February 17, 1999    
This Date's Issues: 3056•3057  • 

Johnson's Russia List
#3056
17 February 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Moscow Tribune: John Helmer, Three Monkeys on Evil. (IMF and
Central Bank).
2. AP: IMF: No Russia Loans Until Reforms.
3. AP: Russia Reformer: 3 Years Needed. (Nemtsov).
4. Ray Finch: Moscow 1999. (Poem).
5. Michael Gerke: Re Jonathan Dean on JRL 3048. (START).
6. Grzegorz Kolodko speaking in Washington DC Feb. 18.
7. Russia -- Crossroads of Crises: A Search for Solutions/
Washington DC meeting Feb. 18.
8. Voice of America: Eve Conant reports on Pasko trial in 
Vladivostok.
9. Moscow Times: Melissa Akin, Where Oh Where Has Skuratov Gone? 
10. Andrei Liakhov: $50 Billion - Who needs the hype? (Central Bank).
11. New York Times: Thomas Friedman, Deadheads and Warheads.
12. Reuters: Russian Communists says party probe a witch-hunt.
13. Itar-Tass: Zhirinovskiy Eyes Primakov as Russia's Deng Xiaoping.] 

*******

#1
Date: Tue, 16 Feb 1999
From: helmer@glas.apc.org (John Helmer) 

>From The Moscow Tribune, February 16, 199
THREE MONKEYS ON EVIL
John Helmer

For years now, officials of the International Monetary Fund (IMF),
Russia's Finance Ministry, and the Central Bank of Russia
have been conducting a discreet conversation among themselves they
intended noone else to hear -- at least not in Russia.

Mikhail Zadornov -- who complained this was unprincipled and undemocratic
when he was a member of parliament -- defended the practice, once he joined
the conversation. "It's really not worth being discussed publicly," Zadornov
claimed last week, speaking to the Duma as Minister of Finance. That was
a little echo of Victor Gerashchenko, the Central Bank chairman, who made
his remark, also to the Duma, the week before.

The topic of the conversation that has embarrassed the officials by being
disclosed to Russia's chief law enforcement officer, its chief auditor,
and its parliament, is what the Central Bank has been doing with its reserves.

Those reserves -- consisting of foreign convertible currencies and
precious metals -- have been the focus of precise IMF auditing, ever
since the IMF started lending money to the Rusisan government. That's
because of a secret provision in the IMF loan agreements, and in the
annual IMF-Russian economic programme. This sets a level of net reserves
which the Russian government and Central Bank pledge to maintain at
all times. Net is the term that means the value of cash and precious
metal, less the value of the debts Russia owes to the IMF and the World 
Bank. 

Within the IMF office in Moscow, there has always been one, sometimes
more officials, whose job it is to monitor carefully the movement of cash 
and metals into and out of the Central Bank's reserves. When, years ago, a 
Finance Minister (Boris Fyodorov) tried to add $500 million to the value of 
the reserves at the Central Bank, the IMF objected immediately. The Central 
Bank had "bought" the diamonds from the Finance Ministry's Gokhran (treasury),
so that the Finance Ministry could add roubles to the money supply, without 
lowering the net reserve level, or breaching the IMF's money supply target. 
But the IMF disallowed the accounting move, and the diamond value was 
subtracted from the reserve total.

That was five years ago -- about the time, Russia's parliament has now been
told -- the Central Bank was moving its currency reserves through offshore
European banks it controlled, and into fronts those banks had created
to churn the cash through their books, earning commissions. At least one
of those money laundries has been identified -- in a public manner
officials of the Bank, the Ministry, and the IMF disapprove of.

How is it possible the IMF didn't know what the Central Bank was doing with
billions of dollars of cash reserves, if at the same time it was ready to 
pounce on $500-million line-items labelled diamonds?

The answer to that question is one Martin Gilman, the current IMF 
representative in Moscow, thinks is not really worth discussing publicly.
That would make him one of the monkeys who see no evil, hear no evil, etc.
were it not for a point the Procurator-General has suggested, regarding the
movement of the Central Bank's cash reserves -- silence in the face of a 
crime is also a crime. Every time he opens his mouth to say nothing, Gilman
makes himself an accessory -- possibly a co-conspirator -- in a pattern
of activity that is criminal under Russian law.

So what did Gilman say the other day, when he was asked what accounting
rule the IMF applies to the Central Bank's transactions with platinum
and palladium? 

"There is no answer," Gilman said, tiptoeing carefully through a spokesman.
"Not yet."

Now the question has significance, because late last year, the Central
Bank refused to allow the Accounting Chamber to audit its platinum and
palladium reserves. The reason given by the Bank's chief accountant at the 
time was that these precious metals are not counted in the Bank's
international reserves, according to the IMF definition.

We know that definition disallowed diamonds, and included gold. But gold
has lost a good deal of its value on world markets in the past 18 months,
while platinum and palladium have more than doubled. For the first time ever,
palladium has become more costly than platinum; both metals are at least
$60 per ounce more costly than gold.

So, it stands to reason that, when pressed by the IMF to raise its net 
reserve figure, the Central Bank would want to add the value of its platinum 
and palladium holdings; and what's more, stock more of the metals, if
it could.

When Moscow traders recently understood that the Central Bank was bidding
to purchase platinum from Russia's commercial banks, they believed the
Bank had obtained the IMF's agreement to count at least platinum,
and possibly both platinum and palladium, in its reserve figures.
What other value could the metals have for the Central Bank, the traders
surmised, knowing the government won't allow the Bank to export either
metal abroad? Why pay dollars or gold the IMF counts in reserves
for platinum that isn't counted, and can't be exported?

The official in charge of the Central Bank's precious metals
stocks has denied the rumour. He claims there has been no change --
but then, like most Central bank officials, he also believes this
is really not worth discussing publicly.

So the rumour is credible, and Gilman of the IMF can be suspected of
trying to conceal it. Why he would do that is suggested by the magnitude
of the figure which platinum and palladium would add to the reserve aggregate.

Bank officials refuse publicly to say that they are holding stocks of 
platinum and palladium. But leaked Finance ministry documents prove that
monthly transfers of palladium to the Central Bank have at times reached 
as high as $500 million. The accumulation of palladium has been
estimated in Russian press reports at 9.7 million ounces (330 metric
tons), currently worth about $3.4 billion. No estimate of the volume
or value of the Central Bank's platinum stock has appeared, though
Moscow experts believe it unlikely to be more than 20 tons.

If this platinum and palladium are now being included in the Bank's reserves, 
they are likely to add between $3 billion and $4 billion to the current 
precious metal figure. Counting only gold, this stood at around $3.9 billion 
last November. 

Last August's rouble devaluation caused a massive drop in Central Bank
currency reserves -- and this decline has continued into this
month. The combined total of Russia's currency and precious metal reserves
has 
now fallen below the $12 billion mark, officials say.

If the rumour of the accounting change were true, addition of
platinum and palladium would mask much deeper currency losses than the
Central Bank has so far acknowledged. These losses are currently under 
investigation by the Accounting Chamber, and by criminal investigators of 
the Procurator-General's office. 

Experts believe that, in normal accounting practice, masking losses by
undisclosed accounting changes could not remain secret for long. The
IMF, for one, would be expected to be the first to report it. If
Gilman is pretending to see nothing, in order to say nothing, it would
not be the first time he's played the monkey in Russia.

*******

#2
IMF: No Russia Loans Until Reforms
February 16, 1999

MOSCOW (AP) -- The International Monetary Fund won't give Russia desperately
needed loans unless the government overcomes internal resistance to market
reforms, the IMF chief said in an interview published Tuesday.

Communists who dominate Russia's parliament frequently criticize IMF policies,
and demand a reversal of, or at least an end to, free-market reforms. To many
Russians, whose living standards have plummeted since the Soviet Union's
collapse, the word ``reform'' is anathema.

``There are voices in Russia that say you must reject cooperation with the
IMF, cut yourself off from the rest of the word, and proceed along some kind
of a traditional-for-Russia `own way','' the Russian daily Novye Izvestia
quoted IMF managing director Michel Camdessus as saying. ``Practice shows it
to be a mistake.''

``I don't want Russia to turn into a Cuba or North Korea.''

But even the Communists in Prime Minister Yevgeny Primakov's Cabinet want IMF
loans to meet at least some of Russia's foreign debt payments this year and
avoid a humiliating default.

Camdessus said he understands Russia's economic plight, but insisted that
loans are conditional on a sound 1999 budget plan that shows signs of
financial reform.

``As soon as the government unveils a realistic plan to steer the country out
of its economic crisis and implements tough fiscal policy, I will be the first
to recommend that my colleagues assess releasing a new economic aid package to
Russia,'' Camdessus was quoted as saying.

An IMF mission left Moscow in earlier this month without striking any
agreement with the government. Two IMF fiscal policy experts were expected in
Moscow later this week to gather more information on the budget.

There were some positive economic signs reported Tuesday. Tax Minister Gregory
Boos said real production in Russia grew by 3.1 percent in the last quarter of
1998, the highest growth rate since the country began its economic reforms,
the Interfax news agency reported.

The increase was presumably caused by increased demand for domestic products,
since the collapse of the ruble has made imports too expensive for many
Russians. If the trend continues, Boos said, Russia could emerge from its
economic crisis by next year.

Boos also said tax payments are up sharply so far in February, and that the
government might surpass its target for the month.

******

#3
Russia Reformer: 3 Years Needed
By KIM GAMEL
February 16, 1999

NEW YORK (AP) -- Prominent liberal Russian politician Boris Nemtsov is
optimistic about his country's future; it's the present that has him
concerned. 

``Russia needs not one or two or three years,'' he said Monday. ``It needs a
generation for improvement.'' 

Nemtsov, who has built his career on reform and is popular among Western
economists, told a packed auditorium of scholars and Russian experts at
Columbia University that Russia faced daunting problems that were not likely
to be solved under Prime Minister Yevgeny Primakov. 

``I think that the existing government has no ideas how to improve the
economy,'' Nemtsov, 40, said. ``There is no concrete economic program.'' 

Nemtsov, a former deputy prime minister, said he was hoping to gain renewed
influence by joining a newly created coalition of liberals and democrats
running in parliamentary elections in December. 

Russian liberal groups have been torn apart by rivalry in the past, and
Nemtsov said he hoped they could take at least 5 percent of the parliamentary
seats by banding together. 

The reformer was less optimistic about the 2000 presidential election, saying
he didn't believe any of the potential candidates would be able to improve the
economy. He said his new party, Just Cause, or Pravoe Delo, would wait for the
results of the parliamentary elections before deciding whether to field a
presidential candidate. 

Nemtsov, who was often mentioned as a potential presidential candidate before
his economic initiatives met stiff resistance at home, said the group also
would try to get prominent economist Grigory Yavlinsky and his party Yabloko
to join the coalition. 

Nemtsov said Russia's current economic situation demanded tough measures that
Primakov wasn't willing to take, including forcing inefficient companies into
bankruptcy and improving tax collection efforts. 

Nemtsov, who was speaking as part of a lecture series, was deputy premier in
Prime Minister Sergei Kiriyenko's Cabinet, which devalued the ruble and
defaulted on some debts in August, prompting foreign lenders to freeze aid to
Russia. 

He has defended his government's decision, saying it was forced by deep
economic trouble and previous mismanagement. President Boris Yeltsin fired
Kiriyenko's government a week after the default and devaluation. 

Nemtsov also downplayed accusations of corruption that followed reports that
the Central Bank had parked the nation's hard-currency reserves in a tiny
offshore firm that reaped huge profits. 

He said the Central Bank was legally allowed to invest money outside the
borders and any corruption was likely to come from those handling the money on
the other end. 

But he feared it would harm Russia's aid negotiations with the International
Monetary Fund. Russia has urged the IMF to release new loans so the government
can pay off part of its massive domestic and foreign debts. The IMF has
remained noncommittal, demanding that the Cabinet approve a viable economic
plan. 

******

#4
Date: Tue, 16 Feb 1999 
From: ray finch <rayfinch3@yahoo.com>
Subject: Moscow 1999

This being the 200th anniversary of Pushkin's birth, I submit the
following poem to further our understanding. 

Moscow 1999

Da zdravstvyite t'ma 
Da skroetsya sol'ntse.

Some say the world will end in fire. 
The clock is ticking, ticking, ticking.

The large bear rises from its stony slumber, 
Head aching from the fermenting berries
It consumed in fear and haste last fall;
With bloodshot eyes, it grunts and staggers 
Searching for some little water.

Big black and gray crows sift 
Through last night's garbage; 
The sleek Mercedes rushes by 
Splashing the beggar with mud.

All is good after the 3d shot of vodka,
Da, harmony, beauty and justice;
You can't even remember the failure,
A consumptive wife and hungry children, 
The piss and broken glass of a dark stairwell 
In a building for the condemned;
The broken elevator leading nowhere.

Rich, red lipstick, the smell of fur,
She stood bored behind the polished counter 
Surrounded by costly treasures,
Which no one could longer afford;
Thinking how long will this play last
Before the bright windows are smashed?

Creativity and beauty
Over the mundane routine; 
Savoring their lust for life
With Dmitri Karamazov.
The bundled hag selling cigarettes 
Shuffles to avoid frostbite,
Tears forming in her eyes.

The bent, old widow crosses herself again, 
Then places a candle before the weeping icon; 
The stern visage of Christ looks approvingly, 
Upon their sacrifice and suffering;
While the fat priest sprinkles holy water
Over the warhead of the SS-20. 
The third and final Rome.

The Zhiguli's alarm screams all night
No one hears; there's nothing left to steal. 
We were once a superpower 
Commanding respect and fear.

Here come the men in uniform,
Defenders of the Rodina!
Upholders of the law!
Which country? That which belongs to us, you Jew; 
Which law? The one written on the side of my boot.
Red, black and brown, they march in step 
Converging on the Kremlin.
The road to hell their anthem.

Outside the mausoleum
An exchange booth is manned
By a veteran from the Great War; 
Besides rubles, he will gladly sell 
Humans, parts or whole, state secrets, 
Tanks, treasures and trinkets;
Or, if you can afford it
A one-way ticket out.

Venus is now aligned behind Saturn,
A bad omen for those with Cancer;
Volan visits the bloc at Chernobyl
And tries to awaken the chief engineer 
Passed out and asleep at the switch;
The president consults with Nostradamus. 
His kingdom come via apocalypse.

Each layer of the simple onion
Contains its own truth, and at the center
You saw the old women picking through trash, 
Heard the violinist in the metro,
Smelled the stench from the doorway,
And realized that you knew nothing.

Scars from those dark years, indelible
As tattoos on the knuckle;
Lies, fear, cruelty, deprivation, 
Injustice and prolonged suffering;
The knock upon the door, on the soul 
Late at night, in a cold prison
Forever bruising the human spirit. 
Unmitigated tragedy.
We'll never understand.

*******

#5
Date: Tue, 16 Feb 1999 
From: CyGerke@aol.com (Michael Gerke)
Subject: Re: Jonathan Dean on JRL 3048

As NATO will decide on accepting a new strategy and the Russian duma
hopefully will debate on 
START II next spring, John Dean’s article about new approaches to nuclear
disarmament (JRL 
3048) is quite useful to launch a discussion about START III.
Not trying to tell Mr Dean his job and avoiding to bore JRL readers with
details, I nevertheless 
want to draw your attention to some problematic points in his suggestions.
First, inclusion of 
tactical nukes in START negotiations will give them a weight, they simply
do not deserve. Being 
short range missiles, they have to be located near the theater and become
highly vulnerable - as the 
case with MIRVed ICBM one can use or lose them. Tactical nukes are
therefore a detriment to 
crisis stability; metaphorically speaking, they are manufactured with a
build-in escalation switch. 
Rather than including these missiles in the START process, they should be
the subject of a separate 
disarmament treaty. Such an approach perhaps bears more chances to get
other de-facto nuclear 
states involved into disarmament negotiations.
My second point is about the nuclear triad. Giving every partner the
possibility to compose its own 
mix of total deployed warheads, does not lead to enhanced crisis stability.
Since bombers can easily 
be assigned to nuclear and non-nuclear missions and submarines may cruise
near an opponent’s 
coast, one should further a mostly land based nuclear force.

*******

#6
Date: Tue, 16 Feb 1999
From: Janine Wedel <jwedel@gwis2.circ.gwu.edu>
Subject: Professor Kolodko at GWU

Professor Grzegorz W. Kolodko will be speaking at the 
Institute for European, Russian, & Eurasian Studies 
at The George Washington University on Thursday, February 18,
1999, at 4:00 pm, in 103 Stuart Hall (2013 G Street, N.W.).

The talk is entitled:
"From Shock to Therapy. Ten Years of Post-Communist Transition" 

Professor Kolodko is a Professor of Economics at the Warsaw
School of Economics and the Yale School of Management.
He also served as First Deputy Premier and Minister of
Finance in Poland during the critical years 1994-1997. 
He is currently a visiting scholar at the IMF. His new
book "From Shock to Therapy: The Political Economy of
Post-Socialist Transformation" is forthcoming from Oxford
University Press this spring. 

*******

#7
Date: Tue, 16 Feb 1999 
From: "Gerard Janco" <caesarevents@hotmail.com>
Subject: Washington: Russian Roundtable Discussion

The Center for American-Eurasian Studies and Relations (CAESAR)
Invites you to its first Caviar Reception
& Russian Roundtable Discussion for 1999
"Russia -- Crossroads of Crises: A Search for Solutions"
February 18th, Thursday
At THE RUSSIA HOUSE
1800 Conn. Ave., NW 
(Dupont Circle Metro, corner of Conn. & Florida Aves.)
Reception: 5:30-6:30 p.m.
Discussion: 6:30-7:30 p.m.

The Center is inviting Russian area specialists, government officials, 
representatives from different organizations, and those interested in 
the Russia within the Washington, DC metropolitian area to gather and 
discuss the crises in Russian leadership, economics, and arms control 
and nonproliferation efforts, as well as the environmental, health and 
social issues facing the nation. 

The current state of Russian-American relations is at stake, as well as 
future developments for world peace and security.

The Center for American-Eurasian Studies and Relations is an association 
of specialists, officials, scholars, and citizens who are interested in 
advancing positive relations between the United States and the nations 
of Eurasia(Europe and Asia). 

Our members include many prominent dissidents, human rights activists, 
arms control specialists, as well as students and local citizens who 
protested for freedoms in East Germany, Czechoslovakia, Moscow and 
Beijing. Formerly the Center for Soviet-American Relations, we are 
celebrating our 10th year anniversary in 1999.

Questions: The event is free, to RSVP or put your name on the list, 
contact the Center at (202)966-8651 or e-mail to Eurasia@aol.com
(cash bar)

Please visit our new website which was designed by our Moscow office at 
http://www.eurasiacenter.org

********

#8
Voice of America
DATE=2/16/99
TITLE=RUSSIA / ENVIRONMENT
BYLINE=EVE CONANT
DATELINE=VLADIVOSTOK

INTRO: THE TREASON AND ESPIONAGE TRIAL OF A RUSSIAN NAVY CAPTAIN
RESUMES TUESDAY IN VLADIVOSTOK. THE OFFICER, GRIGORY PASKO, WAS 
ARRESTED FOLLOWING A REPORT ON JAPANESE TELEVISION SHOWING HIS 
PICTURES OF THE ILLEGAL DUMPING OF RUSSIAN MILITARY NUCLEAR WASTE
IN THE PACIFIC OCEAN. V-O-A'S EVE CONANT IN VLADIVOSTOK REPORTS 
THE TRIAL IS RAISING QUESTIONS ABOUT PRESS FREEDOM IN RUSSIA, AND
ALSO ABOUT ENVIRONMENTAL ABUSES AND OFFICIAL SECRECY. 

TEXT: THIS IS THE SOUND OF RUSSIAN SAILORS DUMPING MISSILES, ONE
BY ONE, INTO THE PACIFIC OCEAN. 

/// SOUNDS - DUMPING ROCKETS, WATER SPLASHING ///

THE SCENE WAS CAPTURED ON VIDEOTAPE BY RUSSIAN NAVY CAPTAIN 
GRIGORY PASKO WHO SAYS THE MISSILES ARE RADIOACTIVE. SOME SAY 
THE REASON GRIGORY PASKO NOW FINDS HIMSELF IN JAIL IS BECAUSE HE 
TOOK THESE PICTURES AND SOLD THEM TO A JAPANESE TELEVISION 
NETWORK. 

CAPTAIN PASKO IS BEING TRIED IN A CLOSED COURTROOM BECAUSE OF 
OFFICIALS CALL THE "TOP SECRET" NATURE OF THE CASE. THE 
PROSECUTION WILL NOT SAY EXACTLY WHAT CAPTAIN PASKO IS CHARGED 
WITH, BUT HIS SUPPORTERS MAINTAIN HE HAS BEEN SINGLED OUT BECAUSE
HE EXPOSED CORRUPTION AND ECOLOGICAL ABUSES OF RUSSIA'S MILITARY.

CAPTAIN PASKO IS NOT THE ONLY PERSON RAISING THE ALARM. AN 
ECOLOGIST WHO MAPS THE OCEAN FLOOR -- BORIS PREOBRAZHENSKY -- 
SAYS HE MADE WHAT HE CALLS A DISTURBING DISCOVERY WHILE SCUBA 
DIVING NEAR THE CITY OF VLADIVOSTOK.

/// PREOBRAZHENSKY ACT ///

AT A DISTANCE OF ABOUT ONE-HALF KILOMETER FROM SHORE 
LINE OF BEACH, I FOUND A BIG HEAP OF ROCKETS, DROWNED. 
IT IS CLOSE PROXIMITY TO THE VERY POPULATED PLACE AND 
VERY DANGEROUS BECAUSE HULLS OF THESE ROCKETS, OF 
MISSILES, CAN BE DETERIORATED BY THE ACTION OF THE 
SALINE MARINE WATERS. HIGHLY TOXIC FUEL INSIDE OF 
ROCKET CAN BE SPILLED OUT. HOW SOON IT WILL COME, GOD 
KNOWS.

/// END ACT ///

HIS FINDINGS WERE HIDDEN UNDERWATER. BUT OTHER CRITICS SAY MANY 
MORE EXAMPLES OF ECOLOGICAL ABUSE AND NEGLECT CAN BE FOUND ABOVE 
GROUND FOR ALL TO SEE. ON THE OUTSKIRTS OF VLADIVOSTOK IS THE 
CITY'S ONLY DUMP -- A HUGE MOUNTAIN OF TRASH. ECOLOGISTS SAY THE
DUMP CONTAINS SO MANY TOXINS THAT THEY CAUSE THEIR OWN CHEMICAL 
REACTIONS AND BURN UNCONTROLLABLY. SEAGULLS FLY THROUGH THE 
PLUMES OF SMOKE ABOVE THE TRASH. AT ITS BASE, THE FRIGID WAVES 
OF THE PACIFIC PULL THE TOXIC TRASH OUT TO SEA.

THIS IS WHAT IT SOUNDS LIKE TO WALK ALONG A NEARBY RECREATIONAL 
BEACH. 

/// SOUNDS - CRUNCHING OF METAL - FADE UNDER ///

THERE IS NO SAND IN SIGHT ON THIS BEACH -- JUST PILES OF RUSTED
METAL THAT HAVE WASHED ASHORE. SEVERAL PEOPLE ARE ON THE BEACH. 
BUT INSTEAD OF ENJOYING THE VIEW, PENSIONERS LIKE 60-YEAR-OLD 
ZINA YAVORSKAYA USE PICKAXES TO SIFT THROUGH THE METAL.

/// YAVORSKAYA ACT - IN RUSSIAN - FADE UNDER ///

SHE SAYS SHE IS COLLECTING METAL. AS SHE STANDS ON A PILE OF 
RUSTED WIRES, SHE SAYS SHE CAN FIND BRONZE, COPPER, ALUMINUM, AND
STAINLESS STEEL. SHE SAYS PENSIONS ARE SO SMALL, SHE AND THE 
OTHERS NEED TO DO THIS TO SURVIVE. 

MARINE ZOOLOGIST AND LOCAL ENVIRONMENTAL ACTIVIST ANDREI KUBANIN 
LOOKED DISTRESSED AS HE WATCHED THE BURNING DUMP IN THE DISTANCE.
HE IS A SUPPORTER OF NAVY CAPTAIN PASKO AND THE ENVIRONMENTAL 
REFORM CAPTAIN PASKO WAS TRYING TO INSTIGATE BEFORE HIS ARREST.

/// KUBANIN ACT - IN RUSSIAN - FADE UNDER ///

MR. KUBANIN SAYS THAT IF PEOPLE COULD HAVE KNOWN EARLIER WHAT IS 
NOW KNOWN ABOUT RADIOACTIVE WASTE, THERE MIGHT NOT HAVE BEEN 
ACCIDENTS LIKE THE CHERNOBYL POWER STATION IN UKRAINE. 

BUT ECOLOGIST BORIS PREOBRAZHENSKY SAYS HE DOUBTS THE RUSSIAN 
GOVERNMENT REALLY WANTS TO EXAMINE AND CLEAN UP WHAT HE CALLS ITS
ECOLOGICAL MESS.

/// 2ND PREOBRAZHENSKY ACT ///

THEY DON'T REALLY CARE. THEY SAY THAT THEY DO, BUT 
ACTUALLY THEY DON'T. THEY NEVER SPENT A SINGLE CENT FOR
REAL PROTECTION OF THE ENVIRONMENT.

/// END ACT ///

PROFESSOR PREOBRAZHENSKY UNFURLED A RUSSIAN NAVY MAP FROM 1988 
THAT WAS ONCE TOP SECRET. HE POINTS TO AN AREA OF THE OCEAN THAT
HAS BEEN MARKED OUT AND LABELED "SWIMMING TEMPORARILY 
PROHIBITED."

/// 3RD PREOBRAZHENSKY ACT ///

WELL, "PLAVENIE BREMENO ZAPRESHENO." (SOUND OF 
UNFURLING MAP) THAT MEANS, AS USUAL, IT IS A DUMPING 
PLACE FOR SOMETHING DANGEROUS. 

/// END ACT ///

SUPPORTERS OF NAVY CAPTAIN GRIGORY PASKO SAY THAT AS HIS TRIAL 
RESUMES, THE NAVY OFFICER MIGHT SOON LEARN THAT WHAT MAY BE MOST 
DANGEROUS ABOUT RUSSIA'S ENVIRONMENTAL ABUSES IS TALKING ABOUT 
THEM. 

*******

#9
Moscow Times
February 17, 999 
Where Oh Where Has Skuratov Gone? 
By Melissa Akin
Staff Writer

Prosecutor General Yury Skuratov took aim at some of the country's most
powerful people, and fired everything he had. 

Then he resigned. 

Then he disappeared. 

In his wake he left President Boris Yeltsin's family, the Central Bank and one
of the country's murkiest business empires in disarray and facing
unprecedented corruption allegations that, one way or another, were Skuratov's
doing. 

And in the more than two weeks since, Skuratov hasn't been seen in public -
creating fertile ground for Russia's avid community of conspiracy theorists. 

The official version is that he checked into the Central Clinical Hospital for
treatment of his heart condition. 

The hospital, however, said Tuesday it hadn't seen him either. 

"Sku-ra-tov," said a duty nurse at the Central Clinical Hospital, shuffling
papers. "Our records show we have no such patient." 

But federal officialdom is sticking to its version, in which Skuratov is lying
in the hospital and improving all the time. 

"His sleep has normalized," said Igor Kirillov, spokesman for the Federation
Council's committee for constitutional legislation and legal reform, quoting
Yeltsin's representative Yury Yarov. 

Yarov pleaded with the upper house Tuesday for speedy approval of Yeltsin's
request to let Skuratov go. 

The Federation Council, which hires and fires federal prosecutors, is due to
take up the resignation request at a full session Wednesday. 

And most likely it will vote to approve. The committee voted Tuesday to
recommend to the full house that the resignation be approved with no fuss. 

The council is likely to quietly ignore a request by the State Duma, led by
Viktor Ilyukhin, a Communist deputy and former Soviet prosecutor, to sort out
the real reasons for Skuratov's ouster. 

Presidential representative Yarov said that by meeting with Skuratov in the
hospital he determined that the prosecutor general willingly resigned from the
post he has held since 1995. 

"No suggestions or pressure were put to Skuratov, not by the president nor by
his administration," Yarov told the Federation Council committee Tuesday.
"Skuratov issued the request himself because his workload had increased and he
had had heart pains. It became too difficult and he asked the president to
release him from his job," Itar-Tass quoted him as saying. 

Feb. 2, the day Skuratov resigned, his office raided the headquarters of
Sibneft, an oil company linked to oligarch Boris Berezovsky. The investigators
said they were gathering evidence against Atoll, a private security firm said
to be controlled by Berezovsky and reported to have spied on Yeltsin and his
family. 

That afternoon, Yeltsin appeared unexpectedly in the Kremlin and accepted
Skuratov's resignation. 

The campaign against Berezovsky's media, automobile and airline empire has
continued. 

On Feb. 4, State Duma deputies announced they had a letter from Skuratov dated
Feb. 1 alleging the Central Bank had transferred $50 billion in reserves out
of Russia to a company registered in the Channel Islands for "management."
Central Bank officials have confirmed the charge. 

No fewer than six versions of how Skuratov came to resign are still
circulating. 

The most popular is **Version No. 1, Berezovsky: Damned If You Do.** Self-
proclaimed friend of Skuratov and former presidential pollster Vyacheslav
Nikonov wrote last week in Izvestia that Skuratov was just biding his time,
waiting to release damning evidence against Berezovsky, who has long been
accused of exerting dubious influence over Yeltsin and his family. 

"Once he said to me, 'The day I decide to start a criminal investigation
involving Berezovsky will be the last day I work in the prosecutor's office.
But I'm going to do it. Disgusting ...,'" Nikonov wrote. This version credits
Skuratov with giving the orders to investigate Berezovsky-linked businesses. 

The version says that a panicked Berezovsky then engineered a campaign to
pressure Skuratov into resigning. 

**Version No. 2, Berezovsky: Damned If You Don't** casts Skuratov as the heel-
dragger in a campaign to end Berezovsky's influence over the Yeltsin family.
Longtime Berezovsky enemy Prime Minister Yevgeny Primakov supported and is
often cited as the source of the campaign to shake up Berezovsky's empire,
which some say he may have been using as a surrogate attack on the president.
If Skuratov opposed the campaign against Berezovsky, Primakov might have
engineered his removal. 

**Version No. 3, Spies in the Bedroom** is being circulated by Versia
newspaper, published by Sovershenno Sekretno. This one holds that Skuratov got
hold of damning evidence on corruption in the Kremlin. Bugs were found in the
offices of Primakov and his assistant, and Yeltsin was presented with a tape
of conversations held in Yeltsin's own bedroom, and Berezovsky is blamed. The
spooked president orders a sweep of Berezovsky's businesses. Yeltsin also goes
after Skuratov, who is presented with a tape of himself, his mistress, and an
unmade bed in an apartment rented by the security services. The tape is used
to blackmail Skuratov out of office. 

**Version No. 4, Money Trouble** has it that Skuratov was brought down by his
enemies in the Central Bank for whom revelations about FIMACO became the last
straw. Skuratov last year had sought to pin charges of insider trading and
other financial improprieties on employees of the Central Bank. Then-bank
chief Sergei Dubinin fiercely denied any improprieties. The FIMACO revelation,
however, has compromised Central Bank administrations stretching back to the
early '90s and has put the current administration on the defensive. "He got
into a fight with Dubinin, and ended up touching [current Central Bank
Chairman Viktor] Gerashchenko," said Andrei Piontkovsky of the Center for
Strategic Studies. 

**Version No. 5, Friends in Low Places** says that Skuratov and his deputies
were in too tight with the Communist-dominated State Duma, a hotbed of
opposition to Yeltsin's presidency, so Yeltsin decided to force him to resign.

The final version has been brewing for years: The Prosecutor General's Office
has been under harsh criticism to solve a backlog of high-profile crimes such
as the murder of Vladislav Listyev, a television executive slain in one of the
country's first high-level economic contract killings. In other cases, such as
the murder of Dmitry Kholodov, a reporter for the popular daily Moskovsky
Komsomolets, only low-level suspects have been arrested even though the trail
of evidence appears to lead higher up. 

**Version 6, Sheer Incompetence** has it that Yeltsin blamed Skuratov for
discrediting the national fight against crime. 

Nikonov wrote in Izvestia, "I can't believe that Yeltsin, lying sick in bed,
was suddenly struck with the thought, "Wow, we're notsolving many crimes. The
prosecutor is painfully leftist. I'm going to head down to the Kremlin in
defiance of my doctor's orders and I'm going to fire him." 

*******

#10
Date: Tue, 16 Feb 1999 
From: "Andrei Liakhov" <liakhova@nortonrose.com> 
Subject: $50 Billion - Who needs the hype?

I'm following with the greatest of interest how the story of the alleged
"slush off-shore fund" of the Central Bank/the Russian Government unfolds
and the more I read the more my genuine surprise grows. Here are the
reasons:
1. Messrs.Dubinin and Geraschenko stated in their respective public
responses to the General Procurator's allegations about the alleged illegal
transfer of up to US$50 billion to an unknown Jersey fund management company
that (i) this company exists from 1990 (surely Geraschenko was not preparing
to default then?!) and was set up by Eurobank in Paris and (ii) the money
(the exact amount disputed) were transferred there "to safeguard the
national reserve from possible actions by foreign investors in case of
litigation based on Russia's default". 
Now either both of them are trying to hide something else or have no idea of
either legal and accountancy procedures involved or are two most
unprofessional and naive persons (which is very difficult to beleive given
their professional qualification and previous expertise). Firstly in case of
such litigation lawyers for the plaintiffs will look to seize foreign assets
of Russia including hose theld in the name of the Central Bank which include
78% of shares in Eurobank and its assets which (if Messrs Dubinin and
Geraschenko are correct) include inter alia the bank's interest in Fimco.
The minute the lawyers for the lenders see Fimco (and beleive me it will
happen very quickly following seizure of the bank's assets) all monies it
received from the Central Bank will be seized too. 
Secondly it is common knowledge that all non cash (i.e. non physical cash)
payments in USD are routed through correspondent accounts of various US
banks and all banking transactions with USD are recorded somewhere in the
US. Thus it will be possible (in case of default litigation) to obtain a US
court order the effect of which will be tracking down of all payments by
the Central Bank of Russia in USD. The paper trail will inevitably lead to
all "hidden" funds originated from the CB. Any properly qualified lawyer or
accountant would tell them that in 5 minutes. 
So Messrs Dubinin's and Geraschenko's arguments do not seem to be plausible
and they quite clearly do not disclose the true purpose of establishing
Fimco or for sending substantial funds there and the first question the
answer to which I think should be made public is "Why Have you instructed
Eurobank to set up Fimco?" 

Even more interesting seems the story of how Fimco and "US$50 billion"
surfaced in Moscow. To understand that one has to inter alia remember
Primakov's past and experience. 
It must also be remembered that as Fedorov's remarks illustrate the
existence of Fimco was more or less open secret at least for the top
officials from at least 1992. 
It should also be noted that SVR (Russian External Intelligence Service)
traditionally was involved in what was also referred to as "external
economic counter-intelligence" (see Law "On Intelligence" of the RF) plainly
speaking gathering information about the activities of the Soviet/Russian
organisations abroad. 
So it would be just and reasonable to put all these facts together and make
the only correct assumption: SVR knew everything or almost everything there
is to know about Fimco for some time. 
The other logical question which may be very reasonably derived from that
fact is who and when (if ever) in the Government was officially made aware
of Fimco's activities?
And why that story surfaced now? Not on August 18th, September 9th or
anywhere between September and January, but now?
No-one will probably ever answer the first 2 questions with any accuracy or
truthfully, but a very simple logic dictates a possible answer to the last
question: why now?
To answer this question is very simple and very complicated at the same
time. The best answer in my view should be "Who will gain most?". The answer
seems to be very simple and very complicated: Primakov. Look what he has to
gain: 
1. The public demands a scapegoat for the catastrophe of August 17 - a
tradition strongly entrenched in Russian conciousness - and by what at
least to me seems to be quite clever manipulation of the press Primakov
points his finger to several leading figures of the Reformers' camp who are
already tainted by various scandals slease and improprieties. I can
reasonably expect the finger to extend to various oligarchs in the near
future.
2. The public expects Primakov to demonstrate quickly that he is capable of
tackling Russia's problems - what can be a better example than exposing a
scam to streal Russia's wealth? If in addition the money are really there
and will be returned Primakov will pay wages, pensions, etc. etc., etc., and
thus demonstrating that he can really make a difference.
3. All the above will make his Government gain power, continue to enjoy
popular support and give it another lease of life.
4. He will also get rid of some people whom he considers to be enemies or
who may represent a challenge to his Government.
5. He will substantially boost his reputation with the international lending
community by demonstrating that he is able to correct improprieties in
spending of the borrowed money.Depending on the amount recovered from Fimco
(if there is anything left there by now) it is\likely that Russia will make
a couple of payments and at least catch up of delayed or suspended payments.
I also expect the lenders to be more succeptible to Primakov's cause and
possibly lend some more.
6.In the best case scenario (i.e. if the monies recovered from Fimco are
very substantial (let's say more than US$10 billion) and all whom he expects
to be disgraced are disgraced Primakov will become at least the next
Russia's king maker if not king himself.
All in all the whole story seems to be a classic intelliugence operation in
the best traditions of CIA of the early 70ies with the only difference: CIA
acted in the third world (Chile, Dominican Republic) while SVR has to use
all of its skills and expertise in order to bring some semblance of order
into its own home.
It's very difficult to say which direction the Fimco story will develop (any
comments from Johnson's List regulars are most welcome) but one thing is
very clear - it's possibly a beginning of new king. 
Andrew G. Liakhov, Dr. of Science.Law, 

*******

#11
New York Times
February 16, 1999
[for personal use only]
FOREIGN AFFAIRS / By THOMAS L. FRIEDMAN
Deadheads and Warheads

I ran into the Russian reform party leader Grigory Yavlinsky in Europe two
weeks ago and asked him a simple question: "Grigory, when America wakes up
from its impeachment nightmare, what kind of Russia will we find?" 

He thought about that for a moment and said: "You will find a Russia that is
even more of a threat to you than the Soviet Union. Frankly, it's more of a
threat to its own people. That's what I care about. But it is also more of a
threat to you." 

Mr. Yavlinsky's point is a bit of an overstatement -- but not much. Russia
today is a threat because of its weakness, not its strength. It is like a
supertanker with a busted hull leaking rancid crude oil all over the place. It
is selling weapons to anyone with cash; its most Dr. Strangelove-like
scientists are putting themselves out to the highest bidders; it can't afford
to properly maintain and safeguard its nuclear arsenals. 

So what to do? Well, all the unreconstructed cold warriors around Washington
are dying to declare that Russia's experiment with democratization is over and
we should go back to treating it like the Soviet Union. There are so many
people who miss the cold war, with its absolute-good-vs.-evil quality; they
hunger for a return of the Politburo. Frankly, I wish Russia were the Soviet
Union again; at least we knew how to deal with it. But it's not, and
pretending that it is only fosters the illusion that we can just sit back,
build an iron curtain around it and contain Russia's weakness as we once
contained its strength. Good luck. Try containing a Russian technical college
selling nuclear know-how to Iran out of a Mafia-run Moscow. 

Russia is not the Soviet Union. It is just a big Albania -- an experiment in
democracy gone wrong, spewing out criminality, weapons and unemployment in all
directions. We can't afford to ignore this Russia and we can't effectively
contain it. In such a messy situation we need to strip our policy down to the
basics, and that means focusing on two things: eliminating Russia's "deadheads
and warheads." Russia needs to just start over, and American policy, to the
extent that it can, needs to help Moscow do just that. 

Russia is slated to hold new parliamentary elections in December. The Russian
Parliament, or Duma, today is still dominated by Communist deadheads, who live
by the old Leninist motto that the worse things are for Russia, the better
they will be for Communists. If we have learned anything from the past four
years it is that as long as the Duma is dominated by Communists it will be
impossible for any Russian president to put in place the basic institutions to
build a real foundation of reform. Russia needs many things, but nothing is
possible without a different Duma. 

The potential votes are there. As the Russian-American scholar Leon Aron,
author of the forthcoming biography "Boris Yeltsin: A Revolutionary Life,"
points out, in the 1996 presidential elections Mr. Yeltsin beat the Communist
Party leader, Gennady Zyuganov, by a margin of roughly 4 to 1 among Russian
voters under age 25. The Communists dominated the over-60 crowd. The
demographics in Russia are on the side of reform. 

The West right now should focus on organizing forgiveness and a restructuring
of Russia's debts, to take the pressure off the Yevgeny Primakov Government,
so it can run a credible budget that might begin to draw back some private
investment, stop the bleeding and provide a reasonably stable environment for
the December Duma elections. This is the only hope for electing fewer
deadheads and more reformers. 

On the strategic front, President Clinton should go to Moscow tomorrow and vow
that he will not leave until he has worked out an arrangement for implementing
the Start 2 and proposed Start 3 nuclear treaties. Forget about a big ABM and
missile-defense deal right now. It's too complicated. Russia is ready to
reduce from 7,500 nuclear warheads to 1,500, as part of the Start process.
Let's do that now, and tell the Russians we'll pay for it all. That's 6,000
warheads that might not end up in Iraq or on the market. 

I don't know whether today's Russia is an infant American revolution
struggling up from Communism, or a declining Weimar Republic on a slippery
slope to Fascism. I do know, though, that we cannot afford to just watch, and
we can make ourselves safer no matter which way it goes by focusing on
deadhead and warhead elimination. If Mr. Clinton is looking for a national
security legacy, and not just a Social Security one, he should hop the next
plane to Moscow. 

*******

#12
Russian Communists says party probe a witch-hunt

MOSCOW, Feb 16 (Reuters) - Senior Russian Communists said on Tuesday that a
Justice Ministry decision to investigate their party's activity was a witch
hunt-which could undermine attempts to strike a truce among major political
forces. 

Justice Minister Pavel Krasheninnikov said on Monday he had ordered to check
whether the Communists, Russia's biggest single political force, had violated
Russian laws regulating the activities of political parties. 

``It is an attempt to start a witch-hunt...undertaken by executive powers and
President (Boris Yeltsin's) camp,'' Interfax news agency quoted Viktor
Ilyukhin, an outspoken orthodox Communist, as saying. 

Communists said the investigation was timed to hurt talks between the
government, parliament and the president, which had hoped to reach a political
stability accord ahead of national parliamentary and presidential polls. 

``It looks like a lot of people don't want a political accord to be reached,''
RIA news agency quoted Gennady Seleznyov, the Communist speaker of the State
Duma lower house of parliament, as saying. 

``What -- they did not know that the working group, including the president's
representative, is starting its work?'' 

The Communists, who form the largest faction in the lower house of parliament,
have drawn strong criticism from the Kremlin in recent months over anti-
Semitic remarks made by two of the party's deputies, including Ilyukhin. 

The ministry said the investigation would try to establish whether the party's
activities complied with the aims of its founding charter and with Russian
legislation. 

RIA quoted Krasheninnikov as saying he had information suggesting the
Communists had violated Yeltsin's decree barring political parties from
setting up branches in firms and institutes. 

But Communist party leader Gennady Zyuganov said the decision was
``provocative by nature,'' and the ministry should fight soaring crime instead
of ``inventing imaginary infringements,'' Interfax news agency reported. 

``I have the impression that the Justice Ministry's leadership has nothing to
do but to carry out political orders of those who have ruined the country,''
Zyuganov said in clear reference to Yeltsin. 

******

#13
Zhirinovskiy Eyes Primakov as Russia's Deng Xiaoping 

OMSK, February 15 (Itar-Tass) -- Vladimir
Zhirinovskiy, the leader 
of the Liberal Democratic Party of Russia (LDPR), said on Monday that Russia
needs a prudent reformer like Deng Xiaoping in China. 
"The time for young communist league secretaries, such as (ex- premier
Sergey)
Kiriyenko 
and the like, has passed in Russia", Zhirinovskiy said during his brief
stopover in the Siberian city of Omsk. 
"Time has come for a Russian Deng Xiaoping and Yevgeniy Primakov is the man.
But in the quality of the prime minister", Zhirinovskiy said. 
The LDPR leader is touring Siberia on his first election campaign this
year. 
He said he was resolute to win gubernatorial elections in the Sverdlovsk
region in August 
so as to "really prove in a matter of months how good the LDPR ideas are". The
region is currently headed by Eduard Rossel. 

******