June 7, 1999    
This Date's Issues: 3329 • 3330•

Johnson's Russia List
#3330
7 June 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Itar-Tass: 50 Years since First Nuclear Weapon Test in Russia.
2. Reuters: Heat on Russia envoy as Ivanov condemns NATO.
3. Bloomberg: Chernomyrdin on Russia's Role in Kosovo Peace Talks: Comment.
4. AFP: Russian Military Blame NATO For Collapse Of Kosovo Pullout Talks.
5. Xinhua: Official: Russian Army Must Be Re-Equipped.
6. Financial Times: John Thornhill, Ex-PM may run for mayor of Moscow. 
(Kiriyenko)
7. In These Times: Fred Weir, Russia's King Lear.
8. Wallace Kaufman: Russian health Data and Larger Questions.
9. Segodnya: Boris Fyodorov, Swapping an awl for soap; Sergey Shatalov,
A rapid reaction government?
10. The Russia Journal: Gregory Feifer, Politics Behind a Wall of Rhetoric.
11. www.polit.ru: Selections from morning newspapers.
12. Washington Post: David Hoffman, Yeltsin's Control Ebbs, Kremlin 
Intrigues Flow.]

********

#1
50 Years since First Nuclear Weapon Test in Russia.

MOSCOW, June 7 (Itar-Tass) - A symposium in the Russian Academy of Sciences
marks the 50th anniversary of the country's first nuclear weapon tests. 

"This should never be used," Igor Kurchatov, who developed the nuclear
bomb, used to say again and again. The prominent 20th century scientist
felt moral pangs because of his discovery and advocated peaceful uses of
nuclear energy. Kurchatov began nuclear studies back in 1932. He discovered
nuclear isomerism and then obtained the first accelerated particles. The
first nuclear bomb was tested under Kurchatov's supervision on August 29,
1949. 

The aim of the symposium at the Russian Academy of Sciences is to discuss
the role that was played by fundamental science in solving the historic
task of state importance of creating nuclear weapons on the basis of the
knowledge of experts of the USSR Academy of Sciences. 

*******

#2
Heat on Russia envoy as Ivanov condemns NATO
By Timothy Heritage

MOSCOW, June 7 (Reuters) - Russian Foreign Minister Igor Ivanov expressed
deep concern on Monday about NATO's handling of the Kosovo crisis, and
pressure mounted on Balkan envoy Viktor Chernomyrdin to resign for being
too soft. 

Ivanov criticised NATO on his arrival in Bonn for talks with seven major
powers after hopes of a quick end to alliance air strikes on Yugoslavia
faded with the breakdown of talks between NATO and Yugoslav generals who
had been meeting in Macedonia. 

``NATO has considerably raised the level of its demands and continues
bombing,'' RIA news agency quoted Ivanov as saying before talks with the
foreign ministers of Japan, the United States, France, Germany, Britain,
Italy and Canada. 

``This causes deep concern in Moscow,'' he said. 

Ivanov said in televised comments that NATO had sought to include political
declarations in a planned United Nations resolution on sending an
international force to Kosovo when Serb troops withdraw. 

``NATO has tried to insert into the document a whole number of fundamental
political issues. Only the U.N. Security Council is authorised to decide on
these issues,'' he said. 

His comments reflected dissatisfaction in Moscow over the Kosovo peace
process, and particularly over NATO's refusal to halt the air strikes even
though Belgrade has accepted the peace plan agreed by Chernomyrdin with the
West last week. 

Chernomyrdin, who did not go to Bonn, kept a low profile on Monday. He has
been accused by Communists and nationalists of betraying Moscow's interests
and caving in to NATO's demands by putting Russia's name to the peace plan. 

In an ominous sign for Chernomyrdin, Russian news agencies said Ivanov was
accompanied in Bonn by Leonid Ivashov, a general who has openly criticised
the plan despite being part of the Balkan envoy's delegation at talks in
Belgrade last week. 

Communist leader Gennady Zyuganov, whose party is the biggest single force
in the lower house of parliament, said the chamber was preparing a
resolution urging President Boris Yeltsin to sack Chernomyrdin as his
special envoy. 

``He has gone from special representative to special destroyer,'' Interfax
news agency quoted Zyuganov as saying, repeating accusations that the peace
plan could lead to a further breakup of Yugoslavia. 

The lower house, or State Duma, has no powers to force Chernomyrdin out but
it would increase pressure on Yeltsin and his envoy. 

Communist Gennady Seleznyov, the Duma's speaker, said the Foreign Ministry
should take over Kosovo diplomacy. 

``It would be correct if our Foreign Ministry professionally conducted all
talks on Yugoslavia for the Russian side,'' Seleznyov told Interfax. 

Russian leaders offered no direct reaction to the failure of the talks in
Macedonia, but a military source told Interfax that Moscow was hoping the
military talks would resume soon. 

``It is certainly possible to get the talks back on track and we are not
inclined to dramatise the situation,'' the source said. 

*******

#3
Chernomyrdin on Russia's Role in Kosovo Peace Talks: Comment

Moscow, June 7 (Bloomberg) -- Viktor Chernomyrdin, Russia's special envoy
to Yugoslavia, who together with Finnish President Martti Ahtisaari
brokered peace negotiations between the Yugoslav government and the North
Atlantic Treaty Organization last week, said a peace settlement in Kosovo
will meet Russia's national security interests, Russian news agency
Interfax reported. Talks collapsed after Yugoslav representatives rejected
NATO's proposal on withdrawal of troops from Kosovo and the western
alliance said it will intensify bombing. Chernomyrdin has been accused by
political opponents at home and Russian military officials of a too- hasty
compromise with NATO's conditions and betrayal of Serbia's and Russia's
interests. The following is a translation of some of Chernomyrdin's
comments, reported by Interfax: 

During the negotiations ``I though about Russia, about the country's
security in a way to prevent joining war in the Balkans. We have already
experienced it once.'' In World War I ``we stood just for Serbia, lost 7
million compatriots and eventually found ourselves alone against everyone
else.'' 

Referring to politicians who are urging Russia to get involved in military
conflict, Chernomyrdin said: ``We see them under a red banner. . This
cannot be allowed as this will be the last war.'' 

The nation's pride ``should be directed to restore Russia and its
economy.'' 

In the case of Russian participation in a peacemaking force in Kosovo,
Russian troops ``will never be subordinate to NATO, this is ruled out. . By
our legislation, by our moral standards Russian force will not be under
NATO's command. That is the president's directive.'' 

*******

#4
Russian Military Blame NATO For Collapse Of Kosovo Pullout Talks

MOSCOW, Jun 7, 1999 -- (Agence France Presse) The Russian military on
Monday blamed NATO for the collapse of talks on securing a pullout of
Yugoslav troops from Kosovo, and accused a senior British commander of
exceeding his authority, Interfax news agency reported.

A military official cited by Interfax accused NATO of seeking to dictate
the terms of the withdrawal of Serb forces from the troubled province ahead
of the deployment of an international peace force.

"The UN Security Council has been left outside the framework of the talks,
which violates the peace agreements reached during the
Chernomyrdin-Ahtisaari-Talbott trilateral talks in Bonn," the official said.

He was referring to Russia's Kosovo envoy Victor Chernomyrdin, his EU
counterpart Martti Ahtisaari and US Deputy Secretary of State Strobe
Talbott who devised a peace plan accepted by Belgrade on Thursday.

Moscow insists peacekeepers can only be deployed in Kosovo under the
auspices of the United Nations, as provided for under the peace plan.

The Russian official accused NATO's chief negotiator at the pullout talks -
Lt.-Gen. Michael Jackson -- of overreaching himself during two days of
negotiations at the Yugoslav-Macedonian border.

Jackson "has taken on too much responsibility. Decisions on any
international presence in Kosovo are not made at his level," the military
source said.

The British general said Yugoslav proposals were "not consistent" with the
agreed peace plan and "would not provide a safe return of the refugees and
full withdrawal of Serb troops.

"There is no alternative but to continue and intensify the bombardments
until the Yugoslav side is prepared to implement their commitment," he said.

Despite the hitch, the Russian military source said Moscow hoped
negotiations would resume quickly: "It is certainly possible to get the
talks back on track, and we are not inclined to dramatize the current
situation." 

*******

#5
Official: Russian Army Must Be Re-Equipped

MOSCOW (June 6) XINHUA - Russian Deputy Prime Minister Ilya Klebanov said
Sunday that Russia's army must be re-equipped in light of the Yugoslav
crisis. 

"We must urgently supply powerful, high-precision weapons, which we have,
to the armed forces," Klebanov, in charge of the military industrial
complex, said in St. Petersburg, where he was attending celebrations of the
200th anniversary of the birth of poet Alexander Pushkin. 

Russia "possesses many new types of weapons and financing is needed for
their production," the Interfax news agency quoted him as saying. 

"The condition of the Russian defense industry is in very bad condition,"
Klebanov said, adding that "exporting enterprises survive, but the ones
without this component have ceased to exist. " 

He said the government would set up five defense agencies as a priority to
"begin an inventory of defense enterprises in a month, so that industrial
concerns can be created." 

In another related development, Interfax quoted diplomatic sources as
saying that Russian Foreign Minister Igor Ivanov will fly to Bonn Monday
for an emergency meeting of the so-called G8 foreign ministers on Kosovo. 

The visits of Austrian and Uzbek foreign ministers, Wolfgang Schussel and
Abdulaziz Kamilov, originally scheduled for Monday, have been put off under
mutual understandings, Interfax said. 

*******

#6
Financial Times
7 June 1999
[for personal use only]
Ex-PM may run for mayor of Moscow 
By John Thornhill in Moscow

Sergei Kiriyenko, Russia's former prime minister, is publicly toying with
the idea of running for mayor of Moscow as the Kremlin starts criticising
the incumbent, Yuri Luzhkov. The two politicians exchanged such fierce
words over the weekend that Mr Luzhkov threatened to take Mr Kiriyenko to
court for defamation. 

In a newspaper interview, Mr Kiriyenko condemned Mr Luzhkov's management of
Moscow, alleging it was impossible to solve any problem without a bribe.

Mr Kiriyenko, who remains popular in Russia in spite of being prime
minister at the time of last August's devastating financial crash, admitted
he would have little chance of unseating Mr Luzhkov. But he said it was
important to highlight the failings of Moscow's administration.

The former prime minister's attack appears part of a broader attempt by the
Kremlin to discredit Mr Luzhkov, who is seen as one of the strongest
candidates to succeed Boris Yeltsin as president.

Sergei Karaganov, head of the Council on Foreign and Defence Policy, a
think tank for the Russian political elite, said the Kremlin appeared
intent on destroying Mr Luzhkov politically and clearing the ground for its
own preferred candidate.

"Luzhkov is now target number one for the Kremlin. For them, he is worse
than the Communists not because he is anti-liberal but because he is a
serious independent figure," Mr Karaganov said. "If Luzhkov does not go
into open opposition, then he is dead."

The bald, pugnacious Mr Luzhkov, who was re-elected Moscow mayor in June
1996 with about 90 per cent of the vote, has had a volatile relationship
with the Russian president. 

Mr Luzhkov has supported Mr Yeltsin at critical moments, helping to
suppress the Supreme Soviet in October 1993 and strongly backing his
re-election bid in June 1996.

But the Kremlin was incensed last month when Mr Luzhkov's allies in the
Duma, the lower house of parliament, voted to impeach the president. 

It has also been irritated by Mr Luzhkov's staunch defence of Yuri
Skuratov, the scandal-tainted prosecutor general who has been investigating
allegations of corruption in the Kremlin.

Mr Luzhkov, whose hands-on management style and love of grandiose
construction projects has won him much popularity, is currently trying to
bring the city elections forward from June 2000 to December 1999 to give
him a clear run at the presidency - should he decide to stand. Otherwise,
Mr Luzhkov would have to choose between fighting the city and presidential
elections and risk losing both.

The Moscow mayor's opponents have warned that Mr Luzhkov's style of
"nomenklatura capitalism" would create perverse results if applied across
Russia.

Mr Luzhkov's supporters respond that Moscow is the most market-minded and
openly democratic member of Russia's 89-region federation.

*******

#7
In These Times 
June 27, 1999
http://www.inthesetimes.com
Russia's King Lear

BY FRED WEIR

Boris Yeltsin is the problem, not the solution. Funny how long it has taken
for that realization to dawn, even among some Russians. "Many people used
to think some larger principles were being fought out on the Russian
political stage, like the struggle for democratic reform against the legacy
of Communism," says Viktor Levashov, a political scientist with the
Institute of Social and Political Studies, an academic think tank in
Moscow. "Now it's obvious that Yeltsin stands for nothing but the
perpetuation of his own power. The battles he is fighting are against
shadows in his own mind, but his blows land on the whole country."

Russia was thrown into uproar in early May when Yeltsin suddenly fired his
prime minister of nine months, Yevgeny Primakov. Citing a lack of long-term
economic strategy for the sacking, Yeltsin replaced him with Interior
Minister Sergei Stepashin, who blandly announced he would follow the
economic course set by his predecessor. The real reason for Primakov's
departure seems to be that he was a compromise candidate in the first
place, who enjoyed the trust of the Duma and was beginning to look all too
presidential in the performance of his duties.

"Yeltsin cannot share power," Levashov says. "He cannot stand seeing anyone
get too close to his chair, and that is the main reason we have a system of
permanent shake-up."

But Yeltsin's luck--and his genius for political combat--held out. By
firing Primakov, he canceled the gains made by the opposition-led Duma last
fall when, amid economic crash and political breakdown, the Kremlin was
forced to consult with Parliament and accept a prime minister not entirely
of its own choosing. 

Then Yeltsin walked away from a bungled attempt by the Duma's leftist
majority to impeach him. The five charges against Yeltsin included weighty
matters such as his responsibility for the bombardment of parliament in
1993 and the bloody two-year war in Chechnya. But the Kremlin managed to
talk--some say buy--enough independents and ultra-nationalists into
boycotting the vote, heading off the constitutionally required two-thirds
majority. Whipped and bedraggled, fearing dissolution by the triumphant
president, the Duma endorsed Stepashin a few days later.

The 47-year-old Stepashin, who has spent his entire career as a policeman,
even allowed himself a joke at the Duma's expense: "All those who voted for
me may lower their hands and step away from the wall," he quipped.

What was it all for? "No one in contemporary Russia can compete with
Yeltsin in terms of strength and will to power," says Valery Fyodorov of
the Center for Political Trends. "Unfortunately he only gathers his
personal forces to combat a perceived threat to himself, never for
constructive purposes. And his greatest political victories have disastrous
effects for the country."

Critics say each turn of the screw has not only boosted Yeltsin's personal
power but reaffirmed and strengthened the autocratic character of the
Russian state. The sweeping democratic experiments of the Gorbachev era
have been reduced to political theatrics in a Duma that has no real power.
As authority was concentrated at the top, early post-Soviet visions of
creating a middle-class market society through mass privatization and
economic stimulation gave way to a narrow oligarchy of Kremlin-connected
plutocrats.
One of Yeltsin's reasons for dispensing with the popular and wily Primakov
may have been that the prime minister--at the Duma's urging--was
encouraging the public prosecutor to investigate the criminal activities of
big tycoons, such as Boris Berezovsky, and even to probe corruption within
the Kremlin itself. 

Some fear that Yeltsin is now preparing to rewrite the rules again, since
the current Constitution--authored by Yeltsin after he forcibly disbanded
Parliament in 1993--stipulates that he must leave office when his second
term ends in June 2000.

The pretext for this could be the creation of a new state. For more than
two years, Yeltsin has been promoting the federation of Russia with its
Slavic neighbor Belarus, a marriage that now looks close to completion.
"Yeltsin will under no circumstances relinquish power voluntarily," says
Anton Surikov, a former aide in Primakov's government. "Attempts to unite
Russia and Belarus before the presidential elections in 2000 should be
watched closely. I believe there will be an attempt to keep Yeltsin in the
Kremlin for a third term as president of a Russia-Belarus union." 

*******

#8
From: "Wallace Kaufman" <taconia@mindspring.com>
Subject: Russian health Data and Larger Questions
Date: Sun, 6 Jun 1999 

The cause-of-death statistics in Eberstadt's good report on Russian health
(JRL#3328 6 June 1999)
should be considered preliminary to the extreme--at least for internal
causes. Gun shot wounds, knifing, suicides, car crashes and domestic or
industrial accidents require little expertise to identify. Internal causes
often require expertise that most CIS medical people don't have. Soviet
medicine achieved admirable heights but in very special places, not among
Moscow's micro-raions, provincial cities, and rural villages--the generality
of clinics and hospitals that deal with the everyday problems of citizens.
Doctors who continue to work for $100 or $200 a month (when salaries are
paid on time), are special people, but most of them have training at the
level of a Registered Nurse or Physician's assistant in the West, and they
have not stayed current with medical science or technology.

Eberstadt has made a useful report using the best data available, and he
provides some caveats: "If cause-of-death statistics are to be believed . .
." It's worth adding a stronger warning, that data originating with poorly
trained and underpaid local health workers and filtered through a variety of
bureaucratic filters and funnels should not be considered a reliable guide
to internal causes of death. My tongue is only partly in cheek when I
conclude from many diagnoses I've heard across the former USSR that doctor's
seem to recognize only 5 human organs: heart, lungs, liver, kidneys and
brain. Granted, tuberculosis, irregular heartbeat, and blood pressure are
easily enough measured, and I am surprised at how many of my friends over 50
in the CIS have blood pressure cuffs: almost all of them. Certainly
cardio-vascular disease deserves to be on the list of major killers.

At the same time, the fine tuning that might yield better understanding of
causes and effects doesn't exist. I have no friends who know their blood
cholesterol level or their triglyerides. (I do have innumerable friends who
scoff at the idea that fat might cause circulatory problems, and my Kazakh
friends widely acclaim eating fat, especially pure white horse-fat sausage,
as a way of cleansing the body. They say it is espcially good at cleansing
radiation.) On the professional side, the indiscriminate recommendation and
use of antibiotics (when available) shows a naive faith in their
effectiveness and blindness to the dangers of overuse and intermittent use.
(Russia may be a major generator of drug resistant bacteria.) Many complex
and outdated drugs are easily available over-the-counter or on the black
market, and few physicians, let alone ordinary citizens, are aware of
problems associated with drug interactions with other drugs or with foods.

I think it is fair to say ignorance should be considered as a possible
killers, tho I leave it to others to decide if these are internal or
external. Eberstadt suggests a more important question that should be
explored. What are the cultural factors that lead Russians to engage in the
behaviors and create the social institutions that correlate with widespread
health problems and decreased longevity? Here is a question that should
engage academic, political, and commercial minds, a question that would
yield valuable fruit and fiber for all.

Wallace Kaufman
INFORMATION THAT MAKES A DIFFERENCE
146 Quartz Hill Rd.
Pittsboro, NC 27312 USA
Tel: 1 919 542 4072
Fax: 1 919 542 1731
wkaufman@arcticmail.com

*******

#9
From: "Robert Devane" <robertdevane@glasnet.ru>
Subject: Contribution
Date: Mon, 7 Jun 1999 

The following is an unofficial translation of two opinion articles by
well-known Russian economists, Boris Fyodorov, a former Finance Minister,
chief of the Tax Service, and Deputy Prime Minister, and Sergey Shatalov, a
former Deputy Finance Minister. The articles were published side by side in
the daily newspaper Segodnya on Thursday, May 27th. Both articles appeared
under the headline "The government still has a chance. Does it need it?",
which was apparently chosen by the newspaper's editors. Boris Fyodorov's
piece was titled "Swapping an awl for soap", which is a Russian colloquial
expression that suggests that one is swapping one article for another
article of comparable value. Sergey Shatalov's piece was titled "A rapid
reaction government?". These translations appeared in the May 31st issue of
Renegade Weekly. These translations have been provided by Renegade Capital
for information purposes and personal use only.


Swapping an awl for soap
By Boris Fyodorov

A week ago I wrote that we will quickly determine what kind of government
we have and what it's going to do by the composition of the cabinet. Today,
everything is clear. The government is weak and won't do anything.
Unfortunately Sergey Stepashin, for whom I personally have a liking, has
already permitted a vast amount of errors.

In effect we've exchanged an awl for soap. The main part of the government
has simply not changed. Economic policy has been entrusted to Mikhail
Zadornov [NOTE: The article was published prior to Zadornov's resignation.
– Renegade Capital], who bears direct responsibility for at least two
disgraceful budgets, August 17th, and the failed restructuring of GKOs. By
the way, it is news to me that this dilettante understands anything in
macroeconomics. It would never have occurred even to his former boss
Grigory Yavlinsky to make him the First Deputy Prime Minister in charge of
the macro-economy. 

It can be said with full justification that there will not be any economic
reforms, and that instead there will be agonizing survival and endless gray
compromises. There will be "redemption" of debts with devalued rubles,
there will be taunting compensation for deposits for people over 80, there
will be mockery of creditors and investors, there will be monetary emission
and credits from the Central Bank to the government. There will not be
collection of taxes, there will not be tax and pension reform, and there
will not be an honest budget.

On the other hand, it seems to me that a mistake was already made when
baseless attacks on Nikolai Aksenenko began. How is he worse than Victor
Chernomyrdin, Oleg Lobov, Oleg Soskovets, Yuri Maslyukov, Alexei Bolshakov,
and others? Yes, he is not a specialist in macroeconomics (Zadornov isn't
either), but at least he has successfully managed a gigantic sector, and
such people are absolutely necessary in the government. Besides that, his
capacity for work has already become legendary, and all attempts to connect
him with Boris Berezovsky evoke laughter.

On the whole, the roles of Berezovsky and Chubais in forming the government
are overestimated by 99%. In the government there are neither liberal
economists, nor those who are obviously Berezovsky's proteges. When many of
my acquaintances saw a scheme in the magazine Vlast, which ascribed them to
either Chubais' or Berezovsky's clans, they were very surprised.

In reality, our government is one big misunderstanding, whose goal is one
big and endless compromise. That is precisely why no one is expecting
anything of this government. Its role is to hold out until elections, and
then the President will think about whom will be the Prime Minister and his
effective successor. Vladimir Ryzhkov [head of the Our Home – Russia
faction in the Duma. – Renegade Capital] was right apparently when he
called the government interim and technical.

It is very sad that having resolved yet another political problem with the
Parliament and the Communists, the executive branch of government doesn't
want to do anything and is wasting priceless time. So it was after August
of 1991[collapse of the Soviet Union and Yeltsin's full-fledged ascension
to power. – Renegade Capital], after the April referendum of 1993 [adoption
of the new Russian Constitution, which effectively made Russia into a
presidential republic. – Renegade Capital], after October 3rd – 4th, 1993
[when Yeltsin ordered tanks to shell the rebellious Parliament. – Renegade
Capital], and after the presidential elections of 1996. Events today are
moving according to the same scenario.

Such exclusively political approach, which ignores the necessity of
resolving economic problems, is deeply flawed. In the end it will merely
lead to a new political crisis. And any references to the elections have
absolutely no relevance here He who does nothing loses in the elections.

Sergey Stepashin has fallen into a trap typical for a new Prime Minister
and is losing his only chance for a success. With Mikhail Zadornov and
Alexander Pochinok he won't go very far. He simply won't even budge from
where he is. By the way, it is unclear why they hadn't returned Victor
Yerin and Oleg Lobov to the government.

Of course, there are fairly good specialists in the government (Mikhail
Kasyanov, Mikhail Fradkov, Sergey Shoigu, and others), but it is not they
that determine the face of the government and they are in a clear minority.
Stepashin himself has a good reputation, experience, and strength. But one
soldier in the field is not a warrior. The absence of personalities next to
the Prime Minister and the planned isolation of Aksenenko do not bode well
for the country.

It is regrettable that Stepashin, as a representative of a new generation
of politicians, is ceding his chance for success so resignedly and quickly.
God forbid that in January of next year someone says that "His name is not
Pinochet, not Stolypin, it's Stepashin. There was such a Prime Minister in
the 1990s. Either before or after Ivan Silayev".

I would like to be wrong. The new government is still just at the beginning
of its patch, the clock having only begun to count the first 100 days.
Sergey Vadimovich [Stepashin], some things are still within your power! 


A rapid reaction government?
By Sergey Shatalov

Formation of the government is practically over, at least the key players
have been determined. It remains to be established what the game that they
are going to play is called, what its rules are, and what cards came to be
in their hands.

The re-arrangements which were made in the financial-economic block of the
government offer hope on a team-like coordinated game, whose main contours
are visible. It seems that the Parliament will be offered a strict draft
budget for 2000, and the already known unpopular solutions, agreed with the
IMF by the previous government. One can expect expansion of authority of
the treasury in implementing the budget and controlling budget funds,
strengthening of control over extra-budgetary funds and the financial flows
that pass through them. If the switches aren't suddenly shifted to a
different set of rails, the government will be striving towards a gradual
improvement in the country's financial condition, avoiding abrupt moves.

The "opponents", in the face of the parliamentarians, are just as
predictable, with the elections as their main task for the foreseeable
future, which creates conditions for an entirely different system of
values. Since it is difficult to call the government a team of
like-thinkers, the block which is responsible for the "real" economy may
quite plausibly partake in a counter-game against the "financiers" (for
which there already is unambiguous evidence). One wants to hope that the
government will be able to avoid the splitting of the personality, which is
characteristic of schizophrenia. That presupposes that the government will
be able to set priorities and formulate, at least in the form of a
declaration of intentions, and then begin to implement a wholesome economic
program, which is needed even if only as a target by business, which is
looking from side to side in dismay, waiting for intelligible impulses from
the government. It is important that the government not limit itself
exclusively to patching up of the tears that appear by the minute, but also
work on the future. The creation of understandable, equal, and stable
conditions, without exclusive particularities and sanctuary harbors for the
chosen ones, is required of it.

In the new political situation, conditions emerge for the formation of
acceptable tax policy without the elements of adventurism, typical of the
previous cabinet. There are basis for supposing that the ax of war between
the Finance Ministry and the Ministry of Taxes and Collections will be
buried, and the resolution of the issue of which one of them is in charge,
will lose its acuity and ambitiousness, going into the past like a growing
pain. Last year, the State Tax Service was transformed into a ministry,
and was able to obtain functions in the formation of tax policy, which were
previously not characteristic of it, having taken the corresponding
authority away from the Finance Ministry, which previously had full
unconditional priority in his delicate sphere. Such a solution was hardly
reasonable, even on the basis of the broadest considerations, regardless of
who occupies the ministerial posts today or tomorrow. Until the Ministry of
Taxes and Collections becomes not only a control organ, but also a
department which is given the task of collecting taxes and which is
strictly made to answer for not performing these tasks, it is difficult to
expect that the tax policies it develops will be free of fiscal
distortions. It is more judicious to "divorce" tax policy from the
collection (control over the payment) of taxes, and have two "competing"
organs, each with its own sphere of responsibility. After all, after the
denunciation of the repression of the 1930s and 1950s, it does not occur to
anyone to combine the functions of the legislator, the judge, and the
executioner of punishment in one person.

Everything is complicated by the time of trouble in which the government
finds itself. The draft budget for next year must be submitted in the
nearest weeks, by which time all of the conceptual provisions which set the
rules of the upcoming game must be formulated. With all the complications
of today's mode of life, it is necessary to find a balance between strict
measures for the reduction of expenditures and increase of revenues on the
one hand and the lightening of the burden on law-abiding taxpayers on the
other hand. Having rejected exotic experiments, the main barriers to the
development of the economy -- taxes on turnover and the excessive taxes on
wages payable, as well as the multitude of distorted tax bases,
characteristic of the profit tax – must be liquidated. There is still a
chance, possibly he last one. It cannot be lost.

*******

#10
The Russia Journal
June 7-13, 1999
http://www.russiajournal.com
Politics Behind a Wall of Rhetoric
By Gregory Feifer/The Russia Journal 

Oil executive Roman Abramovich and former Railways Minister Nikolai
Aksyonenko have rocketed to the center of the Russian political rumor mill
over the past two weeks. Both are reputedly close to influential
billionaire tycoon Boris Berezovsky, whom the Russian media claim had won
the battle for the country's new government.

Berezovsky, who denied the two were his proteges, nonetheless admitted June
4 for the first time that he used his ties to Yeltsin's inner circle to
influence the Cabinet's formation.

As the Russian press repeatedly points out, Abramovich and Aksyonenko leapt
from obscurity to dominate the front pages of the country's papers. That
indicates the two chief aspects of Russian political culture: its
domination by rumors of political patronage-fanned by the media-and the
fact that Russia's political stage is indeed run by those connections.
Rumors necessarily take the place of verifiable fact.

Instead of reinforcing the country's young political institutions and using
them to construct the foundations of a transparent democratic system,
Russian politicians are increasingly forging the same type of informal
networks that dominated the country not only for the seventy years of
Soviet rule, but for centuries. And, as a result, westernizing reform
continues to be retarded.

The figure of Boris Yeltsin weighs heavily. Timothy Colton, Director of
Harvard's Davis Center for Russian Studies, has called the Russian
president an "all-thumbs democrat," roughly meaning that in the vague
interests of building a democractic state, Yeltsin, armed with a
constitution that has been dubbed "superpresidential," has used autocratic
methods.

In the past two years, those means have come to dominate the president's
conduct. The assertion of his own power-perhaps in the public eye more than
anything else-has become Yeltsin's main goal. His chief action is protest:
hiring and firing state officials, balancing interests and political power
beneath him in order to dominate the political spectrum.

Witness the firing of Prime Minister Sergei Kiriyenko last August after the
onset of Russia's financial crisis. The move plunged the country into a
political crisis from which it is still battling to recover. Yevgeny
Primakov's premiership was a compromise with the suddenly empowered
Communists in the Duma lower house of parliament, who stood up to the
president's choice of Viktor Chernomyrdin, Yeltsin's loyal deputy as prime
minister from 1992 until Kiriyenko's appointment in April last year.

Former Interior Minister Sergei Stepashin, appointed prime minister last
month, was also a compromise of sorts: as Russia's tight-lipped chief law
enforcement officer, the new premier is a man with whom the Communists and
other conservatives cannot help but sympathize.

But Stepashin's chief characteristic has been his loyalty to the president
throughout the post-Soviet era. With his appointment, not to mention the
humiliating defeat of the Duma Communists' attempts to initiate impeachment
proceedings against Yeltsin, the Kremlin could have rested-briefly at
least-content in the knowledge that it had gained the upper hand in running
the country once again.

But instead of trying to appease opposition forces by making a public show
of creating a compromise government (something that did indeed occur, as
many of Primakov's ministers retained their posts), Yeltsin embarrassed his
prime minister by slapping down his choices for key ministerial posts. That
engulfed the brand-new government in rumors of behind-the-scenes power
struggles within the Kremlin, placing it on shaky ground. Among what the
Russian media calls Yeltsin's inner circle-his "family"-are daughter
Tatyana Dyachenko, chief of staff Alexander Voloshin, former chief of staff
Valentin Yumashev, Berezovsky, and Abramovich.

"I have never tried to hide that I have very good relations with Yumashev,
normal relations with Tatyana Dyachenko, and good relations with Voloshin,"
Berezovsky said June 4, AP reported. "I have never concealed that I have
been meeting with them to discuss problems that concern me."

Berezovsky, whose business began with a car dealership and expanded to
include oil and media holdings, added that Yeltsin's advisers have
"enormous influence on the government."

While the businessman may in some ways be seen as a positive force in
Russia's attempts at political transformation-as someone concerned with
building institutions that would preserve his newly made wealth-like
Yeltsin, his back-room dealings undermine his public goals.

First Deputy Prime Minister Aksyonenko said immediately after his
appointment that he wanted to oversee "everything." Although he later
backpedaled on his statements, Aksyonenko did the damage: as a reputed
Berezovsky protege, he gave the media ample material to back up claims that
Berezovsky was once again dominating the Kremlin as one of its chief
advisers (albeit informal). Not that that isn't the case, as Berezovsky
himself pointed out. The central fact is that much of the news on Russia's
front pages is speculation. The political system remains closed to
outsiders, obscured by a wall of rhetoric, a trait that has existed for
centuries.

The newest insider, now seen as Russia's top so-called financial and
industrial "oligarch," is the elusive Roman Abramovich, who has reputedly
been Berezovsky's number two as head of Sibneft, the oil company in which
Berezovsky gained a controlling stake during Russia's notorious
loans-for-shares privatization giveaway in 1996. Abramovich is supposed to
have pushed past his mentor in the quest for the presidential family's ear.

Yeltsin's actions, however, have not been entirely directed toward building
his own grandeur, even if that has been his ultimate goal. Russia's radical
reformers throughout the decade functioned almost entirely under the
president's patronage and would have most likely done little without him.
Yeltsin's own rhetoric is often admirable; the president has often called
for civility and an end to corruption, using the bully pulpit as a
head-of-state should.

But the president's own ambitions have often overtaken any inclination
toward democratization. Yeltsin's continued public presence at the top of
Russia's political system, often in embarassing states of incoherence and
senility, now destabilizes the system and puts off an inevitable
post-Yeltsin transition. That will most likely take shape under the future
presidency of ambitious Moscow Mayor Yury Luzhkov, who has built a monopoly
on the capital city's crooked capitalist boom.

Yeltsin's actions are partially fuelled by symbolic attempts to curtail his
power. The president found himself under attack again last week as the
Constitutional Court on Thursday began considering a Duma proposal to
clearly define when the president should give up power.

Yeltsin's representative in the court said the parliamentary request is a
politically-driven attempt by Yeltsin's enemies to find new reasons to
remove him, after last month's failed impeachment attempt.

But even if the critical mass of Yeltsin's actions over the past decade
have been positive for Russia, his current mania for controlling every
aspect of government undermines the foundations of any future
democratization Russia may undertake. Moreover, it is undermining whatever
achievements the president made in putting Russia on its largely mythical
path to a western-centric transition.

For Russia's institutions are undermined by informal dealings that the
elite uses to pursue its interests, Berezovsky being a prime example. So it
should come as no surprise that while Yeltsin says he governs in the
interests of democracy, in fact, in the waning days of his presidency, his
thumbs are fast squashing out any such thing.

*******

#11
www.polit.ru
June 7, 1999
Selections from morning newspapers

Novoye Vremya (A. Kolesnikov, "Stepashin Government Vs. Government")
comments on the government's lineup. The magazine says that the government
may not last long, although right-wing politicians consider Stepashin as a
possible presidential candidate. However, actual power in the government
will be in the hands of Aksyonenko whom mass media compare with Berezovsky
and Abramovich. The author believes that "Anatoly Chubais has lost... a lot
in the personnel struggle", while the future of the government remains
unclear. 

Novoye Vremya (D. Orlov, "An Unpopular Cabinet") says that all those who
are not related to the "Family" had to leave the government. The author
draws analogies with the "ministerial shakeup" in 1915-1916 when the "court
clique" got "its people" appointed to high posts. He came to the conclusion
that "the system of power based on the chief executive's inner circle is
doomed even in a formal democracy". 

Novoye Vremya (L. Tsukanova, "The Moor Has Left Again") came to the
conclusion that Boris Yeltsin has lost all interest in the formation of the
government after the appointment of Stepashin as Prime Minister. However,
the President may "wake up" at any moment and interfere. Commenting on the
establishment of the "Family's" control over financial flows, the author
says that the point of it is not to prepare for elections, but to ensure
its own wellbeing. Among other tasks of the "Family" (and of Berezovsky in
particular) the author names keeping Luzhkov away from power and redividing
powers "through a democratic election". The author says that by appointing
Stepashin Yeltsin might have wrecked another of Berezovsky's brilliant
combinations. 

Segodnya (I. Petrov, "Sergei Kiriyenko Begins a Ram Attack") comments on
the conflict between Yuri Luzhkov and Sergei Kiriyenko. The author says
that the former prime minister intends to debunk the Moscow system of
management by taking on Luzhkov in the upcoming mayoral elections in
December. "City officials have already expressed a view that behind Sergei
Kiriyenko's demarches may stand certain forces in the Kremlin seeking to do
damage by using the ex-premier ahead of parliamentary and presidential
elections". 

Vechernaya Moskva (S. Minayev, "Kiriyenko Finds an Elephant") writes that
Sergei Kiriyenko is almost of the same weight category as Valery Shantsev
who automatically becomes Moscow mayor if Luzhkov wins presidential
elections. The newspaper compares the ex-premier with a pug-dog barking at
an elephant, which secures it a victory. 

*******

#12
The Washington Post
7 June 1999
[for personal use only]
Yeltsin's Control Ebbs, Kremlin Intrigues Flow
By David Hoffman

MOSCOW—When the call came through, Gennady Seleznev, speaker of the lower
house of the Russian parliament, recalls that he heard President Boris
Yeltsin on the line, saying that his new prime minister would be Nikolai
Aksyonenko, a little-known railway boss.

"My ears are clean today," Seleznev said after the call. "There's nothing
wrong with the telephone line. It works clearly. The president named
Aksyonenko to me."

But a short time later, Yeltsin gave the job to Sergei Stepashin, the
interior minister. Aksyonenko was named first deputy instead. The two have
been jousting for influence over the key government portfolios, part of a
larger contest for money and power on the eve of Russia's campaigns for
parliament and president.

As a result, Russia's fourth government in 14 months has gotten off to an
exceedingly slow start and has offered no clear economic strategy.
Moreover, the muddled outcome has left many shaking their heads about
Yeltsin, who appears ever more impetuous, erratic and malleable. Seleznev,
using an old Russian expression for confusion, chidingly observed: "The
president's week has seven Fridays."

When Yeltsin announced that he had dumped Yevgeny Primakov as prime
minister, he said he wanted more energetic reform efforts. But Primakov's
departure had a different effect. A group of Kremlin favorites, including
some presidential aides, Yeltsin's daughter Tatyana Dyachenko and a tycoon,
Boris Berezovsky -- all of them known here as "The Family" -- wasted no
time putting their loyalists into the most lucrative government agencies.
This group was behind Aksyonenko.

But they were in competition with another group spearheaded by Anatoly
Chubais, the architect of Russian privatization and now head of the
electric power monopoly, who has his own channels of influence in Yeltsin's
circle.

"From the very beginning, it was a double-headed government and a struggle
between two clans," said political consultant Igor Bunin.

Berezovsky has again emerged as a power broker. Under investigation for
financial dealings during Primakov's eight-month term, a warrant was issued
for his arrest, then withdrawn.

Last week he was unabashed when asked about the latest Kremlin shake-up.
"There was a struggle between influential business groups and political
groups," he said. "I took part in that struggle."

Political sources said Aksyonenko's near-appointment reflected Berezovsky's
lobbying of members of "The Family," including a former Yeltsin chief of
staff, Valentin Yumashev, and the current chief of staff, Alexander
Voloshin, who was once associated with a Berezovsky business.

The latest round of Kremlin intrigue has introduced a new face to the
Russian public, Berezovsky's business partner, Roman Abramovich, who
controls the Russian oil company Sibneft, reportedly with Berezovsky.
Abramovich, a 33-year-old oil trader, has steadfastly remained out of the
limelight in recent years. He was described as now exerting even more
influence on Yeltsin's inner circle than Berezovsky, which Berezovsky
disputes.

What struck many analysts was how swiftly Berezovsky and his allies moved
to control Russia's most cash-rich agencies, including the Russian arms
export company, which sells about $2.5 billion a year in weapons, and the
state Customs service, which holds huge cash deposits.

"Their aim is to take under their control the key financial flows that go
through the government," said Valery Solovei, a political analyst with the
Gorbachev Foundation. "This is needed to ensure their financial interests
and accumulate funds for the election campaign.

"The pie is getting smaller -- I mean, the national wealth -- and the
number of eaters is not. And they start to elbow each other, pushing their
own ways."

Thus, Aksyonenko immediately grabbed control of Russia's natural resource
exporters, the military-industrial complex and the big industries. A new
fuel and energy minister, Viktor Kalyuzhny, was installed, and he quickly
restored a lost quota to enable Berezovsky's oil company, Sibneft, to buy
Iraqi oil under the United Nations' program. Kalyuzhny also allowed that,
as minister, he might take on managing the state's 37.5 percent stake in
the Gazprom oil monopoly.

Handling huge amounts of government cash in such areas as defense, natural
resources and transportation has often been lucrative for private
financiers in Russia -- the government puts deposits in favorite banks,
which then use the money in their operations.

Chubais also played a role in the latest power struggle. According to
officials, when Yeltsin was on the verge of naming Aksyonenko, it was
Chubais who rushed to Yeltsin and persuaded him that Stepashin would be
better. Chubais repeatedly has gone out of his way to praise Stepashin, and
fought to keep several centrist reformers, such as Mikhail Zadornov, from
bolting the new government. But he lost a bid to have Zadornov remain at
the Finance Ministry helm.

Berezovsky and Chubais are said to be keeping a wary eye on Moscow Mayor
Yuri Luzhkov. A leading candidate for president, Luzhkov has been building
a campaign organization, and in the past feuded with Berezovsky and
Chubais. "The Family" in the Kremlin is said to want to make sure that
Luzhkov does not become Yeltsin's successor, even though they do not seem
to have an alternative.

All the jockeying has left Stepashin looking desperate to avoid being
shoved aside. "I hold all the cards," he insisted.

"I think it's an exaggeration," said Solovei, the political analyst. "He is
trying to put a good face on a bad business." 

*******