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Johnson's Russia List


March 16, 1999    
This Date's Issues: 30923093   


Johnson's Russia List
16 March 1999

[Note from David Johnson:
1. Itar-Tass: No Russian Leader Is Expected to Attend NATO Summit in April.
2. Itar-Tass: Patriarch Alexy II Prays for Peace and Accord in Russia.
3. Interfax: Official Reports Yeltsin's Nuclear Deterrence Policy.
4. Judith Shapiro: 3 questions for LA Times/3090/health care.
5. Reuters: Elizabeth Piper, Yeltsin, Primakov make new show of unity.
6. Moscow Times editorial: Beware FSB Surveillance Of Internet.
7. Los Angeles Times: Gennady Gerasimov, No Cause to Revive Missile Fever.
8. Heinrich Vogel: Reforming Russia.
9. Cameron Sawyer: Varoli/3090/women.
10. The Times (UK): Anna Blundy, The trouble with glasnost. (Gorbachev).
11. Reuters: Sebastian Alison, Post-Soviet energy boom fails to ignite.
12. Derek Miller: 3088-White/Sexual Harassment.
13. Reuters: Russian govt slammed for slow economy efforts.
14. Alexandre Konanykhine: Response to 3080/Finch/Corruption.]


No Russian Leader Is Expected to Attend NATO Summit in April.

WASHINGTON, March 16 (Itar-Tass) -- UN Secretary-General Javier Solana does
not think that either Russian President Boris Yeltsin or Prime Minister
Yevgeny Primakov will attend the NATO summit in Washington in April. He said
so in his address to journalists in the American capital on Monday. He went on
to say however that this question would probably be raised during Primakov's
official visit to Washington next week. 

The NATO chief said Russia would most likely not take part in the April summit
of the alliance 'at the same level as other countries.". He recalled that
Russia had been represented at the 1997 NATO summit in Madrid but at a lower
level than all the others, so it was to be expected that someone would also
arrive this time, that is the chair reserved for Russia would not be vacant. 

Solana expressed doubt that any of the leaders of the former Soviet Union, as
for example the first and last Soviet President Mikhail Gorbachev, could be
invited to attend. "I do not think that Gorbachev will be invited," he said.
"The summit is an event for the present governments." 

Solana is confident that Russia is playing and will continue to play "a very
important role" in NATO's present and future life. But he declined to venture
an opinion as to whether Russia would ever join NATO. "I would not like to
reply to this question," he said. "I always say that had today's meeting been
taking place five years ago and someone asked me whether I could imagine NATO
and Russia taking part together in an operation of multinational forces, I
would have replied in the negative. Now it is reality." 

According to Solana, NATO has already opened itself widely to cooperation with
Russia. How far both sides would advance depends both on their own behaviour
and on the security situation in Europe. Solana refused to make guesses as
none of the Russian leaders has yet shown any interest in accession to NATO. 


Patriarch Alexy II Prays for Peace and Accord in Russia.

MOSCOW, March 15 (Itar-Tass) -- Patriarch of Moscow and All Russia Alexy II on
Friday offered a liturgy and a public prayer for guarding Russia from
internecine strife and enmity, for granting peace, calm and welfare to the
people of Russia at a church erected in honour of "Derzhavnaya" /"nationhood"/
icon near the Cathedral of Christ the Saviour in Moscow. 

Patriarch Alexy wished that "we did not bring another disaster upon Motherland
in rocking our small ship which was sailing the stormy sea of life's ups and

Alexy II reminded that the "Derzhavnaya" icon had supported Russia through the
hard times of the 1917 revolution, followed by the years of civil war,
repressions and religious persecutions. "Despite the fact that over 70 years
God was officially denied in Russia, Faith has survived," the Patriarch said. 

Alexy II pointed out that the last decade had been rather hard on Russia. The
period covered the collapse of a Great Power, and the events of 1993 when "we
were praying for guarding Russia from civil war and bloodshed." 

The Patriarch wished the prayers of the Orthodox people were answered, and
peace and accord were granted to our Motherland. 


Official Reports Yeltsin's Nuclear Deterrence Policy 

MOSCOW, March 15 (Interfax) - Russian First Deputy
Security Chief Vyacheslav Mikhailov commented on
Monday [15 March] on the guidelines for the nuclear deterrence policy
approved by President Boris Yeltsin in a document saying that
Russia may use nuclear weapons if all other measures have failed to ward
off a dire threat to security. Russia sees its nuclear forces as a
"guarantor of its national security and a means of deterring aggression
against the Russian state and its allies," Mikhailov said.
According to the guidelines, the main purpose of Russia's nuclear
deterrence policy is to guarantee the territorial integrity and
independence of Russia and its allies and prevent external barriers to
Russia's development. This policy, the document says, is not
directed against any specific state or groups of states. Moscow, the
guidelines say, considers its nuclear arms primarily as a means of
deterrence and may use them only as an extreme measure to fend off a
critical threat to the security of Russia or any of its allies. "As long
as there are nuclear weapons in the arsenals of other states, the
guaranteed nuclear deterrence of an aggressor against Russia or its
allies is one of the most important priorities of the Russian state,"
Mikhailov said. The document also says that Russia stands for
consistent international efforts to reduce global nuclear arsenals and
ultimately destroy them. "We believe that in the prevention of
military threats priority should be given to political, diplomatic, legal
and other nonmilitary measures, including actions by the U.N. aimed
at maintaining peace and cutting short acts of aggression," Mikhailov


Date: Mon, 15 Mar 1999
Subject: Re: 3 questions for LA Times/3090

In reference to your LA Times article:

Richard Paddock writes that the deeply disturbing and tragic incident 
in the Kuzbass shows the breakdown at present of the fine health care 
system inherited from the Soviet order.

Maybe. None of what either of us writes, in any event, detracts from 
the sense on the part of relatives that this was an avoidable set of 

However, here are three sets of questions he could find the answer to, 
if he is half as conscientious and talented as his predecessor from 
that paper.

1. How long has the intensive care facility of which he writes been in 
operation? Was it an intensive care facility on US norms? Who decided 
on and financed its purchase?

2. By what means were supplies and medicines paid for, and if they 
were, who decided to pay these and not doctors, nurses or 
electricity bills? How were the intensive care nursing staff trained, 
where and when?

3. What is the opinion of the World Health Organization and similar 
authorities on the wisdom of putting in an intensive health care 
facility when it is impossible to afford a back-up generator? What is 
the opinion of the same authorities (domestic and international) on 
the most important and pressing needs for the Russian health care 
system now? How many normally survive intensive care in such a 
facility, both in Russia and inthe world at large? What might be the 
alternative uses for funding (like district or public health nursing 

If you just want to sell papers on a shock/horror basis, no need to 
worry about such additional questions. I always expect more from the 
LA Times. 

(personal capacity only)
Judith Shapiro
Chief, Transition Economies Section
Economic Analysis Division
United Nations Economic Commission for Europe


Yeltsin, Primakov make new show of unity
By Elizabeth Piper

MOSCOW, March 15 (Reuters) - Russian President Boris Yeltsin and his prime
minister made a new pledge of unity on television on Monday to try to douse
speculation that the Kremlin chief is considering a government shake-up. 

Yeltsin took the unusual step of mildly scolding Yevgeny Primakov in public,
over his handling of the media, during a 90-minute meeting in the hospital
where the president is having treatment for an ulcer. 

But the president then rallied behind Primakov in televised extracts of the
meeting, dismissing media suggestions of a split over the premier's rapidly
growing influence. 

"They are trying to drive a wedge between us, but there is no such thing in
real life," Yeltsin said during talks in Moscow's Central Clinical Hospital,
where he has been since February 27 receiving a second spell of treatment for
the ulcer. 

"I absolutely agree with you that there is no wedge between us," Primakov
replied quickly. 

It was the second time in just over two weeks that Yeltsin and Primakov have
made a show of solidarity on television. The first effort, after a meeting on
February 25, failed to quell the media speculation of a widening rift. 

Many newspapers have suggested Yeltsin, 68, may be considering removing
Primakov out of jealousy or sacking members of his cabinet because of a lack
of signs of economic recovery. Dismissals of government members could also
undermine Primakov. 

Primakov, 69, and the Kremlin have denied any government changes are afoot,
and presidential press secretary Dmitry Yakushkin told Ekho Moskvy radio
station the two leaders had not discussed personnel changes. 

Political analysts say Yeltsin, who guards power jealously, might be tempted
to undermine Primakov but would find it hard to find a replacement prime
minister acceptable to the Communist-led State Duma, the lower house of

Despite renewing his support for Primakov, whom he nominated last September to
resolve a government crisis, Yeltsin suggested the secretive premier was
handling the media badly. 

"I do not like your relationship with the media," he said, talking clearly but
slowly. "I am used to forcing myself not to react sharply (to the media)...
You do not calm the situation but on the contrary you stir it up." 

Primakov laughed back: "You have stronger nerves than I. You are a calmer man
than I. But I will take your advice." 

Yeltsin renewed an offer to intervene in talks between the government and the
International Monetary Fund on new loans for Russia, but Primakov said there
was no immediate need. 

Primakov is due to hold talks with the IMF while in Washington next week and
he and Yeltsin expressed optimism last week about the outcome of the
negotiations, although the Fund has been unhappy with the pace of reforms. 

Securing new loans would be another boost to Primakov's standing but a failure
to do so would leave him exposed. 

"Primakov has 10 days to become a reformer," read the main headline in the
weekend edition of the newspaper Sevodnya. 


Moscow Times
March 16, 1999 
EDITORIAL: Beware FSB Surveillance Of Internet 

In a master control room in the bowels of the Lubyanka, teams of FSB
agents spend their days intercepting private correspondences sent via the
Internet between friends, lovers, business partners, politicians. And there
is no one watching the watchers. 

It's a disturbing idea. And as Jen Tracy reports in Business Extra on Page
15, it is well on its way to becoming a reality. 

A new regulation known as SORM-2 is under review at the Justice Ministry,
awaiting minor tweaks before its eventual enactment. This regulation would
allow the Federal Security Service, or FSB, to conduct real-time monitoring
of every e-mail message, credit card transaction and web page sent or
received in Russia. 

The SORM-2 arrangement would have this information piling up in FSB
computers. In theory, the FSB would need a warrant to look at any of it; in
practice, however, the FSB has already demanded such information from
Internet service providers without warrants, so there is no reason to
expect particular compliance with the constitution on that point. 

The U.S. government already monitors international e-mail traffic through
the National Security Administration, and the NSA's legal authority to do
so seems equally dubious. But at least the NSA, unlike the FSB, has never
been accused of selling the information gathered for use as political
kompromat or using it to blackmail prominent businessmen. Nor, for that
matter, does the NSA trace its roots to that of a Soviet secret police
organ that tortured and killed. 

The SORM-2 proposal also calls for Internet service providers themselves
to lay out the thousands of dollars it will likely cost to install the
surveillance hardware the FSB needs. Providers will pass on the cost of
this hardware to the consumers in the form of a 15 percent cost hike -
which means Internet users will pay more for the pleasure of being spied

That Internet service providers are a bit timid in leading the fight
against SORM-2 is not surprising - the FSB can just pull the licenses of
troublemakers and shut down their businesses. But SORM-2 ought to be
derailed, and providers should be encouraged to do more. 

For starters, providers could indeed dump old stored e-mails from their
computers. These e-mails are stored as a byproduct of programs that track
each Internet user's web hits - but those programs could also be rewritten
to be more selective. Providers have no business storing old e-mails for
long periods of time - only so the FSB can come along and demand to read


Los Angeles Times
March 15, 1999 
[for personal use only]
No Cause to Revive Missile Fever 
U.S. talk of a defense shield is for domestic consumption; Russia must not
get into an arms war again. 
Gennady I. Gerasimov Is a Visiting Fellow at the East-west Center in
he Was Chief Spokesman for Former Soviet President Mikhail Gorbachev and
Former Foreign Minister Eduard A. Shevardnadze During the Glasnost Period of

Now that "ABM" is back in the armchair strategists' alphabet soup, Moscow is
haunted by a bad case of deja vu. Moscow swallowed President Reagan's "star
wars" bluff--hook, line and sinker--and in trying to keep up with the Joneses
across the ocean, went broke. 
I remember the discussion that took place at the meeting of the Soviet
delegation in Reykjavik before the beginning of the Soviet-American summit in
1986. President Reagan's "strategic defense initiative" was discussed. To go
ahead with this plan meant violating the 1972 ABM treaty limiting
antiballistic missile systems. So Americans talked about prematurely
withdrawing from the treaty. 
During our discussion, I ventured my humble opinion about SDI being a
stellar delusion, not to be taken seriously. Marshal Sergei F. Akhromeyev,
chief of the general staff at that time, offhandedly dismissed my arguments.
He took SDI very seriously. 
Unbelievably, both sides came close to the agreement on nuclear
disarmament at Reykjavik. Imagine the world today if they really had. But they
did not because Mikhail Gorbachev insisted on Reagan abandoning his pet
project, which he refused to do. Now everybody agrees that, no matter what
Reagan's pipe dream, the whole enterprise was no more than a bluff. Many
Americans admitted it soon after the idea was launched in 1983. Strobe
Talbott, who then worked for Time magazine, wrote in 1984: "After a year of
study and refinement in the executive branch, the SDI now implicitly accepts
the impracticability of a leakproof umbrella." This same Strobe Talbott, now
with the State Department, has been given the task of persuading the Russians
to agree on the "modification" of the ABM treaty on the grounds that the
United States needs limited missiles against "rogue states." 
I think that the many arguments against a "complete" territorial ABM
program are just as valid against a "limited" one. The late British scientist
John Bernal wrote in his book, "World Without War," that the method on which
ABM defense is based was first used by Baron Munchausen during the siege of
Gibraltar. He fired his cannon at an oncoming ball and sent it back to destroy
an enemy battery. Technology is faster and better now, but the slower human
factor remains. 
But let us look at the argument about the "rogue states." To begin with,
there are no "rogue" states, though there can be "rogue" leaders. The
assumption that some of them, if and when they get nuclear ballistic missiles,
will send them to New York or Honolulu just for the fun of it, is paranoid.
They know about the "assured destruction" of their countries as a result of
this kind of action. Even rogue leaders are not suicidal. To make life
difficult for the United States, they have other means to employ: terrorism,
bombs in suitcases, etc. 
Paradoxically, the same paranoid logic can be detected on the Russian
side. Russian strategists talk about the "destabilization of the strategic
situation." This is based on the deterrence factor in the concept of MAD
(mutual assured destruction), strengthened by the ABM treaty. American
withdrawal from the ABM treaty may undermine MAD because, these strategists
say, the new "shield" over the United States may provoke a first strike by
For many Russians, who still think along Akhromeyev's lines, this
"limited" defense looks like "limited" pregnancy. And their suspicions may be
reinforced if they read the Feb. 22 issue of National Review, which calls a
strategic defense "more justifiable now, even vis-a-vis Russia." 
Let us check these fears with arithmetic. In six years, if the limited
system proves to be possible (a big "if"), the United States will have
deployed 200 anti-missiles. By that time, if all goes well with the SALT II
treaty, Russia will cut its nuclear missiles to 3,000-3,500. If a nuclear war
starts, 200 American anti-missiles are not going to be a big obstacle for the
many more Russian missiles that would survive the first strike. 
Why then are Russia and China worried about this new U.S. proposal, while
Britain is not? Because British-American relations have something that is
lacking in Russian-American or Chinese-American relations: trust. 
Old notions die hard. Ideological conflict disappeared, but some old
reasoning remains. I also think that the main reasons for the resurrection of
the anti-ballistic missiles issue are domestic: The Clinton administration
wants to take the wind out of the sails of the Republicans and ABM buffs, and
to provide jobs on the eve of the election campaign. In any case, the Russians
don't like premature withdrawal. But politics makes strange bedfellows. I
suspect the Russians might agree to jump into the U.S. bed if the Americans
follow Reagan's idea to share with the Russians technological knowledge in the
field, just as we do in space exploration. 


Date: Mon, 15 Mar 1999
From: "BIOst Research" <>
Subject: #3086 Gunars Reinis on Rebuilding Russia 

Reforming Russia

While sharing the distress and gloomy asessments in most of the reactions to
Gunars Reinis' piece, I would like to draw attention to an additional aspect
of the Russian crisis which in my view disqualifies comparisons with
Germany's situation in 1945: It is the absence of any traditions of a rule
of law. Remember: Germany had its first civil code regulating property
rights passed by the Reichtag in the 1870s and it was not changed under the
Nazis. In this environment individuals, business, lawyers, judges, and
officials in law enforcement accumulated the kind of collective experience
which after WWII represented a critical base for Germany's recovery. This
asset cannot be substituted by training accountants and MBAs nor by
transfers of money (most American observers' pet idea, as far as I can see).
Generally, I am joining the doom-sayers in the debate about 'Reforming
Russia' because I fail to see how preindustrial standards of behavior which
have been preserved under authoritarianism and communism can be overcome in
a quick fix. In my view, even the most enlightened reformer (still to be
born) will need decades to breed the kind of fertile legal framework to
break the hamstrings of corruption, irresponsibility, and cyniscism. Too
much of the precious time needed for adaptation and learning new rules has
been wasted. Primakov has not changed an inch on this account, playing power
games. And the kind of 'poryadok' desperate Russians are calling for is
light years behind the rule of law which we in the West have learned to take
for granted.
This is not to deny the existence of pockets of distressed citizens who are
fully aware of this deficit - but where (outside Yabloko) are the political
'elites' to push this cause? And where is the money to bring Yabloko the

Heinrich Vogel
Bundesinstitut fuer ostwissenschaftliche und
internationale Studien
50823 Koeln
Tel.: +49-221-5747-0
Fax: +49-221-5747-110
homepage: http//


Date: Mon, 15 Mar 1999 
From: Cameron Sawyer <> 
Subject: Varoli/3090

I'm afraid you're quite right, Mr. Varoli. I have spoken up on several
occasions for Russian women, their power and skill in dealing with sex
roles, but my seven years in this country do bear out your assertion that
sexual harassment is rampant and has cruel effects. Russian women are much
better able to deal with it than American women (on the average of course)
because they navigate the murky waters of sex roles much better than our
women do, but that is not always enough.

There was just an article in Moskovsky Komsomolets last week which stated
that every Russian woman has to sleep with her boss at least once in her
life. Horrors! Surely an exaggeration, but it turns your stomach.

Like you, I am married to an assertive Russian career woman (a lawyer), and
anyone attempting to sexually harass her would quickly find himself missing
his testicles. But you cannot judge the situation by such cases - the
problems occur with pretty young women desperate for an entry level job to
feed their families (often including parents). Since the crisis, the
situation is even much worse. By the way, foreign managers working in
Russia, especially Europeans, don't seem to be any better behaved than


The Times (UK)
March 15 1999 
By Anna Blundy 
'The trouble with glasnost was that once people felt freer, once everything
was out in the open, Gorbachev got the blame for it'

By 1991 Mikhail Gorbachev, the last General Secretary of the Communist Party
of the Soviet Union, had already been consigned to the pleasures of the
international lecture circuit by his rival, Boris Yeltsin. It is fairly clear
who got the better deal. Today that very lecture circuit brings a slick,
reinvented, elder-statesman-style Gorbachev to King's College, Cambridge, and
a symposium called Russia on the Eve of a New Millennium. 

This is, of course, the dream event for those who love to speculate on the
future of Russia as though it is something that must be resolved once and for
all and, fortunately for Mikhail Sergeyevich, the audience will be mostly non-
Russian. For back in the former USSR he would be hard pushed to find any
audience for his ruminations. 

Here he is still loathed as a man who betrayed his past, who sold the Soviet
Union to the West for a few dollars and who let his country disintegrate
before his eyes. In the mid-1980s, while Gorbymania gripped the English-
speaking world, Russians were wondering where the booze had gone. Although
there are many and complex reasons for Gorbachev's lack of popularity at home,
for he will always be someone who destroyed rather than created, the thing
that Russians hold against him more than anything else is his appallingly
miscalculated prohibition. 

Despite the fact that he could easily have thrust himself forward as a man of
the people in the Yeltsin mould (born to a peasant family in 1931, the very
year his village was collectivised, he worked the fields, lost relatives to
purges and wars and worked his way painstakingly up the party ladder in
Stavropol), this mistake set him apart from them. 

But this was 1985 and Gorbachev seemed to have hit upon what was (and in fact
still is) the problem with the Soviet Union. "Our rockets can find Halley's
comet and reach Venus," he said. "But our fridges don't work." Now, of course,
the rockets are not up to much, either. 

Alcohol, he decided, was at the root of the problem, and the man who became
known as the "mineral water secretary" rather than the General Secretary
clamped down on it with a vengeance. Opening hours for shops selling alcohol
were curtailed and queues stretched around the block. Alcohol was banned from
official receptions and 150 million decilitres of samogon, or moonshine, were
produced a year, resulting in an untold number of fatal poisonings. Shops did
a roaring trade in perfumes. 

A well-known Gorbachev-era joke goes as follows: A man is waiting in line for
vodka. After four hours, he says "OK, I've had enough of this. I'm going to
the Kremlin to kill Gorbachev". A few hours later, he comes back to resume his
place in the queue. "So? Did you kill him?" ask his fellow queuers. "No. The
queue to do that was even longer," he sighs. 

The telling thing is that there were any Gorbachev-era jokes. There were never
any jokes about Stalin. The trouble with glasnost was that once people felt
freer, once everything was out in the open, Gorbachev got the blame for it. 

Suddenly the theatres were producing plays about Stalinist purges, the sites
of mass graves were being uncovered, the world was told about the Chernobyl
disaster, dissidents told stories of their exile, imprisonment and torture,
the huge-scale corruption of party bosses and the unimagined privileges of the
elite were revealed. And the stench of all this rot, with which Gorbachev was
barely associated, stuck to the very man who wished to dispense with it by
exposing it. 

Also, as far as cultured Russians were concerned, the guy was a fake. He had
cleaned up his Russian and you could almost be fooled into believing that he
was an intelligent, but every now and then his southern peasant twang would
slip out and intellectuals would fall about sniggering at the country boy who
pretended to be a gentleman. Even today you only have to misplace the stress
on the word "to begin" at a dinner party and people will laugh at your witty
imitation. He was saved from acquiring such a blemish in the West by his
brilliant English interpreter, who singlehandedly made his employer seem a
worthy bantering partner for Clive Anderson. 

Mikhail Gorbachev is adored by the West partly because America sets so much
store by freedom of speech. In Russia, it was always joked that Gorbachev
failed to provide food, clothing, security and the continuation of a way of
life, but he managed to provide freedom of speech. "But the thing is, most of
us didn't have anything to say." 


Post-Soviet energy boom fails to ignite
By Sebastian Alison

MOSCOW, March 15 (Reuters) - When the Soviet Union came apart at the end of
1991, many of its former republics expected to become rich by luring foreign
investment to develop their vast energy resources. 

Seven years on, combined former Soviet oil output is little over half its 1987
peak, oil prices are at a 25-year low and most members of the former union,
including energy producers, are in an economic mess. 

How has it all gone wrong? 

Industry sources point to a mix of political and economic mismanagement, legal
and tax regimes which scare investors away, exaggerated hype over reserves,
low oil prices and huge differences in attitude between the two sides. The
longed-for boom shows no sign of coming soon. 

``The main reason underlying all the setbacks is that there is still a huge
wall between the Western perception of what to do in these countries and the
Soviet-type mentality of the host countries,'' says Yevgeny Khartukov, a
veteran of the Soviet oil industry and now head of the GAPMER oil consultancy
in Moscow. 

``To find a common business language between those who have never been on the
same footing is not just a question of signing a couple of deals or waiting
for the change of a couple of governments. It takes decades, the change of

The Soviet Union used to be the world's biggest oil producer. Peak output of
well over 12 million barrels of crude per day was half as much again as Saudi

Because the industry concentrated on huge, geologically simple Siberian
reserves discovered in the 1960s which were relatively cheap to exploit, other
areas got low priority. 

In Azerbaijan, the source of over half the world's oil in 1900, and Kazakhstan
and Turkmenistan, the other main energy republics, little was done to develop
remote, costly fields. 

Independence was meant to change all that. These states immediately started
attracting foreigners to develop the wealth. 

In Russia too, foreigners began to look for opportunities, awaiting the
implementation of promised legislation to create a favourable tax regime and
protect their investments. 

But Russia now faces a desperate economic crisis following currency
devaluation and debt default last year, foreign oil companies are leaving
Azerbaijan, and Turkmenistan is exporting a fraction of the gas it sold before

Only Kazakhstan is enjoying some success in raising oil exports, and then only
through the success of a single project. 


Russia is largely to blame for its failure to develop the sector. 

Although reserves are huge and cheap to exploit compared to marginal fields
such as those in the North Sea, lawmakers consistently failed to approve laws
protecting investors until this year. 

Production sharing laws, which protect investors by giving them a chance to
seek redress through international arbitration, were only amended when all
other sources of investment had dried up, said Richard Freeman, president and
CEO of Timan Pechora Co LLC, an exploration company formed by foreign oil

``It was only when Russia realised there would be absolutely no financial help
at all from Western governments (following Moscow's debt default) and there
wasn't going to be any more portfolio investment for the time being, that they
realised foreign direct investment was the only investment they would get,''
he said. 

He added that Russia had lost at least three years in passing the legislation
and even now it was ``not perfect.'' 

The tax regime has also been subject to so many changes that few can keep up.
One analyst said the regime was ``strangling the industry.'' As a result, few
foreign oil companies have got much further than opening representative
offices in Moscow. 

Those that have may wish they had not. 

When British Petroleum bought 10 percent of promising oil company Sidanko for
over half a billion dollars in 1997, it could hardly have guessed that 16
months later many of Sidanko's units would be bankrupt and the whole company
facing bankruptcy. 

BP Amoco failed in its bid to have Sidanko placed under independent external
management earlier this month, and a company spokesman described it as ``a sad
and damaging day for foreign investment in Russia.'' 

This lack of foreign confidence and investment, coupled with a lack of
domestic cash for investment, has led output to slump. Last year Russia
produced six million barrels per day compared with over 11 million in the

Given that oil is worth only half what it was a few years ago, the economic
impact of the decline has been catastrophic. 


Few other republics are faring much better, though for different reasons. 

Azerbaijan has been awarding exploration contracts since 1994 for production
in the Caspian Sea, once described as a new Kuwait and the industry's new
frontier for next century. 

But reserves so far have proved disappointingly low, and because the Caspian
is landlocked, the cost of moving oil to markets will always make the oil
expensive to produce. 

Five years after the first Azeri exploration contract was signed, a further 15
have followed. 

But so far only one group is actually producing oil, and two consortia have
quit the country this year, citing low reserves and costs which are simply too
high at current price levels. 

A senior official with a major Western oil company stressed the importance of
further exploration in Azerbaijan. 

``There is a fairly normal exploration cycle going on here of excitement, some
disappointment, some successes, and the picture will only emerge with time,''
he said. But whatever the outcome of future exploration, Azerbaijan will not
be rich soon. 

Turkmenistan's potential wealth is based on gas, not oil. But it is also miles
from markets, and will need billions of dollars to build pipelines before it
can raise any revenues. 

Turkmen President Saparmurat Niyazov has given a contract to a U.S. company to
build a pipeline to Turkey, but has yet to sell any of the gas. Normal
industry procedure is to sell gas for years ahead before building the

Both Russia and Iran have already stolen a march on Turkmenistan by selling
long-term gas supplies to Turkey, making it quite possible Turkey will never
need Turkmen gas. 

Even if the country does conclude a contract, several years will be needed to
build the pipeline, after which revenues for years more will be needed to pay
back the construction cost. Few expect the country to receive major net gas
revenues soon. 

Only Kazakhstan has had some success through the work of a single joint
venture company, Tengizchevroil, developing the gigantic Tengiz field in the
west of the country under the leadership of U.S. major Chevron. 

An international consortium is now building an oil pipeline from Tengiz across
Russia to the Black Sea which is expected to be completed by 2001. Eventually
it will deliver 1.3 million barrels per day of Kazakh crude to world markets. 

But even in Kazakhstan, other fields have been in limbo for years, with
exploration deals signed but no work started. 

Both Western firms and former Soviet states are disappointed that the initial
euphoria has not led to greater results. 

``The problem is that expectations were too high,'' said GAPMER's Khartukov.
``Now we have what should have been expected from the beginning.'' 


Date: Mon, 15 Mar 1999
From: Derek Miller <> 
Subject: 3088-White/Sexual Harassment

T.S. White declared that he did "not wish to diminish the problem os sexual 
harassment either in the US or in Russia" in responding to John Varoli's 
note on the topic, but proceeds to do just that in his subsequent 

By focusing on Russia's view of the Clinton affair, White avoids the topic 
of sexual harassment in both the U.S. and Russia. Clinton's consensual 
affair with Lewinsky is not an example of sexual harassment - rather, it 
was poor judgment exhibited by a man who should have known better. To 
tacitly compare that affair to the problems Russian women experience when 
forced to engage in sex or lose their job is to trivialize the very 
difficult position Russian women are put into.

Though White couldn't understand why Clinton's affair was included in 
Varoli's article, he proceeds to make it the center of his rebuttal. If he 
had conversed with his representative Russian female executives on the real 
topic of sexual harassment, I'm sure he would have received very different 

I also have a difficult time understanding the vitriolic comments against 
American women. Was the persecution of Clinton their work only? Were no 
Republican men involved? How can anyone write that "American women have 
committed a gross injustice on American men and the American family?" This 
sounds like women were part of some huge, coordinated conspiracy!! Such a 
blanket condemnation of women and complete absolution of the male half of 
any blame for the current state of affairs seems to be a perfect example of 
what women are so damned upset about! Without getting into feminism and 
how many women would actually call themselves "feminist", I think White is 
being way too critical.

White implies that he has done a good job of integrating into Russian 
culture. Yet he also seems to think that 20-year old mini-skirted 
secretaries have their own personal "krysha"!! Mr. White, individuals 
generally do not have krysha's - companies do. And I dare to hazard a 
guess that a boss's krysha is bound to be somewhat heavier than his 
secretary's. Finally, as White pointed out, Russian culture and moral 
standards are somewhat different than American - I laugh when I try to 
picture a "krysha" intimidating a businessman to leave the secretary alone! 
Get real, this is Russia!!

I haven't referred to the crux of Varoli's article, sexual harassment in 
Russian companies, because I recall agreeing in large part with everything 
he said (I erased the article, so can't be more specific). Yes, it's 
definitely a major problem. Both men and women are at fault, many of the 
former for considering sex a part of the job, many of the latter for using 
sex as a tool to achieve their goals. On the level of flirting and 
intimations, sexual conduct is tolerated by all. However, the vast 
majority of women balk at going any further, and it is a crime not to 
condemn those men who use physical or economic force to obtain sexual 
favors from co-workers. I appreciated Varoli's article as an attempt to 
bring attention to a serious issue. I am vaguely alarmed by Mr. White's 
enthusiasm for embracing local culture in this regard. Need I say more?

Derek R. Miller
Miller Investment Group


Russian govt slammed for slow economy efforts

MOSCOW, March 15 (Reuters) - Prominent Russian politicians and businessmen on
Monday criticised the government for being too slow to improve the country's
crisis-hit economy. 

"The federal authorities do not fully take into consideration the
extraoridinary nature of the social and economic situation," the businessmen
and politicians said in a draft recommendation after a day of round-table

"The government is showing unjustified slowness and indecisiveness, uses a lot
of old methods and often uses recipes which have not justified themselves." 

Yegor Stroyev, the speaker of the Federation Council upper house of
parliament, where the round-table talk was held, urged the government and the
lower house, the State Duma, to work out and approve laws which would help get
Russia out of crisis. 

"The urgent adoption by the Duma of laws presented by the government, first of
all, those which concern the tax system, is necessary," Stroyev told the

Investors and producers complain that taxes are too heavy, while the system
itself is too complicated with one law sometimes contradicting another. 

The Duma on Friday passed several tax bills, including one which introduces
lower value added tax (VAT) from July 1. 

Deputies believe the measure will help local producers but the International
Monetary Fund, whose mission is now in Moscow assessing the possibility of
releasing new loans to Russia, opposes the idea. It says a cut in VAT will
push tax collection down and wants the cut to be introduced later. 

The Duma also passed a bill which raises the maximum income tax to 45 percent
from 35 percent. The bill, which must be approved by the Federation Council
and signed by the president to become law, is to come in force from January 1,

The top tax rate is to be levied on a yearly income higher than 300,000
roubles ($12,900). 

Stroyev said the government should fight capital flight, which he put at up to
$1 billion a month recently. 

"Either we stop capital flight or we shall have to reject rouble conversion.
There is no other way out," he said. "We are waiting for a tough and clear
policy from the government and the central bank." 

He also criticised the central bank for the lack of a clear position on reform
of the banking system, seriously hit by the financial crisis of last summer. 

($ = 23.26 roubles) 


From: (Alexandre Konanykhine)
Subject: libel
Date: Sun, 14 Mar 1999

KGB "Active Measures" 

Last Sunday (03/07/99) I opened a new DJL and read there a number of very
interesting statements about myself. According to some Ray Finch, whose
letter David published, I, among other things: 

a/ thrived as a money launderer on an "off-shore island" (sic);
b/ stole millions of dollars;
c/ entered the United States under a false visa;
d/ duped and intimidated the naive U.S. authorities (sic);
e/ tampered with witnesses and defrauded U.S. courts. 

Of course, I can sue the author and the publisher of the libelous
material, but, as David told me, the DJL would likely seize to exist. Such
an outcome is definitely not among my intentions because DJL has been
providing all of us an excellent information tool on modern Russia. So, I
decided instead to contribute to DJL by sharing with DJL readers some very
entertaining and educating information on an ongoing KGB operation (KGB
still existed when it started this operation and though it was split into
several parts, some of which were renamed, for the sake of simplicity I
will use the term KGB here). 

I am confident that after considering the facts related to the appearance
of the Ray Finchs letter, you will come to the conclusion that Ray Finch
is a KGB operative and his letter to DJL is a part of a grand KGB
disinformation campaign. 

The Ultimate Motivation. 

Recruited American citizens are the KGBs most valuable assets. Their
number has never been great, and they are quite costly. There must be some
very compelling motivation to risk compromising one of such valuable
assets. KGB motivation to use all available resources to defame me was
revealed by a Department of Justice expert in his sworn testimony before a
federal judge: 

"From the documents I read, I saw strong indications that this is not the
case about Alexandre Konanykhine. This is the case about KGB covert
operation, in which most probably hundreds of millions of dollars were
smuggled by the KGB from Russia, deposited under secret accounts in the
West. And since Alexandre Konanykhine fled Russia, moved to the United
States and went public and started writing petitions to different Russian
institutions and top government officials, so the KGB, together with the
Military Prosecutor's Office, make a decision to make a cover up. So when
Alexandre Konanykhine started to make public declarations, the KGB got
scared that these declarations, statements, can expose their hundreds of
millions of dollars, and they can lose it, and that this crime can be
exposed. What the KGB needed .. is to shut him down, to silence him, to
make sure that he doesn't make any statements any more." (See ) 

In 1992 KGB tried to shut me down by kidnapping me. I was supposed to be
murdered upon signing over to the KGB my banks and companies. Fortunately,
I managed to escape after being in captivity for only a few hours. The FBI
in 1994 confirmed the kidnapping through its sources. 

In 1993-1994 KGB tried to shut me down by placing contracts on my life in
several countries. An FBI representative testified in my immigration
hearing about the contract on my life placed in the United States. 

In 1995-1996 KGB tried to shut me down by manipulating and duping the U.S.
Immigration and Naturalization Service (INS) into arresting me on
fabricated charges. (See
te.htm ) When the scheme was exposed in a federal court in 1997, INS
agreed to pay a hundred thousand dollars to my attorneys, and the federal
judge ordered an investigation of the joint KGB-INS operation. (See ) 

At the same time, since late 1992 KGB has been engaged in one of its most
intense "character assassination" campaigns in its recent history, trying
to discredit me and thus neutralize my disclosure of its grand theft
operations. Dozens of main Russian print and broadcast media kept accusing
me, while quoting KGB sources, of various crimes, which included theft of
$300,000,000 from Russia, laundering billions of dollars, and defrauding
U.S. Federal Reserve System. Mr. Finchs letter appears to be just the
latest salvo in this KGB-organized barrage. 

What makes Mr. Finchs letter different is that he authored it after
reviewing the decision of a U.S. court which, after examining thousands of
documents and considering testimonies of numerous witnesses, concluded that
all accusations against me had been fabricated by the Russian government
to conceal its corruption. So, Mr. Finch dismisses all facts by making
sweeping allegations that U.S. courts are corrupt, American witnesses (see
the list at ) were bought and thus
lied, the American reporters were bought as well, and the American
government was intimidated by an ambulance chaser in my employ - just
re-read Ray Finchs letter! 

May be Mr. Finch is just a cynic who automatically assumes dishonesty and
corruption? Oh, no! Mr. Finch states that corruption IN RUSSIA is over
exaggerated and is not to be presumed. For Mr. Finch corruption is to be
presumed only IN THE USA. Only the KGB disinformation department would be
trying to sell this point of view. It is evident that Mr. Finch is one of
its peddlers. 

Disinformation Peddlers 

For Mr. Finch the American Press is corrupt and not reliable; what IS
reliable is "moderate Russian press, e.g, Kommersant". In Russia
Kommersant is known for eagerness to publish any disinformation for modest
bribes or favor trading. In 1997 I sued Kommersant for $134 million and
Izvestia for $176 million. I won both cases. See Mr. Finchs attempt to sell
Kommersant as "the Russian equivalent to our Wall Street Journal" can
hardly be anything but a clear indication that he is paid by the same

>From the latest article of Kommersants reporter M. Varyvdin: "[U.S. Court]
seriously took the [official statement to the Russian Parliament] of
[Deputy Prime Minister Colonel-General] Anatoly Kulikov that Konanykhine
had stolen $300 million. This obvious exaggeration (you may call it an
artistic trick) was taken by American judges as a sign of bias on the part
of the Russian authorities... So, big-hearted Americans gave Konanykhine
political asylum". 


How it all started? What are the details of the story? Answers to these and
many other questions cannot fit in this letter, but may be found on 

What is the real situation with corruption in Russia? Please see And if you have any questions
not answered there - write to me to 



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