Febuary 2, 1998    
This Date's Issues: 3038   • 3039

Johnson's Russia List
#3038
2 February 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Kremlin, mayor worried by right-wing march.
2. Itar-Tass: Russia Ex-Deputy PM Sceptical about Election Hopefuls.
(Nemtsov).
3. Michele Berdy: Upper Volta.
4. Frank Durgin: Re Soviet behemoth Uralmash.
5. New York Times: William Safire, A Russian Feeler.
6. U.S. News and World Report: Mortimer Zuckerman, Proud Russia on its 
knees. Will the West come to the rescue?
7. U.S. News and World Report editorial by Mortimer Zuckerman: Coming 
to Russia's rescue. A collapse would cause grave security problems for 
the West.
8. Itar-Tass: US Proposal on 3 Warheads for Topol Evokes Concern.
9. Mark Ames: Re Moscow's flu war means breathtaking measures.
10.Moscow Times: Simon Saradzhyan, Primakov To Clear Jails for 
Corrupt. 
11. Journal of Commerce: Senators Chuck Hagel and Jack Reed,
Russia at a crossroad.]

*******

#1
FOCUS-Kremlin, mayor worried by right-wing march

MOSCOW, Feb 1 (Reuters) - Russian President Boris Yeltsin's chief aide and
Moscow mayor Yuri Luzhkov expressed concern on Monday about a weekend march by
militant right-wingers in the capital. 
Luzhkov vowed to crack down on political extremism, while Kremlin chief of
staff Nikolai Bordyuzha said Sunday's march by several dozen supporters of
Alexander Barkashov's Russian National Unity (RNE) was a provocation intended
to stir trouble. 
``Its organisers expected they would lead to skirmishes with police but the
law enforcement organs showed restraint,'' Bordyuzha said in an interview with
the daily Izvestia newspaper. 
Bordyuzha said it was ``nonsense'' that Russia had no clear law defining
political extremism and demanded careful study of the actions of a policeman
seen on television apologising to the marchers after they were briefly
detained and then released. 
Luzhkov, a potential candidate in the presidential election due in 2000,
discussed the issue with police chiefs on Monday. 
``We were very surprised by the behaviour of that (police) leader.
Perhaps he
is not quite familiar with what the RNE is,'' Luzhkov said in comments to
reporters shown on television. 
His spokesman, Sergei Tsoi, was quoted by Interfax news agency as saying
Luzhkov intended to curtail the RNE's activities in Moscow. 
Luzhkov, who has started commenting on broader national issues as the
presidential election approaches, barred the RNE in December from holding a
congress in Moscow. Its members favour black shirts and Nazi-style armbands. 
Interfax quoted a police chief as saying there were no formal grounds for
halting the march or arresting the marchers becasue the RNE was registered
with the city authorities. 
Justice Minister Pavel Krasheninnikov later said a special presidential
commission on political extremism would discuss the situation around the RNE
on Tuesday. 
Yeltsin, whose terms ends in mid-2000, has urged the government to curb
political extremism, particularly because of a controversy over recent anti-
Semitic remarks by some Communist members of parliament. 

*******

#2
Russia Ex-Deputy PM Sceptical about Election Hopefuls.

YAROSLAVL, February 1 (Itar-Tass) - A former high-ranking government
official said on Monday Communist leader Gennady Zyuganov, law-and-order
general Alexander Lebed, and Moscow Mayor Yuri Luzhkov might win the 2000
presidential election, but none of them would be able to run the country
properly. 
"None of them will bring happiness to the people," former first deputy
premier Boris Nemtsov told reporters in Yaroslavl in central European
Russia, where he is organising a new movement, Rossia Molodaya, which
translates Russia the Young. 
Speaking about Luzhkov, he said his possible victory would spell "the
metropolitan oligarchy's coming to power". 
"The mayor of Moscow, in which budget revenue per head is four times as
much as in the rest of Russia, simply does not know the way the country
lives," he said. 
In terms of his own career, he said he was not going to occupy any
official positions yet, because his main task was "to win as many seats in
the Duma (lower house) as possible and make it responsible". 
The odds are that Rossiya Molodaya and its coalition partners can get
more than 10 per cent of seats in the Duma, according to him. 

*******

#3
Date: Mon, 01 Feb 1999 
From: "Michele A. Berdy" <maberdy@glasnet.ru> 
Subject: Upper Volta

In JRL #3035, Donald Jensen notes that "'Upper Volta with missiles' is how
some foreigners descirbed the USSR shortly before its demise..." I think
this phrase has come up a couple times recently in JRL -- and attributed to
foreigners. Actually, it was Mikhail Gorbachev who used the phrase about
10 years ago. I don't recall the source, but perhaps some Gorbachev
scholars can enlighten us. 

*******

#4
Date: Mon, 01 Feb 1999 
From: durgin@maine.edu (Frank Durgin)
Subject: Soviet behemoth Uralmash copes in crisis

I found article #6 of 3037 "Soviet behemoth Uralmash copes in crisis"
by Peter Henderson quite interesting, but I feel there is a need to
put things into perspective.
For openers, I would suggest comparing that "Russian
industrial and manufacturing powerhouse" with GM. In 1995 GM
had 709,000 employees. Its 1997 revenue of $178 billion
exceeded the GDP of 16 European nations.
On the day of the opening of the Davos forum, the Financial Times
published its list of the world's largest 500 companies and not
one Russian enterprise appeared on that list.
On the FT's list of the 500 largest European firms only one
Russian enterprise appeared - Lukoil, 485th on the list.

*******

#5
New York Times
February 1, 1999
[for personal use only]
A Russian Feeler
By William Safire 

Davos, Switzerland -- With Russian inflation running at 100 percent a
year, Prime Minister Yevgeny Primakov told a little joke about being
forced to accept demands to be disclosed next week by the International
Monetary Fund. 
"A man is handed a letter from his wife," he said at the World Economic
Forum. "He opens it and the page is blank. 'How can that be?' he is
asked. 'It's all right,' he replies. 'We don't talk.' " 
He had begged Al Gore to lean on the I.M.F. for repayment delay and new
loans, and was turned down for good reason: the former spymaster has no
economic plan to deal with congenital corruption beyond "optimizing the
prison population." 
But if Russia goes under, 30,000 nuclear missiles and the scientists and
engineers behind them go on sale. The nation is not "too big to fail"
(its population is smaller than Indonesia's, and is slumping toward half
that of the U.S.), but the fallout from its collapse could be dangerous. 
The usual cast of pompous Russian reformers and Yeltsin bureaucrats who
used to parade around this Alpine conclave is absent. Now, a skeleton
crew of Primakov's bankers wring their hands about devaluation and
default, in contrast to the single longtime voice of opposition with the
plan and self-confidence to turn Russia around -- Grigory Yavlinsky. 
The economist and former pugilist, 47, is the last democratic reformer
left standing. That's because he ignored Boris Yeltsin's seductive
revolving door and instead built a grassroots party. In December's
parliamentary elections, his Yabloko Party will grow; and running for
President in 2000, Yavlinsky will at least be kingmaker. 
Western Kremlinologists no longer hoot in derision when I say that; they
saw Yabloko make possible Primakov's temporary ascension. Yavlinsky
insists it was the only way to insure free elections after Yeltsin, but
power-hungry Primakov may have other ideas. 
Yavlinsky preaches the need for "tough love" to top American officials,
to get us to assume Russia's I.M.F. repayments without new I.M.F. cash
infusions. To regain the confidence of investors, he seeks new ways to
reinstill Russian self-confidence. 
One way is to break the mold on missile defense. President Clinton,
after six years of pooh-poohing a shield against rogue-state missiles,
suddenly reversed field lest he be blamed for vulnerability to
germ blackmail. But Russians do not want to change the old ABM treaty
that kept each superpower defenseless against the other. When I asked
Primakov about it, he stayed in the old Communist rut: Touch ABM and
Start II won't be ratified. 
Yavlinsky comes at it creatively: "America has a right to missile
defense against terrorism, as does Europe, of which Russia is a part."
He proposes a non-strategic missile defense in cooperation with
NATO, capable of shooting down fewer than 100 missiles, thereby
providing an umbrella against terrorist attack without destabilizing the
Russian-American standoff. That would finesse the impasse and ease
ratification of Start II's reductions. 
Russian pride would thus be salved and money saved, but I see other
motives: it would provide paying work for thousands of talented Russian
technologists now looking hungrily toward Iran and Iraq, and would
lessen the pressure for sales of missile and nuclear plants to states
already taking advantage of Russian desperation. 
Does Russia have anything to offer in missile defense? Using a
handy-dandy cell phone, I called Prof. Andrei Piontkovsky in Moscow,
director of the Academy of Science's strategic studies, to ask what
Russia had on the shelf to shoot down missiles. 
"The S-300," he replied promptly, as if I were a customer, "two years
more advanced than your Patriots." That's dubious; he could not point to
a single successful test of that missile against missiles.
Besides, the S-300 is the weapon Russia peddled to Greek Cypriots until
the Turks warned they would take out any such missiles that were
delivered. 
Still, Russians have long been adept at making long-range nukes and
might bring expertise to the anti-missile table. Rather than punish
Russia for dealing with Iran, the West, Yavlinsky urges, should
cooperate with Russia to keep its scientists, know-how and products at
home. 
Worth discussing. As Clinton belatedly dumps his resistance to missile
defense, we can usefully explore with NATO and Russia ways to stop
incoming terrorist missiles. 

*******

#6
Date: Mon, 1 Feb 1999 
From: Christian Caryl <110317.1466@compuserve.com>
Subject: Mort Zuckerman article 

U.S. News and World Report
Febuary 8, 1999
[for personal use only]
Proud Russia on its knees
Will the West come to the rescue?
BY MORTIMER B. ZUCKERMAN
With Christian Caryl

MOSCOW–Lenin's corpse still draws reverent thousands to Red Square. On the
recent anniversary of his death, they waited hours to file past the body in
its granite tomb. Like millions of their compatriots–the Communist Party
leads the polls with as many as 30 percent pledging their support–the
mourners in Red Square look back with bitter nostalgia to the Soviet
"nanny" state that provided education, health care, a job, a low-rent place
to live, and a cradle-to-grave security that is now but a distant memory.
Fittingly, it is Lenin who provides the most apt metaphor for just how
grim things have become. For the better part of the century, embalmers have
kept him looking as he was in life, but the state can no longer afford
their exclusive services. The embalmers are busy moonlighting, discreetly
touting their skills to lesser mortals, so as to keep–as it were–their own
bodies and souls together.
They are lucky. Death is one business that flourishes in the catastrophe
that has overtaken Russia. Elderly pensioners dying of starvation no longer
make news. Life expectancy for adult men has fallen from 64 in 1990 to 59
in 1998. And the question for the country now is whether it can survive at
all as a coherent state, still less as a civilized society. The statistics
are staggering: At least 70 percent of Russians live near or below the
subsistence level. Over 40 million live below the official poverty line of
just under $40 a month, compared with 31 million in November 1997. Forty
percent of Russia's children are chronically ill. Tuberculosis has struck
down 100,000 people, and some 2 million may well be exposed.
And that's just the beginning. Meat and dairy livestock herds are down
by 75 percent, grain production by 55 percent, milk production by more than
60 percent over the past five years. Seventy million people in more than
100 cities live in pollution that exceeds American maximums by a factor of
five or more. Three quarters of the water supply is contaminated. Entire
segments of the health system have collapsed. Gennadi Zyuganov, the leader
of the Communist Party's 157 deputies in the Duma, is a heavy man given to
gloom, but he asks me a reasonable question. "How can we survive the
winter?" Then he adds, "I want to preserve freedom, but if this government
fails, the next one might well be the military."
Rust belt. The decline of Russia in the 1990s is deeper than even the
Great Depression in the United States. From 1929 to 1935, American national
incomes and gross domestic product fell by a third; in Russia, real per
capita incomes are down by as much as 80 percent. Gross national product
has fallen over 55 percent and is now down to about the level of that of
the Netherlands. Russia's annual government revenues are less than what the
U.S. Treasury collects in a single week.
Bereft of investment, Russia has become a giant rust belt. Oil output is
down 50 percent. The infrastructure–electric power, nuclear plants,
railroads, sewage systems–is falling apart, the result of a plunge in real
capital investment of 90 percent over the past several years. Today, most
industrial enterprises are losing money, unable to pay their suppliers,
their workers, or their taxes. Almost three quarters of the economy
operates on barter. Only 8 percent of taxes due are paid in cash–and no one
pays them on time. Most of the factories provide not value added but value
subtracted, since the goods they produce are worth less in the new market
economy than the raw materials that go into them. The government still
employs 40 million out of 67 million workers. The workers are kept employed
out of fear of the political consequences of massive unemployment and are
supported through subsidies–subsidies from a government that spends two
rubles for every ruble collected. It cannot collect enough taxes to pay a
few dollars a month to its military draftees. Teachers have not been paid
for months.
With runaway inflation and no jobs, great masses of Russians have lost
everything, including faith. They boil with anger and cynicism–and not just
because they are poor. Their country has been stolen from them. The small
group of men who have corruptly seized the assets of the state flaunt their
wealth as unthinkingly as any czar. These men are the oligarchs. They have
also robbed government of its sinews–the tax revenues to maintain state
services and infrastructure. The taxes from natural resources–especially
gold, minerals, diamonds, and timber–once provided 75 percent of state
revenues under the Soviet system. Now these resources are controlled by the
tycoons, and they use their political connections to pay no taxes, sending
much of their illicit profits out of the country: More than $300 billion
has gone this way, according to Interpol and the Russian Interior Ministry.
Once a superpower, Russia now fields a military that looks more like a
beggar's army, unable to pay itself, house itself, or, as seen in Chechnya,
fight. No one trusts the police. The judicial system is impotent. Laws are
openly disregarded. The press protects the oligarchs–who own most of it.
Parasites. Last week's visit to Moscow by Secretary of State Madeleine
Albright did little to lift the gloom. Relations with Washington are
getting colder all the time, so much so that Albright felt compelled to say
that the United States was "neither ignoring nor avoiding or dismissing
Russia and its views." With President Boris Yeltsin's health failing,
Albright made a point last week of getting better acquainted with several
of the men most likely to run in next year's presidential election,
including Moscow's vigorous, popular mayor, Yuri Luzhkov. The 62-year-old
is widely considered the man to beat in 2000. Still, despite Luzhkov's
popularity in Moscow, there is little expectation among ordinary Russians
that the election will do much to improve the calamitous state of the
larger Russia. 
The visitor to Moscow may be easily deceived about the nature and scale
of the Russian disaster. The city bustles. There are more cars, more neon,
more smartly dressed people with cell phones since I was last there. Mayor
Luzhkov has renovated historical architecture, put a roof on the soccer
stadium, built an underground shopping center next to the Kremlin, and
invested in plants and office buildings. All this, plus private shops,
nightclubs, and restaurants, suggests that market capitalism is working.
It isn't, not even here in the capital, which has tax revenues from the
headquarters of 85 percent of the banks and resource giants like Gazprom
and Lukoil. Moscow is also a special case because Luzhkov persuaded Yeltsin
to let the city opt out of much of the bogus privatization effort. In
Moscow, a truer indicator of the state of the country outside is Pharmacy
No. 1. It was once the pride of the free Soviet health system. No longer
can a citizen go along assured of a decent level of health care. Drugs are
scarce and out of reach. Only a few pharmaceutical companies have survived
the financial collapse of August 17. Prices are up three or four times. The
choice now for Yelizaveta Nikitina, 62, who needs blood pressure pills, is
medicine or food. On a pension of 450 rubles a month–$20–she cannot have
both. "I'm afraid to look," she says. A young man in a black parka stands
near the pharmacy's doorway. Yes, he has the blood pressure medicine for
Nikitina: "350 rubles for 20 pills," the man says, "and you don't need a
prescription." The young man is typical of the parasites infesting Russia.
The mafia, which dominates Russian commerce, exacts an estimated 25 percent
for "security"–basically, bribes in exchange for permission to conduct
business. Every owner of a store and kiosk has to pay a racketeer. The
Moscow police chief says that 95 percent of his force is on the take. The
oligarchs ride the streets in armor-plated cars with armed guards at the
front and a following wagon carrying guards with submachine guns.
The divisions of society here have hardened. Russians see that
speculators and criminals flourish while workers, pensioners, and investors
have suffered. Since August 17, thousands of educated Muscovites have been
catapulted into unemployment offices. Konstantin Filipenko, 47, was a
lawyer in the elite Soviet Foreign Trade Ministry. Last year, he took a job
in a bank that went bust; he has been looking for work ever since. "Yes,"
Filipenko says, "I get unemployment insurance–80 rubles a month." That is
$4, enough to buy a meal at McDonald's. Filipenko laughs. He has a pass for
free public transport–and has nowhere to go. He is bitter about the "young
reformers" who tried to pull Russia toward a market economy. "They're
adventurists," Filipenko sneers. "It was all theater."
The catastrophe is not endemic. It is man-made, a product of the decade
in which Russia undertook the extraordinary challenge of building democracy
and a market economy for a proud people who had never experienced either.
Their leaders took the advice of Western governments and financial
institutions, embarking on a program of "shock therapy." First, in 1991,
under a young reformer and acting prime minister, Yegor Gaidar, Moscow
ended price controls–without first developing a competitive market economy
that would restrain increases. The result was disaster. Runaway
inflation–2,600 percent in 1992 alone–wiped out most savings. Next, Gaidar
and company moved to depoliticize the economy by removing assets from state
control. In this first stage of privatization, the old communist elites–the
nomenklatura–handed over political control in exchange for their own
effective ownership of the state assets they had administered on the
Communist Party's behalf. The government believed that nomenklatura
capitalism was better than nomenklatura socialism. They were wrong. The
"red directors" did not grasp the notion that they were now supposed to
attract capital by improving productivity and expanding market share. Their
main interest turned out to be using state-wage credit and capital for
their own benefit. With remarkable aplomb, they confused the cash flow of
the company with their own cash flows to Zurich bank accounts. They used
political contacts to keep subsidies going or avoid taxes.
The second stage of privatization took place through 1995 and 1996, when
Russian folklore turned out to be prescient. Anatoli Chubais, 43, is a
redhead. In Russia, redheads have traditionally been regarded with
suspicion because there are so few of them. As deputy prime minister,
Chubais became the darling of the West, especially the Clinton
administration. Everyone was impressed that he brought a laptop computer
into meetings. He was the man to "get the job done"–doing what Margaret
Thatcher had done in selling off some of Britain's best and most profitable
companies. In Russia, however, the government had huge budget deficits that
were financed by loans from private banks. The banks were on to a good
thing. Because there was no treasury department, the banks were designated
as holders of the government's revenues–customs duties, taxes, free loans,
and the like. The banks used these funds not only to speculate with
government rubles but as a basis for lending money back to the government,
often at usurious rates of interest.
Chubais and his young reformers regarded it as brilliantly simple to
meet their bank debt by selling off the largest oil, energy, and mineral
extraction businesses. Theoretically, they were auctioned to the people on
a loan-per-share deal. In fact, they were sold at insider auctions, at
pennies-on-the-dollar deals, to the oligarchs in media, banking, and
industry through politically connected banks that formed financial
industrial groups.
It was a ripoff, the greatest giveaway of wealth in history. The tragedy
was that the political weakness of Yeltsin in 1995 led him to do business
with the oligarchs, who in turn gave him hundreds of millions of dollars
and totally slanted media support in 1996, when Yeltsin ran for the
presidency. The oligarchs who bankrolled Yeltsin believed they had bought
the country as well. They drew the line at paying for his government by
meeting their tax obligations, hence the gigantic deficits that forced
Yeltsin's government to borrow at higher and higher rates using government
paper (called GKOs) at interest rates that reached 150 percent a year. Then
when the Asian crisis made foreign lenders nervous and energy prices–the
principal export revenue source–collapsed, the young reformers' financial
pyramid imploded. August 17 took down several of the oligarchs. Two of
them, Alexander Smolensky and Vladimir Vinogradov, have watched the banks
that were the centerpieces of their empires tumble into virtual bankruptcy.
Mikhail Khodorkovsky has essentially abandoned the ruins of his once prized
bank, Menatep, and fled for refuge to his barely functioning company. The
financial slump brought the television network controlled by Boris
Berezovsky to the verge of collapse and allowed political opponents to
reassert government control by kicking out a few of his straw men. For all
that, however, the oligarchs are still powerful, milking Russia's oil, gas,
and mineral riches while intimidating its politicians.
Risking blood. What can the new government do? I went to an elegant
office, a relic from communist days, to ask a short, portly man with the
aura of self-assurance that comes naturally to a former Communist Party
insider and KGB chief. Prime Minister Yevgeni Primakov speaks English, but
we spoke through a translator. The prime minister was critical of the
privatization program. "It did not create a market economy– quite the
opposite," he said. "It defeated any hope of efficiency." Still, Primakov
would not attempt to take back the companies sold in the rigged casino. The
oligarchs employ huge security forces, said Primakov: "De-privatization
would risk bloodshed. I am seeking political stability and I am succeeding."
But Primakov does envisage the state increasing regulation. He has
removed Valentin Yumashev, a presidential chief of staff, who was beholden
to Berezovsky, and replaced him with a former KGB officer. I found Primakov
proud of the fact that he pushed through the Duma a draft law that will
allow the government to share in some of the earnings from natural
resources. "I got 11 similar amendments to other laws, which nobody gives
me credit for," the prime minister said. The amendments await the signature
of President Yeltsin. Primakov said he also intends to find a way to
control the output of and revenues from vodka because 60 percent is made
illegally. Most producers pay no taxes. Rotgut vodka killed 32,000 people
in 1998.
The oligarchs are being pressed by others beside Primakov. Grigori
Yavlinsky, the most intelligent and educated of the parliamentary
leadership, told me he is urging them to have open and honest books. "Under
the law, the oil and gas is still owned by the state," Yavlinsky says. "We
have production-sharing agreements, but they just don't share. We must have
access to the revenues from natural resources." Russia needs a financial
KGB to make sure the government gets treated honestly. "I've told them that
if they don't work out an arrangement for fair shares with somone like me,
there will be an explosion," Yavlinsky adds. "And sooner or later they will
lose everything."
But nobody believes the oligarchs and the big companies will take heed.
The foreboding in the air in the badly demoralized Russia today is a
commonplace of the left, the right, and the center, but it was most
dramatically summed up for me by the ultranationalist Vladimir Zhirinovsky.
"The conditions in Russia are now as ripe for a revolution," Zhirinovsky
said, "as they were in October 1917."

*******

#7
U.S. News and World Report
February 8, 1999
Editorial
BY MORTIMER B. ZUCKERMAN / EDITOR-IN-CHIEF
Coming to Russia's rescue
A collapse would cause grave security problems for the West

For 40 years after World War II we were worried about the rising power
of the Soviet Union. Now we have to worry just as much about the collapsing
power of Russia. The source of the anxiety is much the same but
paradoxical. In the first period we worried that Russians might use their
weapons of mass destruction. Now we should worry that they might lose them.
The country is not just bankrupt. As I wrote in this week's World
section, Russia is in an economic free fall that threatens the coherence of
the central state and the ability of the government to control its arsenal
of nuclear, chemical, and biological weapons. Any time now they might
become black-market items for rogue buyers. Prime Minister Yevgeni Primakov
acknowledged to me that Russia cannot prevent its hard-pressed scientists
from selling advice to Iran or Iraq. And if the state disintegrates
altogether, we could face the apocalyptic scenario of ultranationalists or
some other faction challenging the command and control of nuclear weapons
spread over 39 different Russian districts. 
Where once the state was too strong, it is now so weak that it cannot
even collect taxes. Poverty, crime, and inflation are rampant. What was a
decade or so ago a self-contained, self-supporting economy, possessing vast
reserves of gold, has become an economy completely dependent on foreign
aid. Virtually overnight this once proud superpower has lost its name, its
flag, its unifying ideology, and half of its territories. 
Cash infusion. It is critical to our interests that Russia survive its
economic, political, and psychological ordeal. The West, and especially the
Clinton administration, bears some of the blame for encouraging the
reckless rush from communism to raw capitalism.
The United States, the International Monetary Fund, Germany, and other
countries have already pumped more than $150 billion into Russia. No one
can say where this fantastic sum has gone, but for every dollar that has
been extended by the West, Russians have deposited at least as much in
foreign banks. So far, foreign money has helped postpone reform rather than
hasten it.
Primakov promises more vigor and vigilance and may well deliver. With
debts of $17.5 billion coming due in 1999, and with annual government
revenues of only $24 billion, he protests the rejection of his request for
more help while the IMF gives billions to Brazil, South Korea, and
Indonesia. But financial management in Russia before Primakov was
appalling. The most recent infusion of $4.8 billion from the IMF barely
touched ground before it ended up in foreign bank accounts–for the benefit
of the oligarchs who virtually own the country. 
Relief is nonetheless justified. The stakes are too high. But how can it
be given without feeding corruption? Direct supplies of food and medicine
should be extended for humanitarian reasons. No money should go to support
the currency or the banks. The IMF cannot be expected to advance more
money; its credibility as a lender has been hurt enough by the way Russia
has flouted the conditions attached to its loans. Aid to the government
must be tied to economic and political reforms and earmarked for projects
that can be monitored. The best course might be to encourage private
companies to take up specific ventures, with some substantial portion of
their investments to be guaranteed by the U.S. government and conditioned
on the appropriate legal and management structures within Russia. The
private sector keeps better track of money than the government does.
If Russia wants this, or more, it must establish a political modus
vivendi with the West and not challenge our strategic interests. It must
get tougher with anyone who helps Iran, Iraq, or Libya; Primakov himself
must limit his longtime support for Saddam Hussein. It must come down hard
on any scientist who helps rogue countries. And Russia could gain much if
it drastically reduced its vast and unnecessary nuclear arsenal.
But the touchstone of any policy must be this: Russia is a tragedy on
the way to a catastrophe that could envelop us all.

******

#8
US Proposal on 3 Warheads for Topol Evokes Concern.

MOSCOW, February 1 (Itar-Tass) - The U.S. proposal to compensate for the
deployment of two anti-ballistic missile systems with the permission to
Russia to have three warheads on missiles of the Topol-M complex evokes
concern, Igor Sutyagin, head of the military-technical and
military-economic policy sector of the department for military-political
studies at the Institute of the U.S. and Canadian Studies, Russian Academy
of Sciences, told Tass. He commented on an article by Walter Pinkus,
published by the influential Washington Post on January 22. 
According to the article, the Pentagon officials are now studying a
proposal, under which Russia should be allowed to deploy new strategic
missiles with three warheads, if Moscow, in its turn, does not express any
objections against the U.S. plan to create a limited national
anti-ballistic missile system in two areas of deployment with a total of
200 anti-missile launching installations. According to Sutyagin, the author
of the article writes that the information came from the sources in the
Clinton Administration. 
In his opinion, the U.S. is trying in this way to resolve the problem,
which emerged two months ago. Russia emphatically opposes the
"modification" of the ABM Treaty, signed by the two countries in 1972. The
U.S. can deploy the system no earlier than in 2005. This is why it would
like to get Moscow's approval, which shows that the U.S. continues to
regard Russia as a great nuclear power. "I should like to stress in this
connection, that the idea itself, if it is officially put forward in this
form, may attract Russia's close attention and do much to lull our concern.
It would be met with favourable attention," Sutyagin said. 
"The impression is that Russia could accept the deal and amend the ABM
Treaty, taking into consideration the permission," he continued. "The most
important thing, however, is that the idea could lull our concern over U.S.
ABM plans only at first sight. If we start thinking about a possible
reaction of China, it will become clear that the permission for Russia to
have missiles with three warheads will not settle any problems. The ABM
system the Americans are going to build should make it possible to
intercept 50 blocks coming towards the U.S. territory. 
"China has only 17 missiles that can reach the U.S. If China wants now,
or in the future, to do what we and Americans have been doing over the past
40 years (putting into effect the strategy of nuclear deterrence on a very
limited scale), then the deployment, approved by us, will lead to the
nuclear arms buildup by China." 
"This will be followed by a series of developments, which are easy to
forecast: the appearance of new missiles in China will bring about the
response of India, then Pakistan, then Israel. As a result of it, the
threats in the world will be further heightened and not reduced. 
"Thus, the idea of the permission for Russia to have missiles with three
warheads in exchange for its consent to the deployment of the ABM system
looks very atractive, but after a thorough analysis it looks different.
Specifically, it only resolves the problem of Russia's relations with the
U.S., but we should take China into consideration too. 
"In my opinion, at least one more thing should be added to the idea:
China should be drawn into the discussion. China should take part in the
discussion of the problem of the creation of the U.S. ABM system. It is
important to make the renewed treaty multilateral. It is only on this
condition that the treaty will have favourable prospects," Sutyagin said. 

*******

#9
Date: Mon, 01 Feb 1999 
From: "Mark Ames" <exile.editor@matrix.ru> 
Subject: Kathy Lally, Moscow's flu war means breathtaking measures

If I didn't live here in Moscow, I'd come away from Kathy Lally's article
"Moscow's Flu War Means Breathtaking Measures" believing that all Russians
avoid the
kinds of medicines and remedies we white folk might use, and instead revert
to medieval, savage, voodoo-like remedies like smearing onions on your feet
or snorting dirty socks. You almost wonder, after reading Lally's article,
whether Russians have yet developed a complex set of language skills or the
ability to create fire. I for one decided to check. So I went down to the
closest Apteka, or pharmacy, on my street corner. I asked one of the
pharmacists there, Lyubov Luskutova, if drinking cognac or smelling old
socks or rubbing onions on your feet is the best way to overcome the flu
epidemic that threatens all of us here. Surprisingly, the native spoke in
an intelligible language, expressing a dazzling variety of emotions--such
as bewilderment and confused laughter. She said she'd never in her life
heard of rubbing onions on feet or snorting dirty socks in order to ward
off the flu. She works in a
pharmacy--yes, that's right, Russians actually have pharmacies. And at
pharmacies, they sell medicines.

So just to set Lally's Baltimore-area readers straight, I'd like to note
that the most common medicines to fight flus and colds sold here at my
local apteka (and at the zillions of apteky in Moscow, including in nearly
every metro station and every street block) are Tylenol flu medicine,
Coldrex, Coldrex Nite, TheraFlu
Tylenol for kids, and Lorane. For sore throats, most buy either Strepsils
or Hall's mints. The prices are high in ruble terms--Lorane costs 74 rubles
a bottle, or about 3 dollars. But Luskutova assured me that sales aren't
noticeably down from last year's flu season period. "People have to live,"
she said just this morning. I'd personally doubt that sales are as stable
as she thinks, but I will definitely take her word over Lally's.
Other popular remedies for the flu are staying home from work and sleeping,
drinking tea with honey, and drinking juice. Maybe these things weren't
wacky enough to fit into Lally's "see how savage the Russians are" piece.
Imagine the honest lead: "Russians are preparing for the onslaught of flu
by buying Tylenol and Theraflu medicines from their local pharmacies." Naw,
it wouldn't sell, as they say in Hollywood. Doesn't make them seem savage
enough.

Russians thankfully don't stoop to mocking stories about how we Americans
drop billions a year on totally
useless vitamin supplements just because some quack named Linus Pauling
told us to do so, and won a big ol' award for it. Which gets to the point:
THERE IS NO CURE FOR THE FLU! Duh!

I wrote this response because it seems that the old colonialist attitude is
seeping back into the Western journalist narrative as never before. Up to
August 17th, at least you had two narratives: good reformers versus savage
old
commies; or, see how much better we are than the Russians. Now journalists
have done the Vichy/resistance flip-flop and have become harsh critics of
the government here, leaving readers back
home with only one narrative to wash their brains with: how many ways can
you paint a Russian as a savage. You
could say that Galina Starovoitova was the last "good guy" pushed on the
home readers, even though she was an irrelevant has-been whose death had
almost no influence on local elections. No matter--she counted to
progressive-minded journalists, who saw in her one of their own. Now, with
Starovoitova gone, Russia's image better
watch out. As Jean MacKenzie wrote in a November 24th, 1998 installment
of her Moscow Times column, "Confessions of a Russophile," "the last
vestiges of the light that [Starovoitova] was instrumental in bringing to
this dark, savage country are slowly dying out." 

That's right: even Moscow's self-proclaimed Russophile openly refers to
Russia as
"this dark, savage country."

Un-Ga-Wa! Bu-ba-goo-wa!

Like Ann Blundy's recent piece in the Times about how all Russian women are
doomed to a life of prostitution or arm decoration-ness merely because they
aren't physically bland (as we presume the highly-evolved Blundy is), the
going theme for
'99 seems to be to dig up as many ways as possible to prove that Russia is
an African backwater whose only hope--albeit a futile hope--is to remake
itself into a Western nation. 

Which is where the eXile comes in. We've decided to up the ante a little on
this whole Russia-bashing thing to offer you, at no extra shame, your very
own ugly colonialist article that will hopefully put this whole matter to
rest. It can be accessed at: www.exile.ru

Enjoy. And make sure you eat plenty of hot chicken soup!

Mark Ames
Editor
the eXile

*******

#10
Moscow Times
February 2, 1999 
Primakov To Clear Jails for Corrupt 
By Simon Saradzhyan
Staff Writer

Prime Minister Yevgeny Primakov joined a long list of statesmen calling
for a war on economic crime and added a new twist: By amnestying tens of
thousands of criminals, his government will make room in Russia's
overcrowded prisons for the corrupt officials. 
But analysts said Primakov's tough rhetoric was largely politically
motivated and unlikely to lead to a full-scale campaign to put an end to
economic crime, widely seen as one of the biggest hurdles along Russia's
path toward economic recovery. 
Primakov vowed to fill Russian prisons with those "plundering Russia"
and "robbing society." He said the amnesty recently proposed by his
government for 94,000 prisoners would free up enough cells. 
"It is now necessary to fight economic crimes very vigorously," he said
in an interview on NTV's Itogi program Sunday night. 
"Of course, everything should be in accordance with the law, but we will
no longer look the other way," he said prior to leaving Davos, Switzerland,
where he attended the annual World Economic Forum. 
Boris Berezovsky, a financier reported to have earned part of his
fortune in insider deals, called on Primakov to reverse his promise to fill
up cells with those convicted of economic crimes. 
This "would bring us back to Soviet times" when authorities operated on
the principle that you can always find something to charge someone with,
Berezovsky said Monday. 
Primakov said he was unaware of any lists of people considered prime
suspects. "If such lists exist you should ask the law enforcement agencies
why they are not opening criminal cases," he said. 
The prime minister, whose government is hoping to persuade the
International Monetary Fund to lend more money to Russia, said the
anti-corruption drive would be welcomed by foreign investors, who have been
"the first to ask us to clear the field of corruption, crime." 
Primakov also may have been trying to appeal to a domestic audience
ahead of parliamentary and presidential elections, analysts said. 
"It is a purely political, populist statement that ... again indicates
that Primakov has made his choice and is preparing for the presidential
elections" in 2000, said Yevgeny Volk of the Heritage Foundation's office
in Moscow. 
Volk and other analysts said Russia was unlikely to see a full-fledged
campaign to mop up economic crimes. 
Any anti-economic crime campaign is likely to be "very short-term and
will probably be forgotten by the government as soon as it finds another
campaign to launch," said Mark Galiotti, a chief expert on Russian
organized crime at the University of Keele in Britain.Galiotti also noted
that "Soviet methods" of siccing police on economic criminals would not
bring results unless complimented by the adoption and enforcement of
adequate laws to fight capital flight and money laundering. 
Russia's bureaucratic machine also should be cleansed of corruption, he
said. 
Many top officials, including President Boris Yeltsin, have declared
national crusades against crime, but most of the Kremlin's grand plans to
defeat the country's flourishing underworld have remained on paper. 
Russia's shadow economy is estimated to produce 40 percent of gross
domestic product and the country loses billions of dollars every year due
to illegal capital flight and massive tax evasion. 
"It is clear that [to fight organized crime] one should begin with
cleansing the economic sphere," said Boris Bolotsky of the economic crime
laboratory at the Interior Ministry's Scientific Research Institute. 
An international survey put Russia among the world's most-corrupt
countries last year. 
"Corruption in Russia has reached such dimensions that it is ruining the
economy," former Interior Minister Anatoly Kulikov said on Ekho Moskvy
radio earlier this month. 
Kulikov said business executives spend some 50 percent of their income
bribing bureaucrats and he called on the prime minister to set up a
government body to lead a war against corruption. 
Corruption costs Russia an annual average of 50 billion rubles, the
influential non-governmental Council of Foreign and Defense Policies said
in a report last year. 
Russian police exposed 200,000 economic crimes last year, which is 16
percent more than in 1997, Interior Minister Sergei Stepashin has said. 
Russian law-enforcement agencies last year exposed 15,000 cases of abuse
of power by officials, including 5,500 bribe cases, which is 11 percent
more than in 1997, the police chief said. 

*******

#11
Journal of Commerce
2 February 1999
[for personal use only]
Guest Opinion
Russia at a crossroad
BY CHUCK HAGEL & JACK REED 
Chuck Hagel, a Republican, is a U.S. senator from Nebraska, and Jack Reed,
a Democrat, is a U.S. senator from Rhode Island. 

On our recent trip to Russia, we encountered a country struggling to
define its future in the midst of economic crisis and political uncertainty. 
Gone was the exuberance of the past several years. In its place, we
found an immense country with immense problems. 
One reason Russia faces such daunting challenges is that many of the
basic cultural elements necessary for a thriving democracy and free-market
system have been historically absent in Russian society. Throughout
history, Russian culture has been dominated by a central, controlling
authority -- the Communist Party, the Russian Czars or the Nordic princes.
Now, as Russia struggles with its economic and political problems, it
has no strong central authority to guide the way. The Yeltsin government is
basically a government in exile. As Russia struggles to make a fundamental
transition, it has no strong infrastructure to support a market economy.
This has left a vacuum, which has allowed the criminal elements of
Russia to flourish. Crime and corruption so control Russian commerce and
government that they represent much of the framework on which the Russian
economy now hangs. As one prominent Russian elected official told us, "We
are just continuing our cycle of dependency."
Russia is suffering from multiple, self-inflicted economic wounds
compounded by an international economy in recession. Its income-producing
industries are almost exclusively in natural resources such as oil and
timber. With a huge drop in prices for these products, it has been denied
its most lucrative earnings at a time it is attempting its ambitious
transformation to a market economy.
Russia's most critical economic problems are its own. It lacks a stable
banking system. More than 80% of its economy is conducted through barter,
restricting the flow of capital and making tax collection virtually
impossible. There is no national codification of private property rights or
of the judicial processes. It retains much of its Soviet bureaucracy and
planned-economy mind set.
Russia is not just an emerging market; it is an emerging economy. Yet as
one analyst put it, "How many emerging economies do you know with a space
station?" There is a strange duality that exists in Russia -- it is still
making strong breakthroughs in science and technology, yet it can barely
provide the basic needs of its people.
Because of the lack of guidance and assistance from Moscow, most of the
89 governmental units that make up the Russian Federation are pressed to
address their challenges on their own. Russia is becoming increasingly
regionalized as these independent units of government ignore Moscow and
find their own solutions. It may be this process of regionalization, where
creative solutions will be found, that in the end saves Russia.
It must be noted that however much Russia struggles, the Russians are a
strong, proud people. We spoke to college students in Krasnoyarsk, the
heart of Siberia, and were struck by the clear-eyed realism with which they
approached their situation.
They realized they may not see the fruits of their efforts for a
generation, yet they grasped the historical opportunity they have been
granted for increasing freedom and economic opportunity.
One member of the Krasnoyarsk Duma, who had been a member of the
Communist Party for more than 30 years, told us, "We will not go back."
We also met three of the potential presidential candidates -- Yuri
Luzhkov, the mayor of Moscow; Gen. Alexander Lebed; and Grigory Yavlinskiy,
leader of the Yaboloko Party in the Duma -- who expressed the same sentiments.
All of this hope, however, collides with grim economic reality. Today,
the economic and political future of Russia hangs in the balance.
The next year will determine whether Russia can endure an economic
crisis, maintain a commitment to a free and open society and democratic
government, and select leaders who will lead it to a better life. How it
addresses these challenges will have extraordinary consequences for the
United States and the world.
While recognizing that Russia must act more decisively, America cannot
simply stand aside. The days of the blank International Monetary Fund check
and U.S. indulgence of President Yeltsin may be gone, but the overwhelming
lesson of our trip is that America must remain engaged.
If we lose faith in the possibility of a democratic Russia, then we will
add to the chorus within Russia that fears an open society. This end will
not be in the world's best interests.
But while America should stand by Russia, we cannot solve their internal
problems. During our visit, anonymous posters began popping up around
Moscow and St. Petersburg. No one could tell us who was responsible, but in
their ambiguity they reflect the crossroad facing the Russian people.
Will they will face head-on the tough challenges that lie ahead, or will
they turn inward and further isolate themselves from the West?
The posters read, "No one can help Russia but ourselves." 

******