
stupidity, not of evil foreign conspiracy."
Indeed, from the snowy vantage point of Moscow, far from being the shadowy
instigator of Russia's economic crisis, Soros looks like one of its
biggest, and most naive, casualties. "His role in causing the Russian
crisis was zero," a Russian magnate, one of the notorious "oligarchs" whose
empires were decimated by the economic collapse, explained while sipping
coffee in his company's lavish, but now nearly deserted, Moscow
headquarters. "He is actually a loser in the Russian capitalist game. In
Russia, Soros is a victim, not a devil."
Insofar as anything can be categorically asserted in the opaque world of
global hedge funds, the Russians seem to have a point. Stanley
Druckenmiller, the chief investment strategist at Soros Fund Management,
estimated this summer that the Russian crisis had cost the Soros treasure
chest close to $2 billion, the largest loss ever to hit the legendary group.
"It is too painful for me to look," Druckenmiller told The Financial Times
in late August. "We were hit by everything: stocks, GKOs [government
treasury bills].... It has turned a potentially great year into an average
This version of the story--with Soros, like almost every other major
Western investor, losing his shirt in Russia--has none of the macabre
fascination of the evil genius theory of Soros's manipulation of the ruble.
But the workaday verdict from Moscow has the virtue of being more credible.
For one thing, speculating on the collapse of the ruble was far harder to
do than, say, making money on the depreciation of the pound in 1992. The
ruble was a far less liquid currency, and one that became increasingly
difficult to trade as the crisis intensified. Worse still, in the aftermath
of the financial meltdown, even those financiers savvy enough to bet on a
ruble devaluation were out of luck. Russia's moribund banks--dubbed "the
living dead" by one Western accountant in Moscow--are largely refusing to
pay out on the forward contracts that some investors bought, in an effort
to hedge against ruble depreciation.
That still leaves the option of speculating on another, more liquid
currency, likely to be strongly affected by a ruble devaluation, as some
observers believe Soros did on the d-mark. But, while possible, it still
stretches credulity to believe that Soros intentionally pushed the ruble
into devaluation solely to ensure that his d-mark bet came off. For a
start, that sort of convoluted currency play would be highly
self-destructive--Soros lost far more through the ruble's knock-on effect
on his Russian investments than he stood to gain from any notional gamble
on the d-mark/dollar exchange rate.
But the real reason the conspiracy theories about Soros and the ruble fall
down is the simplest of all: Influential though he is, it was not George
Soros who brought down the Russian currency. By the time Soros's letter was
published on Thursday, August 13, two prominent Russian banks had begun to
default on loans to Russian counterparts. Their default rippled through the
teetering Russian banking system, which began to collapse like the
proverbial house of cards. By Friday morning, the situation was so dire the
country's leading bankers and politicians summoned Sergei Dubinin, the
central bank chairman, to cut short his summer vacation and make an
emergency trip back to Moscow. By Saturday, Russian officials, after
frantic meetings with the IMF and local businessmen, realized devaluation
and default were inevitable.
By the time Soros wrote his letter, Russia's economic time bomb had already
begun to tick out its final hours. He accurately diagnosed Russia's
"terminal" condition, but, by then, the patient was too far gone for Soros
or the Western investors and policymakers who read his pessimistic
prognosis to either hasten or avert the young market economy's death throes.
Indeed, the real story about Soros and Russia is not the tale of the
calculating capitalist who coldheartedly profited from "market
disequilibrium" in distant lands. In Russia, a country central to Soros's
"open society" political project, the philanthropist got the better of the
Soros fervently hoped that the values of civil society and the rule of law,
which he spent millions of dollars promoting, had triumphed in the former
heartland of communism. It was this idealistic view that drove his
investment in Russia, particularly his costliest and most high-profile
move: a $980 million contribution to the privatization of Svyazinvest, a
telecommunications company. The August crash proved that Soros had been
wrong--like most investors who allow political sympathies and wishful
thinking to enter into their calculations. As a saddened Soros himself told
The Financial Times last month: "[I] bet that Russia was ready to make the
grade from robber capitalism to legitimate capitalism. This was a bet I
made and I lost."
January 23, 1999
[for personal use only]
Emigres keep Russia alive
Culture: Hundreds of Russian immigrants in the area yearn for the old
culture and hope it won't be lost on their Americanized kids.
By Liz Atwood
Teacher Anna Yasinova holds up a black and white sketch of an ear of corn
and asks her students if they know the Russian words for the picture. Their
hands shoot up. "Cucuruza!" one yells out.
She holds up another picture, an elephant. "Slon!" the children shout.
Then comes a picture of a wide-eyed deer. First grader Sergey Ruzenkov
raises his hand eagerly and cries out, "Bambi!"
Yasinova suppresses a chuckle. Here in Room 19 of Baltimore County's
Millbrook Elementary School, cultures often collide. Pupils carry their
Russian homework in backpacks adorned with Tamagotchi key chains. They
practice writing their Russian letters while seated beneath posters of the
Many of the 19 pupils who attend these twice-weekly, after-school classes
are children of Russian-speaking immigrants who came to Baltimore for a
better life, yet cling to their old culture and struggle to pass it along
to the next generation.
More than 8,000 Russian-speaking immigrants settled in Maryland from 1991
to 1996 -- the state's largest immigrant group during those years -- and
they have brought a distinctive flavor to northwest Baltimore and Baltimore
The Babushka Deli and other Russian markets sprout along Reisterstown
Road, selling kefir and kielbasa, and renting Russian videos. Three
Russian-language newspapers are published in the area. And Comcast
Cablevision offers a Russian-language station that features news broadcasts
and game shows from Moscow.
But many immigrants worry that their children are forgetting their
culture -- that they know Walt Disney but not Leo Tolstoy, that they can
converse in English over the Internet but are unable to write a letter in
Russian to their grandparents.
Larissa Sergeeva, who came to the United States a year ago with her
14-year-old son and 8-year-old daughter, has already seen her daughter
struggle for the right Russian words when
"Almost everyone wants Russian language classes for our kids," said
Sergeeva, who lives in Pikesville. "I want her to be able to read Russian
literature. It is part of her culture."
That culture binds Sergeeva and other recent immigrants with those who
made the journey to America in the late 1970s when Moscow -- courting world
opinion on the eve of the Olympics -- lifted the Iron Curtain a bit.
Most have been Jews seeking asylum from discrimination in the former
Soviet republics or joining relatives already here. Others have pursued
prosperity, as economic conditions back home deteriorated. They came from
cities and villages. Some are working-class; others are professionals.
When they first arrive, the worry is not of losing their old culture, but
of fitting into a new one.
Within a few weeks of settling in America, they must begin to learn
English, find a job and buy a car -- while grappling with new concepts such
as insurance and rent. They must cope with unfamiliar mandates, including
schools that require student attendance and doctors' offices that demand
Helping to ease the transition is a small society of services that has
sprung up in Baltimore. In addition to Jewish aid agencies, there are
Russian-speaking lawyers, accountants and real estate agents -- even travel
But they cannot eliminate all the surprises and disappointments the
Valeriy Zelentsov, a 38-year-old Muscovite, came to Baltimore two years
ago after a distant relative promised him work. The job never materialized,
but Zelentsov stayed, learning English by watching his favorite movies,
including "Groundhog Day" and "Jerry McGuire," on videotape.
He says Baltimore fit neither the cinematic image of a big American city
or a Wild West town. Zelentsov was surprised to encounter suburban sprawl.
"You can't go shopping without a car."
Anna Medvedeva, a photographer who came to Baltimore from Kiev six years
ago, couldn't wait to try her first Big Mac. Now, fast food isn't so
appealing, and she prefers Russian restaurants for big occasions.
She and Zelentsov publish the monthly newspaper Baltimorsky Boulevard
from a spare bedroom in his Pikesville apartment. "Maybe next year we will
be able to get a normal office," says Medvedeva, 27, who was a journalist
in Kiev, the capital of the Ukraine. "That is my dream, but that's too
early for us."
The pages of Boulevard make clear the conflicting demands of the
immigrants' old and new cultures. Readers get news about Hollywood stars as
well as Russian pop idols such as Alla Pugachova, stories about local
disputes among immigrants and political assassinations in Russia.
The search for familiar faces, attitudes, foods and language prompts the
immigrants to gather at Russian restaurants and shop at Russian delis,
For the Jewish immigrants, there can be additional conflicts as they
grope for a new identity.
Some immigrants -- through luck, talent or perseverance -- settle
comfortably into American life.
Klara Berkovich, a violin teacher in Leningrad, came to the United States
with her family in 1979. After teaching at Peabody Conservatory of Music
and the Baltimore schools, she retired, but still gives violin lessons to
Her husband, Adam, worked six years to reclaim his engineering
profession, and retired as a principal systems engineer for the Maryland
Their children, who were in their 20s when they came to the United
States, succeeded as well. Efim is an engineer in New York; Leonid plays
second violin in the Baltimore Symphony Orchestra.
"We were not afraid to start over," Mrs. Berkovich says, adding:
"Everything that happened we are very grateful for."
Immigration is often toughest on the elderly, who have trouble picking up
a new language and finding friends. But the young, too, can be perplexed by
the unfamiliar surroundings -- and torn by conflicting cultural demands.
Although the students frequently are high achievers, especially in
science and math, they often are so truant that schools have sent social
workers to their homes to explain the importance of attendance.
"The parents are very protective," says Susan Spinnatto, coordinator for
the county's English-to-Speakers-of-Other-Languages (ESOL) classes, which
last year enrolled 153 children from the former Soviet Union. "When the
kids get a sniffle, they keep them at home."
Many of these students test the boundaries of their new land, asserting
themselves with teachers and classmates, she adds. "They say, `This is a
democracy, can't we do what we now want?' "
At home, they often are translators for the family -- a role that makes
them resistant to discipline and control.
Eventually, many parents and grandparents start to worry about the
changes in their children, says Igor Gorsky, who came to Baltimore from
Ukraine in 1979. "When you slow down and look in retrospect, you say, `What
about my Russian roots?' "
Gorsky was 18 when his family left Kiev. Now, he is married and has a
10-year-old daughter and a 5-year-old son.
The desire to cling to the old culture often intensifies with time,
Gorsky says. He and other immigrants who came in the late 1970s were
fleeing a totalitarian regime and coming to an America that was suspicious
and sometimes hostile to Russians. They spent several years in America
downplaying their past before starting to reclaim their culture.
For later arrivals -- including some who retain Russian citizenship and
travel back and forth between the countries -- the desire to hold on to
their heritage and impart it to their children is even stronger, he says.
Gorsky, whose family owns Baltimore's Astoria Restaurant, is surprised at
the culture's hold. He sees young men and women who grew up in America
reading Russian newspapers. Some speak Russian with American accents, but
they are drawn to the Astoria's distinctive food and music. Often they seek
out Russian mates, even if they carry on their courtships speaking English.
Every weekend his family's restaurant on Park Avenue attracts hundreds
from the local Russian-speaking community who come to party with their
Astorio, the house band, strikes up a pulsating Russian pop song and the
crowd pours onto the dance floor, leaving their tables stacked with salted
fish, beef tongue, pickles and beet salad. They will dance and drink, talk
and smoke until 4 a.m.
"They come here not to eat, not to dance, but to socialize," Gorsky says.
He has not been back to Kiev, but hopes some day to take his children.
"I love it here," he says over the blare of the restaurant's band. "It's
where I grew up But I'm still going to be of Russian descent."