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Johnson's Russia List


April 27, 1999    
This Date's Issues: 3260 3261    

Johnson's Russia List
27 April 1999

[Note from David Johnson:
1. Moscow Times: Igor Semenenko, State Won Deficit Victory Without 
Neglecting Wages. 

2. Reuters: Adam Tanner, Billions gone as Russian corruption thrives.
3. Washington Post: Midnight in Moscow. Dusko Doder reviews Malia and

4. RFE/RL: Robert Lyle, Russia and Ukraine Face Serious Economic Problems.
(Views of World Bank's Johannes Linn).

5. New York Times: Anatol Lieven, Let's Not Freeze Russia Out.
6. Interfax: Lebed Thinks Yeltsin Incapable of Tough Actions.
7. Newsweek International: Lucy Jones, Better Spell It 'Cyberia.'
Software start-ups thrive in the Silicon Taiga.

8. Washington Post letter by Mark Katz: No Role for Russia in Kosovo.
9. Gary Kern: Call for info on Walter G. Krivitsky.
10. Paul Backer: Comment on Reeves article and meaningful lending for RF.
11. the eXile editorial: Exiled from Apathy: Call Us Dissident Emigres.]


Moscow Times
April 27, 1999 
State Won Deficit Victory Without Neglecting Wages 
By Igor Semenenko
Staff Writer 

The government Monday basked in the rare glory of not only beating its
targeted first quarter deficit by almost 40 percent, but of doing so
without sacrificing wages. 

"In the first quarter of 1999 the federal government paid 27 billion
rubles ($1.1 billion) of salaries," First Deputy Finance Minister Viktor
Khristenko said. 

Part of the salaries were paid by drawing from the roughly 38 billion
rubles earmarked for investments in industry, agriculture, infrastructure
projects and scientific research, Khristenko said. 

The Finance Ministry on Friday announced that the first quarter deficit
was 20.6 billion rubles ($837 million), or 60 percent of budget target.
Revenues were 89.2 billion rubles, almost 98 percent of the target, and
outlays were 109.8 billion rubles, or 87.6 percent of target. 

However, Khristenko acknowledged Monday that the government faces a lot of
challenges on the budget front during the second quarter. 

It therefore looks unlikely that the government will be able to pull off
the same stunt again. 

"Investment expenditures are usually conducted in the second half of the
year and this is exactly what we are going to do," said Khristenko. 

At the same time, the government will have to service looming debt
obligations and pay higher salaries to its employees. As of April 1, the
government indexed salaries to inflation. 

"We hope that the regional governments will find sources of financing to
pay the increased payroll," said Khristenko. 

That is of course wishful thinking on the part of the first deputy finance
minister, analysts said. By April 1, the regional governments had
accumulated wage arrears of 9.3 billion rubles ($380 million). Although
that debt is down from the 12.7 billion rubles the regions owed at the
beginning of the year, the reduction came from 9.9 billion rubles in
federal funds that were sent to the regions. 

"Whatever the developments are, we will try to restrain ourselves to a 2
percent [primary] budget surplus," said Khristenko. 

>From the very start of the economic crisis, the International Monetary
Fund urged the Russian government to show more care in its fiscal policies.
But this will be a difficult task if all state promises are to be kept.
The 1999 budget calls for 474 billion rubles in revenues, a figure the IMF
has said needs to be increased sharply. 

However, even a 2 percent primary budget surplus is better than the
deficits that the government has been running for almost a decade. 

Some analysts cast doubt on the government's forecasted surplus, saying
the parliament elections in the autumn could blow a hole in Russia's fiscal
responsibility. "There are elections coming due and it is difficult to
estimate whether they will abstain from buying votes," said Peter Westin,
an economist with Russian-European Center for Economic Policies. 


Billions gone as Russian corruption thrives
By Adam Tanner

MOSCOW, April 26 (Reuters) - Yuri Boldyrev, one of Russia's top corruption 
fighters, says he knows the temptation of a good bribe first hand. 

``I've had offers, of course,'' said Boldyrev, deputy head of the Audit 
Chamber which investigates the misuse of public funds. 

He recalled that as a member of the upper house of parliament in 1993, he was 
approached before the chamber selected a new speaker. The lobbying clearly 
implied a payoff. 

``They didn't have enough votes, so naturally a comrade comes over and says, 
'Yuri Yuriyevich, we must come to an agreement, we need to talk,''' Boldyrev 
said in an interview. 

``No one is an idiot, they don't give suitcases of money to each other. 
Perhaps on a very low level it is done that way, but not on a higher 
government level.'' 

The temptations and opportunities for government corruption remain great in 
the chaos of post-Soviet Russia and have cost the country billions of dollars 
in recent years, experts say. 

Yet the difficulty in prosecuting a few recent high-profile cases suggests 
Russian bribe-takers rarely face justice. When clues lead to the highest 
corridors of Russian power, the trail of evidence often eventually, and 
mysteriously, runs dry. 

Prosecutor General Yuri Skuratov's investigation of possible Kremlin 
wrongdoing in the allocation of government building contracts earlier this 
year is a case in point. He said he had gathered details from Swiss bank 
accounts showing corruption among Russian officials. 

Then a March broadcast of a video of a man resembling Skuratov in bed with 
two women derailed that effort. He has since taken administrative leave 
pending investigation of his own case. 

In April, the deputy prosecutor issued an arrest warrant for one of Russia's 
most prominent businessmen, Boris Berezovsky, formerly a government official 
close to President Boris Yeltsin's family, on alleged illegal business 

A few days later the arrest warrant was lifted. Berezovsky returned to Russia 
from abroad a few days later. 

``There are a lot of strange things here, I agree,'' Oleg Sysuyev, Yeltsin's 
deputy chief of staff, told Reuters. ``Russia is growing but has still not 
grown up to the level of a real democratic society with a government living 
on the basis of law.'' 

Commenting on the Berezovsky case, Sysuyev said politics played an important 

``The decision on arrest is a very serious decision. If it is a very serious 
decision and it is changed within two days on some basis it can cast 
suspicion on the author of such a decision -- that he did not act by the law 
but by what he understood to be political needs,'' he said. 


Russian corruption varies in scale from the traffic cop who takes $1 to 
pardon an offence on the spot to millions of dollars ferried to officials in 
foreign accounts for their ``assistance.'' 

Boldyrev said overall corruption has had a staggering toll on public finances 
of a country in deep financial crisis. 

``Every year we uncover a huge quality of government funds that are illegally 
distributed,'' Boldyrev said. 

``Over the three years before August 17 more than about $17 billion were 
illegally taken,'' he continued. ``That's what we have uncovered, that which 
we are able to control. In reality the real sum is significantly greater.'' 

So pervasive is the problem that some sociologists call post-Communist Russia 
a ``kleptocracy,'' or government of thieves. 

Corruption has deep roots in Russian history and even the steely hand of the 
Soviet government failed to eradicate it. 

Liberal parliament deputy Yuri Shchekochikhin, who made his name as a 
journalist investigating Soviet corruption, said Russia's free market changes 
have created a bribe bonanza Soviet officials never dreamed of. 

``Soviet society didn't have religion, but it had fear, and bureaucrats were 
afraid,'' he said in an interview. ``Bureaucrats have now lost their fear of 
punishment and public opinion does not insist that a bureaucrat involved in a 
scandal leave. 

``Something now that didn't exist before was widespread corruption among 
security structures. That's the Interior Ministry, and the Federal Security 
Service and the prosecutor's office, but especially the Interior Ministry,'' 
he said. 

Interior Minister Sergei Stepashin said earlier this year that Russia had 
dismissed 4,000 police for wrongdoing in 1998, with 360 cases going to court. 
He has also called for better salaries to fight corruption in police ranks. 

Low pay is a chronic problem. Even the president earns only $400 a month and 
ministers get $250. 

In many cases, Russia's legendary bureaucratic rules and regulation are the 
swamp that gives rise to corruption. 

Shchekochikhin cites Moscow's requirement that residents have to get official 
permission to live in the capital. 

``This has prompted a large amount of bribes to ordinary police,'' he said. 
``The external appearance of the women at the passport registration desks in 
police stations have changed. Now they have diamond rings, golden earrings. 

``Bad laws are a direct path to corruption.'' 

Moscow Mayor Yuri Luzhkov, a likely candidate for president in 2000, has 
defended the Soviet-era system of residence permits as a way of upholding 
public order. He has ignored a Constitutional Court ruling against the 
residence permits. 


Experts say that to fight corruption, Russia needs an updated set of laws 
and, perhaps most importantly, economic stability, which has proved elusive 
over the past decade. 

``You can't jump at once from a planned to a market economy, as, of course, 
some of our laws date unfortunately from the USSR,'' Justice Minister Pavel 
Krasheninnikov told Reuters. ``When the laws are more uniform, then these 
possibilities (for corruption) will be less and less.'' 

Yeltsin has from time to time unveiled new anti-corruption drives, but his 
deputy chief of staff Sysuyev said a broader approach is needed. 

``You can't fight against this with individual campaigns or decisions,'' he 

``You need to follow an economic path with a flourishing of the government, 
with corresponding laws which unfortunately we don't have in Russia.'' 


Washington Post
25 April 1999
[for personal use only]
Book review
Midnight in Moscow
By Dusko Doder
Dusko Doder is the author, most recently, of "Heretic in the Kremlin," a
biography of Gorbachev. 

>From the Bronze Horseman to the Lenin Mausoleum
By Martin Malia
Harvard. 514 pp. $35

Russia Seeks Its Place as a Great Power
By Dimitri K. Simes
Simon & Schuster. 272 pp. $25

The basic image of Russia I retained from my college days was that of an
Asiatic despotism possessed by a messianic zeal to dominate the world. Maps
demonstrated how the tsars kept enlarging Old Muscovy until it occupied
one-sixth of the globe's land surface in 1914. In the daily newspapers --
this was at the height of the Cold War -- we read how their Communist
successors continued to expand Moscow's imperial reach.

The famous 15th-century monk Philotheus of Pskov had made it easy to see a
link across Russia's history -- from Peter the Great's push to the Baltic
to the world-wide communist jihad of the 20th century. He predicted that
Moscow was destined to become the capital of a world empire, the third and
final Rome. The monk wrote to his tsar shortly after the fall of
Constantinople in 1453: "all Christian kingdoms have united into yours . .
. two Romes have fallen . . . the third stands and there shall never be the

Here was a Russian paradigm -- a fusion of the state with a messianic idea
-- accepted by several generations of Western scholars, politicians and
journalists. It is now being challenged by Martin Malia, professor emeritus
at the University of California at Berkeley, whose provocative new book,
Russia Under Western Eyes, may prove something of an icebreaker in the
current debate on how to deal with post-communist Russia.

The monk had in mind "not the power of the Muscovite state, but the purity,
the 'right teaching' of Muscovite Christianity," Malia says. But Old
Muscovy foreign policy was never governed by this precept, and the
Romanovs' territorial expansions -- apart from the Polish partitions --
focused on the decaying borders to the southeast and east. In Poland, the
first partition was engineered by Prussia and Austria, with Russia as an
accessory; the second was Catherine the Great's initiative to snuff out the
"spirit of insurrection and innovation" inspired by the French Revolution.

The tsars, of course, were not averse to expanding their realm. But they
always acted within the established international order. Catherine's dream
of restoring a Christian Empire in Constantinople was just that. It was
never raised to the level of practical policy. Even in the aftermath of
victory over Napoleon, when Russia was dominant as never before,
Catherine's grandson Alexander I acted as the champion of international
law, peace and stability. (He, for example, refused all help to the Greek
national revolt against Turkey in 1821.)

Throughout this period of territorial expansion, Russia was seen not only
as an enlightened despotism "but the most enduring and successful of them
all." Voltaire, Diderot, and Jeremy Bentham heaped praise on the Romanovs;
Leibniz actually made contributions to Peter's reforms. Even Thomas
Jefferson saw Alexander I as a monarch "whose ruling passion is the
advancement of the happiness and prosperity of his people."

A change in Western views of Russia occurred around 1815 when Alexander's
military might raised the specter of a "Russian menace." In response, the
first in a series of anti-Russian Western coalitions (England, France and
Austria) was formed. The metamorphosis of Russia's image in the West was
completed with the repression of the 1830 Polish insurrection by Nicholas
I; Russia was cast into the outer darkness of Asia.

Ironically this was the moment when Russia had moved closer to the West
than ever before. She had developed a cultivated and creative elite and was
on her way to becoming a "first class cultural power." Her military
strength had declined. Her actions at the edges of the empire reflected the
effort of a status-quo power to manage the slow disintegration of the
Ottoman empire and Poland's unrests.

But the strident hostility toward Russia had become almost irrational in
England and France. Press accounts described the Russians as not
"accessible to the ordinary motives of the human mind," and their security
concerns were regarded as "dark ambitions of despotism" -- even though the
British had thought it legitimate to pacify India, and the French did the
same in Algeria. The greatest source of stereotypes that persist in our day
-- Russians being "barbaric," "Asiatic," "aggressive," "dreaming of the
conquest of the world" -- was the writings of the Marquis de Custine, with
Karl Marx making a significant contribution.

Malia brings vast erudition to his assault on many "less rational Western
reactions" to Russia, insisting that only Bolshevism represented a true
fusion of the state with a messianic idea. Even Russia's Pan-Slavism, when
it gathered momentum in the second half of the 19th century, originated
outside the Winter Palace and never became the official objective of state
policy. Only Lenin managed to turn Russia into something it has never been
before -- a revolutionary state determined to bring down the entire
international system -- and cut her off from her steady movement closer to
the West.

The subtext of Malia's argument is that the Soviet period must be looked
upon as "the great aberration" in Russia's development and that we should
look upon her in a pan-European context as we define our relations with the
post-Communist rulers. After the Fall, by Dimitri K. Simes, focuses on the
current relationship and "American foreign policy choices."

Simes is a fine and thoughtful writer who moves through the absurd and
historic moments, forcing his own interesting ego into the midst of things.
Once a young scholar in a prestigious Soviet research institute, he
emigrated to the United States in the 1970s and latched on to former
president Richard M. Nixon in the mid-1980s. Shortly before his death,
Nixon selected Simes to be director of the Nixon Center. The relationship
appears to define Simes's political views.

Simes offers little in the way of new alternatives. The monk Philotheus and
"messianic imperial urge" and Richard Pipes's concepts of Russia's
"essential otherness" and her "relentless outward drive" shape his
argument: The way to deal with Moscow is to emulate Nixon's "romantic
pragmatism." (Nixon's knowledge of Russia comes down to such insights as
"you need a real son of a bitch to do" a foreign minister's job.)

As "Nixon's junior partner," Simes traveled to Moscow on two occasions, and
his personal observations are the most interesting part of the book. There
are echoes of Nixon's Oval Office tapes as the old rogue considers vintage
McCarthyite techniques to force President Bush and national security
adviser Brent Scowcroft to take him seriously as a Russia expert. "So you
think they would be afraid of me," Simes quotes Nixon as saying. "You think
that [they] wouldn't want me to blast them for being soft on Gorbachev?"

"Absolutely, Mr. President," the eager acolyte answers, "and I don't think
you will have to blast them if you make it clear in private and through
important friends on the Hill what the administration would be up against
if they adopt" measures to provide economic aid in support of Russia's
reforms. With such insights, Simes's book will find its best audience
inside the Beltway. 


The East: Russia and Ukraine Face Serious Economic Problems
By Robert Lyle

Washington, 26 April 1999 (RFE/RL) -- The World Bank's top official dealing
with Russia and the other nations in transition in Central and East Europe
paints a sobering, even daunting picture of what many in the region will
face over the next year or so. 

Johannes Linn, the bank's Vice President for Europe and Central Asia, says
the region faces a protracted crisis of economic, social, and now security
problems especially in the next 12 months. 

Speaking to reporters in Washington Sunday before the start of this week's
annual meetings of the bank and the International Monetary Fund (IMF), Linn
said Russia and Ukraine especially face serious economic difficulties: 

Linn said: "We continue to expect a decline in output and uncertain
political outlook due to elections that are coming up this year and next
year. The social situation in these countries is fragile since incomes are
continuing to decline and social support systems are continuing to weaken.
Poverty is on the rise, in Russia, for example, in our estimate, almost 20
percent of the population is in extreme poverty. And we of course also see
a situation where structural and social reforms are incomplete and
proceeding only very slowly and with limited political support." 

Linn says the impact of Russia's continuing financial crisis is being felt
to various degrees around the region. 

The countries in Central Europe -- Hungary, Poland and the Czech Republic
-- are the good news, he says, remaining relatively stable and unaffected
by the crisis because of early reforms and strong policies. 

But for most former Soviet countries, the impact has been severe and will
be felt for a long time to come, says Linn. The global economy won't make
the real difference among these nations, he says, it depends on their own
policies and their proximity to Russia: 

Linn said: "If Russia could recover and recover quickly, this would have
major beneficial impact on all the countries around Russia. So it's not the
global perspective per se that is the overriding importance here, but it's
sort of regional factors that have the impact." 

Asked about lessons learned from the Asian and Russian financial crises,
Linn said there were many, including the basics of strong domestic reforms.
But one lesson that was part of Russia's collapse last summer was it's
strong defense of currency exchange rates. A major part of the IMF's last
loan drawing for Russia was eaten-up in the Central Bank's attempt to
defend the exchange rate of the ruble. Linn says it's clear now this can
lead to severe crises: 

Linn said: "Ukraine is a good example where in fact a rather sensible
management of getting away entirely from a fixed exchange rate in fact
prevented the kind of melt down we see in Russia. 

"The weakness of banking systems and supervision, linking this of course
also with the exposure of short term debts, in appropriate foreign exchange
positions -- again Russia being a good example, -- are another important
lesson that we are drawing for much more work and attention has to be given." 

Another significant lesson says Linn is the danger of a weak social safety
net. Very weak social protection systems are unable to deal with the
fallout of severe economic crisis, says Linn. Russia was particularly bad,
he says: 

Linn said: "We had difficulty in engaging the Russians through 1996 in an
active dialogue on social reforms, and still have difficulty in Ukraine
today. Earlier attention to social system reforms of social systems and
then more significant action also would have helped in crisis response." 

Russia has still not dealt adequately with its social safety net, says Linn
and the deepening crisis only makes clearer that Russia cannot afford
further postponement of reform. He says that in a recent study of the
social system in Russia, the bank believes that the worst of the crisis is
still ahead in another 12 months. Next winter will be the hardest time,
says Linn, far worse than this year. 

The bank projects that real personal incomes in Russia will fall an average
of 13 percent through 1999, with the extreme poverty rate rising to over 18
percent of the population while social expenditures by the government will
fall by 15 percent. 

More broadly for the region, Linn says the major lesson from the crisis has
been the necessity of a political consensus on reforms. He compares
Bulgaria and Romania as examples: 

Linn said: "Though Bulgaria has now in fact recovered from a severe
financial crisis only two years ago because in fact it has pursued a
consistent and comprehensive reform and stabilization process based on a
reasonably clear and sustainable political consensus between the president,
the government, parliament and wide segments in the population. Romania, by
contrast, has had considerable difficulties that one can trace back to the
lack of political consensus and difficulty of forming a clear political
underpinning for reform and stabilization. 

"Now we're hopeful that in looking forward, Romania can find a more
consensus-oriented reform process and indeed Romania is one of the pilot
countries for the comprehensive development framework where we will focus
very much with the leadership and under the leadership of the president, on
trying to build this broader consensus, so that to me is a very important

The World Bank's Vice President for the East Asia and Pacific region,
Jean-Michel Severino, told reporters that East Asia is finally seeing some
financial stabilization: 

Severino said: "But the recovery is extremely fragile. Exports are going
very slowly and domestic demand is still very fragile. This is because of
the evolution of world demand. There's not much growth in the system around
the world and the fragility is compounded by the social and political
uncertainty that exists in the region." 


New York Times
April 26, 1999
[for personal use only]
Let's Not Freeze Russia Out
Anatol Lieven is a fellow at the Institute for Strategic Studies and the
author, most recently, of "Ukraine and Russia: Fraternal Rivals."

LONDON -- Since the NATO campaign against Yugoslavia began, Western
leaders have tried to persuade Russia to help mediate a settlement and
get them out of the hole they have got themselves in. 

There is every reason to include Moscow in negotiations. While official
Russian rhetoric has been white-hot against the bombings, Western
officials know that the Yeltsin Government's policies have been a great
deal calmer. 

A settlement could give NATO the appearance of victory without
requiring an all-out war against the Serbian nation -- a war that the West
seems unwilling or unable to undertake. Such a diplomatic success for the
Russians would also help rebuild relations with Moscow and strengthen the
Government against anti-Western forces there. 

For it to work, however, we must give Moscow something concrete to
offer Slobodan Milosevic rather than simply telling Russia to demand
Yugoslavia's surrender. The latest Yugoslav peace offer via the Russian
envoy, Viktor Chernomyrdin, involving a United Nations force, is
inadequate in itself. Nonetheless, we can almost certainly use it as the
basis for further talks, with Russia as the mediator. And Strobe Talbott,
Deputy Secretary of State, who is to meet with Mr. Chernomyrdin this week
in Moscow, should use the offer as a starting point in a search for a

In fact, we can trust Russia to make a serious effort to deliver a
reasonable settlement. Though strongly critical of NATO, both President
Boris Yeltsin and Prime Minister Yevgeny Primakov have announced that
Russia has no intention of getting involved militarily in the conflict.
Aside from sending humanitarian aid to Yugoslavia, Russia's most
aggressive act has been to dispatch one warship to the scene to observe
the goings-on. Most critically, Russia has not lifted the arms embargo
against Yugoslavia, nor moved to break economic sanctions imposed by the
United Nations. 

At a time when NATO pilots are under fire from Yugoslav weaponry made
in the Soviet Union, the importance of this Russian restraint cannot be
overestimated. It provides an obvious example of why we need to preserve a
working relationship with Russia. While it is extremely unlikely that
Russia will ever use its enormous arms stocks directly against the West,
the risk that it will arm people and states capable of attacking us is
all too clear. Predictably, one result of the NATO campaign has been the
Russian Parliament's refusal to hold further debates on ratification of
Start 2. 

We also need to recognize that Mr. Yeltsin and Mr. Primakov have
preserved their moderate stance toward NATO in the face of a rising tide
of real popular fury in Russia. Russia is not an ally of Yugoslavia, as
many seem to believe. During the Croatian and Bosnian wars, Russian
nationalists and Communists produced much rhetoric about ancient ties with
"our Serbian Orthodox brothers," but it cut very little ice with the
great majority of the people. This was true despite the parallels between
Serbia and Russia in the 1990's: both are dominant nations in
multinational states that then broke up, leaving large populations of
ethnic minorities stranded outside their "homelands." Despite this
connection, Russians, especially in the educated elites, seemed to
recognize that the Serbs had committed atrocities and that it would be
foolish for Moscow to sacrifice its interests on their behalf. 

All that has changed since the NATO campaign began. For the first time,
the overwhelming majority of ordinary Russians are strongly interested in
what is happening in the Balkans and are passionately opposed to NATO
policy. For the first time, these feelings are shared by a majority of
Russia's educated youth, including many who were previously both strongly
pro-Western and utterly indifferent to the Yugoslav wars. To a lesser
extent, this is also true in Ukraine, Romania and other Orthodox countries. 

his is not just about "hurt Russian pride," in the patronizing phrase
used by too many American diplomats and commentators. In the Russian
perception, Moscow gave up enormous territories and military positions
from 1989 to 1992 without receiving anything like the financial
compensation or strategic guarantees that it could have had if it had
negotiated on the basis of ruthless Realpolitik. 

The Russians trusted the West to share Mikhail Gorbachev's vision of a
new order of respectful and non-conflicting relationships between the
traditional European powers. 

In recent years, educated Russians have become increasingly angry at
what they see as the double standard the United States applies in
international affairs. Americans preach democracy to Russia but follow pure
geopolitics and economic interest when it comes to making friends with
ruthless dictators in Central Asia. The United States preaches open
markets to Russia but plays a zero-sum game against Russia over Caspian
oil pipelines. Washington complains about Russian military exports but
arms Turkey to the teeth with surplus American weapons. 

In addition, Russians believe that the United States is hypocritical: it
has demonized Serbia for conducting ethnic cleansing but has acquiesced in
the same atrocities by Croatian forces armed by the United States. It
has given de facto support to the separatist Kosovo Liberation Army,
while turning a blind eye toward Turkey's ruthless campaign to suppress
Kurdish rebels. And whenever Russia has had the temerity to disagree with
NATO, Western promises to consult with Moscow have proved empty. 

With the NATO attack on Yugoslavia, however, an important barrier has
been broken as far as Russians are concerned. For the first time, NATO
has not just showed bias but openly violated longstanding international
conventions. As Russians see it, this could herald future NATO
interventions in the former Soviet Union. It would thus be insane for
Moscow to trust NATO to pursue a balanced and objective approach in
future disputes. 

Kosovo presents NATO with a set of appallingly unwelcome choices. The
wrong decision could lead to serious NATO casualties, a ruined and
bitterly hostile Serbia, international terrorism by Serb extremists and a
Russia so bitterly alienated that it will sponsor those terrorists. The
West's own interests demand that we try to find a way out of this mess,
and that we ask Russia to help us do so.


Lebed Thinks Yeltsin Incapable of Tough Actions 

KRASNOYARSK, April 23 (Interfax) -- Governor of 
Krasnoyarsk territory Aleksandr Lebed has said that President Boris 
Yeltsin and his administration "are incapable of any tough actions at the 
present." In an interview Friday with Interfax, he spoke against "huffing 
and puffing, because it is unbecoming." "The only thing the 
administration is capable of today is assuming the pose of a monitor 
lizard which seems ferocious but is in fact harmless," Lebed said. "The 
Kremlin administration is simply miserable compared to the Duma which 
historically confronts the president, the Federation Council which has 
actually declared the president's impeachment and the Cabinet which has a 
complicated relationship with the president," he said. "On April 21 the 
presidential power system in Russia virtually collapsed and the name of 
the president is irrelevant in this respect. It collapsed because of 
ineptness," Lebed said. "The new president will have to work long and 
hard to prove that there is power," he said. "Power should be strong, not 
ferocious," he said. In his opinion, territorial leaders are the only 
ones who exercise true power today. "This is the most responsible power 
now," Lebed said. 


Newsweek International
3 May 1999
[for personal use only]
Better Spell It 'Cyberia'
Software start-ups thrive in the Silicon Taiga 
By Lucy Jones 

Vladimir Malukh, a 33-year-old computer programmer, regularly receives
e-mails from Microsoft. The software giant wants to hire him, and has
offered him several incentives: a work permit, a fat salary, a nice
apartment in Redmond, Washington-even driving classes. Malukh isn't
interested. "When you've lived in the Soviet Union, the last place you want
to work is Microsoft," he says. Malukh much prefers running his own
thriving company, called ProPro, which makes computer-design software. "We
have clients around the world," he says. 

So far, so familiar. But Malukh is more than an independent-minded software
entrepreneur. He's an independent-minded software entrepreneur who lives in
Siberia. Specifically, in Akademgorodok, a once secret "academic town"
started by Nikita Khruschev in 1957 as a defense-industry research center.
Since 1994 more than 40 software companies have sprung up in this town,
which is 2,000 miles from Moscow, 20 miles south of Novosibirsk and
sufficiently prominent in cyberspace to have earned the nickname of the
"Silicon Taiga." Lodged in decaying university buildings, these fledgling
firms are producing products for such world-class technology companies as
Canada's Northern Telecom and America's Sun Microsystems. Akademgorodok is
teeming with cheap talent. For many years, mathematically gifted students
from across Russia were brought to the city to study. Its institutes were
the country's most and its scientists the most privileged, shopping in
well-stocked stores. Funding peaked in the mid-1980s when Mikhail Gorbachev
commissioned 500 engineers to build a rival to Intel. Since then drastic
cuts have left little money for salaries. A programmer can now be hired for
as little as $1,000 a month. 

No wonder Western companies have come calling. Northern Telecom chose a
firm called XDS to upgrade its compiler programs. Sun signed up UniPro,
which has more than 100 employees, to work on a number of projects,
including applications for its Java language. Though Malukh said no,
Microsoft has hired away so many Akademgorodok programmers that the locals
are now annoyed. 

It's not surprising that many want to leave. Some scientists go unpaid and
must grow their own potatoes to get enough to eat. The health service has
deteriorated, and the crime rate is rising. Such hardships have made some
researchers reactionary. You're more likely to see a picture of Stalin than
Einstein in the institutes, while hammer-and-sickle flags fly proudly over
shopping arcades. 

But the Internet just might save the city. Malukh's customers, many of them
in Europe, don't care that he's in Siberia. They download his products over
the Web, use e-mail to get technical support and savor the fact that his
products cost a third as much as competing products from the West. "We do
not feel we need to emigrate because Russia has become a country with
better opportunities to start your own business," says Malukh. Watch out,
Bill Gates. 


Washington Post
26 April 1999
Letter by Mark Katz
No Role for Russia in Kosovo

I take exception to Celeste Wallander's argument that the only way to
resolve the crisis in Kosovo is through inviting Russia to play a role
there ["Russia's Role," op-ed, April 8]. The Yeltsin-Primakov leadership
already has demonstrated that it is neither willing nor able to contribute
to a resolution of the crisis that would protect Kosovo's Albanian majority.

Ms. Wallander claims that resolving the crisis requires "the active
participation of all Europe's great powers. By its geopolitical position,
its economic potential over the long term and its overall military
capability, Russia is one of Europe's great powers." This view is incorrect.

First, Russia's geopolitical position did not stop Marshal Tito from
breaking with Stalin in 1948, nor did it prevent Yugoslavia from remaining
outside Moscow's sphere of influence throughout the rest of the Cold War.
If Yugoslavia could escape from the orbit of a powerful Soviet Union in the
past, the West has no reason to accept Serbia as part of the sphere of
influence of a diminished Russia now.

Second, while it is true that Russia has "economic potential over the long
term" (as do many countries), this fact is irrelevant when assessing the
present conflict. Russia has no excess wealth that it can devote to foreign
economic assistance, so it can't possibly make an economic contribution to
the resolution of the Kosovo crisis.

Third, since Moscow was unable to defeat the poorly armed Chechen rebels
inside the borders of the Russian Federation, Russia's ability to project
force in any situation where it would meet resistance outside its borders
obviously is quite limited.

The Russian security elite need to understand that their country will never
again be a great power unless Russia resolves its worsening domestic
problems. It is what is happening in Russia -- not Kosovo or anywhere else
-- that Moscow needs to worry about for many years to come.

A "Russian role" in Kosovo would undoubtedly be of great benefit to
Slobodan Milosevic, but it would be of no benefit to the Albanian Kosovars,
America and the West or -- to the extent it postpones Moscow's realization
that its great power status is gone -- Russia itself.



Date: Mon, 26 Apr 1999 
From: Gary Kern <gkern@alumni.Princeton.EDU> 
Subject: Call for info on Walter G. Krivitsky

After more than 10 years of research and seven months of writing, I am
just finishing up a book on Walter G. Krivitsky, the famous defector who
created a sensation with his articles on Stalinist Russia and who, in
Feb. 1941, wound up dead in a Washington DC hotel after telling friends
not to believe any newspaper notices of his suicide. The title is THE

Now that I am on the last chapters, I would like to ask anyone who might
have any special information or insight into the case to contact me by
e-mail. There have been many articles and chapters of books on
Krivitsky, but no monograph, and I want to get everything in it.


Date: Mon, 26 Apr 1999 
From: "Paul Backer" <> 
Subject: Comment on Reeves article and meaningful lending for RF.

Mr. Reeves article for the Indipendent after chiding Russians for "not
understanding money", introduces an exciting view of sovereign borrowing and
illustrates the moral and economic hazards of lending to Russia, absent
identifiable policy objectives for non-private lenders such as IMF and World

quote, "Despite all this - and divisions within the IMF - the Russians are
to get their money. Obviously, the IMF wants its loans back, but some of
Moscow's debts due this year are to the fund itself and the World Bank. By
borrowing again, Russia should be able to make payments, ultimately
reducing overall debt."

The idea that Russia owing money it can't repay can reduce overall debt by
more borrowing solely to make debt payments is exceedingly odd. It is very
difficult to identify Russia's (or the lenders') legitimate long term
development interest in borrowing solely to finance previous debt,
ultimately increasing Russia's and its taxpayers debtload without doing
anything to enhance Russia's ability to pay future loans or address key
underlying issues for failure of Russian commercial structures such as lack
of viable enforcement of existing legislation.

The practice of borrowing solely to finance payments on previous borrowing
(a.k.a. check kiting) is frequently illegal when done by private entities as
it is used by financial institutions (and others) with bad loans to deceive
shareholders and regulatory agencies by avoiding the admission of bad loans
on their balance sheet by keeping lending "good" by lending the debtor money
solely to make payments.

It is now abundantly clear that the RF government sees foreign lending as
"money for nothing", at worst to be repaid by some successor regime. The
situation on Russia's streets and markets vividly demonstrates the failure
of the traditional international development lending scheme of trading
essentailly meaningless "reform" measures such as changes to the federal
budget (arguably the least read work of fiction in Russia) for hard
currency. The idea that fine tuning a less than $22 billion federal budget
can meaningfully address federal debt payments totalling $17 billion in 1999
alone strains the bounds of credulity. Maybe it is fitting that after
running a nation-wide Ponzi scheme (the GKO), the Russian Federation will
pursue check kiting as a federal fiscal policy with silent acquisence of the
international lenders.

The staggeringly high cost of absence of meaningful investor, shareholder,
corporate and securities law enforcement is evidenced by the losses of GKO
and capital market investors in RF who found themselves virtually without
protected rights at the mercy of those, including the RF government to whom
these investors entrusted their money.

Absent meaningful international lender effort to help the RF develop the
means to pay its debts including measures to finance and promote the
development and institutionalization of investor, shareholder, corporate
and securities law enforcement, Russia's best hope to save its economy is
sovereign debt default.


the eXile
April 22, 1999-May 6, 1999
Editorial ( 
Exiled from Apathy: Call Us Dissident Emigres

"eXile". When we first thought up the name, we were at least half-joking.
In a country where millions of people over the centuries have suffered
genuinely gnarly exile--sent to ice-covered hell-holes far to the east to
be worked to death--the idea of a bunch of TV-overdosed dweeb dropouts from
the American suburbs calling their two-bit biweekly club guide an "eXile"
publication was preposterous at the very least, and genuinely offensive at
most. At the time, we didn't really care, though...The important thing, as
far as we were concerned, was that the name allowed us to use that
annoying, overworked "X" on the cover. It let our readers know that we were
aggressively behind-the-times. And the X looked great on t-shirts. Back
then, a bunch of free t-shirts was about as much as we hoped to get out of
the venture. 

Then came war in Kosovo. Our country bombing the shit of our Russia's
favorite li'l nation in the world that it doesn't share a border with. 

America could have chosen dozens of countries to bomb, none of which would
have pissed off the Russians. If being a humanitarian Tom Clancy was what
this was all about, we could have taken sides in the Ethiopia-Eritrean
conflict. It's all flatland desert, and they're pretty poor. If what we
were after was lousy weather, bad terrain and tribal warfare, we could
have taken our pick from Sudan to Sri Lanka and no one in Russia would have
batted an eye, while the eXile would have been able to mosey along sneering
at all and sundry, and proudly flashing our Death Porn T-shirts to the world. 

Most people here, us included, probably wouldn't have given a spotted owl's
ass about Kosovo if we hadn't been stranded, suddenly, overnight, like
citizens of a hostile country during wartime. That's because, by bombing
the Serbs, the Clinton people forgot that we were, in effect, bombing the
Russian people. It doesn't matter whether WE think it's a rational
reaction; they do, and they're pissed off. We'd have been just as apathetic
and indifferent as the 265 million Americans living on the mainland. Like
them, we'd return from our unsatisfying jobs every evening, turn on CNN and
pop woodies during the Pentagon briefings while gorging on a pint of Ben &
Jerry's Chunky Monkey, before flipping to the Discovery Channel's
documentary on the F-117. In other words, we'd care as long as our
attention spans would allow. That's our right. 

But this time, we have no choice. Much as we'd like to, we can't be
apathetic, if only because our pimply, hairy asses are suddenly on the
line. Our hosts are now convinced that we're citizens of a terrifying,
unpredictable, aggressive country. If one day the Russians snap and make us
do a rope dance from a Tverskaya Ulitsa lamppost, then we at least want to
know why. 

In fact, it's not too difficult to understand the Russian position.
Americans may think that this war is about Nazis versus Jews, but most
people here know that the Serb-Albanian flareup is just the latest episode
in a centuries-old Balkan blood feud. One meth-fueled night on the Internet
reading the American media reports on Kosovo was enough to crank our
paranoia pistons into high gear. American newspapers, television programs
and wire services are so lazy, provincial, jingoistic and smug that they
barely even bother to repackage the fluff they're fed by the Pentagon and
NATO--who, you might think, would have a certain interest in spinning the
story in a certain way. Even a macho hippie like Oliver Stone couldn't have
woven together a more perfect, evil war-propaganda conspiracy. Only Stone
would have had at least one sympathetic character: the poor, innocent,
betrayed American public. 

Tchya, right. The American public isn't innocent; it just can't be
bothered. As every publisher and producer knows, the surest way to lose
your public is make them question what they hear on the news. Phone calls
and emails to family in the US are proof. Try presenting them with solid,
irrefutable evidence of your government's idiotic, savage behavior in
Serbia and they'll say, "Yeah, well, look, whatever. I don't really give a

The lucky bastards have no idea how good they have it, being apathetic and
all. Goddamn apathy-hogs. In fact, it's downright maddening that because of
the American public's resolute will-to-apathy, we ourselves can no longer
say things like, "Who cares, man?" without risking having our stripped and
bloodied corpses dragged from the back of a Volga around and around the
Garden Ring Road. 

So now we're taking revenge. If the entire American press is going to spout
the NATO position on Kosovo with one single, collective Soviet mind, and if
the public is going to continue accepting--in fact, demanding--the kind of
apathy-friendly good NATO/bad Serb narrative that they're now receiving,
then we have no choice but to take a steaming hot dump on their front
doorstep. It's the only language these people understand. 

So here's what we propose. From now until the end of the Kosovo War, the
eXile is hereby transforming itself into a dissident American newspaper.
That's right, you heard us: we are now dedicated to being a dissident,
EmigrE newspaper, along the lines of Novaya Russkaya Slovo. If the entire
American press corps is committed to showing only one side of the war, and
if America's idiotic Balkan aggression is going to make us pariahs in the
Russia we love, then we're going to do our best to take as many Americans
as we can grab down with us. 

Don't take us seriously? Well, you better. 

We got the team. That's right. We've got the extra time on our hands.
That's double-right. And we've got you, the eXhole reader, stuck reading us
whether you like it or not. The days of mentally grazing in the fields of
abundant idiocy are over, folks. We're gonna put America's propaganda
machine through a turbocharged woodchipper--remember that woodchipper scene
in Fargo? Yeah--like that. And we aim to make it as messy as possible. 



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