Center for Defense Information
Research Topics
CDI Library
What's New
CDI Library > Johnson's Russia List

Johnson's Russia List


March 4, 1999    
This Date's Issues: 3076 3077   


Johnson's Russia List
4 March 1999

[Note from David Johnson:
1. Moscow Times editorial: Down With Donuts, Up With Bagels .
2. Itar-Tass: Patriarch Speaks of CHILDREN'S Suicide.
3. AFP: Form government from deputies, Russian Duma leader tells 
Yeltsin.(Vladimir Ryzhkov).

4. Anthony D'Agostino: Re McFaul/3074.
5. Itar-Tass: Civic Consensus to Underlie YELTSIN'S Address to

6. Mark Scheuer: IMF loans.
7. Don Loewen: Thatcherists of Russia.
8. Jamestown Foundation Monitor: WILL PRIMAKOV PERSONALLY ASK GORE 

9. Bloomberg: Russian Economy, Markets Defy Many Doomsayers for Now.
interviews Anatoly Baranov, public relations director for the Russian 
aviation firm MAPO.

11. Washington Post: David Hoffman, Yeltsin's Absentee Rule Raises
Specter of a 'Failed State.'

12. Moscow Times: Andrei Piontkovsky, SEASON OF DISCONTENT: Andropov 
and Brezhnev Meet In Primakov.

13. Financial Times: BEREZOVSKY: Tycoon's revelations fall flat.]


Moscow Times
March 4, 1999 
EDITORIAL: Down With Donuts, Up With Bagels 

Dunkin' Donuts is gone. They have closed down their small Moscow operation and
pulled out. 

Some might bemoan this as a cowardly retreat - and indeed, it is a cruel cut
when one can't find a Boston Creme donut at the Starlite Diner. But here at
The Moscow Times, we are defiantly wiping away our tears, stiffening our
quivering upper lips and crying out: Good riddance! 

What is the donut, after all, but a symbol of the self-indulgence and
superficiality of the pre-ruble devaluation go-go years? Mass produced and
sticky, the donut belongs to that brief era when the Russian stock market was
the "world's best performer" - back in the days when President Boris Yeltsin
was a figure of manly vigor, and when smug expatriates with bad grammar would
lecture Russians for their insufficient appreciation of "reformers" like
Mikhail Gorbachev, Yegor Gaidar and Sergei Kiriyenko. Those were the days when
prostitutes brazenly roamed Tverskaya Ulitsa, American officials gushed about
the Kremlin's "economic dream team" and every foreigner who had been in Moscow
a month would knowingly show off his or her financial-marketspeak by tossing
around acronyms like ADR and GKO. 

And then it all collapsed, almost like a Boston Creme donut that had been sat
upon ... or something like that. The get-rich-quick expatriates left. Dunkin'
Donuts departed. Left behind in Moscow were Russia's truest foreign friends -
and the bagel. 

It is significant that before the ruble devaluation, there were no bagels in
Moscow. Too ethnic. Too steady. Too chewy. Yet today the Great Canadian Bagel
chain reigns supreme, and the bagel deserves to be a symbol for an era of more
introspective and healthier activity. The donut, that factory-made pseudo
cuisine, could never have been the Russian national idea. By contrast, the
bagel easily could fill that hole. For all we know, the bagel could even be of
Russian origin (it certainly isn't Canadian). 

Not so long ago, everyone was getting wildly rich on an unsustainable
speculative bubble - fat, jacked up on concentrated sugar and intellectually
lazy. Now savvy expatriates in Moscow are thoughtfully chewing on repentance
and wholesome fibers - and bracing themselves for the inevitable Western
television and newspaper accounts that claim to see international economic
significance in the closing of two Moscow donut stands. There will be nothing
said in such reports of the $100 million plans for 19 more Russian MacDonald's
this year, of the 200 new Bridgestone Tire shops on the way over the next four
years, of Skanska AB's $1 billion Sheremetyevo airport facelift intentions. 

Yes, the donut is dead. 

So long live the bagel. 


Patriarch Speaks of CHILDREN'S Suicide.

MOSCOW, March 3 (Itar-Tass) - Alexy II Patriarch of Moscow and All Russia
addressed children's suicide among other subjects at a press conference in his
Moscow residence which followed the ceremony of awarding him a breastplate of
honour by a regional club of newspapers. 

Alexy said facts of suicide of children are explainable by vulnerability of
their souls pained by stepped up propaganda of the idea that human life costs

The patriarch said ethical void is characteristic of the present-day education
of teenagers, who find its formative surrogates in get-together set in entry
lobbies of houses, archways, garrets and discotheques or derive them from

Views of the Soviet-era Young Communist, or Komsomol, and pioneer leagues can
vary, but they did attend to leisure of children, now left to their own
devices, Alexy said. And the void of soul is always filled in by surrogates,
he said. 

He cited as an example the all-pervading Western action movies. What can they
teach by their fare of up to 20 murders that go with impunity, Alexy asked. 

He said he had visited a penal colony in Vitebsk, where he found 13-14-year-
old serving their time for murders. 

Alexy went on to say that numbers of orphanages are increasing in Russia.
Statistics report an abundance of cases of children fleeing from their
alcoholic and drug addict parents and hell of their lives home. 

He recalled how the Russian Children's Fund introduced him to a family which
adopted ten children of different ethnicities from orphanages. Alexy said such
facts speak volumes of Russia's soul and of its being more than a country of
rampant crime pictured by the media. 

The patriarch cited the missionary work of Orthodox priests in military units,
where they saved many downcast soldiers headed for fatality. 

Alexy said his frequent visits to Sunday schools left him with the belief that
their pupils will not be lost for the future. This prompts the crucial
importance of returning to spiritual and ethical beginnings, he said. 

Russia with its 1000-year history should not borrow the alien experience but
should look to its own traditions, Alexy said. 

His summary of the suicide topic was in a way of a soft-spoken aside, given
that succumbing to despondency and suicide are defined by the Russian Orthodox
Church as two gravest sins. 

"One must not commit suicide from despondency. One should try out all of
possible ways out and, what is more, to appeal for help to people who are
carriers of spiritual principles," Alexy said. 


Form government from deputies, Russian Duma leader tells Yeltsin

MOSCOW, March 3 (AFP) - A leading Russian centrist on Wednesday urged
President Boris Yeltsin to form a government based on a parliamentary majority
so as to avoid endless friction between the Kremlin and Communist deputies.

"Never in our history have we had a responsible parliament," said Our Home Is
Russia parliament faction leader Vladimir Ryzhkov.

"For six years in a row we have had an opposition parliament which never
carried any responsibility for anything while the nation suffered," Ryzhkov
said. "Russia cannot survive this much longer."

Under Russia's current constitution, the president handpicks his government,
leaving parliament sidelined as little more than a professional debating

As a result, Communists who dominate the State Duma lower house of parliament
are almost permanently in conflict with the head of state, and are currently
pushing for Yeltsin's impeachment.

But the current cabinet headed by Prime Minister Yevgeny Primakov is trying to
change all that by pushing through a "political truce" intended to end strife
between Communists and the Kremlin ahead of the approaching parliamentary and
presidential elections.

That document is currently being drafted by a working group that includes

The deputy said that final text of the agreement might be ready by Friday but
the Kremlin was putting up a stiff fight against a provision requiring Yeltsin
to cede on the issue of forming the government from the Duma's largest

"That is the one major stumbling block," Ryzhkov said.

He further argued that allowing opposition forces into the government en masse
would work in the Kremlin's favor since it would make Communists more
responsible for economic and social policies.

"Right now parliamentarians are busy reading slogans without giving any
thought about whether there is any money in the budget to fund the promises,"
he said.

All sides have already agreed to a political provision within the non-
aggression pact keeping Primakov at the head of state at least through the
year-end, Ryzhkov said.

He added that the Kremlin was further ready to accept the formation of a
constitutional commission that could study potential changes to Russia's basic

"Yeltsin's side in principle has agreed to some constitutional changes,"
Ryzhkov said. "That in and of itself is revolutionary."

The Russian leader in the past had fought off Communist demands to alter the
1993 basic law that is heavily tilted in favor of the presidency. But Yeltsin
has come under intense pressure to formally cede power due to his repeated


Date: Wed, 03 Mar 1999 
From: "Anthony D'Agostino" <>
Subject: Michael McFaul

Michael McFaul's Moscow Times piece (JRL 3074) about threats to Russian
democracy reminded me of a meeting, I think in 1994, at the Northern
California World Affairs Council, in which we both addressed this question.
Michael gave a presentation on his work in Moscow and I was asked to make
a comment. I remember that we both agreed that the Yeltsin constitution of
1993 was a terrible hindrance to democratic development. I compared it to
the French constitution that Napoleon the Third installed by coup d'etat in
1851, according to which the president could declare war, command the armed
forces (including his substantial presidential guard), make treaties,
appoint ministers and ambassadors, frame and execute the laws, in effect
rule by decree. The tendency in that meeting was to count this on the
negative side and to balance it with hopes for positive developments in
civil society. I wonder if we were light-minded to do so.

McFaul does regard the de facto weakening of Presidential power since
August as a positive development, while noting that the authoritarian
constitution continues in force. Yeltsin, like Hindenburg, rules
paternally and usually gently these days, but some new President could
without difficulty use the available constitutional powers to create a
genuine dictatorship. One cannot draw much comfort from the thought that
the fascist Barkashov might have "only" 100,000 followers, while the
Russian presidency is already a dictatorship waiting for the right
candidate. The fall of what remains of Russian democracy would have
uncertain consequences for our own national interest. 

Should our administration now consider the heretofore extraordinary
proposition that Duma attempts to reduce Presidential power, whatever their
motives of the moment, are positive for Russian democracy and therefore
should not meet with our disapproval? 


Civic Consensus to Underlie YELTSIN'S Address to Parliament.

MOSCOW, March 3 (Itar-Tass) - The need for a civic consensus will be one of
the key issues to be addressed by the president in his annual state-of-the-
nation address to the Federal Assembly, presidential first deputy chief of
staff Oleg Sysuyev said. 

Sysuyev told NTV's hero of the Day programme on Wednesday evening that
"special attention will be given to reaching a civic consensus in order to
avoid chaos in the country before elections slated for 1999 and elect
responsible people." 

Sysuyev said that the address will reflect the president's views of what has
to be done to ensure that Russia moves forward in the next millennium. 

"Apparently it will be a political testament of the outgoing president to a
new president of the Russian Federation," he added. 

Sysuyev noted that the address will assess the events that occurred in 1998,
including the August 17 crisis. "It will be a clear and understandable
assessment, acknowledging the mistakes that were made," he said. 


From: "Mark Scheuer" <>
Subject: Desperate Request for Logical Explanation
Date: Wed, 3 Mar 1999 

Due to some unfortunate gene mutation that I attribute to my mother's side
(don't tell her that), I struggle to understand this statement that appeared
in your #3075 publication of "Russian economy supremo accuses IMF chief":

"Russia desperately hopes to secure a new IMF loan that would help cover a
4.5-billion-dollar loan Russia must reimburse to the Fund this year."

Could someone familiar w/ economics/IMF policy PLEASE clarify the economic
logic of paying debts to one's debtor by going further into debt w/ that
same debtor? I understand the warm/fuzzy, "don't walk away from Russia"
stuff, but why is it impossible for analysts to speak forthright and say,
"Russia isn't going to be able to make its $17B payment in 1999. Any money
it receives from the IMF will be intended for x, y, and z economic recovery
programs. . ."???


Date: Wed, 03 Mar 1999 
From: Don Loewen <> 
Subject: Thatcherists of Russia

Dear David:
Perhaps I've missed this in your postings -- I have to admit that I don't
get through all of them, although I do try to read the TOC for each one.
If this story has been covered on the list or in the media, please just
delete this letter. If not, it may be of interest to the list and even
spark a media frenzy :-).

Last week on my way to a post office in suburban Moscow I saw something
strange out of the corner of my eye: a wall full of posters which looked
very different from the usual posters advertising concerts by Filip
Kirkorov, Natalia Koroleva, or some other Russian pop icon. This poster
showed someone looking rather, well, regal. And familiar-looking. I went
closer, and was shocked to read: "Thatcherists of Russia" complete with a
picture of the Iron Lady herself, dressed in what must be prime-ministerial
garb in the UK. There was an announcement that a new party was being
formed, with founding meetings to be held in St. Petersburg on Feb. 26 (?),
and in Moscow on March 2. They even advertised a web site:

I thought it must be a well-funded joke, but then I saw dozens of the
posters in other locations, including a billboard plastered full of them on
the Garden Ring. Last night I visited the web site, which shows that this
is either a serious attempt to found a new party, or a very elaborate and
carefully-planned prank. Maybe it's just a publicity stunt. I didn't see
the names of the initiatiors anywhere on the web site, but I didn't wade
through it all. Still, I'm surprised that I haven't read anything about
this anywhere. Perhaps it's been plastered all over papers which I don't
read, since my only regular news sources here are the Russian papers and
your list.


Jamestown Foundation Monitor
3 March 1999

said yesterday that if he is unable to reach an agreement with the
International Monetary Fund, it will not be a "catastrophe," given that
Primakov or even President Boris Yeltsin can take over as Russia's
negotiator (Russian agencies, March 3). A Russian daily reported today that
Primakov will, in essence, take over from Maslyukov at the end of this
month, when the prime minister travels to Washington to meet with U.S. Vice
President Albert Gore. According to the newspaper, Washington will agree to
use its influence with the IMF to win aid for Russia only if Primakov makes
"serious political concessions"--specifically, if he agrees to an American
withdrawal from the ABM Treaty. The paper predicted that if Primakov fails
to win further IMF funding for Russia, leading to a sovereign default,
Primakov will lose his job. In this connection, the paper noted that March
23--the date for the start of the Washington meeting of the Gore-Primakov
Commission--will mark the first anniversary of the firing of Prime Minister
Viktor Chernomyrdin (Kommersant daily, March 3).

Another newspaper, meanwhile, was much more upbeat, predicting that Russia
will reach an agreement with the IMF. According to this account, and in
contrast to Camdessus' tough talk this week, Western governments are talking
more and more about the possibility of writing off Russia's
multibillion-dollar Soviet-era debt altogether. In this second take on the
issue, the IMF head and the G-7 leaders are simply playing a game of "good
cop, bad cop" (Izvestia, March 3). U.S. President Bill Clinton recently said
that aiding Russia's economy was a top priority.


Russian Economy, Markets Defy Many Doomsayers for Now
Moscow, March 3 (Bloomberg)

Stocks are surging. Inflation is slowing. The currency is rallying. 

This is Russia? 

Six months after Russia defaulted on debt and abandoned its defense of the
ruble, roiling the world's emerging markets, the nation's economy is, for now,
confounding many doomsayers. 

The hyperinflation many economists predicted a few months ago -- forecasts for
annual inflation ran higher than 100 percent -- has yet to materialize.
Instead, the monthly inflation rate probably fell to 3.8 percent in February
from 8.5 percent in January and 11.6 percent in December, according to the
Economics Ministry. 

The ruble, which fell 70 percent against the dollar in the last four months of
1998, rallied 0.5 percent in February. Instead of weakening to 30 or 40 per
dollar, as many forecast, the Russian currency has steadied at 22.93. 

And the benchmark Russian Trading System Index, which plunged 85 percent in
dollar terms last year, has gained about 27 percent in 1999. Only Turkish
stocks have done better. 

``We've seen true stability,'' said Peter Westin, an analyst at the Russian
European Centre for Economic Policy, a think-tank funded by the European

Still Troubled 

Granted, the Russian economy remains deeply troubled and the government faces
serious problems this year, such as a widening budget deficit, low tax
collection and billions of dollars of foreign debt payments. As much as
anything, the degree to which its economy and financial markets have exceeded
expectations speaks to how dire those expectations were. 

Westin, for example, forecast back in November triple digit annual inflation
this year. Now he says he was wrong. 

``Having predicted hyperinflation by Christmas, I'm more careful in my
forecasting now,'' he said. 

Many economists expected the Russian government to meet its obligations and
pull the economy out its quagmire by simply printing money, a strategy that
might have unleashed hyperinflation and sent the ruble tumbling anew. 

So far, though, some of these dire forecasts haven't come true. 

While the government has boosted the money supply by 23 billion rubles ($1
billion) in the fourth quarter, it hasn't printed as many rubles as people
thought. On Feb. 15 the money supply totaled 207.1 billion rubles, compared
with 207.3 billion rubles on Jan. 5. 

Resisted Pressure 

What's more, the government of Yevgeny Primakov, which contains several
communists, has resisted pressure to take populist measures such as indexing
wages to inflation, even as real income has fallen 33 percent since August. 

``The government printed a minute amount of rubles expected,'' Westin said. 

There is no doubt that many Russians are suffering. Much of the nation has
slid into a barter economy, where people exchange goods and services, not
cash. Many workers haven't been paid for months. 

The government is also requiring exporters to convert 75 percent of their
foreign currency revenue into dollars at separate auctions, propping up the

Russia has resisted increasing already artificially low prices charged by
railways, telephone companies, and utilities. 

``Even though superficially the indicators are getting better, structurally
there's been no reform,'' said Martin Taylor, a fund manager at Baring Asset
Management in London with about $800 million invested in Eastern Europe and
Russia. ``It's cocooned in this cashless world where no one pays for anything.
The economy is in a deep freeze.'' 

Thaw Seen 

This artificial sense of stability is unlikely to last as the 1999 budget
relies on a steady stream of foreign financing to meet its obligations,
analysts said. 

The International Monetary Fund suspended a $22.6 billion IMF- led loan
program after Russia defaulted in August, and has said it's still not
satisfied with the pace of reforms. 

``The government is counting on $7 billion in gross financing from
international institutions and we haven't seen that yet,'' said Peter Boone,
economist at Brunswick Warburg brokerage in Moscow. ``If they don't get
foreign financing and issue a 20 percent increase in the money supply to raise
$1.6 billion over a period of three months, then there would be 20 percent
inflation and depreciation of the exchange rate.'' 

Russia's annual rate of inflation soared to 84.4 percent last year from 11
percent in 1997 after the government stopped defending the ruble in August.
The ruble's plunge pushed up the price of imports, reducing them to a trickle,
and forced storekeepers to mark up prices of domestic products. 


Russia's month-on-month industrial production was boosted in December by 7.1
percent partly due to import substitution by domestic producers after the
price of imports soared. That growth will be stunted, though, as domestic
manufacturers lack the capital to invest in expanding production, analysts

``Russia needs a strong government to tackle the structural issues, otherwise
foreign direct investment won't return,'' Taylor said. 

Russia, with $63 per capita in foreign investment, lags behind other
neighboring countries, according to Westin. Hungary has received $1,668 in per
capita investment, while Kazakhstan has received $365 per capita. 


Date: Wed, 03 Mar 1999

Boris Kagarlitsky interviews Anatoly Baranov, public relations
director for the Russian aviation firm MAPO

#Russian left journalist Anatoly Baranov has featured before on
the pages of <I>Green Left Weekly.<D>In 1996 he came under attack
from the authorities in the Moscow municipality, after an article
he had written for the newspaper <I>Pravda<D> caused the city
administration severe embarrassment. Almost immediately, Baranov
was sacked from his job with an economics weekly, and Moscow Mayor
Yury Luzhkov eventually took him to court.
#Since then a great deal has changed. Members of the Communist
Party have entered the government, with Yury Maslyukov taking the
post of first vice-premier with responsibility for the economy.
The presence of leftists in the government raises serious
questions. Is Russia's wealthy elite trying to save itself through
an infusion of "fresh blood", manoeuvring the left into
administering the crisis of the ruling system? Or are real
structural reforms in the offing?
#Meanwhile, Baranov too has taken on a new role - as public
relations director for the Russian military-industrial firm MAPO,
a state company which includes the enterprises that produce the
famous MiG fighter aircraft.

#Q. Anatoly, when leftists come to power they often abandon their
principles and become bureaucrats and bourgeois. Do you feel this
danger in your own case?

#A. Yes, I do. But there's another view of the left, even less
flattering - that all we can do is talk, and that serious matters
can't be entrusted to us. If we're perceived as eternal
oppositionists griping at every pretext, then we won't be able to
convince people that we're correct.
#If the present entry by leftists into the Russian government ends
in defeat, we can forget about a socialist, social democratic, or
any other left project in Eastern Europe for a generation. The
situation since the crisis that hit Russia in August last year has
been exceptionally favourable for a new industrial policy in this
country. The ruble has become cheaper, and Russian goods have
become competitive. There isn't cheaper labour power to be had
anywhere. In industry, in machine-building, a process of expansion
has begun, and has continued now for four months. Imports are
being replaced by local products. But an acceleration of this
process is being prevented by the low level of effective demand
from the population - the flip-side of the low wages.
#You could say that the crisis has been very helpful to industry.
But this situation can only sustain growth for a few months. After
that, exports of the products of manufacturing industry will have
to grow. This is the only way to put ready cash into the economy,
and without this cash, the growth will come to a halt.
#It's precisely this growth that the IMF is now trying to stop,
delaying the restructuring of Russian debts and in this way,
providing support to liberal sell-out merchants such as Gaidar,
Fyodorov and Yavlinsky, who have already unleashed a campaign to
have the Primakov-Maslyukov government replaced.

#Q. And the military-industrial complex provides a way of drawing
financial resources into the economy?
#A. MiG aircraft are a marvellous commodity for the foreign
market. In terms of value for money, they outstrip any of their
Western counterparts by a whole order of magnitude. Our low labour
costs make it pointless for our main rival, the US, to try to
compete with us honestly, so methods that are anything but
gentlemanly are being used to try to force Russia out of markets
where it has an established presence.

#Q. You mean pressure from the NATO military apparatus?

#A. Yes, but not only that. In Eastern Europe, the use of Soviet
aircraft is a natural thing. Ground systems are already in place,
and pilots and maintenance personnel have been trained on the
basis of the standards of the Warsaw Pact. In Germany, on the
whole, people understand this. In 1993 Daimler-Chrysler Aerospace
set up a joint venture with MAPO-MiG and the Russian state firm
Rosvooruzhenie in order to service "European" MiGs and to adapt
them to NATO standards. It's true that the contract wasn't
particularly favourable to the Russian side, but there's still a
partnership. When the time comes to replace obsolete or worn-out
equipment, there'll be new Russian aircraft and ground systems.
#It's something quite different when the US offers to hand over
used F-16 and F-18 aircraft "free of charge" to countries of the
former eastern bloc. By the year 2002 the cost to these countries
of this "generosity" will be from 1.8 to 3.2 billion deutschmarks,
while the cost of modernising the MiGs that they already have
would be no more than 250 million marks. Everyone can see the
predatory subplot of this "aid", but it's also seen as an entry
ticket to NATO, and NATO is an attractive organisation for former
members of the Warsaw Pact and even for former Soviet republics.
These countries are being bound to the US politically on the one
hand, and technologically on the other.

#Q. Since they're using non-economic methods against you, it's
clear that MAPO as well has to act on another level. The response
has to be political, and that's obviously why you were given this
job. What's your political function likely to be?

#A. My role isn't to formulate political goals, but to search for
political methods. In Soviet times, when a director couldn't solve
a problem by administrative or economic means, the political
hierarchy of the Communist Party was called into play, and this
was often very effective. In Russia now there's no hierarchy, not
even an administrative one. If the vertical system of economic
management could be restored, even to a limited extent, a lot of
things would be easier.
#The reorganisation of MAPO, which the government has agreed to,
is very important, and is an illustration of what needs to be
done. It's also important for the left. We need to show: look,
privatisation has failed, private investments are inadequate, and
state companies can work efficiently for the good of the country.

#Q. What are your relations now with the people around the Moscow

#A. Life is now forcing many politicians in Russia to make left-
wing declarations, and Luzhkov is no exception. As for the court
case, I won it in the end, after two and a half years. The main
problem for the left in Russia today isn't Luzhkov, who isinvesting funds
from the city budget in order to support Moscow's
industries, to create new jobs and to finance social welfare.

#Q. Are you saying that more and more, the main problems of the
left in Russia today are foreign rather than domestic?

#A. We've seen the completion of a cycle that began with the
rejection of everything, both good and bad, that was accomplished
during 70 years of Soviet power. People have now lived through a
decade without any ideology at all. You know the advertising
slogan: "Pepsi-Cola - Live for Real!" Russians have found that a
lack of ideology has become a synonym for a lack of any principles
at all, and that in circumstances like this, the bulk of the
population always loses out to an unprincipled minority.
#The people at the top levels of authority sensed this a bit
earlier, and presidential aide Georgy Satarov was given the job of
formulating a ready-made national idea. But he couldn't come up
with anything, since national ideas aren't dreamt up by the
presidential apparatus but come from within society, arise on the
basis of objective preconditions.
#It's these preconditions for the birth of a new ideology in
Russia that I want to help realise in the military-industrial
complex, or more precisely, in the aviation industry. This was the
area of the former Soviet economy that was most oriented toward
the future. It was the child of scientific and social progress,
the baby we almost threw out with the bathwater.
#Russia needs an ideology of development. The leftists who came to
power in 1917 carried through the industrialisation of the
country. We have to become a modernising force again, to show that
social justice isn't a brake on economic growth but a stimulating
factor. However, everything has to be concrete. We have to show in
practice that we're correct. 


Washington Post
26 February 1999
[for personal use only]
Yeltsin's Absentee Rule Raises Specter of a 'Failed State'
By David Hoffman

MOSCOW, Feb. 25—When President Boris Yeltsin arrives at the Kremlin, a
Russian tricolor is hoisted over the citadel of government authority to
show he is there at work.

But the flag has not flown much lately; Yeltsin, suffering from a bleeding
ulcer, has come to the Kremlin only sporadically. Although he was back at
work today, his prolonged absences are contributing to what some prominent
analysts believe is a long slide toward the collapse of central authority
in Russia and perhaps the crumbling of Russia as a federation.

Russians have long feared the country would shatter in a violent crack-up,
ignited by secessionist movements in its diverse regions. But a different
model is now gaining currency among political and economic analysts who say
Russia is in imminent danger of becoming a "failed state," not breaking
into pieces as the Soviet Union did, but simply ceasing to function as a
cohesive federal government.

Many Russian politicians and political analysts say the debasement of
Moscow's authority -- possibly leading to a long stagnation and drift in
which no one rules -- threatens to bring its own special dangers, opening
the doors to even more corruption and lawlessness, weapons proliferation,
health hazards and environmental pollution.

If Russia becomes a failed state, the risks are that individual regions and
parts of Russian society will essentially go their own way -- making it
difficult, for example, for Russia to control factories making missile
parts, or to cope with such problems as disease outbreaks or massive piracy
of intellectual property.

Prime Minister Yevgeny Primakov has become so concerned about the ebbing
power of the central government that he suggested recently that Russia
should scrap the popular election of governors, one of the major gains of
the country's young democracy. Instead, Primakov proposed that regional
chieftains answer directly to the Kremlin, as they did in Soviet days --
which would require rewriting the constitution. Primakov lamented that the
Kremlin's chain of command over the country is "not a solid line" but
rather "a vertical broken line -- broken."

Moscow's once all-powerful authority had been eroding for years, even
before the break-up of the Soviet Union. But in recent months, several
factors seemed to add to the disarray. Hobbled by economic decline, the
government has become dysfunctional in some of its core responsibilities,
including such pillars of central authority as the military, the courts and
tax collection. Moreover, a political vacuum at the top -- the president
ill, his prime minister struggling to hold together an unwieldy coalition
cabinet -- has left Russia rudderless and thrust problems on often
unprepared regional bosses.

The deterioration of Kremlin power could be difficult if not impossible to
reverse; Russia has become an anything-goes, chaotically libertarian
society. Meanwhile, the central government has crumbled from within: In
everything from law enforcement to the military, from public health to
scientific research, Russia's national institutions and agencies are a bare
shadow of earlier years. Some of Yeltsin's lieutenants have tried in vain
to reassert the might of the center, such as an attempt two years ago by
deputy prime minister Anatoly Chubais to use police tactics to force major
companies to pay taxes. It flopped. As a result of government weakness,
many analysts say they expect that Yeltsin will be succeeded by a leader
more inclined to resort to authoritarianism.

The Kremlin's troubles have set off fresh alarms here. Sergei Karaganov --
deputy director of the Institute of Europe and chairman of the Council on
Defense and Foreign Policy, a group of Russian business and political
leaders -- said the ebb of central authority is becoming so acute that the
Kremlin might as well not worry about setting economic policy.

Karaganov said Yeltsin no longer projects any meaningful clout from above,
and Russians no longer trust their government from below, since devaluation
of the ruble last year brought on the country's most serious economic
crisis since the collapse of the Soviet Union.

"I don't think there can be any economic policy," he said in an interview.
"It's useless to have any economic policy in a situation where there is
political paralysis spreading through the whole body. There are two
sicknesses. One is the president, which paralyzes greatly the whole body,
and the second is the fact that the population mistrusts the government

"We are experiencing a rapid deterioration of the government," he said.
"You see it in hundreds of small episodes. The military is unable to pay at
all, so the local governments pay the soldiers. Until recently, there was a
complete stoppage of payment of funds to the courts. Imagine what that means."

Thomas E. Graham, a senior associate at the Carnegie Endowment for
International Peace and a former U.S. diplomat here, suggested recently
that Russia may turn into a failed state because of the weakness in Moscow.
"For the first extended period in modern Russian history," he said, "the
center is neither feared nor respected."

Moscow "no longer controls the political and economic situation," he added.
"It no longer reliably wields power and authority, as it has traditionally,
through the control of the institutions of coercion, the regulation of
economic activity and the ability to command the loyalty of, or instill
fear in, the people."

Sergei Alexashenko, former first deputy head of Russia's Central Bank, said
Russian institutions under democracy are "obviously weak" and "never
managed to function properly." He added, "This applies to the institutions
of power, the parliament and the government, to the 'power ministries' --
the army and law enforcement bodies, to economic structures." The economic
crisis, he said, is largely rooted in the "inability of the state to
perform one of its prime functions, tax collection."

The deterioration of Kremlin power was a chief topic at last week's meeting
of Karaganov's defense and foreign policy council. A report prepared by a
panel he headed warned that Russia is falling apart -- a familiar theme,
but the report struck an urgent tone, calling on the ailing Yeltsin to step
down to make way for Primakov.

"The president demonstrates such an obvious inability to control things
that it raises doubt about the expediency of the institution of the
presidency in its present form," the report said. "Mere bursts of activity
do not count."

But the council was divided on whether Yeltsin should quit. Some questioned
whether his premature resignation would help or hurt, and Primakov has
pointedly insisted that Yeltsin must complete his term.

Within the council, few disagreed with the report's diagnosis that Russian
power is rotting from within. "Actually, the process of slow disintegration
is already underway," the report said, adding that such decay may not wreck
Russia as a sovereign state -- just corrode central authority. The document
recalled a similar process in China after the 1911 revolution, which gave
rise to independent territories. "Today, a number of African states, like
Angola, Somalia and others are in the process of factual disintegration,
while formally retaining their integrity."

For their part, Yeltsin and Primakov made a televised effort today to
persuade Russians that the president is here to stay. "My position,"
Yeltsin declared, is "I work until the elections in the year 2000. The
position of the prime minister: He works as prime minister until the
presidential elections." Primakov, who has denied he is a candidate for
president, said everyone should stop speculating.

The Kremlin has tried to arrest the decline of its influence, negotiating
separate power-sharing arrangements with more than 40 of the country's 89
regions that gave them various degrees of autonomy. But the weakness in
Moscow has also thrust new burdens on the regions. For example, the council
noted, regional governments are now provisioning army troops and national
police units, as well as state prosecutors and courts -- all of which it
said "should remain" in the hands of the federal authorities.

The erosion of central authority is also a slow and sometimes uncertain
tug-of-war with the regions. In December, for instance, the president of
the Russian region of Ingushetia issued a decree calling for a referendum
giving it new powers, including the right to appoint its own police chiefs,
legalize bride kidnapping, allow residents to carry daggers and permit the
republic's president, Ruslan Aushev, to pardon those involved in vendetta
killings. The Kremlin objected and vowed to block the referendum. Both
sides have now negotiated a compromise: Aushev dropped the referendum idea,
and the Kremlin agreed to share powers with him in law enforcement and
judicial matters.

Steven L. Solnick, a political scientist at Columbia University, said the
Russian government is becoming dysfunctional. "At the federal level, you
have a state that can't do fundamental things a state is supposed to do --
national defense, a stable currency and a common internal market."

Solnick said that Russia is knotted by power struggles among financial
clans, regions and the giant monopoly companies, among others. "These are
intertwined in ways that make it difficult to establish a clear flow of
power. What we have been expecting is that this is transitional, that
someone will emerge in charge."

But, he added, "that may be a faulty assumption." Already, he said, the
regions and Moscow are at a stalemate. "The center can't attempt to impose
its will because it knows it can't. The only thing that is worse is to try
hard to get your way -- and fail. Then everyone knows the center has


Moscow Times
March 4, 1999 
SEASON OF DISCONTENT: Andropov and Brezhnev Meet In Primakov 
By Andrei Piontkovsky 

A couple of weeks ago the people who with touching pride insist on calling
themselves "the Russian political elite" got together in one of the former
country residences of the Soviet Communist Party Central Committee to discuss
"ways out of the crisis for Russia." Only one idea took shape at this
unofficial brainstorming session - President Boris Yeltsin's early retirement
from office and the transfer of complete power to Prime Minister Yevgeny

The tone of the participants of the Council on Foreign and Defense Policy was
perfectly in tune with the style of political correctness that has established
itself in Moscow in recent months. Whatever statements Primakov might make,
people are required to pay homage to his exceptional intelligence and
intuition. Even when he comes out with outright absurdities about an
"incorrect ruble exchange rate" or "Russian Orthodoxy as the principal
religion," or when he announces that he, as the head of executive power, will
find for this or that person one of the "94,000 vacated places in prisons and
camps," obliging commentators are there to confide in us that "Primakov is an
outstanding ex-spymaster," and that what he just said is "very subtle." 

Of course, as he set off for the meeting the crafty Primakov knew very well
what the assembled toadies intended to say. He heard them out graciously and
with visible pleasure before announcing that he absolutely disagreed with
them: Yeltsin must stay in office until the end of his term, and Primakov
himself has no presidential ambitions. 

The obliging position of the members of the council toward Primakov is
understandable. People like council chairman Sergei Karaganov are in a hurry
to ensure themselves a cushy place inthe new Presidential Council of the next

But what is the secret of Primakov's growing popularity with the public, as
evidenced by various recent opinion polls? 

I learned a great deal by looking at another recent Russian poll that sought
to identify the most prominent politicians of the 20th century. According to
the results, deceased former General Secretary of the Soviet Communist Party
Leonid Brezhnev leads by a long way, followed by successor Yury Andropov. 

This neatly shows what values our tired and disillusioned society longs for:
peace and stability, embodied in the minds of the older generation by the
figure of Brezhnev; and expectations of order, discipline and an end to
corruption that were born in the days of Andropov's rhetoric. In the eyes of
much of society, Primakov is Brezhnev and Andropov rolled into one. His
inaction on the economic front brings the former to mind, while his calls to
"strengthen the vertical of executive power" and "imprison economic criminals"
are reminiscent of Andropov. 

Primakov's tragedy lies in the fact that he is 20 to 30 years too late. Being
far more intelligent and educated, he might have made a better Brezhnev than
Brezhnev himself. The same goes for Andropov - Primakov knows the West far
better than he did. 

But neither Primakov nor the country has the resources for another 20 years of
stagnation. These resources were used up by previous regimes. Now, instead, we
are treated to the spectacle of the last remnants of the nation's riches being
cheerfully divided up - between those locked in combat with the prime minister
such as Boris Berezovsky, and those in his own Cabinet such as Gennady Kulik. 


Financial Times
4 March 1999
[for personal use only]
BEREZOVSKY: Tycoon's revelations fall flat
But some of his attacks seem to be finding their mark, John Thornhill and
Andrew Jack write

Boris Berezovsky, the business tycoon and secretary of the Commonwealth of
Independent States, aired a series of seemingly startling allegations at a
press conference in Moscow this week.

Mr Berezovsky alleged that officers from the FSB, the domestic heir to the
KGB, had first tried to extort money from him and then plotted to kill him.

He then claimed that two of Mr Yeltsin's closest former aides had been
responsible for the murder of Vladislav Listyev, the popular television
presenter and businessman, who was gunned down in 1995. And Mr Berezovsky
echoed accusations - first published in the Nezavisimaya newspaper which he
controls - of ministerial corruption in the government headed by Yevgeny
Primakov. In most countries, such accusations would have sparked a political
firestorm. In Russia they exploded like a soggy squib.

Indeed, the next day Russian newspapers unleashed their own deluge of
kompromat (compromising materials) against Mr Berezovsky. Moskovsky
Komsomolets, which has been the cheerleader of the anti-Berezovsky opposition,
even published transcripts of what purported to be telephone conversations
between Mr Berezovsky and Mr Yeltsin's daughter, Tatyana Dyachenko, reflecting
badly on both of them.

The chief prosecutor's office has also been busy investigating Mr Berezovsky's
business interests.

Last month, masked paramilitary officers raided the headquarters of the
Sibneft oil company, which was once linked to Mr Berezovsky. A criminal case
has been opened against Avtovaz, Russia's largest car maker, where Mr
Berezovsky used to work.

The government has also been trying to sideline Mr Berezovsky at ORT, the main
television channel, which was once dependent on his financial support and has
at times served as his public mouthpiece.

The lower house of parliament, the Duma, has also joined the fray, unanimously
endorsing a motion calling on the 12 leaders of the CIS countries to sack Mr
Berezovsky as secretary of the international organisation. Such a move would
strip Mr Berezovsky of his diplomatic immunity and leave him vulnerable to

Many observers view these public skirmishes as part of a ferocious power
struggle between Mr Primakov and Mr Berezovsky. The two men have long been
personally antagonistic to each other; as foreign minister, Mr Primakov
constantly railed against Mr Berezovsky's interference in CIS affairs.

The prime minister's supporters argue that he is battling to restore the
formal authority of the state and eradicate the informal influence of the
"oligarchs", who so insinuated their way into previous Russian governments.
They say his war against corruption should help stem massive flows of flight
capital - which have so undermined the economy - and restore the confidence of
foreign creditors.

"I think that Berezovsky has been the victim of his own success," says an
official close to Mr Primakov. "He is accustomed to winning his battles with
the government and even changing prime ministers. But this time he is
confronting a really heavyweight sparring partner. My advice to Berezovsky is
to stop because you will lose anyway."

Mr Berezovsky certainly appears rattled by the public assaults against him. "I
have been under close scrutiny of the law enforcement bodies for a long time,"
he said at his press conference. "But can you produce a single fact, a single
law suit against me? Can you cite a single indictment?"

Mr Berezovsky, who is Jewish, says the attack on him reflects the resurgent
power of Russia's Communist party, which is linked to anti-Semitic extremists
and reactionary elements in the security services. He warns that the apparatus
of Russia's totalitarian past is being revived, jeopardising the rights of
every citizen.

Mr Primakov's supporters may believe the campaign against Mr Berezovsky is
politically popular and will scare some of the other "oligarchs" into
submission. But the attack on Mr Berezovsky carries its own risks: he is so
closely associated with Mr Yeltsin's family the campaign could easily be seen
as an assault on the presidency itself.

Furthermore, some of Mr Berezovsky's own blows appear to be finding their
mark. Last week, Mr Yeltsin and Mr Primakov were reported to have exchanged
heated words; soon afterwards the president returned to hospital with an
aggravated stomach ulcer while the prime minister abruptly flew off on a
10-day holiday. Moscow's rumour mill has it that Mr Yeltsin was furious at the
allegations of ministerial corruption aired in the Nezavisimaya newspaper and
Mr Primakov's increasingly overt campaign to win the presidency.

How this latest political drama will play itself out is difficult to predict.
Political feuds in Russia can dissipate as fast as they precipitate.
Yesterday's enemies can often be transformed into tomorrow's friends. In 1993
Alexander Rutskoi, Mr Yeltsin's former vice president, was accused of treason
for instigating an armed uprising. But he was quickly released from prison and
was subsequently elected governor of Kursk.

As one government official remarks, it is often difficult to distinguish
between criminals and victims in contemporary Russia. "I dream of the day when
people are prosecuted in this country for law-and-order reasons rather than
political motivations," he says. 



Return to CDI's Home Page  I  Return to CDI's Library