Center for Defense Information
Research Topics
CDI Library
What's New
CDI Library > Johnson's Russia List

Johnson's Russia List


June 1, 1999    
This Date's Issues: 3315 3316 3317  3318 

Johnson's Russia List
1 June 1999

[Note from David Johnson:
If I may interpolate a personal query: I suddenly find
that I will have to move by July. If anyone in the Washington DC
area has a lead on housing I would appreciate your communication.
1. Reuters: Russia's Chubais praises new government.
2. Segodnya: The Prized Fund Is the Whole of Russia.

3. Itar-Tass: Yeltsin Says New Government "Reformist, Professional".

5. Moscow Times: Eduard Gismatullin, Sibneft Director Steps Onto Kremlin 
Stage. (Roman Abramovich).

6. Masha Gessen: Re: Internet privacy.
7. Reuters: New Russian govt seen unambitious over economy.
8. Itar-Tass: Stepashin Calls for Real Steps in RUSSIA'S Regional Policy.
9. Itar-Tass: Defence Industry Needs Years to Recover, Klebanov.
10. AP: Russia Mulls Reforms for IMF Loans.
11. Moscow Times editorial: Can Battered Liberal Cause Be Righted? 
12. Reuters: Yeltsin to commute Russia's last death sentences.
13. Financial Times: John Thornhill, Pressure on Duma to pass tax-raising 

14. St. Petersburg Times: Fyodor Gavrilov, How About A 'Minority' For 

15. Moskovskiy Komsomolets: Sergey Nitochkin, Ownerless Electorate at 
Stake. (Parties' Election Prospects Noted).

16. Inter Press Service: Russia-Asia: Hard Times Aside, Moscow Still 
Eyes Gas Supply.

17. Sovetskaya Rossiya: Leftist Editors Oppose Russian Patriarch's Plan.
(Re Red Square burials).] 


Russia's Chubais praises new government

CHELYABINSK, Russia, May 31 (Reuters) - Influential Russian businessman and 
former cabinet member Anatoly Chubais on Monday praised the country's new 

"From my point of view, the line-up is strong and will work well," said 
Chubais, who is now head of electricity grid giant Unified Energy Sysyem 
(UES) <EESR.RTS> and is well known in the West as one of the first 
post-Soviet economic reformers. 

"Its main feature is that it was not chosen for its ideology, but primarily 
for professional merits," he said. 

President Boris Yeltsin appointed Viktor Khristenko as first deputy prime 
minister, replacing Mikhail Zadornov who resigned on Friday. Zadornov was 
given the post of special representative to the IMF and other financial 

"Viktor Borisovich Khristenko has a unique experience as deputy finance 
minister on all levels," Chubais told journalists in Khristenko's home town 
of Chelyabinsk. 

Chubais said Khristenko's appointment would be met favourably in the regions, 
as Khristenko worked as first deputy finance minister in charge of relations 
with the regions. 

Chubais also called Zadornov an experienced negotiator. 

The appointments came after two weeks of confusion and a power struggle 
within the government. 

Chubais said the government should try to overcome personal interests for the 
sake of the country and to finalise agreement with the International Monetary 
Fund on credits. 

Russia's previous government struck a preliminary agreement with the IMF on a 
new credit, but the Fund wants to see the country's economic programme 
implemented and several laws in place before opening its purse. 


Russia Today press summaries
May 31, 1999 (?)
The Prized Fund Is the Whole of Russia
According to the daily, a group of people often known as "the Kremlin 
political bureau" have privatized the finances in the country.

The circle around President Boris Yeltsin's family has managed to get the 
head of the national electricity company EES, Anatoly Chubais, to agree to 
the privatization of its largest and most profitable daughter company, the 
Tyumenenergo company.

The privatization will be done in favor of Sibneft, which is controlled by 
Roman Abramovich, the "cashier of the Kremlin," the daily wrote. Abramovich's 
empire is greater than even the largest Russian companies, such as EES or 
natural gas monopoly Gazprom, the daily wrote.

It has also been reported that Gazprom may soon see a change in leadership. 
The 37.5 percent of Gazprom stock that is being held in trust for the state 
by the head of the company, Rem Vyakhirev, may be transferred to Fuel and 
Energy Minister Victor Kalyuzhny. A corresponding government resolution is 
reportedly being prepared.


Yeltsin Says New Government "Reformist, Professional".

MOSCOW, May 31 (Itar-Tass) - President Boris Yeltsin believes that "our
government is reformist, professional and ready to get down to work
immediately," presidential spokesman Dmitry Yakushkin said. 

Yakushkin told the ORT television on Monday that "at today's meeting with
(Prime Minister) Sergei Stepashin, which was a rather long one, they
discussed, of course, the candidacies and the president signed decrees. But
almost parallel to this they also started discussing the tasks facing the
newly appointed officers and the government as a whole in certain areas." 

"Vladislav Sherstyuk has been appointed Security Council first deputy
secretary and this means that this person will supervise practically all
areas," the spokesman said. 

He believes that "this will be a real first deputy because Security Council
secretary Vladimir Putin combines this job with the job of FSB (Federal
Security Service) director." 

He noted that "the president has long and well known Vladislav Sherstyuk
who won the reputation of a very experienced officer as the head of FAPSI
(Federal Agency of Government Information and Communications), and I think
he will be very useful on his new post. At any rate, the president counts
on this very much." 

Commenting on the new appointment of former finance minister Mikhail
Zadornov, Yakushkin said "Sergei Stepashin has said, speaking of Mikhail
Zadornov -- by the way many good words have been said about him and his
high professionalism in the last few days -- that he knows the subject of
negotiations with international financial organisations and of course he
will be in charge of this work as a special representative." 

"I hope that to some extent, today's appointments, the last appointments to
the key positions in the government will put an end to the absolutely
artificial polemic about the formation of the government which has been
going on these last days and which is based on speculation or our eternal
search for and desire to find some secret decision-making springs or some
secret advisers," Yakushkin said. 


RFE/RL NEWSLINE Vol 3, No. 105, Part I, 31 May 1999

RESIGNATION [of Zadornov]. Communist Party leader Gennadii Zyuganov 
said on 29 May that "it is no secret" that business magnate Boris
Berezovskii, Sibneft head Roman Abramovich, and United Energy
Systems head Anatolii Chubais control the process of choosing
the new government, "Kommersant-Daily" reported. Zyuganov
said President Yeltsin "is the hostage of these puppeteers"
and that the groups competing with one another for control
over "Yeltsin's family advisers" cannot decide who will take
the most favorable positions in the government. Many
observers believe First Deputy Premier Nikolai Aksenenko has
close ties to both Berezovskii and his ally Abramovich and
that Aksenenko's rapid rise from head of the Railroads
Ministry to deputy premier is because of those connections.
Nemtsov told an RFE/RL correspondent that the rumor that
Aksenenko is "sponsored" by Berezovskii "does not correspond
to reality." But he added that Aksenenko has been "on
friendly terms with Abramovich for nine years." PB

actions and statements in his first few days of being named
first deputy premier have caught the attention of many
observers, AP reported on 28 May. The daily "Noviye
izvestiya" wrote that Aksenenko is "hogging the blanket" and
"acting like he's...convinced of his hereditary right to rule
the country." The headline of the 28 May "Moskovsii
komsomolets" read "Conductor, Hit the Brakes!"--a reference
to his lifelong work in the railroad industry. Aksenenko
reportedly overshadowed new Fuel and Energy Minister Viktor
Kalyuzhny's first public appearance on 27 May by outlining
plans for the energy sector, while Kalyuzhny simply nodded.
He also surprised many by attending a meeting last week in
Sochi between Stepashin and Yeltsin. PB


Moscow Times
June 1, 1999 
Sibneft Director Steps Onto Kremlin Stage 
By Eduard Gismatullin
Staff Writer

As the latest Russian government is shuffled and reshuffled, attention has
focused on a burning question: Who is pulling the strings? 

While no one has found a definitive answer to this question, the extreme
difficulties in finding an answer have focused attention on the shadowy but
powerful figure of Roman Abramovich and his links to the presidential
family and to the Sibneft oil company. 

As archtycoon Boris Berezovsky keeps a low profile - or is pushed out of
the picture depending on which Russian media commentator is talking -
Abramovich has emerged as one of the media's prime candidates for the role
of puppet master. 

At 32, Abramovich has certainly enjoyed a spectacular rise, one that can
rival any of his fellow Russian tycoons in its meteoric nature. But unlike
even the most modest of the oligarchs, he has remained very much in the

Not only does he rarely appear in public, but the sources of his wealth
remain obscure - as does his very appearance. There are apparently no
photographs of Abramovich in the public domain. 

Scandal sheet Versiya was so frustrated that it organized a competition,
offering prizes to readers who could furnish the paper with photos of the
man who is said to run the Sibneft oil major. NTV's "Itogi" current affairs
program had to rely on a few seconds of footage from the January 1998 press
conference held in honor of the agreement to combine Sibneft with Yukos in
the ill-fated Yuksi joint venture. 

Abramovich's role at the top of Russia's political and business scene began
at least as far back as 1996. Around that time,Abramovich was working as
the head of the Moscow representative office of Runicom SA, a Swiss-based

After Runicom bought a 12.2 percent stake in Sibneft at a cash auction in
1996, Abramovich became the head of Moscow's Sibneft office. 

These days he is listed by Sibneft as one of "the people behind Sibneft" on
the company's web site (, which provides no further
information about him. Neither would Sibneft's press office, other than to
confirm that he is still the head of the firm's Moscow office and that he
is listed on Sibneft's board of directors. 

The press office also insisted that he is not the man who runs Sibneft. 

However, according to the monthly Oil and Capital magazine, Abramovich
stands behind four front firms - Sins, Rifain Oil, Runicom and Financial
Oil Corp. - which between them held 91.6 percent of Sibneft as of mid April. 

Through an extremely complicated web of relationships, these four firms
also connect Abramovich with Berezovsky and with SBS-Agro bank, part of the
empire of Alexander Smolensky. 

Abramovich has also been listed as one of the people behind the Yeltsin
family by numerous sources, including most noticeably, former presidential
intimate Alexander Korzhakov. 

In his memoirs, Korzhakov called Abramovich "the cashier" for the family,
tying him to Berezovsky and to the latter's friendship with President Boris
Yeltsin, the president's daughter Tatyana Dyachenko, and her husband,
Alexei Dyachenko. 

And Alexei Dyachenko also has strong ties to Sibneft. Boris Yeltsin's
son-in-law heads an oil products trading company, East Coast Petroleum,
according to Energy Compass oil newsletter. This firm lifts oil products
from the Sibneft-affiliated Omsk refinery in Siberia. 

But the Abramovich-Dyachenko-Yeltsin axis does not stop there. 

East Coast Petroleum has a Moscow-based affiliate called Belka Trading
Corporation, which published the second volume of Yeltsin's memoirs in
1994. Those memoirs - ***Zapiski Presidenta*** in Russian - were published
in English by Belka in conjunction with Times Books, a Random House
subsidiary, as "The Struggle for Russia." 

According to Korzhakov, Berezovsky associate Valentin Yumashev - the
ghost-writer for the memoirs - used to turn up every month with $16,000 in
cash for Yeltsin that represented "royalties" for the book. 

Abramovich has seemingly escaped the president's reported wrath over the
accusations that Sibneft had been somehow connected with spying on the
Yeltsin family. Investigators raided Sibneft's headquarters building in
Moscow in February, and reported finding evidence of some
intelligence-gathering activities. Although media reports at the time
speculated that both Sibneft and security firm Atol had been linked in an
effort by Berezovsky to collect compromising material on the Yeltsin
family, no evidence of any such conspiracy has ever emerged. 

Meanwhile, for all the talk of Abramovich as the new puppet-master at the
Kremlin - in some versions pushing aside his old mate Berezovsky - there is
no evidence that Abramovich has branched out to involve himself in
activities outside of Sibneft. 

Instead, mostly through oil trading firm Runicom, he has been busy
consolidating Sibneft's hold on its subsidiaries. 

In addition to marketing Sibneft's crude and refined oil products, Runicom
has also helped the oil company to consolidate its holdings through a share

Runicom was registered in Gibraltar by its major shareholder Valnut
Nominees, which holds a 99.8 percent stake in Runicom, according to Oil and
Capital magazine. 

Runicom currently holds a 10.62 percent stake in Sibneft. The trading firm
has helped the oil holding to build up its share to 94.5 percent in
Noyabrskneftegaz, a Sibneft producing subsidiary. Sibneft also increased
its share to a 66.7 percent stake in the exploration unit
Noyabrskneftegazgeofizika, according to Sibneft's press service. 

On Monday, Runicom had closed its offer to shareholders in the Omsk
refinery, retail firm Omsknefteprodukt and the Noyabrsk-based exploration
outfit to swap their shares in the subsidiaries for shares in the Sibneft
holding company. 

Runicom has managed to swap up to 5 percent of Sibneft shares for the
refinery securities, building the oil holding's control over the utility to
about 43 percent, Sibneft's press service reported Monday. 


From: "Masha Gessen" <>
Subject: Re: Internet privacy
Date: Tue, 1 Jun 1999 

Beware of claiming someone is first to do something. Didn't they teach all
of us this when we wrote our first story? Internet providers in different
parts of the country have been resisting the SORM-2 effort since it began,
which is to say, for about a year and a half. And it has been covered.
Check out the Moscow Libertarium web site for the best compilation on this
Masha Gessen
chief correspondent


New Russian govt seen unambitious over economy
By Karl Emerick Hanuska

MOSCOW, May 31 (Reuters) - Russia's new government, almost complete on Monday 
after two weeks of back-room fighting, is unlikely to embark on radical 
economic change and will find itself hostage to the will of Kremlin insiders, 
analysts said. 

The one objective Prime Minister Sergei Stepashin's government was expected 
to pursue with any urgency was pushing legislation through parliament to 
unlock $4.5 billion in promised aid from the International Monetary Fund. 

"I think that it is safe to say this will be their main task," said MFK 
Renaissance economist Roland Nash. "Beyond that, I don't expect they will 
tackle much else." 

Analysts said the only reason for optimism in the new cabinet was Viktor 
Khristenko, a reform-minded political veteran who was named as a first deputy 
prime minister. 

He won the post after Mikhail Zadornov resigned after only three days in 
office amid a row over control of economic policy with fellow First Deputy 
Prime Minister Nikolai Aksyonenko. 

"Khristenko is the one bright spot in an otherwise politically skewed 
cabinet. He is an independent-minded, experienced liberal," said Dan 
Rapoport, managing director of Centreinvest Securities in Moscow. 

But Khristenko was seen as an ineffective counterbalance to Aksyonenko, a 
former railways minister thrust upon Stepashin by President Boris Yeltsin. 
Aksyonenko has said he will control most economic questions and it was partly 
due to tension over this question that forced Zadornov to quit. 

"It is clear this is a government whose actions will be dictated by the 
Kremlin and its close associates. That's a bit worrisome but it also means a 
degree of stability even if it is really stagnancy," Nash said. 

Analysts agreed that the hands of businessmen with close political ties to 
Yeltsin and members of his inner circle were apparent in most of the 

"We've always known there were people behind the scenes, but this is the 
first time we've got to see the strings and the hands," said Gregory Grushko, 
managing director of Aton brokers. 

He and others said the key economic objective of that circle would be 
stability as its members tried to consolidate wealth and influence ahead of 
presidential elections next year. 

"That would be the extent of their economic programme and there is no reason 
to expect the majority of government members would push for anything else," 
Grushko said. 

"But this at point, after the last few weeks of intrigue, I'd be happy with 
anything that looked like stability." 


Stepashin Calls for Real Steps in RUSSIA'S Regional Policy.

MOSCOW, May 31 (Itar-Tass) - Prime Minister Sergei Stepashin said the time 
has come to move on to the implementation of concrete decisions in Russia's 
regional and nationalities policy. 

The "time has come to move from discussions to action and we must not 
downplay the role of the regional policy," Stepashin said on Monday as he 
presented the new nationalities minister, Vyacheslav Mikhailov, to his 

The prime minister noted Mikhailov's appointment is "one of the greatest 
gains in the new Cabinet". 

Stepashin said Mikhailov "works very efficiently and knows what he wants and 
knows how to do it." 

He said Mikhailov will be on the government presidium and will be 
subordinated directly to the prime minister. 

Speaking about the practical tasks facing the Nationalities Ministry, 
Stepashin noted that "there are concrete proposals concerning the situation 
in the North Caucasus", which will be discussed at the upcoming meeting of 
the inter-regional association "North Caucasus" to be held in Magas, 
Ingushetia, in the beginning of June. 

He said a meeting between Russian President Boris Yeltsin and Chechen 
President Aslan Maskhadov still "remains relevant. 

Stepashin said the importance of this meeting had been confirmed by Yeltsin 
himself at their meeting earlier today. 

The president noted that "this should be not just a simple meeting, not just 
a talk", the premier noted. The meeting should be thoroughly prepared, he 
quoted the head of state as saying. 

Stepashin stressed the need to prepare the meeting in such a way that would 
allow Russia and Chechnya to establish normal relations in the 21st century. 

The Federal Security Service director and the Security Council secretary, 
Vladimir Putin, briefed the president on the preparations for the meeting. 

He pointed out that "the timing and the place of the meeting between Boris 
Yeltsin and Aslan Maskhadov have not determined yet, and we are preparing 
questions for discussion by the two presidents." 


Defence Industry Needs Years to Recover, Klebanov 
By Denis Pinchuk 

ST. PETERSBURG, May 31 (Itar-Tass) - The situation in Russia's
military-industrial complex is very dire and it will take several years to
remedy it, newly appointed Vice-Prime Minister Ilya Klebanov said. 

In an exclusive interview with Itar-Tass on Monday, Klebanov said he will
be in charge of the military-industrial complex in the new government. 

In 1992-1997, he headed one of the major defence plants in Russia -- the
Leningrad Optics and Mechanical Association LOMO. Until his appointment, he
worked as St. Petersburg first deputy governor and chairman of the city's
committee for the economy and industrial policy. 

Klebanov said he will leave for Moscow in the evening for a meeting with
Prime Minister Sergei Stepashin. 

"I will have to hold several consultations with the premier shortly in
order to clarify his position with regard to the future of the
military-industrial complex," he said. 

He expressed the hope that the prime minister will "take personally take an
active part in the resolution of problems facing the defence industry." 

Klebanov believes it "very important" that for the first time the
government will have a vice-prime minister in charge of the
military-industrial complex. 

He said he will spend the first days of his work in the new capacity
analysing the situation in the industry. 

"I have to say frankly that this industry did not get enough attention in
the last years. But in the current complex political situation it becomes
especially important," he said. 

Among priority tasks facing the industry, Klebanov named the need to
"cleanse" it of "what it does not need now and what prevents it from
creating modern high-precision weapons". 

"It is necessary to consider a list of enterprises which get government
contracts, optimise their work load and restructure the industry," he said. 

"It will also be necessary to streamline the system of government contracts
and first of all solve all problems with payments under these contracts,"
he noted, adding that "it is very important to work out and legislatively
formalise such an economic system that would allow defence enterprises
which get government contracts to work calmly." 

Klebanov said the prime minister will soon get a list "top priority
measures aimed at helping enterprises in the military- industrial complex
to carry out normal production and research activities even in our dire
economic situation." 


Russia Mulls Reforms for IMF Loans
May 31, 1999

MOSCOW (AP) -- Russia's new prime minister has sent a letter to the speaker
of the lower house of parliament urging the soonest possible consideration
of a legislative package needed to gain loans from the International
Monetary Fund, a legislator said Monday. 

Alexander Zhukov, the chairman of the budget committee in the lower house,
or State Duma, said the government had sent the chamber a package of 30
bills to be considered and passed before the Duma breaks for the summer at
the end of June. 

Passage of the bills is ``a significant condition for ... successful talks
with international financial institutions,'' Prime Minister Sergei
Stepashin wrote to speaker Gennady Seleznyov, according to the Interfax
news agency. 

The bills are intended to augment government revenues, and they include
provisions setting taxes on luxury cars and gas stations, amendments to the
1999 budget and restructuring of banks. 

Russia has reached a tentative agreement with the IMF to borrow $4.45
billion over the next two years to refinance debts to the Fund, but the
loans are conditional on passage of the legislation. 

The prospects for passage of the bills are dim, since most factions in the
Duma appear to oppose them. Lawmakers are especially reluctant to approve
harsh fiscal measures in advance of parliamentary elections, which are
scheduled for December. 


Moscow Times
June 1, 1999 
EDITORIAL: Can Battered Liberal Cause Be Righted? 

The first congress of the Right Cause movement was overshadowed on Saturday 
in news coverage by the infighting and confusion over the new Cabinet. 
Reporters covering the session at the Hall of Columns didn't want to hear 
about liberal ideas, but begged the movement's leaders to toss them a few 
scraps of information about the wars of the Kremlin clans. 

It was a convincing sign, if any was needed, of the deep political hole that 
liberals have dug for themselves - especially those who have served President 
Boris Yeltsin in his revolving-door Cabinets and thus taken the blame, fairly 
or not, for Russia's economic woes. 

There is a temptation to dwell on the role that some members of Right Cause 
had in creating the current system of crony capitalism. 

It is hard to associate any liberal value with the loans-for-shares 
privatization program run by Right Cause leader Anatoly Chubais, in which the 
nation's industrial and mineral wealth was handed off to insiders for pennies 
on the dollar. 

But battered as it is, Russia's liberal movement is a standard-bearer for 
things Russia needs - rule of law, respect for private property, civil 

Perhaps defying expectation, Right Cause members have made a modest good 
start. They showed elementary common sense (not always a hallmark of Russian 
liberaldom) by leaving Chubais off their election list for December's 
election, and Chubais was smart to stay off. 

In any case, Chubais' distaste for the leftist-dominated State Duma - and the 
Duma's distaste for him - makes it hard to imagine him grabbing a tray and 
lining up in the Duma cafeteria next to Gennady Zyuganov. 

By naming former Deputy Prime Minister Boris Nemstov, former finance minister 
and tax chief Boris Fyodorov and former Duma Deputy Irina Khakamada to head 
its election list, Right Cause has picked three people with name recognition, 
at least a smidgen of charisma, and minimized the poisonous associations with 
the Cabinet. 

It has welded together Fyodorov's and Khakamada's groups, both of which won 
less than 5 percent in the 1995 elections but which together could help the 
coalition break that 5 percent barrier needed for Duma representation. 

Maybe they've learned something from their disastrous 1995 showing and are 
determined to wage an effective struggle for power, not just to stand on 
principle as noble losers. 

It would be a hopeful thing. 


Yeltsin to commute Russia's last death sentences
By Peter Graff

MOSCOW (Reuters) - Russian President Boris Yeltsin plans to commute hundreds 
of death sentences in the next few days, emptying death row and in effect 
eliminating capital punishment, an official said Monday. 

Robert Tsivilev, head of the presidential Pardons Commission, told Reuters he 
expected the president to sign four decrees this week which would commute all 
Russia's remaining death sentences to lengthy prison terms. 

``I hope that in two or three days we will not have a single person left in 
our country awaiting execution,'' he said by telephone. 

``In practice, Russia will join those countries that do not have the death 
penalty. I think this is a big step in the direction of democracy and 
civilization for our country.'' 

Tsivilev, who took over the Pardons Commission last October, said Yeltsin had 
already commuted the sentences of about 400 of the 716 prisoners on death row 
at the beginning of the year. The decrees commuting the rest were written and 
awaiting the president's signature, he said. 

The sudden upsurge in pardons followed years of little action against capital 

In 1996 Yeltsin placed a moratorium on carrying out executions as part of 
Russia's bid to join the Council of Europe, which forbids member states to 
execute prisoners in peace time. 

The death sentence was last carried out in Russia, by the traditional method 
of a single bullet to the back of the head, on September 2, 1996. But little 
was done to move other prisoners off death row. 

Only 148 death sentences were commuted in 1998, and not a single one in 1996 
or 1997. 

``For a person to sit in prison, waiting for execution, this is torture,'' 
said Tsivilev. 

``I could not understand why the process should go so slowly. I presented the 
situation to the president, and he supported the decision to speed the 
process up. I sent him a note, and he agreed that by the end of May all the 
death penalty cases should be resolved.'' 

The death penalty remains on the books in Russia for serious crimes, and is 
backed by legislators who see the country as plagued by crime. 

But the Constitutional Court has ruled that the death sentences may not be 
passed down in the 80 of Russia's 89 regions that do not have jury trials. 

Tsivilev said he thought it would be difficult to have death penalty laws 
formally repealed, but that the stances of the Constitutional Court and the 
president were enough to prevent executions from resuming. 

``The majority of the public would like to see the death penalty retained. 
But two high government organs -- the Constitutional Court and the president 
-- insist on the single position that there should not be a death penalty,'' 
he said. 


Financial Times
May 31, 1999
[for personal use only]
Pressure on Duma to pass tax-raising laws
By John Thornhill in Moscow

The Russian government, which was plunged into disarray on Friday following 
the resignation of Mikhail Zadornov as first deputy prime minister, will this 
week urge parliament to pass a package of tax-raising laws, deemed essential 
for the release of fresh credits from the International Monetary Fund.

However, it is not yet clear who will present the government's plans in the 
Duma, the lower house of parliament, following Mr Zadornov's departure.

The Russian government has been lobbying the IMF to loosen the terms for a 
new agreement. But the IMF has demanded that the government demonstrate its 
commitment to raising revenues and unless the government can quickly reach an 
agreement with the IMF it is in danger of defaulting on much of its $150bn 
(93bn) of foreign debt. Political observers suggested the government would 
find it tough to convince parliament to pass the laws - especially given 
widespread media reports that the "oligarchs" had returned to power.

The Kommersant newspaper commented that an oligarchic clan had in effect 
seized control of the Kremlin and was now battling to run the government. 
According to Kommersant, this group consisted of Nikolai Aksyenenko, the 
other first deputy prime minister, Boris Berezovsky, the influential 
financier, and Roman Abramovich, the secretive head of the Sibneft oil 
company and confidante of the presidential family. "It has become quite clear 
that Nikolai Aksyenenko has become prime minister," the Kommersant newspaper 

One senior Russian financier confirmed that Mr Abramovich, a smart, young 
former oil trader, was the real power behind the throne and now exerted far 
more influence over Mr Yeltsin's family than Mr Berezovsky. "He has very 
close personal relations with the family. A lot of Russians would say that it 
must be because of money but it is not. It is purely about personal 
relationships with Tatyana [President Yeltsin's daughter] and others," he 

However, Mr Aksyenenko himself dismissed the media speculation surrounding 
recent events, saying the government was 99.9 per cent complete. "Everything 
that is being discussed in the press in relation to the government does not 
reflect the essence of what is happening," he said.

Mr Aksyenenko, a former railways minister, said Mr Zadornov was a highly 
qualified professional who should have joined the government. "But it was his 
personal decision. God will be his judge," he said.

Mr Zadornov claimed he would not be able to work effectively in the 
government unless he combined the posts of first deputy prime minister and 
finance minister - a suggestion rebuffed by the Kremlin.

The turmoil within the Russian government seems certain to delay the 
conclusion of talks with the IMF, which had developed good working relations 
with Mr Zadornov. 


St. Petersburg Times
May 28, 1999 
How About A 'Minority' For President? 
By Fyodor Gavrilov

THIS past weekend, St. Petersburg hosted the first convention of All
Russia, an electoral bloc founded by a dozen or so Russian governors. No
matter how I tried I couldn't make heads or tails of the new party's
platform. How does it differ from that of Yury Luzhkov's Fatherland, or
Samara Gov. Konstantin Titov's Voice of Russia? There is some overlap even
within the membership of these three parties. 

If there is a difference, it's so slight that we could dismiss All Russia,
especially since its chances at the ballot box are rather slim. There is
one important catch, though: Tatarstan President Mintimer Shaimiev's role
as a founding father. 

Shaimiev's name sounds almost as strange to a Russian ear as it does to
yours, and Shaimiev himself speaks Russian with a thick accent. But it's
what he says that's important, not how he says it. With Shaimiev at the
helm, Tatarstan signed a treaty with Moscow that clearly delineated federal
and provincial powers. 

The first of its kind, this pact is one of the few cases where Moscow and
an ethnic region defined their relationship peacefully. Despite the
presence of local extremists (Tatars have been volunteering to fight in the
Balkans - for the Albanians, not the Serbs), Tatarstan hasn't become a
second Chechnya. And now, for the first time in many decades, a political
party of national importance is informally led by a non-Russian. 

Contemporary Russia is home to around 100 ethnic groups, who speak just as
many languages. A good half of these peoples are Turkic. But the voice of
this "minority" is rarely heard at a national level. Yes, there is one
female news anchor on Russian Public Television - a Kazak, if memory
serves. Then there's our long-serving Minister of Emergency Situations
Sergei Shoigu, a Tuvinian. Finally, there's ex-minister of nationalities
Ramazan Abdulatipov, who has been downgraded to minister without portfolio
in Sergei Stepashin's new cabinet. Abdulatipov hails from Dagestan, where
26 different ethnic groups dwell - which he belongs to is anybody's guess.
And somewhere in Moscow the ex-speaker of the Supreme Soviet and erstwhile
Yeltsin opponent Ruslan Khasbulatov goes quietly about his affairs - he is
a Chechen. That's about it. Of course the presidents of nearly all the
"national" republics are members of the titular "nationalities," but their
role is emphatically local. 

What's so strange about that? you say: Russia is a chauvinistic imperial
power in which Russians have always run the show. And perhaps you'd be
right, but only partly. Manifestations of genuine, aggressive chauvinism
are, in my experience, rare among rank-and-file Russians. The culprit here
is not chauvinism, but ordinary slovenliness: Moscow neglects the country's
ethnic riches in much the same way it squanders other natural resources. 

Dear to my heart is the picture an older comrade once painted for me. He
envisioned a "University of the Caucasus," where, setting aside their
Kalashnikovs, our highlanders would immerse themselves in the creative
sciences and forget the arts of destruction. And I see little Caucasian
restaurants on every street corner in the cities of European Russia. Why
stop there? One day, a calm and sagacious Tatar - Mintimer Shaimiev, for
example - is elected president of Russia. 

A pipe dream, you say? A pipe dream it may be, but what a pity.


Parties' Election Prospects Noted

Moskovskiy Komsomolets 
May 21, 1999
[translation for personal use only]
Article by Sergey Nitochkin: "Ownerless Electorate at Stake" 

I either missed it, or all the analytical shows 
actually did not report on our beloved popularity ratings of political 
or, to be more precise, the ratings of their leaders according to 
our Russian tradition. The failure of the impeachment, the 
"populist" election of Stepashin as premier, a quiet end to the 
President's (and as it turned out, well considered) attack on 
Primakov, and the collapse of the myth about the only democratic 
party in the Parliament--Yabloko--demonstrated that a large number 
of voters need to make their choices as soon as possible. 

Despite the emergence of a new actual leader--young Ryzhkov, 
who amazed the ill-educated Duma with his scholarly knowledge of 
history--the party of the special envoy in the Balkans will 
certainly fail to win seats in the future Parliament, since the 
voters need more than that. Yabloko, which "in solidarity" votes 
equally (one impeachment charge related to 1993 and the vote on 
Stepashin) "in favor" and "against," presented its voters with an 
almost unsolvable task--which part of Yavlinskiy they should vote 
for: the part that is "in favor" or the part that is "against." If 
we recall that Grigoriy Alekseyevich won 6.8 percent of the votes 
for a seat in the present Duma, than the chance of exceeding the 5 
percent barrier is slim under such circumstances. It is impossible 
either formally or in practice for Stepashin, who does not wish to 
align himself with anybody, to establish a new power party in six months. 

The Communist electorate has dwindled naturally (for 
demographic reasons) and will not gain more than 20 percent, despite 
Zyuganov's chatter. Obviously, the national-patriots and fascists 
will not surpass the 5 percent barrier. Fortunately, there is only 
a tiny number of them despite their flashy appearance, loud voices, 
and advertising on television (?!). It is absolutely unknown what 
Pravoye Delo [The Right Cause] is doing. However, it is unrealistic 
to pass the Duma's required barrier even if titanic work, albeit 
invisible to the world, is being carried out. It seems that 
Zhirinovskiy will hold on--he is extremely sly and clever, but it 
will be just over 5 percent. 

In other words, a paradoxical situation has developed in 
Russia six months prior to the elections to the new Duma which 
society would like to see as sensible: Either vote for the more or 
less comprehensible Luzhkov's Fatherland (I already mentioned the 
Communists) or simply not participate in the elections at all. 
However, such arguments are largely related to the elections in 
Moscow and St. Petersburg. The recent elections in Tuleyev's domain 
demonstrated the possibilities of a regional leader. The picture is 
entirely muddled by a mosaic of gubernatorial preferences from 
Prusak to Starodubtsev. 

However, the facts are clear. A vast number of ownerless 
votes remain on the market and any force can pick them up. 
We just hope it will not be an evil force. 


Russia-Asia: Hard Times Aside, Moscow Still Eyes Gas Supply
Inter Press Service

MOSCOW, (May 31) IPS - Russia, which sits on a quarter of the globe's
natural gas reserves, still has its eyes set on getting access to the
Chinese market via a multi-billion-dollar pipeline project to export
Siberian gas. 

But these days its domestic economic turmoil seems to be slowing down, if
not undermining, ambitious plans to supply gas to China, and probably Japan
and South Korea. 

The project, expected to carry 20 billion cubic meters of gas annually,
envisages the installation of a 3,700-kilometer pipeline between Kovykta
natural gas field 400 kilometers north of Irkutsk near Lake Baikal and
China's Pacific coast port of Lianyunggang, via Ulan Bator in Mongolia. 

Possible extensions of the line would include underwater links to both
South Korea and Japan. 

"The Kovykta field is among the most promising natural gas deposits in
Siberia," Yuri Nogotkov, Russia's fuel and energy ministry spokesman, told
IPS. It is estimated to contain reserves amounting to 1.5 trillion cubic
meters, he added. 

In November 1997, Moscow and Beijing reached an agreement on gas pipeline
project. In the joint statement signed in Beijing by presidents Boris
Yeltsin and Jiang Zemin in November 1997, both sides prioritised bilateral
cooperation in natural gas and energy. 

When Chinese Premier Zhu Rongji travelled to Russia February 24- 27, 1999,
the two signed a deal on a feasibility study on a giant gas pipeline
linking the Kovykta deposits in the Irkutsk region of Siberia with China's

During Zhu's visit RUSIA Petroleum and China National United Oil Corp.
signed an agreement to prepare a feasibility study for Kovykta gas project.
The original project included possible underwater links to South Korea and
Japan, but these plans seem to have been dropped due to regional turmoil. 

Cost estimates of the project dropped correspondingly, from 10- $12 billion
down to $4 billion. 

Experts argue that a feasibility study expected to take up to three years
and cost some $100-$120 million will be needed to better ascertain the
area's reserves. 

Russia and China have reportedly invested some $20 million into a
feasibility study. But the future of the project is still far from certain. 

It is still a matter of debate if Kovykta field contains reserves big
enough to justify a pipeline. 

Furthermore, the license to Kovykta field is held by RUSIA Petroleum
company, 60 percent controlled by oil group SIDANKO, which seems have
fallen victim to Russia's economic woes and low oil prices. 

On May 18, 1999, the Moscow regional arbitration court declared SIDANKO,
Russia's sixth-biggest oil company, bankrupt and placed it under external
management for 12 months from July. 

"We do believe the settlement with the creditors could be reached at any
stage of the bankruptcy proceedings," SIDANKO's spokesman Denis Davydov
said. As for the Kovykta project, "so far our relations with the Chinese
partners have seemed to be unaffected by the bankruptcy," he argued. 

Analysts say that its financial setbacks aside, the Kovykta project still
has sound potential. 

"The Kovykta project is very well positioned to supply gas to East Asian
markets, notably China," BP Amoco spokesman in Moscow Howard Chase said in
an interview. 

"It is still a very active project," Chase said, dismissing allegations
that plans to develop Kovykta gas field are necessarily scuttled by
SIDANKO's bankruptcy. 

In April, BP Amoco vice president Norrie Stanley was elected chairman of
SIDANKO as BP Amoco holds a 10 percent stake in SIDANKO. In March, it
reportedly wrote off $200 million of its investment in SIDANKO. 

"However, the fact that SIDANKO was placed under external management, does
not prevent us from continuing efforts to work out a settlement, and we
hope the settlement could be reached soon," said Howard Chase. 

Meantime, Russian gas monopoly Gazprom has yet to give its final word and
has been said to be looking for an acquisition of the project. 

"We do not exclude our future participation in Siberia-China gas pipeline
project," Igor Ivantsov, Gazprom's chief spokesman, told IPS. 

Gazprom accounts for 95 percent of Russian gas production, controls 80
percent of the country's huge gas reserves and is a key supplier to Western

The company sits on enormous oil and gas reserves, amounting to 33 trillion
cubic meters of gas and 14 billion barrels of oil and condensates. 

Rem Vyakhirev, chairman of Gazprom which produces 25 percent of world
supplies, said recently he hoped the company would be able to supply the
East Asian gas market via the pipeline beginning in 2010. 

But even with Russia's impressive 200,000 km long web of pipelines, those
hopes have to be measured against the backdrop of folding oil firms across
the country at this time. 


Leftist Editors Oppose Russian Patriarch's Plan 

Sovetskaya Rossiya
27 May 1999
[translation for personal use only]
Article by Zavtra Chief Editor A. Prokhanov and Sovetskaya Rossiya 
Chief Editor V. Chikin under the "From the Patriotic News Bureau" rubric: 
"No, Your Holiness" 

The patriotic public are troubled by the 
patriarch's statement proposing the liquidation of the "Red Square" 
memorial, which is certainly no "country churchyard," as the patriarch 
puts it, but an emblem of our country's 70-year history and a kind of 
"Red icon" prayed to by millions of citizens who associate with Red 
Square the idea of the Great Country and the Great Victory -- an idea 
trampled on by Yeltsin at Belovezhskaya Pushcha. The destruction of the 
Soviet holy place in Red Square is the last, mystical act crowning 
Yeltsin's villainy and expunging from Russian history its Red 20th Century. 

While ascribing his proposal to concern for the "bones" upon which rock 
festivals and satanic festivities take place, turning Red Square into a 
sewer, the patriarch does not propose to ban these actual diabolical 
presentations. If you follow the patriarch's logic, it is necessary to 
remove from the Kremlin wall the Tomb of the Unknown Warrior, alongside 
which Luzhkov has created a supermarket, while subterranean elevators 
lower millionaire customers almost into the most holy tomb. It is 
necessary to move the czarist burial vaults from the Archangel Cathedral, 
which is next to the work study of Yeltsin, who, following the 
Patriarch's logic, conducts receptions, meetings with ambassadors, and 
presentations to devoted associates directly over czarist bones. 

The remains of Zhukov, Gagarin, and the victors and martyrs of the War 
must not be removed from Red Square. We must not fall into iconoclasm, 
repeating the follies of the radical Bolsheviks in the twenties. 

The patriarch's statement, made right after Stepashin's arrival, can be 
interpreted as the start of a "liberal revenge" and of anti-Communist 
hysteria fraught with the proscription of the Communist Party, the 
dissolution of the Duma, and the wrecking of democratic elections. The 
start of a very acute and possibly bloody spiral of social confrontation. 

Is it so important to the patriarch that the people associate the start 
of this spiral with his name? Have we really forgotten the tragedy of 
1993, when we so longed to see an icon in the hands of the patriarch 
shielding tank volleys? On whom now, if blood is shed, will the 
patriarch's anathema fall? 

If the church, which hitherto has reacted extremely cautiously to 
secular matters, has decided to change its practice and to respond to the 
people's real needs, we have a right to expect it to condemn the 
monstrous anti-Russian, antistate regime which has taken away from Russia 
the result of the entire 20th century and is now encroaching upon the 
21st century. If concern for national reconciliation really fills the 
hearts of senior members of the clergy, let them sanctify the idea of the 
communal burial of "red" and "white" bones in a single Russian grave and 
celebrate an all-Russia requiem service at that grave. 



Return to CDI's Home Page  I  Return to CDI's Library