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Johnson's Russia List


March 7, 1999    
This Date's Issues: 3080   

Johnson's Russia List
7 March 1999

[Note from David Johnson:
1. Reuters: Timothy Heritage, Russia regional heads set sights on Duma.
3. Harvard Magazine: Timothy Colton, Russia Stalled. The Uncertain 
Transition from Communism.

4. March 12 INTERNATIONAL WOMEN'S DAY PARTY in Washington.
5. Albert Weeks: Hough on an FDR for Russia.
6. Moscow Times letter: Robert Coalson, Russia's Free Press Ends at 
Moscow's Ring Road.

7. Moscow Times letter: USAID's Donald L. Pressley responds to Janine
Wedel's "Collision and Collusion: The Strange Case of Western Aid to Eastern 
Europe 1989-1998."

8. Ray Finch: Corruption.
9. the eXile: Matt Taibbi, Press Review. Hacks on Peg-Legs.]


INTERVIEW-Russia regional heads set sights on Duma
By Timothy Heritage

MOSCOW, March 5 (Reuters) - A prominent Russian governor said on Friday a new
political party of regional chiefs hoped to take 15 percent of seats in the
next parliament. 

Konstantin Titov, governor of the Samara region 1,000 km (600 miles) southeast
of Moscow, said in an interview the Voice of Russia party he is helping
organise would be an alternative to Communists on the left and radical
liberals on the right. 

The 30 regional leaders who agreed to set up the party in January hope to win
more of a say for Russia's 89 regions and shift some of the emphasis away from
the Kremlin and Russia's government, both of which are based in Moscow. 

"Of course everyone wants to get a parliamentary majority. If we get 15
percent, we will be glad," Titov, the reform-minded leader of one of the few
regions which puts more in to federal coffers than it takes out, told Reuters
in an interview. 

That looks like a tall order for a party which is not expected to hold its
founding congress until April, only eight months before the next election to
the State Duma lower house. 

The regional leaders appear ready to give up their guaranteed places in the
Federation Council to take seats in the Duma, which has greater law-making

They want to cash in on their local support and a lack of public confidence in
parliament, the government and the Kremlin. They say people are fed up with
economic crisis and want change. 

"After seven years of reforms, the child has grown out of short trousers and
now needs to be dressed like a normal adult in normal clothes," he said. "To
get out of the crisis you have to give opportunities to the members of the

Titov, whose region is an industrial centre of Russia, is joined by several
well-known regional chiefs. 

They include ex-cabinet minister Aman Tuleyev, who is now governor of Kemerovo
region in Siberia, and Khakassia governor Alexei Lebed, brother of former
Kremlin aide Alexander Lebed. 

Six small parties have pledged faith to the bloc including the newly formed
Entrepreuneurs' Movement, the Democratic Party of Russia and the Kedr
environmental group. 

But no major parties have expressed an interest and critics say the party
could face problems finding a common interest beyond blocking the Communists
and deflecting accusations that, by seeking more power for the regions, they
are separatists. 

Titov, 54, said the party would elect a leader but dismissed media speculation
that it would be Prime Minister Yevgeny Primakov. 

Primakov has been searching for ways to prevent separatist trends in the
regions tearing Russia apart. 

He has proposed they be appointed by Moscow rather than elected, a move that
would encourage obedience to central authorities. Titov did not comment on
Primakov's proposal. 



MOSCOW, March 5 (Interfax) - The growth in the number of officials
ready to trade their posts is becoming unprecedented, Russia's acting
Prosecutor General Yuri Chaika told the State Duma on Friday. Large-
scale corruption among officials has become a destructive force in
Russia, he said.
In the past three years prosecutors have exposed 56,000 crimes
against government services, among them 17,000 bribery cases. Over 6,000
bribe-takers and bribe-givers have been tried.
Chaika said that several high ranking officials - including former
finance minister Vladimir Petrov, former chief of the State Committee
for Statistics Yuri Yurkov, and top executives from Dagestan,
Krasnoyarsk territory, Kursk, Tula and Voronezh regions and St.
Petersburg - are being investigated or standing trial in corruption
He said a decree on the foundations of a government anti-corruption
policy should soon be drafted and submitted for approval to the
Chaika was dissatisfied with the lack of cooperation between and of
concerted actions by the legal department of the presidential
administration and the Justice Ministry. "Certain criticism can also be
given to the Federal Assembly," he said. "The absence of a clearly
formulated government policy has a negative effect on combatting
Describing crime in Russia, he said that almost 2.6 million crimes
were registered last year, or almost 8% more than in 1997. There was a
particularly high growth in the number of felonies.
"The rate of premeditated murders in Russia is 5 times higher than
in France, and about 7 times higher than in Germany and Finland," Chaika


Harvard Magazine
March-April 1999
Russia Stalled 
The Uncertain Transition from Communism
By Timothy J. Colton (
Timothy J. Colton, Ph.D. '74, is Feldberg professor of government and
Russian studies and director of the Davis Center for Russian Studies. 

Few occurrences in recent history have been as stunning as the breakup of
the Soviet dictatorship at the turn of the 1990s. Few have raised as many
gleaming hopes for bettering the human condition. And few seem to have had
their promise so quickly dashed in actuality. Where, then, is the Russian
Federation--the largest by far of the post-Soviet states--tending, and what
does this mean for it and for the world? 

If proof were needed of the problems plaguing Russia's "transition," the
news last August of its default on sovereign debt and the massive
devaluation of the ruble (to one-third its former standing against the
dollar) provided all the confirmation necessary. The economic shock of 1998
was accompanied by a political earthquake, as Boris Yeltsin's newly
appointed 35-year-old prime minister, Sergei Kiriyenko, was forced to
resign and parliament approved as his replacement Yevgenii Primakov, a
former foreign minister and head of espionage operations abroad who is
twice Kiriyenko's age and is backed by Communist and nationalist factions
in the legislature. 

It is all too easy to forget from the vantage point of the late 1990s that
when Mikhail Gorbachev's reign yielded to Yeltsin's in 1990-1991 we had
good reason to think that we were witnessing a transition of regimes. Not
only did the Communist Party of the Soviet Union relinquish its hold on
power after more than 70 years. In quitting the scene, it appeared to
discredit the socialist model of economic and social organization and,
indeed, to pull down in its wake the USSR itself as a multinational state,
a regional hegemon lording it over Eastern Europe, and a global superpower.
The successor states to the USSR--the rump Russian Federation and 14
smaller independent countries--seemed to many in the West to be destined to
reinvent themselves as law-abiding members of the international community,
internally democratic and prepared to seek prosperity through market
economics. The Clinton administration took precisely that official line:
over and over, it reassured us that Russia and the rest were "building"
democracy and markets--gamely carpentering away despite a few rough spots
here and there--and were constructing a cooperative strategic relationship
with the United States. Given Russia's size, huge arsenal of weapons of
mass destruction, and mineral and petroleum riches, such an image was
reassuring to Western policymakers. 

No one--not the Russian people, not Boris Yeltsin and his reshuffled
cabinet, and not official Washington--buys this rosy image any longer.
Russia, to say nothing of its ex-Soviet neighbors, is struggling with major
problems, not minor glitches. At stake in the current malaise are not only
the fine points of policy and governmental personnel but Russia's very
adherence to a reform course. 

Russia's troubles are apparent in every sphere of life. Again and again,
bold changes initiated in the early 1990s have floundered and difficulties
unanticipated in the original reform vision have come to the forefront.
Russia is no longer a multinational empire, but it is not doing
particularly well redefining itself as a modern nation state. Most Russian
citizens see the dissolution of the USSR as illegitimate, and their
government flirts with schemes for reintegrating the post-Soviet republics.
At home, tensions among the territories of the federation, and between them
and Moscow, have intensified as the economic downturn worsens and the
central government's ability to buy support through subsidies and credits
dwindles. Some of those tensions feed on distrust between the ethnic
Russian majority and the non-Russian and often non-Slavic minorities who
make up almost one-fifth of the federation's population and often inhabit
compact ethnic homelands. 

The federal bargain is but one of several aspects of Russia's political
structure where discontent and conflict mount. The ostensibly democratic
constitution Yeltsin authored in 1993 stacks the institutional deck in the
president's favor, concentrating nearly unlimited decree-making and
budgetary powers in his hands and in a prime minister highly dependent on
him, while relegating the legislature to an ancillary and purely negative
role. But Yeltsin, physically enfeebled and strategically adrift, has
accomplished absolutely nothing of significance with this raft of powers
since his reelection to a second term in 1996. After watching his economic
program unravel in 1998, he had to accept Primakov as prime minister rather
than face snap parliamentary elections in which not a single party would
have defended his record. He now faces a chorus of demands for amendment of
the constitution. 

It is in the economic and socioeconomic realm that the signs of crisis are
most alarming. Although the liberalization of state controls over economic
activity, the privatization of many assets, and the opening up of Russia to
the global economy did bring some benefits after 1991--the disappearance
for the time being of queues at shops and the free availability of consumer
goods in particular--the brave talk of achieving economic efficiency and
prosperity within a few months or years has been cruelly disappointed.
National output, having contracted every year this decade except 1997,
dropped about 7 percent in 1998 and may sag another 5 to 10 percent in
1999. The Russian stock market is today capitalized at about one-tenth of
its peak value in October 1997. The nascent business class, many of its
profits conveniently deposited in foreign bank accounts, has shunned
investment in domestic economic development and has for the most part
displayed no sense of civic conscience or fellow feeling for ordinary
people. Social services, the civil bureaucracy, and the armed forces have
been starved of resources, but otherwise not reformed or improved. The
state's inability to collect more than a fraction of the taxes owing gives
it an inbuilt budget deficit and thereby exerts constant pressure on the

The reasons for this poor performance are legion. The Soviet legacy is
undoubtedly an onerous one: a government of angels would have found it a
challenge to deal with. In some respects, the new Russia's inherited
problems are more serious than those facing the smaller states that emerged
from the wreckage of the USSR. Its economy was more militarized than any
other during the Soviet period; it inherited most of the Soviet Union's
external debt; its territory is vast and hard to govern; its population is
more ethnically diverse than most other post-Soviet countries. 

The burden of the past, however, hardly absolves post-Communist rulers from
blame for the country's plight. In world perspective, the striking thing
about Russia's material and human resources is how abundant they are. That
bounty, and the reservoir of domestic and international goodwill created by
the initiation of democratization, have been squandered. On key issues,
political leadership has been incompetent, corrupt, or simply absent.
Yeltsin has set the tone, with a capricious style, organizational chaos
within his own presidential household, and a disrespect for law, for
procedural regularity, and for the very openness and accessibility in
government for which he campaigned so brilliantly as an opposition
firebrand a decade ago. Most central ministers and regional governors have
been happy to follow suit. 

So mismanaged was Russia's economic reform, whose fizzling is at the heart
of the present debacle, that it was only a matter of time before its
contradictions caught up with it. Insider privatization, overregulation,
punitive and arbitrary taxation, an inconsistent legal framework, and
lackadaisical prosecution of criminals and gangsters prompted the
beneficiaries of the first wave of reform to shelter their winnings
offshore and scared away most foreign investors. Three-quarters of all
transactions in the industrial economy are conducted in barter, bypassing
money and taxes. Wages, pensions, and social allowances arrive months in
arrears for tens of millions of Russians. Barely bothering to explain to
the mass public the reasons for change or its unpalatable consequences,
politicians have found ingenious ways to keep insolvent firms afloat and to
delay the restructuring of industry. The dearth of results from reform, and
Yeltsin's eagerness to please the electorate in 1995 and 1996, led his
government to embark on a ruinous program of issuance of bonds and treasury
bills at super-high rates of return, the proceeds from which financed
current operations and the ballooning budget deficit. The inability to
service that mountain of short-term debt produced the credit flight and
financial collapse of August 1998, placing the future of many of Russia's
private banks, and the government's creditworthiness, in severe doubt. By
some estimates, Russian public and private institutions owe foreign
creditors almost $200 billion. 

Is it time, then, to pronounce the Russian transition dead? I do not think
so. But it is obvious to almost everyone, including most Russians, that the
change of economic and political regimes is stalled. 

What we expect the future to bring depends to some extent on how we
envision the transition process and what we believe the stall to signify. A
transition is a thing in motion, a progression from one state of being to
another. If we imagine the post-Communist transition to be a
unidimensional, backward-or-forward process--like a train gliding along a
fixed rail between stations--then the headlines of 1998 should be read as
evidence of an indefinite cessation of movement and even as the beginning
of the end for the whole journey. 

But one can sketch other scenarios with very different implications. If the
transitional process, metaphorically speaking, is more like a car or boat
trip than a train ride, the stalled machine can go sideways as well as
backward or forward. Russia, by this logic, could right now be moving off
on a tangent, or maybe circling and drifting haphazardly. Finally, we can
think of the transitional situation as more resembling airborne flight. In
that situation, of course, a sputtering engine can be calamitous--plunging
vehicle, crew, and passengers to the ground with lethal consequences for
them and for everyone within reach. 

There is thus far little to indicate that Russia will backslide anytime
soon toward its authoritarian starting point. Reassembling the Communist
system is probably beyond the abilities of any government. The Primakov
cabinet, which includes several senior ministers from the KPRF (Communist
Party of the Russian Federation), has proceeded cautiously on the economic
front, eschewing hasty moves toward reimposition of state controls on
production and trade. The KPRF itself is undergoing fierce factional
struggles, as radicals within the party push it toward greater
confrontation with the authorities and relative moderates resist. And
public-opinion surveys suggest no great interest among the population in
surrendering their political liberties, even in exchange for economic

Nor does the other doomsday scenario--a fiery collapse--seem imminent. The
government has thus far been able to deal with emergencies in the provision
of food and fuel, and challenges from the regions have been muted.
"Stabilization" is the watchword in Moscow this winter, and there is every
reason to believe that compromises in the interests of stability are

This is far from saying that the crisis is over, or that Russia is about to
resume its halting movement forward. Under the most optimistic of economic
conditions, Russians will have to tighten their belts further. The
government must appease foreign creditors and aid agencies, arrive at
painful choices on bank restructuring, and adopt a sensible and transparent
tax code. Even at that, investment in recovery and growth will be
negligible for a minimum of two or three years. 

Brutal as the economic choices will be in their own right, they will have
to be managed against a backdrop of rampant political uncertainty. National
parliamentary elections are scheduled for December 1999 and a two-round
election to choose a successor to President Yeltsin is slated for the
summer of 2000--or sooner, should he die in office or become incapacitated.
Given constitutional realities, the more important of the two contests will
be over the presidency. A half-dozen major politicians and a sprinkling of
nuisance candidates will be in the running. The early favorites in the
polls--the mayor of Moscow, Yurii Luzhkov, and the governor of Krasnoyarsk
Province in Siberia, General Aleksandr Lebed--are hard-nosed pragmatists
who have flourished in the rough-and-tumble of transitional politics. 

Neither Luzhkov nor Lebed advocates restoration of the former Communist
system. But both are harshly critical of what they describe as the errors
and injustices of the Yeltsin period, both favor a larger state role in the
economy and a harder line toward crime and corruption than hitherto, and
both have nationalistic predilections in foreign policy. The question the
Russians and foreign observers will be asking 18 months hence is whether
the winner will have the desire and the ability to restart systemic
reforms--economic and political--or whether he will try to lead the country
neither backward nor forward but laterally, onto a kind of historical spur
line where it could be marooned for many years. 


From: "Gerry Janco" <>
Date: Fri, 05 Mar 1999 

You and your friends are invited to The Eurasia Center's: 

You are invited to attend a party in honor of women as it follows in the 
Russian tradition. Join a group of Russians and those Americans who are 
interested in Russia in getting together, listening to some nice music 
and enjoy each other's company at the exclusive Russia House Club Room. 

What better way to show appreciate for the women in our lives...and 
start a new tradition in America. So, let's raise our glass for women...

Friday, March 12
1800 Conn. Ave. NW (Conn. Ave. & Florida)
DuPont Circle Metro
Party starts at 7:30 p.m. and goes until...12

Cover donation is $7 for men. For women it is $5. 

There will be an abbreviated Russian menu 
for those who are interested in Russian cuisine. 

Please feel free to invite your friends.
Questions, or 202-966-8651

The Center recognizes the significance that International Women's Day 
has in Russia so we are arranging this event on Friday, which is 
convenient for most people...perhaps the most striking image that comes 
to mind was meeting Russian women veterans of World War II in front of 
the Bolshoi Theater during May in Moscow and trying to understand the 
great sacrifices they endured. The Center also remembers the great 
idealism which Galina Starovoitova brought to Washington, D.C. 
especially during her stay the US Institute of Peace. Her ideals live 
with us.


Date: Sat, 6 Mar 1999 
From: Albert Weeks <>
Subject: Hough on an FDR for Russia

Jerry Hough forgets that the "early" FDR, of whom
he spoke, in the beginning supported big 
corporations--not unlike the Russian rulers do today. 
Too, to say that Roosevelt got us out of the 
Depression (Hough)--by assuming World War II had 
nothing to do with those goszakazy (Hough)--is rather 
unhistorical, it seems to me. But that 
Russia needs a political PERSONALITY like FDR's is 
undeniable. Yet Jerry Hough probably realizes
that such historical "men on horseback" are both
rare and only grow into charismatic leaders within their own 
national environments and historical contexts. Sadly, 
there are no such figures on the Russian horizon.
Butr perhaps necessity, being the mother of 
invention, could also produce such a leader for the
"groaning Rus' " of today, as the Beggar sings
in "Boris Godunov."


Moscow Times
March 6, 1999 
MAILBOX: Russia's Free Press Ends at Moscow's Ring Road 


I am always alarmed when analysts claim that the establishment of a free press
is one of the great achievements of post-perestroika Russia. Indeed, "vigorous
criticism of the government in a multitude of newspapers" is often cited as
the only real sign of reform in Russia over the last 12 years. 

Most recently, I read this specious argument in your pages ("Time to Watch
Liberties," March 3), when Masha Lipman wrote: "No less diverse than [the
political scene] is our press, varying from liberal to communist to fascist,
with all the major newspapers being still on the democratic side. Mockery of
the government abounds in the papers and on television." 

Lipman's description might apply to Moscow, but it looks pretty ridiculous
once one gets beyond the Ring Road. In the vast majority of Russian cities, a
very few private newspapers fight daily an uneven battle against state-
controlled and state-subsidized competitors. 

In Novgorod, often cited as one of Russia's most progressive regions, the
deputy governor sits on the editorial board of the only significant local
newspaper, "Novgorodskiye Vedomosti." In the town of Vsevolozhsk in the
Leningrad region, faxes signed personally by the mayor recently went to every
office in town urging them to subscribe to the newspaper put out by his press
office: Incredibly, the good people of Vsevolozhsk can get home delivery of
this weekly mouthpiece for six months for only 39 rubles! No wonder that the
only private newspaper in town stopped publishing in July and is now going
from one Western fund to another looking for grants. 

I could go on forever. The situation is far, far worse in the more far-flung
regions of Russia, where local officials keep the media under strict, Soviet-
style control. In Kalmykia, President Kirsan Ilyumzhinov had the brilliant
idea of paying collective farmers in the form of free subscriptions to the
local subsidized newspaper. More than 90 percent of the print run of Izvestiya
Kalmykii is distributed this way and each issue has from one to three articles
singing the praises of Ilyumzhinov. In the Altai region there are practically
no nonsubsidized newspapers. 

A recent report by the Glasnost Defense Fund stated that no journalist is
going to risk offending the authorities because they would never be able to
get another job at any other paper in the entire region: "Local journalists
say that it is very easy to work there since almost every government
department holds a weekly press conference and all a journalist has to do is
transcribe what is said word for word." 

Even in Moscow, however, the situation that Lipman describes should not be
mistaken for anything remotely like a "free press." I think that we should be
candid and admit that Russia has no institutionalized, secure free press. If
by a "free press," we mean something like "the existence of uncensored
newspapers with a wide base of advertising support and the confidence of a
diverse readership," there is none in Moscow or in Russia as a whole. 

The state still controls the vast majority of Russian printing presses. The
state does nothing to stimulate advertising in the nonstate press or to
encourage real private investment in the media infrastructure. The state does
not guarantee the press access to public information. What the state does do
is prop up subsidized propaganda sheets that are killing the market that real
newspapers should be operating in. Is it any wonder that corruption is
rampant, that local private initiative is virtually nonexistent and that the
Russian public is cynical and disillusioned with reform? 

Robert Coalson 
National Press Institute 
St. Petersburg 


Moscow Times
March 6, 1999 
MAILBOX: U.S. Aid Not 'Strange' 
In response to "Eastern Pride and Western Prejudice," a Feb. 13 book review. 


"Collision and Collusion: The Strange Case of Western Aid to Eastern Europe
1989-1998" is a catchy title for a book and Dr. Janine Wedel has put together
carefully selected evidence to support her theme. Unfortunately, "Collision
and Collusion" describes only part of the story of Western aid to Central and
Eastern Europe from 1989 to 1998. Like a blind man trying to describe an
elephant whose scope exceeds his grasp, Dr. Wedel provides a limited account
of a vast subject. She focuses on a few sensational issues from which she
draws negative conclusions, ignoring the rest of a story that includes hard-
won results. 

I know, because I am a part of that story. I work for the U.S. Agency for
International Development, or USAID, the agency that has designed and managed
most of the assistance programs that Dr. Wedel reports upon in her book. 

When I account for aid to the region, as I have done in testimony before the
U.S. Congress, I highlight themes that Dr. Wedel largely misses: enthusiasm
and idealism. For example, the "strange" case of Western aid to Eastern Europe
includes the involvement of thousands of Americans volunteering their time and
considerable skill, their enthusiasm and idealism. 

To support this outpouring of enthusiasm and expertise, USAID has done more
than establish the Enterprise Funds noted by Dr. Wedel. We also helped launch
and fund the Citizens Democracy Corps, the International Media Fund, the
American Bar Association's Central and Eastern European Law Initiative, the
Financial Services Volunteer Corps, the MBA Enterprise Corps, the American-
International Health Alliance - all of which rely upon volunteers to carry out
their work. We have tapped the enthusiasm and skill of more than a hundred
private voluntary organizations as well as for-profit organizations with a
keen interest and specific expertise in the region. 

My version of this unfolding story also acknowledges the idealism of a
development approach that works to support the people of the countries
themselves. Rather than focus on central government officials, we have opted
to support capacity building in the private and civil sector. We have searched
for opportunities to foster partnerships among people, organizations, and
institutions - at all levels. This has meant much less money going to support
central governments and virtually no funds controlled directly by recipient
governments. On the other hand, community-based programs that rely upon the
citizens of these countries themselves have become a vibrant part of this
assistance story. It only makes for a strange case if you believe idealism is
an odd virtue. 

Dr. Wedel and some reviewers state that we failed to understand Eastern
European culture and mores, particularly as they underlie intransigence in the
face of political and economic reform. To this I plead guilty. (Did anyone
know how to help privatize entire national systems at once?) However, I reject
allegations that we haven't sought this understanding, or that we have been
too busy talking to one another to listen to our Eastern European colleagues.
Rather, we have had to accommodate our strategies and programs to diverse
stakeholders, political forces, and expectations on both sides of the
Atlantic, while determining the best use of limited foreign assistance funds.
To date, we have fallen short of some of these expectations, but as Dr. Wedel
indicates, we are evolving and adapting, as swiftly as we can. 

Dr. Wedel has written a provocative book on an important topic, but I
encourage her to take another, broader look at assistance programs in the
region today. Instead of a strange chapter of history, she and other critics
may discern a rewarding and exhilarating one - with benefits and results that
far outweigh the errors along the way. 

Donald L. Pressley 
Acting Assistant Administrator 
Bureau for Europe and the New Independent States 


Date: Sat, 6 Mar 1999
From: ray finch <>
Subject: corruption

The scam.

Here's the plan: We set up a bank on an off-shore island, where we can
launder the proceeds from the sale of oil, gas, lumber, metals etc....
After we get the coffers filled with money, we pocket the cash and
take off for the United States where we ask for political asylum.
Don't worry about the question of guilt or innocence. Though we enter
the country under a false visa, we convince the naive US authorities
that the disgruntled creditors and their law enforcement cronies are
all corrupt and are part of an evil mafia. We find a top-notch
ambulance chaser who knows how to split hairs and intimidate
bureaucracies. Besides hiring a couple of journalists to tell our side
of the story, we'll set up a web page where these freedom-loving
Americans can read the pravda about the case
( Our lawyer hires patsies to back up our
story, and even finds a "expert" to frighten the judge with tales of
TB-infested Russian prisons. Any other resistance we convince with
some 6-digit arguments.

A report which surfaced a few weeks ago (DJL# 3067, Baltimore Sun, 23
Feb 1999, Federal judge grants Russian banker political asylum) did
not receive the attention it merited, in that it points to two
dangerous tendencies in US-Russian relations. The story dealt with why
a U.S. immigration judge granted political asylum to a Russian banker
accused by Moscow prosecutors of stealing millions from a bank he
helped found.

You can't tell the good guys from the bad.

Consider how the story was portrayed in the moderate Russian press.
The Russian equivalent to our Wall Street Journal, Kommersant, carried
the headline "Refugee in the law" [Bezhenetz v zakone], which is a
play on words of the Russian concept of "Thieves in the law" [Vory v
zakone]. The word "law" in this context has nothing in common with the
western concept of law and is granted to those mob bosses who have
achieved a level of authority within the criminal world. The allusion
is clear. This banker has been transformed from a criminal boss to one
who has been granted refugee status.

Sources here in Moscow are unanimous in their belief that the
above-mentioned banker is guilty of some form of theft (i.e. where did
he come up with the millions to support his less than humble
lifestyle?). Guilty or not, the rationale for granting this
individual political asylum seems rather suspect and could establish a
dangerous precedent. The judge who granted the asylum commented that
"Russian prosecutors had engineered the case against the former banker
in order to punish him for exposing corruption amongst Russian
government and business officials." That the Russian law enforcement
structures are infected with corruption is beyond doubt. (However,
this same corruption exists in a less obvious, more sophisticated and
perhaps less prevalent form within US law enforcement agencies.) But
by granting him asylum the judge would appear to be implying that the
entire Russian law enforcement structure is corrupt. This is a weighty
charge, with even more serious implications.

Imagine for a moment that the Primakov government, or perhaps its
successor, undertakes to really clean out the Herculean stables of
Russian corruption. To avoid prosecution, there will likely be a host
of wealthy Russians fleeing the stables and looking for a new country
in which to reside. Having learned that one of their kind finagled his
way into the US using the above scam, the INS had better be prepared
for a flood of those Russian oligarchs wanting political asylum. And
no doubt their lawyers will take full advantage of the above precedent.

While the lawyer community would welcome such a turn of events,
legions of successful Russian businessmen and bankers could have a
deleterious effect on the US economy. One is reminded of Lenin's
sealed train back into Russia. Some of these folks play by a less
sophisticated set of rules. They will not only take the whole cake,
but will deliberately break the plate to cover up their tracks. The
INS will not be the only government agency with an extra workload.

The other dangerous tendency which this story illustrates lies in the
realm of psychology. Perhaps it's just a Cold War leftover, but more
and more Russians and Americans now see each other as potential
enemies. From the American trench, the Russian mafia has replaced the
bugaboo of the Soviet Army. From Hollywood to the Washington Post,
Russians are now portrayed as amoral superpredators intent upon
causing a capitalist apocalypse. The Pentagon and the intelligence
community have replaced their old Soviet orders of battle with
line-ups of the top Russian oligarchs.

A similar transformation is occurring on the Russian side. During
Soviet times, few Russians actually believed in the image of the fat,
greedy, hypocritical American capitalist. During the past five years,
however, many Russians have since converted. The banners of
"democracy, market economy and rule of law" preached by the American
government carry about the same weight as those empty slogans carried
during Mayday parades.

With all the distractions of the past year, few Americans are aware of
the strained relations between the US and Russia. The reasons, at
least from a Russian perspective, are mostly variations on a single
theme: the US is taking advantage of Russia's weakness. For a growing
number of Russians, the US is partially responsible for their
country's current dilemma, and providing refugee status to an
individual who has allegedly stolen millions of dollars from Russian
depositors is just further proof. Whether true or not, the message
they perceive is that it's OK to steal from Russia as long as you
deposit the goods in a US bank. All the democratic and market rhetoric
is just a smokescreen to hide the ultimate capitalist logic: money can
buy anything.

Please don't hold your nose when talking of Russian corruption.

At a deeper level, the danger is even more insidious. Having worked in
Moscow for the past nine months, I can't count the times when fellow
westerners would adopt an air of moral superiority concerning the
Russians. Though nothing was ever said, the message was clear:
"corruption is knee-deep and it's almost impossible to teach these
Russian savages the proper way of doing business. The west is free of
corruption and measures must be taken to prevent becoming infected
with the Russian mentality."

Let's set the record straight. Most Russians are just like the rest of
us and do not belong to some separate moral tribe. They want the same
things: a loving family, job security and a decent standard of living.
They are tempted by the same sins. The key difference is that the
system which they have been raised in is much less perfect than the
American model. While it is true that many Russians view the law and
authority in a different light from their western counterpart, they
still retain a fundamental understanding of right and wrong. And
though rife with corruption (and now TB), Russia's law enforcement
agencies have not lost this understanding.

The alternative is too grim to consider. If the US accepts the premise
that the Russian government has lost this understanding and is now
wholly corrupt, the US will not only be confronted a huge influx of
quasi-criminal refugees, but will inadvertently transform Russia into
a new evil empire. Even more tragically, the US will lose sight of its
own fallibility.

Ray Finch, Moscow


the eXile
February 25-March 10, 1999
Press Review
Hacks on Peg-Legs
By Matt Taibbi (

One of the easiest ways to measure the cowardice of a Western journalist is
his faithfulness to an insane concept known in the business as "the time

Everything that appears in the news sections of major newspapers has to
have, at least in theory, the so-called "Time Peg"--a public event or
announcement which allows the newspaper to introduce a story and
simultaneously insist that it happened not yesterday, not the day before,
but today. Dog falls off building Thursday; expose on chronic problem of
falling dogs appears Friday and not before. See the thing is, quality,
thoroughness, even being right on a story--all these things are secondary
in the news business. The important thing, when it comes to reporting in
today's Western journalism world, is to be fast. Or, at least, not slower
than the next guy. 

The converse of this is that when a reporter, out of laziness, stupidity,
or sheer inattention misses a story, he is left, on the following day, with
a serious dilemma. Does he file the story a day late, thus admitting to his
editors that he missed the story yesterday? Or does he simply ignore the
story all over again--hoping it will go away, so that in the future, when
asked, he can claim that leaving the story out the first time was a strict
and well-informed editorial decision, and not an oversight. 

Career-wise, ignoring the big story you missed the first time around seems
to make sense. Most likely, everyone else missed it, too. Writing it up a
day late, without a "time peg"--a new announcement, a new development, a
new "thing" that happened that day (i.e. new casualties in a plane hostage
crisis)--will only call attention to your deficiencies. So you turn your
head as long as you can, hoping that some schmuck from the Daily Telegraph
or the Philadelphia Inquirer doesn't bring down the whole house of cards
and break the story in your home country, forcing you to get on the ball
and admit you missed out on something big. 

Most of the world didn't notice it, but virtually the entire Western Press
corps in Moscow elected to take the career route a few weeks ago with a
strange and ugly story called the "FIMACO" scandal, electing to turn their
heads in the hopes that it would go away before their editors noticed
they'd missed the thing. When it didn't, they each, in their own separate,
reptilian ways, attempted to out the story in their own pages by attaching
a false "time peg" to their first stories--implying that the story broke
not a week before, but on the day they wrote it. 

Even the eXile, in its last issue, which was published on February 10, had
the wherewithal to put <../shite/fimaco58.html>a little gag about Fimaco in
its pages the first chance it got. Even more impressive-- as much as we
hate to admit this-- the Geoff Winestock-less Moscow Times had been on top
of the story for almost a week already by the time it came out in the eXile. 

On the face of it, it was clearly, by any conceivable journalistic
standards, a major story. A general prosecutor who is deposed outs a scheme
in the government whereby some $50 billion dollars in state cash and hard
currency reserves, including money loaned from the IMF, had been removed
from Russia and deposited in a mysterious offshore British (Channel
Islands)-based investment vehicle called "Fimaco". 

It was a story that had a huge bearing on Russia's financial relationship
with the West. If money was being hidden from international lending
institutions, from private investors, and from just about everybody else
who was owed money by the Russian state, and hidden not just anywhere but
in some shady slush fund with a charter capital of $1000 and an absolutely
incomprehensible semi-private status--hey, folks, that's a big, big story.
I mean, that's a keeper, a real good eatin' fish. If you've been writing
about little dips and rises in the dead Russian stock market, or reporting
on the dreary and totally bogus economic plans forever being put forth by
Russia's most recent openly corrupt government, then you damn well better
not miss FIMACO, because this was the real deal. The Moscow Times, to its
credit, got the story right. They stuck it on the front page from the
moment deposed Prosecutor Yuri Skuratov made it an issue, and kept it there
for two weeks. But what did the rest of the Moscow Press Corps do? Judge
for yourself. 

Reuters first picked up the story on Feb. 11th, a day after the eXile, six
days after the Moscow Times, and a full ten days after Skuratov first outed
the scheme in a letter to Duma Speaker Gennady Seleznyov. There was no
mention of earlier movement on the story. Their "News Peg" was a "new"
letter from Sergei Dubinin in response to Skuratov's charges. There was no
mention of Skuratov--i.e. of what Dubinin was responding to-- in the
Reuters piece. Reuters thus became the first major news service to stick a
phony news peg on the FIMACO story. 

On the following day, the Financial Times came out with a story that said
that Dubinin's letter was the first confirmation of "suspicions that the
Central Bank moved money offshore." This was not strictly true; first of
all, Dubinin, as a former employee of the Central Bank who now works at
GazProm, carried a lot less weight in his letter than Skuratov, who, up
until the first of the month, had been the acting General Prosecutor of the
entire country and was a far better, and more likely objective, source on
the matter. The FT in its piece basically lied; they told the public the
story was not important until February 11, while even the Moscow Times and
eXile knew, from well-publicized sources, that the story had been out there
in the open and just as important well before then. 

On February 12, that same day, the Independent, again ignoring the earlier
news peg and focusing on Dubinin's letter, wrote that the story was an
"extraordinary saga" with the potential to be one of the "biggest scandals
of the post-Soviet era." They, too, stuck a phony news peg on to cover
their tracks. 

On the same day, the Bloomberg news service reported first that "former and
current Central Bank officials said as much as $1.4 b had legally (?) been
given to [FIMACO]." This seriously underrepresented the extent of the
story. Only secondarily did they report Skuratov's claims that $37 billion
had been mishandled by the Central bank. They went on to downplay the
story, quoting Mikhail Zadornov as saying "Central banks in many countries
conduct these operations. It's really not worth being discussed publicly."
One has to wonder whether that quote would have been in there if Bloomberg
had covered the story from the start, and not had reason, in the fact of
its tardiness, to downplay its importance. 

On February 13th, the next day, the Associated Press put a shameless note
of immediacy in its reports, leading off by saying that "Russia's banking
community was shaken . . " by the Dubinin report. It did not say that
Russia's banking community was shaken by the Skuratov revelations. It
wouldn't really have mattered if that had gotten it right there, since to
say anyone was shaken by the revelation in Russia's banking community is
suspect, at most; few people really believe that anything will be done
about the siphoning off of government funds offshore. Nonetheless, it
wrote, "the mere existence of [FIMACO] has created a political uproar." An
odd thing to write, since there had, to date, been no outraged statement
from those parties most likely to be furious about the story--in particular
the IMF and the World Bank, major creditors who could make a serious claim
on the money. The better angle to take would have been the absence of an
uproar, and the lack of press attention for the story in the West. 

The thing about waiting around for a new news peg, like Dubinin's letter,
is that it defeats the entire purpose of "speed" in news. If the emphasis
on immediacy of coverage in this CNN era of ours has one putative purpose,
it is to keep the public informed as quickly as possible--even if it means
admitting that you missed a story a few days or even a week ago. Doing
otherwise, the way these major press outlets did, is clear evidence of the
pervasiveness of careerism as a deciding factor in the decision-making of
editors and reporters around the world. Rather than look like fools in
front of their bosses, they'll let you, the reader, stay in the dark. 

Incidentally, this kind of thing doesn't happen so much at home; the
commercial competition wbetween newspapers and television stations is so
fierce there that the opportunity to scoop a rival paper almost never
passes unnoticed. But in the clubby atmosphere of foreign journalism, where
there are few bureaus that compete directly for the same audiences and
where the journalists themselves often share the same office buildings and
hang out at the same restaurants, a policy of deliberate restraint in the
interests of protecting the careers of one's friends can easily be
imagined. The even stranger thing is that-- I would think, anyway-- editors
would tend to reward journalists who will admit they made a mistake in the
interests of getting a good story out. Anyone who has the guts to see
something big that no one else is reporting and put his weight behind it,
and be right, is never going to hurt his career. If breaking big news
stories in your assigned country is no longer the raison d'etre of foreign
bureaus, then why have them at all? That's probably another story foreign
journalists are praying their editors will miss. 




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