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Johnson's Russia List


March 24, 1999    
This Date's Issues: 3107 3108   

Johnson's Russia List
24 March 1999

[Note from David Johnson:
1. AP: Barry Renfrew, Primakov Postpones Visit to U.S.
2. President Clinton remarks on Russia at AFSCME convention.
3. The Globe and Mail (Canada): Geoffrey York, General Dima. 

4. Toronto Sun: Matthew Fisher, Hungry Duck closing.
5. Russia Today satire: Mary Campbell, Waving the White Flag.
6. Stacy Borisov: A Question for JRL Readers on money transfer.
7. Heinrich Vogel: Re: Reforming Russia Response to Mark Jones/3095.
8. Cato Institute summary of Janine Wedel, "U.S. Assistance for Market 
Reforms: Foreign Aid Failures in Russia and the Former Soviet Bloc." 

9. Moscow Times: Gary Peach, Canceled Visit Fortuitous for IMF.
10. Reuters: Primakov decision will not change need for IMF cash.
11. The New Republic: Stephen Kotkin, A Tsar is Born.]


Primakov Postpones Visit to U.S 
By Barry Renfrew
March 23, 1999
An AP News Analysis 

MOSCOW (AP) -- Prime Minister Yevgeny Primakov's abrupt cancellation of a
visit to Washington is a new step back for the once-warm relations between
the United States and post-Soviet Russia. 

But despite the cancellation -- an angry reaction to NATO's plan to bomb
Yugoslavia -- there is little Russia can do about the West's plans. Russia
lacks the military or economic might to impose its views and it is
desperate for Western financial aid. 

Russia has been arguing for months against the use of force by NATO to
solve the Kosovo crisis. A close ally of Yugoslavia, Russia wants to
maintain its traditional influence in the Balkans and show it can stand up
to the West, especially NATO, which it sees as a threat to its own security. 

For similar reasons, Moscow bitterly denounced U.S. and British airstrikes
against Iraq late last year, briefly recalling its ambassadors from
Washington and London. It even briefly put some of its forces on alert. 

Russia's protests were mainly bluster and Moscow quietly moved to patch up
the quarrel within a few days. The protests this time may be longer and
more heated. The issue is likely to unite President Boris Yeltsin and his
usual opponents, the Communists and nationalists who dominate the Russian

Russia's Defense Minister Igor Sergeyev said Tuesday that Russia would step
up its combat readiness if NATO attacked Yugoslavia, the ITAR-Tass news
agency reported. But the Russian military, short of everything from weapons
to food, is close to collapse. After years of decline, Russia's economy is
in tatters, unable to sustain any kind of meaningful military operation. 

The air force, once one of the most powerful in the world, now has few
planes and would not pose any major threat to NATO even if Moscow wanted to
intervene. Russian pilots only fly for a few hours each year, far below the
level necessary to maintain the most basic flying skills and many of their
planes are old and dilapidated. 

Moscow has no bases near Yugoslavia and no way to project its limited power
in the region. The Russian navy is in even worse shape, with just a handful
of warships capable of taking to the sea. 

An additional insult to Russia is that three former Soviet satellites --
Poland, the Czech Republic and Hungary -- are now part of NATO's powerful
military system. 

Meanwhile, Russia desperately needs Western aid. 

Primakov had been flying to the United States to plead for more Western
loans, his government's last hope of handling the financial crisis that
devastated the Russian economy last August. Russia is seeking at least $4
billion in new loans from the International Monetary Fund, where the United
States has strong influence. Moscow knows it must maintain stable ties with
the United States and other Western nations to have any hope of solving its
enormous economic problems. 

While there is little danger of reviving the Cold War rivalry that
dominated the world for more than 45 years, the diplomatic honeymoon that
followed the collapse of the Soviet Union in 1991 is crumbling. 


23 March 1999 
President Clinton

But you have to understand what the big picture here is. There are three
big obstacles to an undivided, democratic, free Europe, that is totally
secure. One is, we've got to build the right kind of partnership with
Russia, and we've got to help them come back economically. They have kept
their democracy alive. They are suffering terribly economically. Some of
it, of course, is like everybody else's problems, some of it's their own
doing, some of it beyond their control. We've got a big stake in that.
They've got 40,000 scientists that were part of their Cold War arsenal.
We'd like them to be doing peaceful, good things, not bartering their
services to other countries to cause trouble. So it's in our immediate
interest, and they could be great partners for us, economically and
otherwise. The second is, the problem of Greece and Turkey....


Date: Mon, 22 Mar 1999
From: Geoffrey York <> 
Subject: General Dima Report

By Geoffrey York
The Globe and Mail (Canada)
March 22, 1999

MOSCOW -- Perhaps only in Russia could a convicted ancient-book thief
go from jail to a flourishing new career as a lawyer and television
celebrity within a few short weeks.
Dmitri Iakoubovski -- flamboyant ex-prisoner, former high-rolling
businessman, ex-Kremlin advisor, Canadian immigrant, Toronto mansion
owner and Canadian police suspect -- celebrated the debut of his new
television show by pouring champagne for his friends this week.
His weekly show, ~Arrest and Release”, is inspired by his four years in
Russian jails. It aims to give legal advice and support to Russia’s
legion of convicted criminals.
Mr. Iakoubovski, a 35-year-old former Kremlin prodigy who favours
expensive suits and flashy cars, estimates that 15 per cent of all
Russians have spent time in jail and fully half the population has a
close relative who served prison time. They are his audience. ~It’s the
biggest electorate in Russia these days,” he boasts.
Even bandits have rights, he says. ~It can happen to anyone. I always
saw them as human beings. Even if a man is sentenced justly, it doesn’t
mean his rights can be violated.”
Mr. Iakoubovski juggled calls on two mobile telephones and munched a
plateful of sausages as he chatted in his law office this week. He gave
away copies of his new legal textbook, ~What is Arrest and How to Fight
It”, as his secretary rushed in and out with more food. His office is
filled with the status objects of his new career: computer,
paper-shredder, exercise machine, an icon of the Virgin with two candles
in front of it, and a photograph of his young blond wife -- his fifth.
Last month he made the cover of Russia’s most popular tabloid by posing
with his nearly naked wife, Irina, who wore only a black bikini brief,
black stiletto shoes, and a coil of barbed wire.
Irina, who began as his defence lawyer, married him in a prison chapel
last year. He says he converted to Orthodox Christianity to marry her.
Mr. Iakoubovski has been making headlines and courting controversy for
a decade now. In the dying days of the Soviet Union, he was an ambitious
young lawyer with high-level government connections and a flair for
shady business deals.
After becoming an executive at an international company that eventually
fell foul of corruption allegations, he moved to Canada and married a
Toronto woman. By 1992 he had obtained landed-immigrant status in Canada
and purchased a $5.3-million mansion in the exclusive Bridle Path
neighbourhood of Toronto, where his neighbour was Conrad Black.
A friend of Russian cabinet ministers, he was soon given the rank of
colonel in the Russian Justice Ministry. But he lost all of his
privileges in a mysterious setback in 1992.
A few months later, he became embroiled in Kremlin intrigues and
returned to Russia as a legal adviser to President Boris Yeltsin during
a corruption investigation against Mr. Yeltsin’s political enemies. Some
observers said his job was to dig up dirt on the president’s rivals. The
media called him ~General Dima.”
In the summer of 1993, while off-duty Toronto police officers were
guarding his Bridle Path mansion, someone fired a volley of gunshots at
his house and his BMW car. He said it was intended as a warning to stay
away from certain powerful politicians.
But by then he was already making high-level Canadian connections. He
posed for a photo with soon-to-be prime minister Kim Campbell during her
campaign for the Conservative leadership in 1993.
For a while he shuttled back and forth between the two countries,
taking refuge in Canada when his enemies seemed influential. But soon he
had booked an entire floor of Moscow’s most luxurious hotel for his law
All was fine until December 1994, when Russian police swooped down and
arrested him. He was charged with participating in the theft of
$130-million worth of rare and ancient European, Hebrew, Chinese and
Tibetan manuscripts from a St. Petersburg library. Convicted in 1996, he
was finally released from a Siberian jail last December.
When he arrived at Moscow’s airport, he was whisked away in a
limousine. His political enemies, he says, have failed to defeat him.
~They were all punished by God. Some lost their posts, some lost their
As for the book theft, he still maintains he was framed. ~If I had
stolen those books, nobody would have found them.”
Mr. Iakoubovski says he still has warm feelings and even nostalgia for
Canada. His mother and 6-year-old daughter are still living in Toronto,
whle his brother is studying computer science at the University of
His feelings for Canada’s police, however, are much less pleasant. He
says they sent two volumes of wiretapped phone transcripts to the
Russian courts, although he claims they found nothing except his banter
with his Canadian and Russian mistresses.
~It was just the usual sexual talk -- nothing else,” he said. ~I’m
sorry the Canadian taxpayers spent so much money just to tape two
volumes of such rubbish. I should write a book on how to reduce taxes in
He insists he still has valid status as a Canadian landed immigrant and
is free to visit Canada whenever he wants -- which he vows to do some
But the Canadian police have a sharply different view.~We would do
everything in our power to assist Immigration in preventing him from
re-entering Canada,” said RCMP Inspector Ben Soave, head of a special
combined-forces unit that fights organized crime.
~He’s obviously a criminal and we don’t need criminals in Canada,” he
said when Mr. Iakoubovski left prison last year. ~We have enough of our
In the meantime, Mr. Iakoubovski maintains that his prison term has
actually made him better-qualified to work as a lawyer. ~People know
that I can understand their situation,” he said.
He insists he has no further interest in politics. And he regrets his
stint in the Kremlin. ~If you get too close to the sun,” he said, ~you
get burned.”


Date: Sun, 21 Mar 1999 
From: Matthew Fisher <>
Subject: Hungry Duck closing

This ran in Toronto Sun on March 21

Moscow - Canada's outrageous contribution to the Russian capital's steamy
nightlife - the Hungry Duck - has closed its doors forever.
Doug Steele, the garrulous 48 year old Nova Scotian who owns what
several leading British and American newspapers called the raunchiest
nightclub on the planet, confirmed yesterday that he was abandoning his
multi-million dollar business, which had received constant attention from
bribe-hungry police and city administrators since it opened three years
What finally did the Duck in was what had made it infamous. Sex,
booze and irreverence.
The Hungry Duck's fate was sealed by a recent late night visit by a
group of Russian parliamentarians. The group, which included several
Communists, entered the club at the very moment when a stripper from
Nigeria was having simulated sex on top of a bar with a half-naked young
Russian woman.
As hundreds of drunk, scantily clad Russian women screamed and
egged them on, the couple gyrated to an ear-splitting rendition of the old
Soviet anthem.
Within days angry politicians were attacking the Hungry Duck in the
Russian Duma and the club's affront to the still much-loved Soviet anthem
had become big news on television.
"It was a good run, but once we hit the Duma I knew that we were
toast," Steele said in an interview. "People here have been jumping all
over us lately.
"I even met the chief of police. He told me that while he had
nothing against us, himself, it would be impossible for us to continue the
Hungry Duck."
The Duck opened a few minutes walk from the Kremlin just as a
generation of hedonistic young Russians with rubles to burn sought
Bacchanalian pleasures denied to their parents and grandparents.
The formula was simple. Customers were encouraged to get
fantastically drunk and then would dance and sometimes fornicate on the
table tops.
The Duck entered new territory last year when Steele came up with
the idea of allowing only women into the club for a couple of hours to
drink as much free booze as they wanted. Strippers were engaged to help the
females who accepted this offer to get rid of their clothes.
Once the women, who were as young as 14 years of age, were in the
right frame of mind, hundreds of men swilling beer and vodka in a courtyard
outside were allowed to join the debauch.
"I'm actually very proud of the joint," Steele said before
rhyming off some of the Hungry Duck's greatest moments.
One of them was on a hot summer evening in when three Russian
players from the Detroit Red Wings and several vice-presidents from the
National Hockey League brought the Stanley Cup and showed it around to the
usual, jammed to overflowing crowd
A group of Canadian MP's and senators also spent a wild evening
and then had lunch the next day with Steele while on a fact-finding tour
ostensibly concerned with Russia's disastrous economic situation.
Fortunately for the distinguished Canadians lawmakers, they did
not visit the Duck the night a policemen fired a round from his AK-47
machine gun into the ceiling. 
"There are six bullet holes in the roof and three in the floor and
there was shooting six or seven times with gas pistols," Steele said. "But
the only really scary time was when a police colonel took his gun out and
ordered everyone to lie down on the floor."
Despite the Hungry Duck's reputation as a den on iniquity,
Steele, who is from Halifax, insisted that nobody had ever died there.
However, a man bled to death at the front door one night after being knifed
in a fight over a woman.
The Hungry Duck is dead in Russia, but Steele promised to open
another Duck with exactly the same format in neighbouring Belarus. To try
and avoid the kind of trouble in Minsk that he has had in Moscow, Steele's
partner there is the wife of one of the president's generals.
But Steele is not done with Moscow yet. He owns the relatively
quiet, upmarket Chesterfield Cafe as well as a subdued restaurant. 
Although he has not yet found a place yet, his next new venture in
Moscow will be a nightclub called the Swinging Frog. It's logo will be a
frog being pushed off a stool by, what else, a drunken duck.
"We will be trying something new but we won't refuse any women
who attempts to disrobe," Steele said, laughing. "After all, frogs like
naked women, too. It will be like in a fairy tale."


Russia Today satire
March 19, 1999
Waving the White Flag 
By Mary Campbell

This week, I surrender. 

This week, Russian politicians have so successfully satirized themselves
that they've effectively put me out of work. 

Take Yury Skuratov (please, Boris Yeltsin has apparently been quoted as
saying.) The (former? still?) Prosecutor-General has resigned, been fired
and refused to quit, all since Feb. 1. Helping himself to a leaf from
Yeltsin's own book, Skuratov's first instinct, when faced with possible
scandal, was to check into hospital complaining of heart problems. He can
hardly be blamed for giving it a shot – this method has worked well for
Yeltsin, who clutches his chest (or his stomach) and retires to a
sanatorium whenever the political weather gets stormy. Skuratov probably
envisioned a happy life "working with documents" somewhere outside Moscow
and appearing occasionally in heavily edited video footage. 

Unfortunately for Skuratov, the video footage, when it surfaced, was not
edited at all. The tape shows the Prosecutor-General in bed with two naked
women, neither of whom is his wife. It might have been Oscar material, were
it not so clearly derivative of another minor classic in the Russian
cinematic cannon – the footage of former Justice Minister Valentin Kovalyov
in a sauna with two naked women, neither of whom was his wife either.
(Whether or not they are the same two naked women who appear in the
Skuratov film is uncertain – this type of production generally doesn't list
the credits.) 

The sauna incident cost Kovalyov his post, but that was back in the days
when Yeltsin fired people and they stayed fired. Skuratov appeared before
the Federation Council to plead his case and convinced its members (in a
speech I for one would like to read) that he should remain

If nothing else, the Skuratov case shows why Russians were so universally
unimpressed by the fuss raised over Bill Clinton's sexual peccadilloes. The
Starr report was in the bargain bins in Russian bookstores almost as soon
as it was translated. 

There is, however, still hope for Monica Lewinsky's own book because,
according to a spokesperson for the book's Russian publisher, "Russian
people are interested in emotions. Where there are emotions, there is

One of the first to express interest was, need I say it? Vladimir
Zhirinovsky. Zhirinovsky is a satirist's nightmare. Nothing you could
imagine him saying or doing could ever touch the things he actually says
and does. He's been offering Bill advice and something like emotional
support since the Lewinsky scandal broke, suggesting that if the U.S.
president were impeached, he could hang out with Zhirinovsky and golf and
trade tales of their sexual exploits. 

Now Zhirinovsky wants to meet Monica to, er, "talk." 

I hope someone captures that on videotape. 


From: "Stacy Borisov" <>
Subject: A Question for JRL Readers
Date: Tue, 23 Mar 1999 

Can anyone give advise on the best or safest means of getting money to an
individual in Russia from the U.S.? Does anyone know how reliable bank
transfers are? Or are there any western businesses in the Moscow area
which will redeem a personal check? My husband and I need to get money to
his mother, who lives in Eastern Siberia and who will be traveling through
Moscow at some time. Any suggestions would be appreciated greatly! You can
reply directly to our e-mail or through JRL. Stacy Borisov 


Date: Tue, 23 Mar 1999
From: Heinrich Vogel <> 
Subject: Re: Reforming Russia Response to Mark Jones, 16 March 1999

According to Mark Jones's philippika the true road towards serfdom in
imperialism, militarism, chauvinism, and foreign adventures started with the
bourgeois institution of property, protected by law - that birth defect of the
human race. Ignorant as I am, however, I most humbly submit a few questions:
What in Mr. Jones' view is "strong statehood" without the rule of law
including the protection of the individual property rights? Shall we go
back to
positions of "proprieté c'est le vol"? What are we to take for the
appropriate "context of socialist planning" to establish genuine social
Models of socialist law in the Soviet Union? Yugoslavia? China?

Quite frankly, I believe, the victims of criminal transformation in Russia
would be infinitely better off, had the timing and sequencing of
dismantling Soviet-typed socialism followed a different logic of first
establishing a
civilized statehood based on law, of training and adequately paying a
competent civil service, and of sticking to a fixed exchange rate of the
before unleashing the accountants and money-jugglers which may be
indispensable for building a globally compatible monetary system - but,
please, later-on
and with strings attached. The loss of statehood, not a scare-crow of
"capitalism" is the problem. This view may be an expression of my typical
hang-up with a socio-economic system called "Soziale Marktwirtschaft", which
caused much less pain than most other types of really existing capitalism.

It will not come as a surprise that my perception of German "Kultur"
differs from that of Mr. Jones. In my view, the cultural background of Karl
Marx, Sigmund Freud, Max Weber, and Joseph Schumpeter (to name only a few) has
been more important for the history of thought than the stereotypes Mr. Jones
biblical wrath seems to be content with.


Cato Institute press release
U.S. Assistance for Market Reforms
Cato Policy Analysis No. 338
March 22, 1999 
Aid for market reforms in Russia and Eastern Europe "largely ineffective"

Money often goes to Western consultants whose advice is redundant or

Aid provided by the United States to Russia and Central and Eastern
European countries since the collapse of the Soviet Union "has been largely
ineffective," according to a new study from the Cato Institute. In fact,
"rather than help to dissipate the legacies of communism, U.S. economic aid
has in some cases instead reinforced the legacies of suspicion, central
planning, and political control over economic decisions," the paper

In "U.S. Assistance for Market Reforms: Foreign Aid Failures in Russia and
the Former Soviet Bloc," Janine R. Wedel provides a detailed examination of
the role played by U.S.-based consultants who were dispatched to help
promote privatization and market reform. In Russia, she notes, much of the
aid effort was directed by Harvard University's Institute for International
Development (HIID), also known as the "Harvard Project," that worked
through a group of self-styled Russian "reformers" known locally as the
"St. Petersburg Clan," or the "Chubais Clan," after its leader, Anatoly
Chubais, who was first deputy prime minister and then chief of staff to
President Boris Yeltsin. But "the program that Chubais implemented led to
the accumulation of property in a few hands and opened the door to
widespread corruption." 

"It is not surprising that, against the backdrop of Russia's Klondike
capitalism, key HIID advisers exploited their intimate ties with Chubais
and the Russian government and were allegedly able to conduct business
activities for their own enrichment," Wedel observes. In 1997 the Agency
for International Development cancelled most of the $14 million still
earmarked for HIID, and two of the Harvard consultants remain under
investigation by the Justice Department. 

In Eastern Europe, she writes, "The majority of the consultants were
'fly-in, fly-out' advisers who visited the region for a short time,
developed weak links with recipients, and knew little of the countries they
were trying to help." They were often considered "redundant and even

Wedel concludes that in Central and Eastern Europe, "aid has generated some
cushy jobs for Western consultants but, in terms of development, has added
little to what private, voluntary exchange could provide on its own."
Janine R. Wedel is a research professor of anthropology and a research
fellow in the Institute of European, Russian, and Eurasian Studies at The
George Washington University and an adjunct professor in the Graduate
Public Policy Institute at Georgetown University. 


Moscow Times
March 24, 1999 
Canceled Visit Fortuitous for IMF 
By Gary Peach
Staff Writer 

The sudden cancellation Tuesday of Prime Minister Yevgeny Primakov's visit
to the United States may be fortuitous for officials at the International
Monetary Fund, whose planned talks on new IMF credits had faced increased
scrutiny over allegations that Russia had misused previous loans. 

The U.S. magazine Newsweek reported earlier this week that the Central
Bank had sent $500 million of the first loan the IMF granted to Russia
straight to the Financial Management Co., or FIMACO, an offshore shell
company controlled by a Central Bank subsidiary that has been the center of
numerous corruption and embezzlement allegations from Russian Prosecutor
General Yury Skuratov and State Duma budget committee member Nikolai

Citing an unnamed Central Bank source, Newsweek reported that the money -
part of an $800 million tranche of a $1.5 billion systemic transformation
facility granted to Russia in late summer 1993 - had been returned to
Russia within six months and used for its original purpose. 

Primakov's talks this week with the IMF, to which Russia had been
attaching enormous importance, were put on hold Tuesday. The prime minister
abruptly called off his planned trip to Washington after U.S. Vice
President Al Gore briefed Primakov on unsuccessful diplomatic efforts to
resolve the crisis in Kosovo. 

Whatever the impact of the cancellation on international diplomacy, it may
well have the unintended side effect of giving international creditors time
to digest the newest allegations. 

At the same time, Western economists were reluctant to stress the
importance these and other scandals would have had on the prime minister's
ongoing dialogue with the IMF. 

"It is my impression there is not a firm commitment in Washington to new
IMF money, even without the allegations," said Ben Slay, senior economist
at PlanEcon Inc., a Washington-based consulting agency. 

"There is still no hard evidence of misappropriations," said Charles
Blitzer, head of emerging markets research at Donaldson, Lufkin & Jenrette.
"And no one will take Ilyukhin's allegations at face value." 

"If the IMF wanted to come up with a laundry list of why not to give
Russia money, then allegations of wrongdoing would be only one of the
reasons, and probably not the most important one," said Slay, adding that
Russia's macroeconomic indicators are enough basis alone to delay any new
disbursements. The IMF, as Slay and other economists explained, is far more
worried about its own credibility at this juncture than it is about Russia
missing payments on debt coming due. 

Meanwhile, Viktor Ilyukhin, Communist chairman of the Duma's security
committee, said he had sent a letter to Skuratov alleging that part of the
$4.8 billion disbursed by the IMF last July was siphoned off to a company
in which Tatyana Dyachenko, President Boris Yeltsin's favorite daughter and
Kremlin aide, holds a 25 percent stake. Ilyukhin claims $235 million was
transferred to the bank account of an Australian firm where Dyachenko owns
the stake "through her Luxembourg representative." 

The letter cites "competent foreign sources," although Ilyukhin's
assistant, Alexander Volkov, declined Tuesday to give information about the

Volkov did say, however, that Skuratov would also receive copies of
payment documents showing the transfer of IMF money to Russia via
Creditanstalt-Bankverein in Lugano, Switzerland, and then to Ost-West
Handelsbank, a Frankfurt bank originally set up by the Central Bank but in
which it now owns a 48 percent stake. 

Analysts were skeptical about any accusations coming from Ilyukhin, a
virulent Yeltsin opponent criticized last year for anti-Semitic comments in
a speech to legislators. 

Opinion on the home front remained divided as to the usefulness of IMF
money for Russia. Anatoly Chubais, CEO of Unified Energy Systems and the
man who led negotiations with the international lender last summer, said in
Samara on Tuesday that new IMF money "is absolutely essential for Russia,
and everything must be done to secure it." 

By contrast, Andrei Illarionov, a leading liberal economist, said that
Russia did not need new IMF financial support. 


Primakov decision will not change need for IMF cash
March 23, 1999

WASHINGTON (Reuters) - Russia's abrupt decision to put off top-level talks
in the United 
States will not ease its dire need for extra cash, nor change the dilemma
donors deciding whether to lend, analysts said Tuesday. 

The experts, speaking as Prime Minister Yevgeny Primakov postponed his
U.S. trip in protest 
of impending NATO action against Serb military targets, said Russia still
needed new money from 
the International Monetary Fund. 

But the fund, which has loaned Russia some $20 billion over seven years,
be damned both if it bent its rules and lent again and damned if it 
did not lend and the world's biggest country imploded in chaos and default. 

Printing money as an alternative to international loans would send the
already battered rouble 
currency spinning lower still and catapult Russia toward hyperinflation,
when prices rise almost too fast 
to count, they said. 

"The basic need that Russia has to get that IMF support is not going 
to be changed by this," said David Satter, a research fellow at the Hudson
and author of a book about the fall of the Soviet Union. 

"They may be complicating things with this because they may lose something
in the 
way of political support. 

Primakov, a former spymaster and foreign minister who took over as Russian
prime minister 
last year, was to meet the heads of the IMF and the World Bank during 
his visit to the United States. 

But his plane turned round en route to Washington after mid-air
discussions with U.S. 
Vice President Al Gore. "It was his choice," a Gore aide said. "The vice
could not assure him that air strikes would not not take place during his
to the United States." 

An IMF spokeswoman said she did not know when talks on new lending would 
resume. "We regret the delay, but we will continue the discussions in other
ways when 
and where possible," she said. 

The IMF halted its lending program to Russia last July after the
government defaulted 
on some debt and devalued the rouble. 

The fund, fearful of pouring more money into a black hole, is wary of 
resuming lending until the Russian government proves it can collect taxes
and pay overdue bills. 

Russian officials say they need some $4.5 billion from the IMF to pay IMF 
loans falling due this year and to open the door for negotiations on
rescheduling other 
debts. They predict dire economic consequences if the fund declines to pay. 

Primakov, speaking to reporters during a stopover in Ireland before his
decision to turn 
his plane around, said on Tuesday Russia wanted an agreement with the IMF.
But he 
reiterated Russia's fierce opposition to the use of force over Serbia's
ethnic Albanian province of 

"It (an air strike) defies common sense and could destabilize the
situation in the 
world. We are categorically against this, categorically," Primakov said. 

Analysts said the IMF could find it hard to justify new lending to Russia 
while economic policy remains murky, the government is virtually unable to
collect taxes and millions 
of Russians wait for months for pay. 

But failure to provide new money could force Russia to default on more
wrecking its borrowing chances for years to come and fueling fears of
political collapse. 

"I would be arguing for a minimum level of IMF engagement, sufficient to
the rollover of Russia's obligations to the fund," said Augusto Lopez
Claros, a former IMF 
staffer in Moscow who now works as senior international economist for
Lehman Bros. in London. 

"But the question which people are posing is should one, at this point,
Russia to default on its IMF obligations." 


The New Republic
April 5, 1999 
[for personal use only]
A Tsar is Born 
By Stephen Kotkin 
Stephen Kotkin is director of Russian studies at Princeton University. 

Is Russia ready for a film-director president? 

Nikita Mikhalkov, the Oscar-winning Russian director of Burnt by the Sun,
continually insists that he plans to participate in Russia's June 2000
presidential elections as a voter. He neglects to add that candidates also
vote. Anyway, major directors, let alone ordinary voters, do not have film
premieres at the Kremlin, as Mikhalkov did in February for his epic The Barber
of Siberia, in which he plays Tsar Alexander III. While the guests arrived, a
military orchestra in prerevolutionary dress uniform played "God Save the
Tsar"--in the foyer of the hall built for Communist Party congresses. The
movie, which cost $45 million--about $44 million more than the few other
Russian films made recently--was followed by an unheard-of fireworks salute
over the ancient onion domes. No political campaign could aspire to be
more impressively. 

Well before the event, Mikhalkov threw Moscow's political elite into hysteria
by distributing the mere 5,000 invitations according to lists--one for the
government, one for Yeltsin's court and presidential administration, one for
the parliament--thereby inducing a fight for recognition of rank among
officials. Anyone who was anyone had to be there--and they were, from
dullard Gennadi Zyuganov to nationalist sound-bite artist Vladimir Zhirinovsky
to perennial liberal wallflower Grigory Yavlinsky. Former Prime Minister
Chernomyrdin, whose government sank $10 million into the movie, attended. The
ever-ailing Boris Yeltsin failed to show, so Prime Minister Yevgeny Primakov
stood in as head of state--at a film showing. Is it possible to imagine
Hollywood's all-time most expensive motion picture opening at, say, the U.S.

Perhaps most telling of all was the behavior of Moscow city boss and announced
presidential candidate Yuri Luzhkov. He skipped the premiere, sending word
he was occupied "inspecting sites" around Moscow--on a Saturday night.
Then, on
Sunday night, he granted the popular television newsmagazine "Itogi" a rare
45-minute prime-time interview, thus bumping Mikhalkov to "Itogi"'s secondary
eleven o'clock evening slot. Moreover, earlier that same day--a religious
holiday (the opening of Lent) that figures prominently in Mikhalkov's
usually uncooperative Luzhkov suddenly invited foreign journalists to a
traditional celebration. The presidential front-runner launching a public
relations blitz precisely when Mikhalkov steps into the spotlight? 

Media commentators quickly asserted that analyses of Russian politics now had
to take Mikhalkov into account. In fact, members of the Russian establishment
have been quietly courting him for more than half a year. Business magnates
have made unsolicited offers of funding. Political consultants have been
competing to volunteer their unsought services. Major media outlets have made
discreet indications of potential support. Mikhalkov, it seems, does not have
to announce his candidacy. Russia might summon him. 

Skeptics still outnumber opportunists, however, in part because the filmmaker
remains a self-styled one-man movement. At a press conference in January,
Mikhalkov announced, "I am my own party." But Russia is a big country. As
Mikhalkov's own right-hand man, Dmitry Piorunsky, puts it: "He's the chairman
of the Russian Cultural Foundation, with its one hundred and fifty employees,
and of the Russian Filmmakers' Union with another thirty or so.... Where's his
political organization?" 

The answer may lie in a person who also has no political party but de facto
controls the Russian state, and without whose blessing the Kremlin premiere
could not have taken place: Prime Minister Primakov. 

Like Mikhalkov, Primakov has been coy about his political plans. After this
past August's humiliating default and the sacking of then-Prime Minister
Kiriyenko, Russia's squabbling power brokers hit upon Primakov as the surprise
replacement. Following the Soviet collapse, he had been tapped to restore
to Russia's intelligence service, whose disoriented officials were providing
guided tours and gifts of supersecret documents to the CIA. Then he had been
moved to the Foreign Ministry, which had come to resemble an eager subsection
of the U.S. State Department (albeit one distinguished by inordinate
self-importance). There he refocused attention on ignored CIS countries vital
to Russia and gave Washington the understanding that, no less than China,
Russia would not be taking marching orders from Foggy Bottom. Quietly, his
authority at home grew. When asked to form a government, he appeared to accept
reluctantly; duty called. 

In power, Primakov has managed to deepen his appeal. This is no mean feat in a
country with a largely nonviable industrial economy, unpayable loans in the
multibillions of dollars, a leaking cold war doomsday complex, an invalid
president with dictator-like authority, and a trouble-loving parliament of
incompetents and some lunatics. The new prime minister began by demonstrably
pursuing political accord and stealthily acquiring levers of effective
authority. Elevating associates to important positions and finding political
roles for as many top politicians as possible, even if they held no official
post, he has multiplied his allies and neutralized potential enemies. He has
maintained the backing of the ever-jealous Yeltsin. And he has refrained from
articulating his own views, encouraging all parties to fantasize about his
eventual preferential support. It has been a virtuoso tactical performance. 

Brilliant political tactics, however, will not do much for Russia's economy,
and Primakov--partly by design, partly by sheer inability--has no economic
program. His vague call for a "regulated market" remains a slogan, for he has
discovered that it is Russia's bribecollecting state officialdom that requires
"regulation" (and drastic downsizing). Even the pro-reform Yavlinsky concedes
that "without a real fight against corruption, it is not possible to solve a
single economic problem in Russia." This circumstance makes Primakov's lack of
an economic program almost logical. And, in contrast to his predecessors, who
usually made a show of going after minor--albeit attention-getting--targets,
Primakov does seem committed to getting a handle on the malfeasant state. He
has censured his own Cabinet members in front of the press, so that ministers
in turn demand greater accountability from their subordinates. While taking
care to protect the interests and reputation of Yeltsin, Primakov has also
moved to drive out those who, through their unofficial connections to the
court, have wielded inordinate influence--most notoriously Boris Berezovsky. 

The "Jewish Rasputin," as the cunning Ph.D. in systems operations is
known, has crushed all previous would-be vanquishers, including IMF darling
Anatoly Chubais, but this time Berezovsky may have met his match. It is not
just that Primakov's government has sought to reclaim control from Berezovsky
over Russia's partially privatized main television network, ORT, in a
loans-for-shares deal whereby the state can reclaim equity for credits that
bankrupt station will not be able to repay. It is that the
Berezovsky-controlled airline Aeroflot--whose president, Valery Okulov, is
Yeltsin's son-in-law--suddenly dismissed several longtime Berezovsky people
helped trigger an investigation of a Swiss company where Berezovsky has
allegedly been parking Aeroflot's hard-currency earnings. 

In the coup de grace, the tax police raided the offices of Aeroflot, as
well as
those of the Berezovsky-controlled oil company Sibneft, and Atoll,
private security agency, which has been accused of eavesdropping on the
president and his family. As one deputy section chief of the presidential
administration gleefully told me in prison-yard slang, "A big chopping is
way." For a politician with few conspicuous achievements, delivering
Berezovsky's head would provide a political boost. Skillful anti-Berezovsky
leaks to the press have already raised Primakov's ratings. 

Manifestly political, Primakov's clampdown has also been selective. He has,
instance, chosen not to challenge the greatest of all Russian oligarchs, Rem
Vykahirev, who manages with little oversight the federal government's huge
interest in Gazprom, a monopoly with yearly revenues in the tens of
billions of
dollars that is notoriously delinquent in paying its taxes. Gazprom does pay a
supposed 2.4 billion rubles of its four-billion-ruble monthly tax bill,
accounting for up to one-third of state revenues. And Primakov may be mindful
of the fact that, when the previous government went on the offensive against
Gazprom, the company temporarily curtailed its tax payments. Primakov's
indulgence may also be related to Gazprom's 30 percent stake in NTV, the only
fully private television network in Russia, and its substantial shares in the
partially privatized ORT and in regional stations, not to mention many central
and regional newspapers. With Gazprom's tax break recently affirmed, Vyakhirev
publicly stated his support for Primakov. 

Selective as it has been, the anti-corruption drive could soon reach beyond
Berezovsky to other tycoons. Investigations have already been launched against
top military officers and even against one former Primakov associate who
runs a
research institute. Longtime academic colleagues with whom Primakov remains in
contact concur that he abhors corruption. He seems in many ways closest to
Andropov and the former leader's "discipline" campaign, which is where Mikhail
Gorbachev's perestroika came from. Nearly 15 years into "reform," a
fatigued Russia may have come full circle. But, this time around, the struggle
against state corruption takes place against the background of national
electoral politics. 

Given the competition, Primakov certainly makes for a strong candidate.
Zyuganov faces a challenge for his party's nomination, and, in any case, the
Communist electorate has a hard ceiling of 20 to 25 percent. Alexander Lebed,
who finished third last time around, has apparently gone into terminal
Viktor Chernomyrdin is history. The Belarus pretender, Alexander
Lukashenko, is
not a citizen of Russia. Thus, even at this early juncture, the presidential
race is shaping up as a two-man contest: Primakov versus Luzhkov. Yavlinsky
the liberals, who cannot win, appear likely to play a substantial swing role,
and, from the evidence of the past several months, both Yavlinsky and his
biggest supporter, the highly influential private NTV, may side with Primakov.

Which way the regions will go is an open question. While Primakov has lent his
mostly invisible hand to some 30 regional heads seeking to form a loose
coalition called Voice of Russia, a challenge to the more formalized
movement built by Luzhkov, Luzhkov has started organizing the country's mayors
in opposition to "disloyal" governors. 

Speculation that Primakov will eventually cut a deal with Luzhkov ignores the
fact that Luzhkov would never settle for the second-fiddle prime ministership
under Primakov. And, according to those who advise him, Primakov cannot abide
Luzhkov's crony-capitalist style of rule. Similar sentiments are widespread in
Yeltsin's presidential administration and inner circle. During an evening
gathering in late January at a dacha in Barvikha--the elite enclave not far
from where Lenin died--I was repeatedly and disdainfully told of Luzhkov that
"Russia has already had a bald guy in a worker's cap." The prospect of
Luzhkov, who is a formidable politician of vast resources and talent, has
energized much of the political class. "All against one; one against all," as
the magazine Profil put it. 

Which brings us back to Mikhalkov. Primakov has repeatedly denied having
presidential ambitions. Even so, he can still be expected to answer the "call
of duty." Yet Primakov will be older than 70 by election time (and would be
close to 76 at the completion of a first term). His lack of charisma and
shortcomings as a campaigner are also obvious. These considerations direct
attention toward Mikhalkov. The 53-year-old filmmaker, who meets often with
Primakov, has announced he will support the prime minister if he chooses to
run. It is conceivable that Primakov could continue to try to put the Russian
house in order, then turn over the formidable resources of the state to a
Mikhalkov campaign. Or Primakov could seek to reinstitute the post of vice
president and forge a Primakov-Mikhalkov ticket. Whether or not he assumes the
mantle of tsar himself in the interim, Primakov is poised to play
tsar-maker--provided the current tsar doesn't remove him first. 

Whatever maneuvers in the corridors of power influence who gets on the ballot,
the voters will decide the outcome. And here Mikhalkov's The Barber of Siberia
could serve as the ultimate "exploratory committee" as it travels the country.
Picture-perfect pretty, Mikhalkov's Russia is mythic Hollywood in style but
in content. Around a weak love story involving a superficial Irish-American
prostitute named Jane and an opera-singing Russian military cadet named
Tolstoy, he creates a big-hearted, fatalistic world of mishaps, official lies,
and penal servitude that is defiantly enigmatic to outsiders but
extraordinarily resonant with Russians. In its first week at Moscow's Kodak
CinemaWorld, 42,000 tickets were sold (compared with 31,000 for Titanic).

Moscow-based critics, presented with the country's first major film in years,
denounced it. But some grudgingly saw merit in it. Nikolai Svanidze, a
tough-minded television commentator, opined that "yes, it's sentimental. But
it's a beautiful sentimentality." At the Kremlin premiere, the deeply cynical
spectators startled one another by clapping during the film, by not repairing
to the lavish liquid buffet for more than three hours, and by standing in
applause at the end. Most of my immediate neighbors spent the film alternately
in titters and tears. Ministers, generals, world-class embezzlers--weeping?
weekly Kommersant-vlast observed that "for the longest time now no one has
able to speak of Russia as a great country." But Mikhalkov can. 

Ultimately, however, the land portrayed in the film is unsettling: a Russian
general's glass-eating drunken spree, a Russian cadet who speaks fluent
but cannot fix a fan, the envy that "drives the country like the steam engine
drives Britain," the misplaced heroism, the nearly blind loyalty to the
emperor. "The Barber is not about tsarism or the `glorious' epoch of Alexander
III," Mikhalkov insists. "It's about preserving worthy traditions. It's about
dignity and honor. Above all, it's about Russia, a maker and breaker of

There is no `happy end.'" In politics as in cinema? 



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