March 23, 1999    
This Date's Issues: 3104• 3105  •3106 

Johnson's Russia List
#3105
23 March 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Primakov heads for US as twin scandals break.
2. Reuters: Kremlin says investigation ``purely political''
3. The Washington Post editorial: Things Could Be Worse.
4. The Times (UK) editorial: PRIMAKOV RULES. Still a chance to lever Russia 
back on to the reform road.
5. The Boston Globe editorial: Staking Russia.
6. AP: Senators Demand Pressure on Russia.
7. Komsomolskaya Pravda: Aleksandr Gamov, 'Graphological Analysis' of 
Politicians.
8. Boston Globe: David Filipov, Balkan crisis colors Russian's visit. 
As Primakov seeks US aid, he objects to NATO airstrikes.
9. Washington Times: Bill Gertz, Russian spies active in Balkans, CIA says.
10. Andrew Miller: Truth or Consecrisis?
11. Anne Williamson: Mr. Primakov, Let Freedom Ring.]

*******

#1
WRAPUP-Primakov heads for US as twin scandals break
By Martin Nesirky

MOSCOW, March 23 (Reuters) - Prime Minister Yevgeny Primakov headed for the
United States on Tuesday, away from a mounting domestic political crisis and
towards tough talks about the Yugoslav province of Kosovo and Russia's
economic woes. 

Primakov's plane was barely airborne when news broke that Russian prosecutors
had removed documents from the offices of President Boris Yeltsin's Kremlin
administration, a highly unusual probe by a unit whose boss is under fire from
Yeltsin. 

With intriguing timing, Azerbaijan added a further twist by saying on Tuesday
it had seized a Russian plane last week with six MiG fighters on board. 

``I confirm that we have detained a Russian 'Ruslan' cargo plane which is
carrying six jet fighters for Yugoslavia,'' Vafa Guluzade, an adviser to
President Haydar Aliyev, told Reuters. 

The Russian Foreign Ministry denied the cargo plane was bound for Yugoslavia.
It said the aircraft was flying from Kazakhstan to Slovakia. 

Yugoslavia is subject to an arms embargo and faces possible NATO air strikes
over Belgrade's refusal to sign a peace deal covering its mainly ethnic
Albanian province of Kosovo. Any sign that Russia, which opposes NATO action,
was aiding Belgrade would hardly help matters. 

Primakov, who was scheduled to stop off for talks in Ireland before reaching
Washington later in the day, may avoid questions about the Kremlin probe,
which the head of Yeltsin's administrative department described as ``purely
political.'' 

But he is almost certain to be quizzed by U.S. leaders about the Russian
``Ruslan'' cargo plane seized in Azerbaijan. 

Even before Tuesday's developments, Primakov's trip had looked set to test his
diplomatic skills as a former foreign minister and spymaster. 

Moscow is seeking fresh credits from the Washington-based International
Monetary Fund (IMF) to help prop up the Russian economy, but the IMF wants to
see more evidence of reform first. 

Rumours about a link between Russian leverage on Belgrade over Kosovo and IMF
credits have circulated in Moscow and Paris, venue for the last round of
Kosovo talks, in the past week. 

But there has been little evidence so far to support this, not least because
Moscow has been unable to persuade traditional Slav ally Yugoslavia to back
the Kosovo peace deal. 

If talks in Belgrade on Tuesday between Yugoslav President Slobodan Milosevic
and U.S. Balkans envoy Richard Holbrooke fail, the next question is whether
NATO will strike Yugoslavia while Primakov is in Washington. 

Interfax news agency quoted ``informed government sources'' as saying Moscow
had told the United States clearly that Primakov would break off his visit if
it did. 

First Deputy Prime Minister Yuri Maslyukov told reporters the IMF negotiations
could be jeopardised if NATO strikes. 

*******

#2
Kremlin says investigation ``purely political''
By Timothy Heritage

MOSCOW, March 23 (Reuters) - Prosecutors removed documents from the offices of
President Boris Yeltsin's administration on Tuesday in a worsening battle
between the Kremlin chief and Russia's top crime-fighter. 

News of the unusual investigation was leaked suddenly, even though it has been
under way since late last week, and prompted the Kremlin to suggest it was
politically motivated. 

Yeltsin failed last week in an attempt to oust Prosecutor-General Yuri
Skuratov. The prosecutor responded by vowing to stay on and root out high-
level corruption, despite being embroiled in an embarrassing sex scandal. 

``This is purely political,'' Pavel Borodin, the head of the Kremlin's
administrative department, told Reuters in a telephone interview. 

Asked if Kremlin officials had done anything wrong, he replied: ``Everything
is fine. There is nothing wrong.'' 

Borodin, who manages the Kremlin's multi-billion dollar empire of country
residences, aircraft, hotels and other properties, confirmed an investigation
had been under way since last week into building contracts involving the
Kremlin. 

A spokeswoman for the prosecutor's office said documents had been removed from
Kremlin administration offices in Staraya Ploshchad (Old Square), not far from
the Kremlin itself. 

``For the past week or so they have been removing documents to do with the
renovation of the government building, the first bloc of the Kremlin and the
Senate (upper house of parliament) building,'' Borodin said. 

``I see nothing wrong because this has been checked three or four times by the
audit chamber, the tax inspectorate and the Finance Ministry. Let them check
some more.'' 

Even if such checks are not new to Borodin, they are rarely publicised and
this one comes at a particularly sensitive time. 

Russia's upper house of parliament refused last Wednesday to accept Skuratov's
offer to resign after he fell out with Yeltsin following the start of several
high-level investigations. 

Skuratov said he had offered to quit under pressure from people who were
threatened by his investigations and were trying to blackmail him. A state
television channel later broadcast part of a videotape showing a man
resembling Skuratov in bed with two young women, neither of whom was his wife.

Yeltsin has not been directly incriminated in the prosectors' investigation,
but officials around him and his family could now be investigated. The
president dismissed his chief of staff last week, apparently over his handling
of the rift with Skuratov. 

Skuratov's office is investigating the operations of a Swiss company called
Mabetex which won lucrative contracts from the Kremlin to renovate official
buildings. Mabetex officials have denied any wrongdoing and threatened to sue
Skuratov. 

News of the investigation of the Kremlin administration's offices emerged
shortly before Swiss Attorney General Carla del Ponte was due to arrive in
Moscow for talks with Skuratov. 

*******

#3
The Washington Post
March 23, 1999
Editorial
Things Could Be Worse

THE ACCOMPLISHMENTS of Russian Prime Minister Yevgeny Primakov thus far
lie mostly in what has not gone wrong. Since he took office a half-year
ago, inflation has soared but not skyrocketed. The country hasn't fallen
apart, though Mr. Primakov worries about disintegration. There have been no
renationalizations or other major backtracking on reform. In fact, there
hasn't been much policy one way or another, and that in itself has come as
a relief to many Russians. If Mr. Primakov runs for president to succeed
Boris Yeltsin, his slogan might be, "Things could be a lot worse."

On this rather meager record, Mr. Primakov arrives in Washington today,
barring any last-minute glitches, on a quest for money. That isn't the only
business on the agenda for his first visit as prime minister, of course.
Mr. Primakov and his principal host, Vice President Gore, will discuss arms
control, missile proliferation, space cooperation and regional crises such
as Kosovo. But Mr. Primakov will be judged at home in large part on his
success in winning additional loans for Russia, or at least a U.S. promise
to pressure the International Monetary Fund to supply such loans.

Those who argue that the IMF should resume its lending, suspended since the
ruble crash last August, offer both pragmatic and moral arguments. Russia
simply cannot afford to pay its debts, they point out; the West can
reschedule those debts in an orderly way or accept a disorderly bankruptcy.
Russia's fiscal budget for the entire year is about $25 billion, less than
what the U.S. government spends in a week. International interest coming
due this year exceeds $17 billion, of which $4.5 billion is owed the IMF.
So, the argument goes, the IMF should at least lend Russia enough to pay
itself back.

The moral argument -- more of a guilt-trip argument, really -- points out
that Russia got into debt in the first place on the advice of Western
economists, including those in the Clinton administration. Its economy
tanked; the least the administration can do now, therefore, is lend more to
those who are trying to pick up the pieces.

Unfortunately, as long as the Primakov rescue crew has no real economic
program, the principal effect of further lending will be to burden
subsequent Russian governments. Western advice may have been flawed, but
the major responsibility for Russia's economic collapse lies with Russia.
It failed to put in place laws and institutions essential to encourage
investment by foreigners and, even more important, Russians. The right to
own land, the ability to enforce contracts in court, some measure of
protection from gangsters and bribe-seekers: These and other key
ingredients are still missing.

The United States and the IMF have a strong interest in encouraging
stability and democracy in Russia. And it is absolutely true that things
could be a lot worse; that's what makes these policy decisions so
difficult. But as a practical matter, what the United States wishes for Mr.
Primakov and his country matters only on the fringes. Until Russia makes
progress on reform, any dollars put in will quickly flow out again. 

******

#4
The Times (UK)
23 March 1999
Leader/Editorial
PRIMAKOV RULES 
Still a chance to lever Russia back on to the reform road 

When Yevgeni Primakov arrives in Washington to meet Vice-President Al Gore
and the IMF, one immediate subject of conversation is likely to be Kosovo.
But the real issue will be the very <timfgneur01003.html?1124027>future of
Russia's reform programme and what sort of country it will be in the
post-Yeltsin age. 

To many international bankers, Mr Primakov is a Lubyanka-trained Oliver who
ought surely not dare to ask for more after last August's default. The
Prime Minister badly needs to convince his hosts that new aid will not
follow past loans into overseas personal bank accounts. 

Whether or not he intends to succeed President Yeltsin in elections next
year, Mr Primakov rules in Russia today. In a murky Kremlin this much
stands clear; nothing else does, save the problems of communism's
crisis-ridden afterlife. 

Russia remains too vital to pretend that its agony does not matter. The
spectacle of its staggering Government, irresolute but wilful on the
precipice, makes people long for a more stable alternative. It is becoming
tempting to specify that alternative in the name of an authoritarian Mr
Primakov. 

The Primakov label remains a tag on a mystery package. Some Russians hail
Mr Primakov as a Soviet Cincinnatus, summoned to save the nation from
chaos. Others ask: is former spymaster Primakov a walking ghost whom eight
years of reform have not laid? His shadowy KGB background, his placing of
senior ex-colleagues to oversee supposedly private media companies, his
putting to rout of his rival Boris Berezovsky might be visible signs of an
ominous political rot. 

Mr Yeltsin's decay has allowed Mr Primakov to put in his bid at the
Kremlin's auction of power. It was Mr Primakov who benefited when the
Moscow prosecutor Yuri Skuratov revealed the disappearance of some
$50billion in reserves from Russia's central bank. Although the prosecutor
was rewarded with embarrasssing exposure of his sex life on television, Mr
Primakov's prize was the sole capacity to manipulate charges of corruption
for political ends. To attract Communist support it is whispered that a
Primakov presidential campaign will be stoked by high-profile trials of
vulnerable Yeltsin era ministers and millionaires. 

Mr Primakov has contrived over seven months as Prime Minister to give
little indication about how he intends to confront Russia's crisis. So far
he has been lucky: the abyss was skirted this winter. Russia needs to
escape immobility not to make immobility its national doctrine again. If
new money is to be given, Mr Primakov must commit himself to carrying out,
within 90 days, conditions agreed in previous IMF deals. As a reformer Mr
Primakov would be more convincing if he sacked Viktor Geraschenko,
arguably the worst central bank governor ever to preside in a major modern
country. 

If a deal is struck, there may be some benefit to the West in the powers
that Mr Primakov has amassed: if Russia's Prime Minister gives his word, he
may at least have the power to keep it. In Mr Primakov's Kremlin, two,
perhaps three, schools of doctors (and undertakers carrying stethoscopes)
contend over Russia's sickbed. Some would embalm; some would pursue
restoration to health; some want only a partial recovery to preserve their
privileges. The IMF loan may be one of the West's last levers to boost Mr
Primakov into the recovery camp. 

*****

#5
The Boston Globe
23 March 1999
Editorial
Staking Russia 

Russia's Prime Minister Yevgeny Primakov, who arrives in Washington today
for meetings with President Clinton and Vice President Al Gore, should be
received as a good poker player holding a very weak hand.

At the top of Primakov's agenda is the Russian Federation's need for more
loans from the International Monetary Fund. The former KGB operative has a
difficult case to make, however, since the last tranche of $4.8 billion
that the IMF loaned to Russia fell victim to an apparent felony.

Treasury Secretary Robert Rubin told a House appropriations subcommittee
last week that the IMF's $4.8 billion ''may have been siphoned off
improperly.'' The full story of what happened to the vanished lucre is hard
to unravel. One credible version is that it was used to enable a few
Russian robber barons, known to their compatriots as oligarchs, to place
their assets in dollars before the ruble was allowed to collapse last August.

Even if it is described in value-free terms, the current Russian economy is
a hydraulic system hampered by a bad leak somewhere. Anyone who
nevertheless decides to pour more money into that leaky system will be
doing so for geopolitical reasons, since no accountant in his right mind
would countenance such a misuse of good money. 

Primakov has done almost nothing to endow the Russian model of Al Capone
capitalism with honesty or transparency. The rules of that postcommunist
economy are those of a crooked casino. Every day brings new evidence of
powerful centrifugal forces tearing apart the Russian Federation. There
have been bombings and political assassinations from the Russian far east
to the Caucasus.

Yet managing Russia's decline is one of the most important US foreign
policy priorities. The United States needs Russian cooperation on a broad
spectrum of international issues - not the least of which is arms control
and the fate of the 7,000 or so nuclear missiles Russia still possesses.
Russia is now the sick man of Europe, but in the long run a workable
relationship is vital to US interests. 

******

#6
Senators Demand Pressure on Russia
March 23, 1999

WASHINGTON (AP) -- A bipartisan group of 34 senators wants Vice President Al
Gore to press Russia's prime minister to stop his country's cooperation with
Iran on missiles and nuclear technology.

In a letter released Monday, the 34 said Prime Minister Yevgeny Primakov must
be convinced that ``an Iran armed with nuclear weapons and advanced ballistic
missiles is no more in Russia's interests than in our own.''

``We want to urge you to make Iranian acquisitions of Russian ballistic
missile and nuclear weapons technology an issue of the highest priority in
these talks,'' they wrote.

Initiated by Sen. Dianne Feinstein, D-Calif., the letter was signed by 20
Democrats and 14 Republicans, including Foreign Relations Committee Chairman
Jesse Helms, R-N.C.

Primakov was arriving in Washington today, with meetings set to begin
Wednesday.

Ignoring pressure from the United States, Russia has sold nuclear and missile
technology partly because of the hard currency it brings to the suffering
Russian economy.

The senators' letter noted that both Congress and the administration have
acted against the Russian-Iranian connection, but it said ``the leakage of
Russian ballistic missile and nuclear weapons technology ... has not abated.''

``The fact is that the Russian government's efforts to stanch the flow of this
dangerous technology to Iran have been decidedly lackluster.''

By acquiring such technology, the senators wrote, ``Iran would be in a far
stronger position to dominate the Persian Gulf region, and it would pose an
immediate threat to U.S. forces in the gulf, to our allies throughout the
Middle East and even to some locations in Europe.''

The letter said Russia was likely to seek the right to launch more U.S.
satellites, a major source of hard currency. It said Gore should tell Primakov
that an increase would not be considered without ``a sustained comprehensive
effort by the Russian government to shut off the flow'' of dangerous
technology to Iran.

******

#7
'Graphological Analysis' of Politicians 

Komsomolskaya Pravda
12 March 1999
[translation for personal use only]
Article by Aleksandr Gamov: "Putting One's Hand To It: All Russian 
Politicians Do It" 

In his complete explanatory dictionary, the wise 
man Dal gave 
a very eloquent and precise definition to such a seemingly everyday 
notion as one's signature. It turns out that all the flourishes that 
our politicians, with airs of importance, their tongues hanging out 
from the effort, place on official papers are called "affixing one's 
signature, writing in one's own hand one's name and title." 

True, there is no apparent need to sign one's title today. 
Only in the past were positions and titles granted for life. Now 
they get changed like calendar sheets, particularly on 
Mondays. 

This does not at all mean that our streetwise politicians have 
abandoned good old traditions in "writing one's name with one's own 
hand"--they have learned to code their titles into trademark 
autographs. For starters, let us try to expose the signatures of 
seven of them. 

1. Boris Nemtsov. Never mind that his "own 
writing" seems to have been hurriedly purloined with the vice- 
premier plaque secretly smuggled out of the White House. Perhaps he 
purloined it precisely because he intends to put the plaque back on 
the door. And without the "vice" prefix next time. 

2. Sergey Kiriyenko. This "young reformer" too 
skillfully covers his tracks--look at how he plays pranks with it: 
coming from the right, then coming from the left, but never leaving 
the Kremlin orbit! Before you know it, such a man will get in 
again. 

3. Aleksandr Lebed. His signature suggests 
megalomania--look at how he spreads his wings. But the left wing 
already seems to have been cut and is trailing. And you can hardly 
fly far in Krasnoyarsk on the right wing only. 

4. Yuriy Luzhkov. What could this resolute 
puncture line mean; where does the trajectory from the mayor's cap 
lead? 

5. Viktor Chernomyrdin. All the things that are 
mixed into his ornate signature! You have the NDR [Russia Is Our 
Home] symbol here--a rooster, albeit considerably plucked; and 
copper piper--gas pipes, perhaps? But what has ChVS put a cross on? 
Interesting... 

6. Gennadiy Zyuganov. His name looks as though it 
was custom-etched on Solovtsy stone; as to the capital letter at the 
end, it apparently is meant to remind future generations of his 
giant--but fortunately unrealized--ambitions. 

7. Yevgeniy Primakov. Unlike Zyuganov, who always 
tries to put as many capital letters in his name as possible, the 
prime minister manages with only small ones. Truly, modesty is man's 
best reward. In the form of positions. 

As to the signature of the author of this article, one can 
only say this: He frequently wants to appear clairvoyant but alas, 
rarely succeeds... 

******

#8
Boston Globe
23 March 1999
Balkan crisis colors Russian's visit 
As Primakov seeks US aid, he objects to NATO airstrikes
By David Filipov, Globe Staff, 03/23/99 

MOSCOW - Russian Prime Minister Yevgeny M. Primakov had hoped to spend his
time in Washington building support for billions in new aid for Moscow. The
Clinton administration had hoped to make progress with Primakov on arms
control and security agreements.

But when Primakov arrives in the US capital today, his meetings with
President Clinton and Vice President Al Gore are likely to be dominated by
an issue that has sharply divided America and Russia - the crisis in Kosovo.

Yesterday, with NATO forces primed for airstrikes against Serbia in case
last-minute talks with Yugoslav President Slobodan Milosevic failed to
yield results, Primakov appealed to America and its allies not to go
through with the bombing.

''We are emphatically against the use of force against Yugoslavia,''
Primakov told reporters after meeting yesterday in Moscow with visiting
Israeli Prime Minister Benjamin Netanyahu. ''We believe that political ways
to influence the situation are still far from being exhausted.''

Primakov brushed off a question about whether he might postpone his trip to
Washington over the Kosovo crisis, saying only, ''I hope there will be no
raids.''

The Clinton administration says Russia's opposition will not halt the
airstrikes. But it is clear that bombing the Serbs would make the timing of
the Russian premier's trip awkward for both sides. 

They already disagree on what Russia needs to do before it gets any more
aid from the West. Primakov wants $4.8 billion from the International
Monetary Fund to help meet Russia's payments on older debts to the IMF,
several billions of dollars of which come due in May. The United States is
aware that much of the money from previous Russian loans it supported has
been spirited off to overseas accounts, and wants a crackdown on corruption
and reforms. As Clinton put it last week, new aid will work only ''if the
money doesn't turn around and leave the country as soon as it's put in.'' 

Republican leaders, irked that Primakov is bucking US interests in Kosovo
while asking for money, have urged Clinton to cancel the trip, and
yesterday, US and Russian analysts said that sounded like the best idea.

Primakov ''does not want to be in this country if we are bombing Serbia,''
said Michael McFaul, a specialist on Russia at the Carnegie Endowment for
International Peace. ''It would be in everybody's interest to postpone the
meeting.''

Despite the differences on economic and geopolitical issues, the Clinton
administration had hope for some progress on arms control talks. This came
after Primakov persuaded the lower house of the Russian parliament to
debate ratification of the 1993 Start II agreement that would limit both
countries' nuclear arsenals to 3,000-3,500, down from over 7,000 on both
sides. But bombing in Kosovo could derail the ratification, and cut into
progress on further arms-reduction talks.

Gore needs success with Russia to stave off what could be a weakness in a
presidential campaign - the sense that the Clinton administration's policy
of constructive engagement with Russia has been a total failure, McFaul says. 

While the prospects for these talks look dim, analysts pointed to a change
in the Clinton administration's approach toward Russia that had become
evident during the preparation for today's talks.

Until last year's economic collapse, the conventional wisdom in Washington
was that the United States needed to support President Boris N. Yeltsin at
all costs, because nothing he could do would be as bad as letting Russia
fall into the hands of Communists.

These days, Russia watchers say the United States should support Primakov
and his Communist-backed government, because nothing could be worse than
what might happen if the ailing, isolated, and unpredictable Yeltsin were
forced to choose a new government.

''I'm no friend of Primakov, but he is better than all the available
alternatives,'' said Marshall Goldman, associate director of Harvard's
Davis Center for Russia Studies.

Getting the Duma to debate Start II, which Russian lawmakers had declared
dead a few months ago in protest of the US bombing of Iraq, is an example
of Primakov's ability to build a consensus in Russia's contentious
political climate, a skill that has won grudging admiration for a former
KGB intelligence agent, spymaster, and diplomat not known as a friend of
the West.

Primakov has also won praise for giving Russia some political and economic
stability since becoming prime minister last August in the wake of the
country's financial collapse. 

''Primakov has probably achieved about as much as possible given Russian
political conditions and the very real limitations of his present power,''
Scott Blacklin, head of the American Chamber of Commerce in Russia, wrote
in a recent commentary published on Johnson's Russia List, an on-line
publication. 

******

#9
Washington Times
23 March 1999
[for personal use only]
Russian spies active in Balkans, CIA says
By Bill Gertz

Russia is recruiting spies, collecting technology, "sabotaging"
international peacekeeping in the Balkans and using world organizations as
cover, according to a classified CIA counterintelligence report.
The report by the CIA's Counterintelligence Center said that Russian
observers in the former Yugoslavia included many current and former
intelligence officials who "conducted intelligence activities and
cooperated with the Serbs," according to a report made available to The
Washington Times.

The CIA wrote the report to alert U.S. policy-makers to the problem of
letting Russia participate in the Kosovo Verification Mission set up late
last year by the Organization for Security and Cooperation in Europe.
The spying has been facilitated by "a conscious international effort to
include Russians in the Federal Republic of Yugoslavia," the report said.

Russian involvement in the Bosnian peacekeeping forces and the Kosovo
mission also was "promoted by the international community," the report said.

The reference was an indirect slap at the Clinton administration, which has
been one of the strongest 
proponents of including Russians in international organizations with little
apparent concern for security.
As a result, "Russian gains include enhanced access to Western personnel,
technology and information, and freedom of action to pursue intelligence
collection and their foreign policy under the mantle of international
legitimacy," the report said.

"American and other Westerners will be fair game for intelligence spotting,
assessment and development," the report said, referring to foreign spying
recruitment techniques.

"As in previous missions, a significant number of Russians probably will be
former or active intelligence officers," the report said.

A CIA spokesman declined to comment on the report. A Russian Embassy
spokesman could not be reached for comment.

The report's disclosure comes as Russian Prime Minister Yevgeni Primakov, a
former intelligence chief, arrives in Washington to confer on NATO plans to
bomb Serbia for its aggression against ethnic Albanians in Kosovo. Mr.
Primakov told the New York Times that Russia views the Balkans as part of
Moscow's sphere of influence.
The CIA report said: "On past missions, Russians engaged in
intelligence-collection activities, cooperation with Serbs and subtle
sabotage which reduced the effectiveness of the international effort and
increased the risks to other observers while advancing Moscow's interests."

Russians in Kosovo will "conduct their own foreign policy," the report said.

The spying also is cost effective. An observer mission run by the
International Conference on the Former Yugoslavia (ICFY) in Serbia and
Montenegro from 1994 to 1996 paid for most of the Russians who took part,
the report said.

During that mission, there was an "unwritten mission policy" that required
placing Russians in key positions of authority, including chief of staff
and special envoy to Montenegro.
"U.S. and Russian observers frequently were paired on the border to assure
the appearance of evenhandedness," the report said.

A later U.N. election-observer mission from 1996 to 1998 -- called UNTAES,
for United Nations Transitional Administration in Eastern Slovonia, Branja
and Western Sirmium -- was regarded as an American operation because of its
U.S. leaders, the report said.

"However, a GRU [military intelligence] officer, Roman Alexandrovich
Epifanon, was deputy commander of the mission's military forces, and there
were so many other Russians in senior subordinate slots they were called
the 'Russian deputies Mafia,'" the report said.

Specific examples of intelligence activities listed in the report include:
* A Russian observer in Montenegro was a 22-year veteran of the Soviet KGB.
"Others were suspected past or present [intelligence officers], several
with GRU backgrounds," the report said, using the acronym for Russian
military intelligence.
The Russian agents were able to conduct background checks from Moscow
through the communications at the Russian Embassy in Belgrade.
* ICFY, which operated in Serbian-controlled Bosnia-Herzegovina, reserved
the position of special envoy to Montenegro exclusively for Russian
officials who used it to try to recruit the president of Montenegro.
* The Russian official who was ICFY chief of staff "undermined [ICFY]
operations with sabotage, including sudden removal and return to Russia of
tanker trucks with arctic diesel for mission vehicles ... leaving the
mission at the mercy of local contaminated fuel supplies."
* Russians working for the UNTAES mission "sold UNTAES data and policy
advice to the Serbs," according to intelligence sources in the region.
* A Russian U.N. observer held many meetings with "high-ranking Serbs"
during the UNTAES mission.

"He was an unreconstructed, pedantic communist," the report said. "He
decried 'unacceptable U.S. hegemony in the world and longed for the return
of a powerful U.S.S.R. and strong Russian leader. In a known instance, he
probed a Canadian U.N. employee for anti-U.S. sentiment."

******

#10
Date: Tue, 23 Mar 1999 13:00:08 +0300
From: ABC in Saint Petersburg/Andrew Miller <abcspb@online.ru>
Organization: Academy of International Business Collaboration
Subject: Truth or Consecrisis?

Truth or Consecrisis?
By Andrew Miller

The buzzword among Russians these post-August 1998 days for 
describing the nation's economic and political state is "crisis." Like 
many Russian words that sound similar to English language variants 
(e.g., "corporation"), one is hard pressed to comprehend the precise 
meaning of the Russian term. 

For example, there apparently was no crisis before August, when 
teachers were being paid $20 per month, the population was declining and 
public health was a shambles. Alexander Rutskoi was the governor of 
Kursk. Dimitri Yakubovsky was corruption Czar. All was right with the 
world.

But trying to think like a Russian ("ouch! that smarts!"), 
post-August, on the economic front, one could view it this way: In the 
decade of the seventies, the Moscow government may have controlled a GDP 
of as much as $2 trillion. At the beginning of the nineties, the 
population controlled by Moscow was halved as the Soviet State 
disintegrated, and the currency printed by Moscow imploded when it was 
offered for the first time in world commerce (since Russia had no 
products anyone wanted to buy, the world had little desire for the 
ruble). Despite that, export of the ruble remained Soviet-style 
illegal, in perpetuation of the illusion that the West simply couldn't 
wait to get its greasy little paws on them. 

In July of 1998, the Russian GDP was 3 trillion rubles and the 
exchange rate of the Russian ruble for the American dollar was 6:1. So, 
the value of the Russian GDP could have been said to have been about 
$500 billion. Since the U.S. GDP is about $7 trillion, the ratio of the 
U.S. GDP to the Russian GDP could have been said to have been 14:1. In 
other words, the wealth controlled by Moscow could be said to have 
decreased by as much as 75% during the decade of the eighties. Given 
that, its hard not to understand why most Russians take a dim view of 
Mikhail Gorbachev, who was the national leader during that decade.

Its also hard not to miss this disparity of ratios - 14:1 
(production) and 6:1 (money). 

Unless the ruble be viewed as similar to the Pound Sterling, 
that is, a substantially and intentionally larger unit of currency than 
the dollar (which, it cannot be gainsaid, is hard to write with a 
straight face), and since national currency is the primary means of 
accounting for the value of national production (and hence wealth), one 
could surmise even without knowing about the relentless efforts of the 
Russian Central Bank to defend the ruble, i.e., to artificially inflate 
its value, that such efforts were taking place. In other words, that 
the July exchange rate (and indeed the exchange rate for the "Russian" 
ruble from the moments of its birth, was a bunch of silly nonsense.

I seem to recall it being said in Econ 101 that businesses 
operated on the basis of silly nonsense seldom are profitable (certain 
tabloid entertainment publications and Disneyland exempted, of course). 
I believe that maxim still holds true for government as well (certain 
U.S. presidents and state governors exempted, of course).

That nonsense, no doubt, makes even sillier nonsense of the 14:1 
ratio. That ratio would be an accurate reflection of the disparity 
between U.S. and Russian wealth only if the ruble was, at that time, 
fairly valued. Since the ruble was being pro-actively defended by the 
State (so as to conceal its weakness and thereby the government's 
general incompetence via the subsidization of the purchase of foreign 
products by Russians, products which they in fact cannot afford, via the 
sale of natural resources for hard currency - which currency is used to 
buy the government's own currency, thereby inflating its value). In 
other words, before August 1998 no one had any real idea of the value of 
Russian production. No one could study it effectively, and therefore no 
one could dream of improving it. It seemed to need improving, however, 
as people were starving. Lo and behold, Russia began to experience some 
economic difficulties. Whodathunkit?

Now, the exchange rate is 24:1. At that rate, the value of 
Moscow-controlled production has declined from perhaps $2 trillion in 
the seventies to $500 billion in 1998 to $125 billion in the early days 
of 1999, and (like the population of Russia) its getting smaller every 
day. This, it might be suggested, may account for the noticeable 
suspicion with which Boris Yeltsin, the current national leader, is 
viewed by most ordinary Russians. As someone who did not study 
Economics very far beyond 101, it seems to me theoretically possible, 
and perhaps even likely, that the Russian GDP may very well soon 
disappear entirely, and that the ruble exchange rate at which that would 
happen could in fact be calculated by someone who didn't flunk Algebra. 
In fact, it seems that it might not be long before the Russians write a 
new chapter in the Econ 101 textbook: the one on negative production.

The word "crisis" came into Russian Vogue somewhere around 9:1. 
Crisis apparently means two things: (a) truth; and (b) rising cost of 
foreign products. Residing in Russia, I can't argue that among the 
Russians' great national talents one certainly must include (a) lying 
and (b) buying foreign products, so it seems logical that anything which 
interferes therewith would be considered badly. Yet, I can't help 
wondering if this is wise. When a drunk stops drinking, they say he 
feels bad for a while. But they also say that bad is better than dead, 
and that bad on the way to better is not a crisis while good on the way 
to dead is a real problem.

On the other hand, however, there certainly can be said to be a 
crisis in Russia, though perhaps the Russians' use of the term is purely 
coincidental.

I think it was mentioned somewhere in Econ 101 that when 
national currency is devalued, there is both economic benefit as well as 
cost. Foreign products become more expensive, but domestic products 
become cheaper and easier to market abroad. I even recall that the U.S. 
government itself may have intentionally devalued the dollar, in so 
doing seeking to rectify the enormous U.S. trade deficit. What's more, 
I notice in the currency exchange offices on Nevsky Prospect that one 
U.S. dollar is worth more than a hundred Japanese Yen and more than a 
thousand Italian Lira, yet I don't recall hearing any Japanese or 
Italian words like "crisis" being thrown around (though, I must admit, I 
wouldn't know them if I did hear them).

This benefit, of course, presents something of a problem in 
Russia, a land where the genuine study of foreign culture (and 
especially that of the U.S.A., the world's biggest buyer of foreign 
products at $800 billion annually, hardly any of which goes to Russia 
despite the warehouse prices, no club membership required) is 
essentially non-existent. Because of the Soviet period of isolation and 
Big Fat Lies, Russians never learned the skill of marketing products and 
dealmaking. Therein, of course, lies an effective application of the 
term "crisis."

Crisis too that the Russian consumer is an utterly passive 
creature, who willing agrees to pay a grossly inflated price for 
home-grown commodities such as sugar with out protest. Sugar vendors 
sell Sugar at inflated prices although the product is made by Russian 
factories using Russian machines and Russian workers, and using Russian 
grown Russian sugar beets as fodder for the machines. One may be sure 
that, post-August, there have been no raises for beet farmers or sugar 
factory workers, but merchants conveniently raise all prices when 
foreign goods go up, and consumers conveniently pay them. Just as they 
did at the beginning of the century, right up until people started 
getting killed.

Crisis three that Russia now is eerily similar to Russia at the 
beginning of the century, with princes gliding down the streets in 
gilded carriages, sparkling boutiques and restaurants visited by a tiny 
fraction of the population who live in remote palaces that dazzle the 
eye with bright and sparkly accouterments.

Crisis or Godsend? 

When Moscow controlled $2 trillion, it decided to engage in an 
arms race with the U.S.A. (whose capital controlled capital at least 
twice as great). This race bankrupted and annihilated the state in 
short order. What's more, as neither Europe nor the U.S. has attacked 
Russia in the weakened interim, it turned out to have been as pointless 
as it was suicidal. As a result of the "crisis" there will be no 
further arms racing.

When Moscow controlled $2 trillion, Russians couldn't choose 
their national leaders and they exported products like Alexander 
Solzhenitsin for free. Now, Russians can choose their leaders, and will 
be forced to learn how to manufacture and market consumer products for 
profit, or die trying. If Americans would buy crispy M&M's, a Zima or a 
Yugo, they would buy a Shok or a Tigoda or a Volga. But first, they'd 
have to hear about them. And then, when they do, they're unlikely to 
buy them from a salesman who is snapping his teeth like a rabid Great 
White Shark and babbling incoherent gibberish. It's hard to imagine, 
but the fact is that Russians don't yet get this, the way a kid doesn't 
get it that you can eat Shok for breakfast every day, and it sure tastes 
good, but one day sooner or later you'll be sorry. No bellyache, no 
Quaker Oats and Flintstone Vitamins. 

One might say, then, that "crisis" might be better spelled 
"p-e-n-i-c-i-l-l-i-n."

But Russia spells "crisis" with two "d's" - first devaluation, 
then default. Pre-crisis, Moscow was borrowing like a heroin fiend, 
stuffing its veins with free money and in effect turning over ownership 
of the company to foreigners. Now, it has defaulted, which is 
apparently the only conceivable way to prevent foreign lenders from 
deluging the country with further indebtedness (though even this remains 
uncertain as the IMF appears to lack for nothing in the fortitude 
department). 

In short, only by means of this crazy little thing called 
"crisis" could Russians possibly have any hope of survival. Which is, 
more or less, how it always has been in the Land of the Midnight Gun. 
But will Russians realize this in time, or will that on-rushing freight 
train called Reality squash poor Penelope Public on the tracks like a 
blini. 

Ruble (that is, four cents) for your thoughts.


Andrew Miller
Ph.D. Economics, Honorus Causus, Joe's Bar & University, 1997
St. Petersburg, Russia

*******

#11
From: "Anne Williamson" <annewilliamson@email.msn.com>
Subject: World Net Daily
Date: Tue, 23 Mar 1999 

Mr. Primakov,
Let Freedom Ring
By Anne Williamson
© 1999 WorldNetDaily.com

The man best able to strike a decisive blow against world tyranny is in
Washington today, but his name isn't Bill Clinton. He's the visiting Russian
prime minister, Yevgeny Primakov.

Primakov hopes to loosen the strings on the IMF's moneybags so that the
arrested $22 billion bailout agreed to last summer before Russia's August
meltdown might proceed. Russia needs new IMF loans just to pay the $4.8
billion due the IMF this year on over $20 billion in previous IMF lending.
Failure to pay risks exclusion from the world's credit markets.

According to the conventions of international finance, a nation can stiff
private investors, but never the IMF. Private banks and bondholders left in
the lurch are paid off routinely through a shell game known as
"round-tripping" in which taxpayers' funds are channeled to the deadbeat
nation through new public loans. The borrower's loans are then re-scheduled
courtesy of the IMF under the auspices of the Paris Club. Since the 1995
Mexican bailout, round-tripping has evolved into multibillion-dollar
bailouts of entire countries and regions that now total $156 billion.

Though such practice cheats the rules of sound banking and of government
accountability, the Clinton administration recently browbeat another $18
billion from the U.S. Congress for the fund's capitalization. Since the IMF
functions as the international arm of the U.S. Treasury and the Federal
Reserve, it is a supreme instrument of U.S. foreign policy whose
establishment is eager to hog-tie other nations with billion dollar loans.

The wind was at Clinton's back in the global game from the get-go. The end
of the Cold War and a restructured economy combined with American know-how
bequeathed the new president the classic conditions of an economic
upswing -- new markets, new technologies, and political transformations. But
then the 1994-midterm elections, which swept into office a host of small
government Republicans, left the Clintonistas discombobulated. Shaken, the
administration resolved to pump money, thereby creating a booming economy,
whose favored players it assisted in exporting the wanton excess to emerging
markets.

In Asia, commercial banks lent dollars in volume to hard-working
populations, who promptly built themselves into over-capacity. In the former
Soviet Union, the IMF lent taxpayers' money in volume to dubious
governments, most especially Boris Yeltsin's.

In Russia, the Clinton administration allowed favored Harvard careerists to
privatize USAID's Russian assistance program under the rubric of "national
security." Harvard socialized taxpayers' funds among their projects, which
included a set of artificial institutions created to provide fiefdoms for a
cabal of selected Russians they designated as "reformers." Thus was Anatoly
Chubais & Co. made significant by virtue of hundreds of millions in foreign
funding; their only achievement -- a bungled privatization that delivered 70
percent of the Russian economy into the hands of approximately seven bankers
who asset-stripped their new holdings with impunity, squirreling billions in
profits away in foreign bank accounts. Russia's bond market rained money.
With eye-popping yields as high as 290 percent on three-month paper, Wall
Street raced to get in on what was in reality an exotic pass-through
arrangement of U.S. public funds centered in Moscow.

Asia's 1997 financial reversals and cascading currency devaluations drove
down demand, and therefore prices, for industrial inputs and commodities.
Russia's dependence on foreign lending escalated, since world demand for her
oil and other natural resources failed to bring in the income needed to
service the exploding bond market. (Tax revenues were not, are not, and
never shall be, of consequence in a country in which private property exists
only where there is power.) Soon, the Russians had to pony up hundreds of
millions from the billions in IMF loans to keep the bond game rolling, then
many, many billions until finally the pyramid collapsed.

Today the Fed is exporting inflation via billion dollar bailouts to Asia,
Brazil, and other lands, a jerry-rigged solution that is no solution. The
rest of the world has no choice but to export in volume to a U.S. market
driven by consumption alone (household savings turned negative last autumn).
How else are they to earn the dollars to pay their loans? U.S. inflation is
returning home in the form of cheap manufactured goods and commodities, with
which U.S. producers can not compete on price.

The threat of trade wars over steel, bananas, and beef looms on the horizon.
Short of a massive tax cut and a disciplined reduction of the gargantuan
federal government which the Clintons will not countenance, there is no
escape for the U.S. from the deflation oozing towards its shores.

But Russia's debacle is now, not tomorrow. Still suffering the longest and
deepest depression experienced by any nation in the twentieth century,
Russia needs the ability to employ her own considerable resources to reverse
a slew of criminal privatizations that have denied the state an income to
cope with a degraded national estate. Saddling common citizens with more
loans from which they will receive no benefit is not going to help.

The West should forgive Russia's public debt along with that of the Soviet
Union and of all the public lenders' victims. Let it be America's gift to
the new millennium. The debts are never collected anyway, but are
re-scheduled repeatedly and, after fading from public attention, finally
forgiven. The Paris Club process only serves to keep incompetent
international bureaucrats in business. The IMF should be dismantled, its
assets returned to donor nations, and the World Bank privatized. But this
will not happen; no anti-constitutional political elite will abandon
willingly the tools that allow them to pursue taxpayer-subsidized globalism.

Between the world wars when new ideologies overturned governments and
national borders shifted often, the issue of national debt was hotly
debated. The consensus supported the view that the debts of one regime
attach to any successor state. However, a competing view held that those
debts incurred for the purpose of strengthening despotic regimes, or for
purposes contrary to the interests of a nation, or by persons or groups
associated with the government to serve interests manifestly personal,
should be recognized as "odious debts" and properly the responsibility of a
certain regime, but not of a nation.

Should Yevgeny Primakov rightly declare Russia's IMF debts odious, the IMF
could not survive. Were he to follow-up with an invitation for an orderly
workout of Russia's private debt in the international court system, he would
strike a decisive blow against the monopolistic Russian bankers who
cannibalized their own country while making a stand for financial prudence,
justice, and the rule of law. In so doing, the Russians could lay claim to
having slain not one, not two, but all three of the monsters this century
has produced, which presume to exploit entire peoples while telling them how
to live; Fascism, Communism, and the IMF. Mr. Prime Minister, cut the
Gordian knot and free us all!

Anne Williamson has written for the Wall Street Journal, The New York Times,
Spy magazine, Film Comment and Premiere. An expert on Soviet-Russian
affairs, she is currently working on a book, "Contagion: How America
Betrayed Russia."

******