March 19, 1999    
This Date's Issues: 3097• 3098 • 

Johnson's Russia List
#3098
19 March 1999
davidjohnson@erols.com

[Note from David Johnson:
This week on the Center for Defense Information's America's Defense 
Monitor television program: "Russia's Nuclear Crisis." A compelling 
up-to-the-minute documentary. Written by David Johnson.
Summary:
Relations between the U.S. and Russia have dangerously worsened in recent
years. Russian economic woes and military deterioration have increased
the risk of loss of control over nuclear weapons, while NATO expansion has
fostered fear and distrust among the Russian people. If the U.S. fails to 
take steps to address these issues, we risk a new Cold War.
For more information on the show, including a full transcript, visit the
website at http://www.cdi.org/adm/1228/index.htm
To receive regular updates on new video releases from the Center for Defense
Information, e-mail adminfo@cdi.org with the message "subscribe."
Airs in Washington, DC on Sunday, March 21 at 12:30 pm on Channel 32. 
Airs in New York on Friday, March 26 on Channel 25 at 8:30 p.m., and on 
Saturday at 7:00 a.m. on Channel 13. 
For air dates in other cities, check your local listings. 
Special Russia List recipient price for VHS tape: $25 (including 
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HOW TO ORDER: Call 1-800-CDI-3334 (credit cards accepted).
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EVEN BETTER DEAL: For $100 order all five of CDI's recent television 
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developments 
in recent years. Ideal for educational purposes. (David Johnson's work.)

1. Fred Weir on the scandal.
2. Reuters: Publishers Say Monica Lewinsky To Visit Moscow.
3. Moscow Times: Jonas Bernstein, PARTY LINES: Kremlin Staff May Pay for 
Failed Smear.
4. AP: Russian Leaders Seek IMF Loans.
5. Itar-Tass: CHURCH SHOULD BE INDEPENDENT FROM STATE: PATRIARCH.
6. Washington Post: David Hoffman, A Soviet Bureaucrat in a Capitalist 
World. Primakov Uses Cautious Pragmatism in Climb to the Top.
7. AFP: Russia's anti-Semitic literature flourishes.
8. AFP: Soros Ready To Give 60M To Battle Russia's TB.
9. The Economist: Moscow goes into business.
10. Itar-Tass: UN CHIEF AWARE OF NEED TO SUPPORT RUSSIA''S REFORMS--VP] 

*******

#1
From: "Fred Weir" <fweir@glas.apc.org>
Date: Fri, 19 Mar 1999 
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT Mar 20) - A bizarre burst of sex, lies and videotape, Russian
style, has become the latest evidence that President Boris Yeltsin's grip on
Kremlin power may be fading fast.
A deepening scandal surrounds Russia's Prosecutor-General, Yury
Skuratov, who was shown on state-owned TV this week in bed with two naked
women. The video, which was distributed to all media outlets and is now
available for sale on Moscow street corners, is apparently part of a
Kremlin-inspired plan to force Mr. Skuratov out of his job.
"This is a very complicated story. Skuratov is being used as a
battering ram against President Yeltsin by some very powerful forces," says
Andrei Ryabov, an analyst with the Carnegie Endowment in Moscow.
The story began earlier this year, when Mr. Skuratov launched an
offensive against corruption in the upper echelons of the Kremlin, the
Central Bank and the Government. He also sent police to raid the offices of
one of Russia's richest tycoons, Boris Berezovsky, whom he accused -- among
other things -- of hiring professionals to spy on top officials, including
President Yeltsin.
On February 1, Mr. Skuratov unexpectedly quit his job and was rushed to
the hospital with what was described as heart trouble. The next day Mr.
Yeltsin left his own hospital bed and drove to the Kremlin specifically to
sign Mr. Skuratov's resignation. There are many theories as to what prompted
this
extraordinary sequence of events, but as yet no hard facts.
After a three week disappearance, Mr. Skuratov suddenly reappeared in
his office and resumed work as if nothing had happened. The Kremlin demanded
that he leave his job and that the Federation Council, Russia's upper house
of parliament, confirm Mr. Skuratov's resignation.
Last Wednesday Mr. Skuratov appeared before the Federation Council,
which is composed of regional leaders who are normally loyal to the Kremlin.
In a rambling and vague speech, he accused Mr. Berezovsky and corrupt
officials of trying to drive him out of his job.
"The main reason for my resignation request was that a very unhealthy
situation had developed around me and the Prosecutor's office as a whole,"
Mr. Skuratov told the Federation Council. "Certain forces had managed to
drive a wedge between the President and the Prosecutor General's office. I
felt I had
lost the support of the President".
Then, in a stinging rebuke to President Yeltsin, the Federation Council
refused to accept Mr. Skuratov's resignation - by an overwhelming vote of
142 to 6.
"This was an extremely serious blow to Yeltsin. It is a very dangerous
signal to see the Federation Council consolidating against him," says Andrei
Piontkovsky, director of the independent Centre for Strategic Studies.
"Yeltsin's enemies are uniting".
The plot thickened later the same night, when a television station in
the former Soviet republic of Georgia broadcast a tape that purported to
show Mr. Skuratov frolicking in bed with two prostitutes. Within hours the
same tape was shown on Russian state television, and was soon on display
everywhere, including
the Internet.
The next day Mr. Yeltsin formed a special commission to investigate Mr.
Skuratov's alleged "misdeeds, which bring disgrace to the honour of a
prosecutor, and his violations of the prosecutor's oath".
Beneath this complex chain of events, analysts say, is a raging power
struggle between President Yeltsin and his Prime Minister, Yevgeny Primakov,
in which the latter appears to be gaining the upper hand.
"The clear winner here is Primakov, even though he played little role in
these events," says Mr. Piontkovsky. "The balance of power is shifting in
his favour".
Mr. Primakov has increasingly taken over the functions of President as
Mr. Yeltsin has spent more and more time in his hospital bed over recent
months. Analysts say the anti-corruption drive launched by Mr. Skuratov was
ordered by the Prime Minister, and that investigators may have been getting
uncomfortably close to graft and sleaze inside the Kremlin itself.
Corruption in Mr. Yeltsin's inner circle has only been the subject of
gossip until now. But Mr. Skuratov says he is cooperating with Swiss
prosecutors who are investigating a Swiss construction company that paid
"large amounts of money" to Kremlin insiders to obtain lucrative government
contracts
in Moscow.
Mr. Skuratov's probes have also come uncomfortably close to Mr.
Berezovsky, who is rumoured to be the Yeltsin family's personal financial
adviser and fixer.
By failing in his bid to force Mr. Skuratov out of office, Mr. Yeltsin
has highlighted for the first time just how isolated and weak his own
position has become after months of illness and political crisis.
"It seems that the Kremlin has committed one of the biggest mistakes in
recent times," wrote the liberal daily Kommersant Thursday. "Trying to move
Skuratov aside, using the good old means of compromising materials, Boris
Yeltsin not only failed to effectively defend himself, he put himself in a
much worse position".
One consequence of the Skuratov affair, analysts say, is that it makes
an impeachment drive launched last week by the State Duma, the lower house
of parliament, look much more credible.
The Duma is dominated by the Communists and other Yeltsin foes. But for
impeachment to succeed, it must be supported by a two-thirds vote in the
Federation Council as well.
"Now that we see the Federation Council is capable of voting so
overwhelmingly against Yeltsin, as they did in the Skuratov case, one has
the impression that impeachment might go through as well," says Mr. Ryabov.
More immediately, the spectacle of sex scandal and power struggle
rocking the Moscow establishment is sure to worsen Russia's already
mud-spattered international image.
"Primakov is going to Washington next week to conduct a range of very
sensitive negotiations," says Mr. Ryabov. "All this mess at home will not
make his job any easier".

*******

#2
Publishers Say Monica Lewinsky To Visit Moscow 

MOSCOW, Mar. 19, 1999 -- (Reuters) Monica Lewinsky is expected to visit
Moscow to launch the Russian-language version of her biography, Monica's
Story, the book's Russian publisher said on Thursday. 

"You can consider it iron-clad," Tatyana Makarova, marketing head of
Vagrius publishers told Reuters. "The question now is whether she will come
in June or July." 

A Russian translation of prosecutor Kenneth Starr's report on his
investigation into Lewinsky's affair with U.S. President Bill Clinton has
been something of a flop for other publishers, she said. 

But Vagrius expects British author Andrew Morton's authorized biography of
the former White House intern to be a big hit. 

"This is not the Starr report...Russian people are interested in emotions.
Where there are emotions, there is interest," she said. 

She said Russia's flamboyant nationalist parliamentarian Vladimir
Zhirinovsky, who has often lampooned Clinton over the affair, had told the
publishers he hopes to meet Lewinsky during her visit. ( (c) 1999 Reuters) 

********

#3
Moscow Times
March 19, 1999 
PARTY LINES: Kremlin Staff May Pay for Failed Smear 
By Jonas Bernstein 

The breathtaking ineptitude with which the Kremlin appears to have handled the
issue of Prosecutor General Yury Skuratov suggests that a purge of the
presidential administration may accompany - or even precede - a major shake-up
in the Cabinet of Prime Minister Yevgeny Primakov. 

The Kremlin can perhaps be forgiven for having assumed that a surreptitiously
filmed video of Skuratov in bed with two prostitutes would be enough to get
rid of the meddlesome chief prosecutor. Former Justice Minister Valentin
Kovalyov, after all, was easily dispensed with in a similar manner, and a
stained dress, for a time, threatened to topple the leader of the world's last
remaining superpower. 

What is unfathomable is that Russia's presidential administration did not have
a contingency plan in the event that Skuratov's wife turned out to be
exceptionally tolerant - which appears to have been the case. 

So now the chief prosecutor, apparently forgiven at home and back on the job,
is a hero not only to the leftist State Duma, but to the erstwhile "pragmatic"
and pro-Kremlin regional leaders in the Federation Council. President Boris
Yeltsin, meanwhile, has had to backtrack rapidly - even appointing, with
characteristic disingenuousness, a commission to determine if there was an
"illegal intrusion" into Skuratov's private life (the president, undoubtedly,
was simply shocked by such tactics). 

At the same time, the Kremlin's close allies at RTR television, which aired a
fragment of the Skuratov video Wednesday, may now have to take time out from
their ongoing defense of Russia's "reforms" to defend the channel's financial
dealings - which, like those at the other state television channel, have been
rumored to be ... murky. Law enforcement sources were quoted Thursday as
saying the issue of RTR's finances was soon to be revisited. 

According to one "version" making the rounds, the operation to neutralize the
Skuratov problem was (mis)handled by Nikolai Bordyuzha, head of the Kremlin
administration, who was encouraged by the Kremlin "family circle" - Tatyana
Dyachenko, Yeltsin's daughter and adviser, and Valentin Yumashev, the former
presidential chief of staff who is still a key insider. Indeed, the Russian
weekly called (appropriately) Versia reported last month that Skuratov's sex
romp was recorded at a government dacha that had been audiovisually wired by
the Federal Security Service. 

Skuratov himself told NTV television Thursday the videotaping had been
organized by Mabetex, a Swiss engineering-construction firm that has allegedly
maintained corrupt relations with members of Yeltsin's circle. In any case,
whoever was the "brains" behind the campaign brought the president, as one
newspaper put it Thursday, "no honor." 

The president, thus, cannot be pleased with his minions. He is now in a
serious conflict with virtually all the country's major power brokers and
power centers. Along with the perennial "national-patriotic" opposition, he
faces the governors, who have essentially gone over to the other side, a
Cabinet that also leans heavily in that direction, and a prosecutor general
who is sitting on a huge pile of kompromat and undoubtedly in a vengeful mood.

So what to do? Bordyuzha, despite years in Russia's special services, has
proven himself incapable of defending the boss. What is needed, in essence, is
a wartime consigliere. Perhaps the man running the national power grid Unified
Energy Systems? 

*******

#4
Russian Leaders Seek IMF Loans
March 19, 1999

MOSCOW (AP) -- Russian officials tried today to persuade the International
Monetary Fund to release new loans and warned that a refusal would be bad
for the IMF as well as Russia.

An IMF mission has been in Moscow for more than a week to prepare a report
on Russia's finances before Prime Minister Yevgeny Primakov visits the
United States next week for talks on resuming loans from the fund. The IMF
group was expected to leave Saturday.

``We must head toward conclusion of the talks and find possible solutions
to our problems,'' First Deputy Prime Minister Yuri Maslyukov said before
meeting the IMF team. ``If talks fail to bring a success, we will both be
hurt.''

Primakov was also expected to meet with the IMF later today.

Russia has been trying to convince the fund that its finances are well
enough in order to merit resumption of loans that were frozen after the
government defaulted on some debts and devalued the ruble in August.

The country remains mired in economic recession and the government has said
that it will not be able to pay about $17.5 billion in foreign debts that
fall due this year unless it gets new loans.

But loan talks have been stalled for months because the IMF disapproves of
the government's desire to cut some taxes, among other things.

Maslyukov said Primakov would meet with President Clinton and Vice
President Al Gore during his trip to the United States to lobby for IMF
loans and discuss restructuring Russia's foreign debt, which totals $150
billion.

``As is known, the U.S. administration has a large influence on
international financial institutions,'' Maslyukov said in an interview with
the business daily Kommersant, published today.

*******

#5
CHURCH SHOULD BE INDEPENDENT FROM STATE: PATRIARCH.

MOSCOW, March 18 (Itar-Tass) - Patriarch Alexy II of Moscow and All
Russia said on Thursday the church should be independent from the state
and that it cannot help passing moral judgement on deeds by the
powers-that-be.

"The church is not involved in political struggle, it does not seek
power but it cannot help passing moral judgement on actions by the
powers-that-be, the situation in the society and people's problems,"
the patriarch said in a live interview with the Mayak and Yunost radio
stations.

It is only possible on condition that the church is independent from
the state, he added.

The hierarch said the church in Russia is free at present and open for
cooperation with any healthy forces who are striving towards the
nation's welfare.

"Our compatriots may belong to various nationalities, differ in
culture, way of life, political views and social status, but the church
loves all of them and is open for everybody," the patriarch stated.

The church's main mission is that of conciliation. "Wherever conflicts
flare up, the Church has raised and will raise its voice, calling upon
the parties to resolve all disputed issues at the negotiating table,
not on a battlefield," the patriarch said, adding that it did so during
conflicts in Vilnius, Nagorny Karabakh, Kosovo and Chechnya.

Russia may see confrontation during the upcoming elections. In that
case, the church will call for peace and accord again, it is the most
important thing. "The people should make the right choice. They should
trust not those who make verbal promises but them who can really help
our society pull out of the streak of difficulties," the patriarch
said.

******

#6 
Washington Post
19 March 1999
[for personal use only] 
A Soviet Bureaucrat in a Capitalist World
Primakov Uses Cautious Pragmatism in Climb to the Top
By David Hoffman

MOSCOW—The end was near for the Soviet Union as President Mikhail Gorbachev
wavered in 1991 on whether to liberalize the economy further. Yevgeny
Primakov met with Gorbachev at his Black Sea retreat and bluntly urged him
to move toward market reform.

"It's the last chance," Primakov said, according to another member of
Gorbachev's inner circle, Anatoly Chernyaev, who was present. "We must do
some drastic things."

Seven years later, Primakov was catapulted into office as Russian prime
minister amid a political and economic crisis. Russia's new market economy
was reeling from a ruble devaluation, and Primakov's outlook had markedly
changed. "We can't go on waiting for the market environment to solve our
problems," he declared.

Such is the long road traveled by Primakov, supreme survivor of the Soviet
and Russian political establishment who has effectively become Russia's
day-to-day ruler. Once he was part of a small group of academics who
believed they could gradually reform socialism, and the Soviet Union, from
within. Now, after Russia's wrenching initial trial with the free market,
Primakov is trying to stop the clock on what many regard as Russia's "wild
capitalism."

Since taking office six months ago, Primakov has put Russia's economy on
hold. The tumultuous transformation from Soviet central planning to market
capitalism remains an unfinished, overriding issue -- and Primakov has
deliberately suspended the madcap, winner-take-all gamble for riches of
recent years.

Instead, he has harked back to an earlier day. His rhetoric and goals have
a distinctly Soviet ring. He has called for restoring a strong, central
authority. His government has toyed with creating a new, mammoth
state-owned oil company. He promised recently to double state subsidies for
the failing coal industry. He has given the back of his hand to the wealthy
oligarchs whose ascendancy became a symbol of President Boris Yeltsin's
era, and its greatest excesses.

But for the most part, even his close friends say Primakov has just frozen
the game. Privatization of state enterprises has slowed; a major overhaul
of the troubled banking system is not in the cards; and the ruble has
continued to slide in value against the dollar. At the same time, the worst
fears of Primakov's critics -- that he would attempt to renationalize
industry or touch off hyperinflation -- have not been realized.

For months, Primakov has pursued a single goal, and he is going to
Washington next week to try to further it. He wants to win agreement from
the West for just enough financial aid to roll over $4.5 billion in
payments Russia owes the International Monetary Fund this year on earlier
loans. That debt alone is a quarter of Russia's entire federal budget, and
failure to arrange a deal could send the Russian economy spiraling further
downward. Russia's total obligations to overseas creditors are a crushing
$17.2 billion, and it already has defaulted on some Soviet-era debt.

"You are asking me why Primakov is doing nothing now?" said Vadim Bakatin,
a former KGB director who was close to Primakov at the end of the Soviet
era and is now a businessman. "Honestly, I have the same question. Maybe it
is the result of 80 years of Communism. Or maybe the result of eight years
of this idiotic course. We are at the bottom of the abyss."

"In August, a period was over -- the period of liberal reforms," said
Valery Solovei, an analyst at Gorbachev's policy research organization.
"Society is extremely tired and is no longer capable of starting
fundamental economic changes. It needs a rest. A strategic respite."

The Primakov "strategic respite" comes on the threshold of another turning
point for Russia. Within the next 15 months, and possibly sooner, the baton
is to be passed from Russia's first elected president, Yeltsin, to a
successor. Yet few of the possible successors share the competitive market
model that Yeltsin applied, unevenly, and that has now been battered and
discredited.

In a recent interview, Primakov again insisted "no, no, no" when asked if
he will run for president. But the 69-year-old premier, the epitome of
caution, the only member of Gorbachev's team to survive in high office
during the Yeltsin years, is already in the constitutional line of
succession if Yeltsin should die or become incapacitated, and Yeltsin's
health continues to be poor.

Once viewed as a caretaker, Primakov has become a political force to be
reckoned with. Among potential rivals to lead the country, his public
opinion ratings are high. "He is not thinking about retirement and building
a nice dacha so he can spend time with his grandchildren," said a prominent
Moscow academic who has known Primakov for nearly 30 years.

But where would Primakov, who spent most of his life in a step-by-step
advance toward the top of the Soviet hierarchy, take the new, and newly
tattered, Russia? What drives the former intelligence chief who is known as
charming and witty in private but ponderous and inscrutable in public?

Primakov's own history, and events of recent months, offer some clues. They
suggest a portrait of a master of back-room maneuvering who is a stranger
to the limelight of electoral politics; of a bureaucrat trying to blend
some old Soviet economic techniques with Russia's proto-capitalism; of a
politician who would like to impose more authoritarian control over a
country in which levers of power simply no longer work; of a leader who,
despite Russia's weakened status, seeks to rebuild the country's influence
abroad.

A Calculating Child

Robert Demargaryan, a childhood friend and classmate, recalled for the
Russian magazine Ogonyok last year how Primakov missed the first week of
classes in the first grade. Fatherless, born in Ukraine, Primakov had moved
to Tbilisi and lived in a 17-square-yard communal apartment with his
mother, a gynecologist. A stern teacher informed the new boy that the other
students had learned how to draw a slanting line, how to repeat in unison
and how to count to 10. What could Primakov do?

"The small, very stocky boy, not the least intimidated, stood up and began
to recite Pushkin," Demargaryan said. "We were all stunned. We listened
open-mouthed, and he kept reciting by heart. All of our achievements
writing lines and little curlicues gradually dimmed, became insignificant."

Primakov, called Zhenya as a boy, was calculating. His friends say they
were often hungry during World War II, and in the school cafeteria each
pupil got one unsatisfying bun each day. Primakov thought up the idea of
eating them in turns: One boy got four buns one day, another boy got four
the next.

Primakov later pursued Arabic studies at the Institute of Oriental Studies
in Moscow. He experienced family tragedy when his eldest son, Alexander,
died of a heart attack as a soldier during a May Day parade in Red Square.
His first wife, Laura, also died suddenly of a heart ailment, according to
Ogonyok.

After stints as a journalist on on state radio and television, Primakov
moved to Pravda, and in 1966 was sent to the Middle East as a
correspondent. Primakov reported on the ferment of Arab nationalism,
including the final years of Egyptian leader Gamal Abdel Nasser. During his
four-year tour, Hafez Assad of Syria and Saddam Hussein of Iraq were rising
to power.

The region was a Cold War battleground, and the Arab world a fertile ground
for anti-Western regimes with whom the Soviet leadership sought closer
ties. In his dispatches, Primakov wrote enthusiastically of the Arab
struggle against Western "imperialism."

"At that time, we all thought, mistakenly, that this was the way for the
Arab people to socialism -- bypassing capitalism," recalled Thomas
Kolesnichenko, a friend of Primakov's for three decades who was also a
Pravda correspondent. "We thought it was a new way, an example of the
crisis of capitalism. It was our feeling."

Primakov also forged a long-standing relationship with Saddam Hussein, who
had become second-in-command in Iraq. "Even back then one could not miss
some of Saddam Hussein's character traits, which later on persisted and
developed, when he became Iraq's only leader," Primakov recalled in a
memoir. "Toughness, bordering on cruelty, strong willpower, bordering on
stubbornness, unpredictability in decisions and actions, achieving a goal
no matter what. He was extremely suspicious."

Primakov and Saddam Hussein met many times over the next 20 years as the
Soviet Union became a major arms supplier to Iraq. Primakov was also close
to the late Kurdish leader Mustafa Barzani and made many trips to the
Kurdish enclave in northern Iraq.

Primakov had close ties to the KGB during his years as a journalist. Some
have said he was a spy under the code name "Maxim." But others speculate
that Primakov, while cooperating with the spay agency, could not have been
an actual KGB officer. As a Pravda correspondent, they say, he was
reporting to the Communist Party's policymaking Central Committee, and thus
probably was not employed directly by the security agencies.

Back in Moscow, Primakov climbed rapidly through the ranks as an academic,
although he would not be known for major research works. He eventually was
chosen director of the prestigious Institute for World Economy and
International Relations, succeeding Alexander Yakovlev, one of the
architects of the economic and political reforms known as perestroika and
glasnost championed by Soviet leader Mikhail Gorbachev.

Primakov's natural caution shaped his place in the political debate. He
could be a progressive in his private talks with friends, but never to the
point of going "over the brink," as one put it.

For example, Kolesnichenko recalled that Primakov opposed the Soviet
invasion of Afghanistan in 1979, but only in private. Primakov would have
been in a position to advise Soviet leaders with special reports but was
not in a decision-making role then. "He never signed any papers for the war
but not any against the war," he said. In later years, when Gorbachev came
to power, Primakov was at the forefront of those who looked for an exit
from the costly and unpopular war. "Primakov survived because he went step
by step," Kolesnichenko said.

"Primakov is the embodiment of the Soviet bureaucrat-politician," said
Solovei. "He entered the highest Soviet elite before 1991. He understands
well the mentality of this elite. He is solid in appearance, never in a
hurry, his statements are weighted. It is the Soviet bureaucratic 'Big
Style.' "

When Gorbachev launched the perestroika reform program, he found support in
a coterie of foreign affairs specialists that included Primakov. They were
part of the establishment but also knew of the Soviet Union's deep
troubles. They were nudging it toward change. "In this sense, Primakov was
a product of the long and failed effort to reform the Soviet Union from
inside," said the prominent academic.

Although known as an ally of perestroika at home, Primakov earned a harsher
reputation in the West when he was Gorbachev's envoy to Baghdad before the
1991 Persian Gulf War. Primakov's meetings with Saddam Hussein, in a vain
effort to avert the war, were described by Secretary of State James A.
Baker III at the time as "meddling" and "a major distraction."

In his memoir, titled "The War That Did Not Have to Happen," Primakov
defended his entreaties to Saddam Hussein to pull out of Kuwait. He claims
he warned the Iraqi leader of the coming allied counterattack but that
Saddam Hussein "reacted in an ambivalent way," and preferred to fight.
Gorbachev, in written answers to questions from The Washington Post, said,
"I have always rejected this idea that Primakov had his own line. . . . The
suspicions which Americans had for Primakov at that time had no ground."

During the coup attempt against Gorbachev in 1991, Primakov was serving in
Gorbachev's security council, along with Bakatin, the friend and former KGB
director. Bakatin recalled that he proposed they immediately speak out
against the coup but that Primakov hesitated.

"Primakov is a wiser person than I am, a more serious politician," Bakatin
said. "He is more sophisticated in these Moscow intrigues. Primakov is more
cautious. Maybe he thought we had to look into things more carefully. There
was this small wavering, of several minutes, maybe." Bakatin recalled that
after a few minutes Primakov presented him with a statement denouncing the
coup as unconstitutional.

When Gorbachev returned to Moscow after the coup collapsed, he no longer
trusted the old KGB and split it apart, putting Primakov in charge of the
foreign intelligence apparatus, with Yeltsin's consent. Primakov held the
post into the Yeltsin years.

As modern Russia's first spy chief, Primakov saw that the country was
dramatically weakening from within. The threats to Russia, in fact, were
greater inside than from abroad. Among other issues, the country was
leaking nuclear materials, billions of dollars in capital was flowing out,
and organized crime was devouring the state.

Primakov also struggled to hold together a spy agency that itself was
contracting, closing down many global outposts. "He was a political leader
of the intelligence service," said a longtime colleague there. "The fact he
managed to preserve it was an accomplishment of its own." It was also on
Primakov's watch that Aldrich Ames was unmasked as a Russian mole in the
CIA, but Primakov was not widely criticized at home for the loss.

Russia's flirtation with the West was fraying in early 1996 when Yeltsin
named Primakov foreign minister. Primakov had come full circle. The
mandarin who was once considered an examplar of Soviet-era "new thinking"
became a totem for anti-Western sentiments in the Russian parliament.
Primakov satisfied the Communists and nationalists with his harder line
toward the West. But he was pragmatic: He opposed expansion of NATO but
later engineered Russia's assent.

Primakov sought to counterbalance American post-Cold War influence by
offering support to such foes of the United States as Iraq and Iran. That
approach still prevails. Iran and Iraq have sent agents to Russia,
apparently shopping for weapons. In January, for example, an Iraqi
delegation visited Moscow and Nizhny Novgorod, Russia's third-largest city.
Russia has denied that the delegation signed contracts to buy weapons in
violation of United Nations sanctions. But the group was headed by Ahmed
Murtada Ahmed Khalil, Iraq's transport and communications minister, who,
sources said, was head of Iraq's biological weapons program from 1987 to 1990.

The Art of Maneuvering

In recent years, Russia's political bosses have each had their own
political and financial clan. Former prime minister Viktor Chernomyrdin,
for example, was close to Gazprom, the natural gas monopoly.

Primakov's base of support has been the security services, including the
foreign intelligence agency he once headed. In the past six months, agents
and officers have come into high-level government posts, many of them named
by Primakov. The head of his executive staff, Yuri Zubakov, is a former
deputy director of intelligence. Robert Markaryan, head of his inner
secretariat, was his assistant at the intelligence service. Nikolai
Bordyuzha, Yeltsin's chief of staff, was a colonel-general in the KGB for
27 years. Other former KGB veterans also are in key positions, many named
by Primakov in recent months.

Kolesnichenko, Primakov's former Pravda colleague, said Primakov is turning
to people he views as free of Russia's omnipresent corruption. "Now,
everything is corrupt. Bribes everywhere. And one person can betray
another. But the people he knew from the intelligence services are clear,
honest -- and poor," he said. "Officers, he can rely on them."

After many years of working behind the scenes, Primakov also had trouble
adjusting to Russia's more open, and questioning, news media. "Having a KGB
mentality, he uses KGB methods," said an insider who works at Russian
government headquarters. "His information policy is KGB -- It's better to
say nothing."

Primakov recently joked that reporters need only call him. But the reality
is more like the formal order he issued Feb. 16 that only he, his
spokeswoman and the "government information directorate" could give the
government's view. Even Yeltsin reproached Primakov in public recently,
saying: "Your relations with the news media -- I do not like it."

Critics also have questioned whether Primakov would lead a retreat from
Russia's nascent electoral democracy. Doubts were raised by Primakov's
recent call to scrap the direct popular election of governors, one of the
democratic gains of the Yeltsin years, and reinstate Soviet-era top-down
"vertical" control from the Kremlin. Instead of voters picking governors,
Primakov said they should be chosen by legislatures, from among candidates
offered by the Kremlin.

Some advisers say Primakov eventually wants to return Russia -- in which
central control is weakening by the day -- to a more authoritarian state.
"To create a strong state, he needs to be president," said the government
headquarters official. "His main goal is to freeze the situation and
stabilize it -- and later to create order. He doesn't want to return to a
dictatorship. He understands it is impossible."

The most searching questions about Primakov concern the economy -- and
where he would take Russia if he became Yeltsin's successor. He has vowed
repeatedly to rejuvenate the "real economy," and many agree that Russia's
brief boom in recent years was fueled by illusory investment in stocks and
bonds, and not in investments in industry.

But Primakov appears to have done little to create the conditions for
investment in the "real" economy. He has declared war on corruption -- so
far without result except for a few high-profile police raids aimed at a
controversial tycoon, Boris Berezovsky. He has long complained about the
debilitating effect of capital flight but claimed in the interview to know
nothing of reports that the Central Bank had sent Russia's national
currency reserves offshore through a hidden firm.

While promising to stick with market principles, Primakov and his
government have reverted to old Soviet habits, such as handing out secret
"stabilization" credits to banks and boosting subsidies to failing
industries and military factories. Economist Alexei Ulyukaev noted recently
that Primakov's government has been rent by lobbying by the military,
agriculture, financial, and oil and gas interests. But, he said, "no
resolute measures" are being taken to "bring order to the budgetary,
taxation, monetary and banking spheres."

"Primakov," he added, "is Gorbachev's best pupil in the difficult art of
constant maneuvering and nonfulfillment of specific obligations, promises
and solemn declarations."

*******

#7
Russia's anti-Semitic literature flourishes

MOSCOW, March 19 (AFP) - Anti-Semitic books are an easy find these days in
Russia and sales of thousands of works such as "International Jewry", or
"Beware, Zionism !" reflect a form of prejudice which is thriving, even in
the Russian parliament.

Some 10,000 copies of the latest publication in that genre, "Jewish Fascism
in Russia", were released as part of a special collection called the
"Library of the Russian Patriot", by the Vitiaz publishing house.

The collection is devoted to denouncing Jews and Freemasonry through the
release of such anti-Semitic classics as the "Protocols of the Elders of
Zion", a 19th century text on an alleged Jewish plot to dominate the world.

The document was later shown to be a fake. Czarist secret police fabricated
the hoax to justify "pogroms" against Jews.

The Vitiaz books also focus on the role of Jews in today's Russia, mostly
by blaming them for the country's ills, beginning with the 1917 Bolshevik
Revolution.

The titles are devoid of any subtlety: "What We Don't Like About Them",
"The Myth of Anti-Semitism" and "The Jewish Occupation of Russia".

Neither are the chapters: "The blood-soaked road of Zionism" and "The
Octopus of World Judeo-Fascism".

Author Georgy Sebov last month released 3,000 copies of his work "The Final
Stage of the Catastrophe", which calls on Russians to destroy "the fifth
column of Zionism in Russia".

According to Sebov, this fifth column encompasses the Russian Orthodox
Church, which "has become an element in the aggression of the Russian people".

Priced at about 10 to 15 rubles, or about 50 cents, the books are readily
available at street kiosques near Red Square or at the Moscow post office.

Russian Jews say authorities are turning a blind eye to the hate literature.

"Unfortunately, the courts have not taken action against the authors of
such books and against politicians who make anti-Semitic statements," said
Tancrede Golenpolsky, one of the leaders of the Russian Jewish Congress.

Right-wing extremist General Albert Makashov, a communist party deputy, in
October vowed to "send about a dozen 'yids' to the other side".

Two months later, another communist deputy, Viktor Ilyukhin, declared that
there were "too many Jews in the entourage of President Boris Yeltsin" and
proposed setting a quota to restrict their numbers in the government.

The State Duma, Russia's lower house of parliament, failed to condemn the
statements.

A Rostov prosecutor meanwhile dropped complaints of anti-Semitism against
Makashov, arguing that his statements could not be considered an offense.

Yeltsin, Patriarch Alexei II and many intellectuals have condemned public
displays of anti-Semitism but to no avail.

Moscow's political class and the press were in an uproar in January when
about 200 saluting members of the neo-Nazi Russian National Unity group
marched in the capital.

Police later found small arms, explosives, bomb-making material and
pictures of Hitler in the homes of right-wing militants believed to be
members of the group. 

******

#8
Soros Ready To Give 60M To Battle Russia's TB 

MOSCOW, Mar. 19, 1999 -- (Agence France Presse) U.S. billionaire financier
George Soros will boost his contribution to the fight against rampant
tuberculosis in Russian prisons to $60 million dollars, the business daily
Kommersant reported Friday. 

Soros, who has already set up a $12 million fund to provide medication and
other supplies for Russia's 100,000 consumptive inmates, told a visiting
team of Russia prison service chiefs recently that he would be able to
stump up half an estimated $120 million bill to battle TB. 

Kommersant ran an interview with prison service chief Vladimir Yalunin, who
led the Russian delegation to the United States last month in search of
support for Russia's crisis-ridden jails. 

Yalunin said that Soros has told him: "Volodya, I will probably be able to
give you $60 million, but the other 60 you will have to find yourself. I
cannot pay for your whole federal budget." 

The prison service chief sketched the growing catastrophe of tuberculosis
in Russian jails, the growth of which has reached exponential proportions
and now affects one in 10 prisoners. 

More than 10,000 inmate sufferers have developed a drug-resistant strain of
the disease, and before they die are frequently released on compassionate
grounds, increasing the risk of the spread of the disease among the general
population. 

"Medical facilities are overcrowded and not capable of creating normal
conditions for housing the sick," Yalunin told Kommersant. "Because of a
lack of financing, we can only provide 20-25 percent of the food, medicine
and equipment needs." 

"Spending on one tubercular inmate is around 30 rubles a day. Multiply that
by 100,000 patients 365 days of the year -- and that's just for medicine." 

******
#9
The Economist
March 20, 1999
[for personal use only]
Moscow goes into business 
City of the dead
M O S C O W 

ANY normal car company that sold barely 100 examples of a new model would
be facing oblivion. But Russia is not a normal market, the city of Moscow
is not a normal shareholder, and Moskvitch is definitely not a normal
company. Nobody seems particularly upset that the Yuri Dolgoruky saloon has
failed to sell. The market didnt like it, and advertising is too expensive,
explains the general director, Ruben Asatrian. 

The Moskvitch motor works was notorious in Soviet times for producing cars
unreliable even by the challenging standards of the planned economy. Now,
supposedly, everything is different. Fuelled by an injection of cash (Mr
Asatrian says he cant remember how much) from Moscows municipal government,
which is also its main shareholder, the factory has started producing a new
range of cars. 

These include Soviet-era models fitted with Renault engines (of which
Moskvitch sells tens of thousands) and three new models, all Volvo
look-alikes, consisting mainly of imported parts bolted into a locally made
steel shell. The mirrors and seats are made by us, says the plants chief
engineer, after some thought. 

At first sight the whole project seems mystifying. The plants finances,
like almost all Moscow city businesses, are emphatically private. Would you
go to a western car company with these questions responded one municipal
entrepreneur tetchily, when asked about his return on equity. The new cars
are not an engineering success (they have a reputation for rapid
corrosion). Even municipal entities such as the Moscow police force prefer
Fords. Although new western cars cost around twice as much as Moskvitchs
best-seller, the Prince Vladimir saloon, the firm sold only 1,100 cars last
year; this years target is 3,000. 

The mayor of Moscow, Yuri Luzhkov, has built a business empire in a city in
which prestige and politics count for more than customers or profits. The
new Moskvitch cars may not be much good, but they are still the flashiest,
best-equipped and most powerful volume cars ever made by a Russian firm.
Furthermore, the antiquated plant employs 12,400 workers. Thanks to foreign
borrowings (around $2.5 billion in bonds and syndicated loans) the city has
been able to support its businesses generously. On March 16th the citys
industry minister, Yevgeny Panteleev, said that all three car plants in
Moscow would have the repayment date on their debts moved to June 1st next
year. 

How much longer can such generosity continue Although Moscows city finances
are obscure, the few outside signs are worrying. Despite Mr Luzhkovs
assertion in a recent interview that the city was super-liquid, it last
month nearly missed a $17m interest payment on a $295m bank loan, finding
the money only in the grace period. The citys credit rating has plunged
since last summers crisis and another downgrade is looming. Its bond yields
have soared in comparison with (hardly rock-solid) Russian federal
Eurobonds (see chart). Foreign analysts who have looked at the city
accounts say interest payments this year will total $250m.




The most conspicuous failure in Mr Luzhkovs empire is Moscows grandest
shopping centre, a three-storey underground mall next to the Kremlin. Even
before the crisis, the project looked weak. It is badly designed, awkwardly
sited (there is no warehousing space nearby) and it failed to attract a
well-known western retailer to be its star attraction. Much of the space is
taken up with boutiques selling designer clothes (and now offering
discounts of up to 70%). These contrast oddly with a sprinkling of
cheap-and-cheerful shops and fast-food outlets. 

Now the centre seems to be in real trouble. To bring in tenants quickly,
rents were pitched very low (by Moscow standards), at $2,000 a square metre
per year. They were supposed to rise to $3,500 by the end of this year.
This looks impossible. On a recent visit, around 20 units in the 22,000
square-metre developmentsome 10%were empty. The complex has a heavy burden
of debt, commonly thought to be at least $330m. (Kim Iskyan, an analyst at
MFK Renaissance, a Moscow investment bank, thinks it is nearer $600m.) The
company plans to issue new shares in an attempt to raise 1.2 billion
roubles ($52m). Given that at least 85% of the equity will stay in
preferred shares owned by the city, outsiders are unlikely to be tempted. 

Mr Luzhkovs adventures have been costly and unsuccessful; Moscows finances
are disorganised; and its response to the crisis has been to bluster and
fumble. But it is still too soon to forecast meltdown. Vast amounts of
money have sloshed through the city and its associated banks and companies
in past years; it is unlikely that all of this has vanished. And there are
still favours, from both foreigners and locals, to be extracted and cashed.
Mr Luzhkov, after all, stands an excellent chance of becoming Russias next
president or prime minister. 

*******

#10
UN CHIEF AWARE OF NEED TO SUPPORT RUSSIA''S REFORMS--VP

UNITED NATIONS, March 18 (Itar-Tass) - Russian Vice-Premier Valentina
Matviyenko, who was on a working visit in New York and who is now on
her way home, told Itar-Tass on Wednesday at the close of her meeting
with U.N. Secretary-General Kofi Annan that the U.N. chief showed
understanding of the situation in Russia and of the need to intensify
the efforts of both the United Nations and the entire international
community in support of reforms in Russia.

Matviyenko emphasised that "Mr Annan reaffirmed that he would devote
more attention to promote greater assistance on the part of U.N.
agencies, such as the U.N. Development Programme (UNDP), the U.N.
Children's Fund (UNICEF), the U.N. Population and Development Fund, to
Russia's social welfare development projects".

The Russian Vice-Premier said "we are interested in cooperation with
the U.N. on the entire range of social problems. Lately we develop
increasingly active cooperation with the UNDP and UNICEF. But we
believe, and I told Mr Annan this, that cooperation with the U.N. on
our programmes to enhance the social protection of the population,
primarily that of women, children, the disabled, and pensioners, and to
bring about social stability in society can be greater".

The problem of refugees in the post-Soviet space was yet another
subject of discussion during the Matviyenko-Annan meeting. A conference
dealing with the problem took place in Geneva in 1996 and
"unfortunately the U.N. efforts to implement the decisions of that
conference are insufficient so far," the Russian Vice-Premier pointed
out. "I requested that the U.N. Secretariat management see to it that
donor aid get increased to resolve the problem, for it still remains
acute," Matviyenko said.

Both sides also welcomed the fact that the social directedness of U.N.
activities increasingly becomes a priority. This is particularly
important for countries with transitional economies, such as Russia,
other CIS countries, and Eastern European states, which failed to take
into consideration the social consequences of current reforms which led
to serious by-effects, such as differentiation of society, inequality,
social tension, and a decline in the living standards of people,"
Matviyenko said.

This is why the U.N. must give greater attention not only to social
stability in these countries but also look for new approaches to
solutions to the problems of unemployment, poverty and social
protection of the population, the Russian Vice-Premier pointed out.

*******