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Johnson's Russia List


June 24, 1999    
This Date's Issues: 3358 3359 

Johnson's Russia List
24 June 1999

[Note from David Johnson:
1. Bruce Blair wins MacArthur "genius grant."
2. AFP: Russia swallows reforms pills, govt says new IMF cash is in sight.
3. Moscow Times: Andrei, SEASON OF DISCONTENT: What Russian Patient Needs: 

4. Loren Gerlach: Response to Ira Straus/3354.
5. Ira Straus: Re: Response of Loren Gerlach.
6. Greg Austin: Soviet Era Military Leaders Database.
7. Jet Stigter: Russian orphans.
8. The Washington Times: Janine R. Wedel, Baiting the Bear.
9. Moscow Times: ORT to Filter Election News Content.
10. Robert Devane: Re: Bjorn Kaupang/JRL3357/Russian law. 
11. AP: Workers Want Russian McDonalds Union.
12. Andrew Miller: Crime and Punishment.
13. International Herald Tribune: William Pfaff, While Europe Dithers, 
NATO Advances Eastward.]


Rights Advocate to Theoretical Physicist: This Year's 32 'Genius Grant'

June 23, 1999
Thirty-two people have been named to share $10 million in ''genius grants''
from the John D. and Catherine T. MacArthur Foundation in Chicago. The
foundation has been awarding grants to ''exceptionally talented and
promising individuals'' since 1981. Ranked in order of grant amount, the
1999 fellows are: 

...Bruce Blair, 51, Washington; foreign policy analyst [at Brookings
Institution] specializing in ways to reduce nuclear risks; $350,000


Russia swallows reforms pills, govt says new IMF cash is in sight

MOSCOW, June 23 (AFP) - Russia's embattled government patted opposition
lawmakers on the back Wednesday for swallowing some bitter economic reform
pills that could see Moscow qualify for urgently sought cash from the West.

"It was a bumper day in the Duma," reported First Deputy Prime Minister
Viktor Khristenko with a smile.

"If we had had such cooperation earlier this month, all of the laws would
have been passed by now. As of today, the need to present a no-confidence
vote in the government has diminished considerably."

The State Duma lower house is mulling 30 reform bills that could convince
the International Monetary Fund (IMF) to disburse loans to Russia for the
first time since it froze payments after last summer's financial crash here.

But Russia's new government is in a race against time since the Duma is due
to break for the summer on Saturday and each measure must be voted on three

The Duma has already irked Prime Minister Sergei Stepashin by voting down a
new gas (petrol) tax. The premier responded by threatening to force a
dissolution of parliament by holding a vote of confidence over the issue.

Stepashin has already bowed to howls of indignation from lawmakers facing
re-election in December by dropping plans to table in a new tax on vodka.

Deputies showed rare cooperation on Wednesday by approving on final reading
several changes to the tax code that would bolster the inland revenue service.

They also approved a new tax on luxury cars and a separate law covering the
restructuring of Russia's vulnerable banking sector, thrown into chaos by
last August's financial crisis, was given a second reading.

The Duma also allowed the Central Bank to issue its own bonds until the end
of the year and purchase precious metals directly from producers in order
to boost its reserves.

In contrast last summer the Duma stonewalled on a similar reform package.
The liberal government of Sergei Kiriyenko toppled two months later after
Russia defaulted on its internal debt and effectively devalued the ruble.

Stepashin said Wednesday that Russia has come a long way since those gloomy
days. "The recovery of the Russian economy has happened quicker than we
expected," said the premier, confirmed to his post in May.

He pointed out that monthly inflation has been tempered to the low single
digits while industrial production grew 1.5 percent over the past year.

The ruble has also corrected its nosedive. The once floundering Russian
unit has traded at 24.23 against the dollar for five consecutive days.

All this has prompted Russian ministers to voice confidence that they may
see new IMF funding by next month.

"If all goes well we can expect IMF funds by the end of July," Khristenko

The IMF cash would ease Russia's enormous foreign debt burden, open the way
for extra aid for the World Bank and Japan, and help Moscow reschedule its
liabilities with both commercial and sovereign creditors.

Investors have also been bolstered by ministers' confident noises by making
Russia's stock market the best performer in the world this year.

The main RTS index has shot up more than 30 percent this month alone and
closed at 125.50 on Wednesday.

Foreign market players say Russia is sure to receive new IMF cash if only
because Fund directors are too embarrassed to admit that their program here
was a failure.

"The IMF is willing to turn a very blind eye towards any misdeeds of the
economy in its efforts to disburse funding," the MFK Renaissance bank said
in a research note.

"Mr. Stepashin and company will have to work very hard to scupper the IMF
program and prevent the disbursal of funding some time over the summer." 


Moscow Times
June 24, 1999 
SEASON OF DISCONTENT: What Russian Patient Needs: Psychotherapy 
By Andrei Piontkovsky 

Our political elite chronically suffers from a split consciousness, loss
of self-identification and manic-depressive syndrome. All of these sad
symptoms were once again clinically demonstrated on the eve of, and during,
the G-8 summit. 

The eighth great member of this prestigious club stubbornly tried to
pretend to be Gabon and the United States simultaneously. "How are we
better than Central African countries?" our financiers basically asked,
entreating that the Soviet-era debt be written off. "How are we worse than
the United States or Germany," our diplomats and military officials asked
indignantly, demanding a separate sector for Russian troops. 

The result was that neither demand was met. "Not to pay back debts is not
good for a large nation," the German chancellor explained to the Russian
premier over breakfast. "Our country is big, only there is no order," the
premier almost sadly objected, but stopped, remembering he had already
quoted that somewhere else - either at the Pushkin jubilee or in his thesis
on the struggle of the Leningrad party organization to provide firemen
with a communist education. 

The newly minted Colonel-General A. Zavarsin-Prishtinsky, as one
well-known liberal newspaper respectfully called him (while a "patriotic"
newspaper published an ode glorifying his military genius) continues to
carry out his menial tasks at the Pristina airfield. It is the logical
result when the political elite is ruled in a severe crisis neither by
principles, national interests or even cynical calculation, but exclusively
by the abnormal complexes of phantom grandeur. 

The political elite's reaction to the events in Kosovo showed that it is
interested neither in the Serbs nor the Albanians, but exclusively in its
own elite status in world politics. "We were not warned, no one consulted
with us, the decision was made without us!" This was the cry of Russian
politicians from Anpilov to Chubais. Moscow was outraged by NATO's bombing
not because people died, but because that outrage gave it additional status
points for opposing NATO. If it was interested in people, then it could
not have lied so long and stupidly about how no ethnic cleansing was
taking place in Kosovo, about Serbian atrocities being NATO propaganda. 

What kept us from condemning both the NATO bombing and the bestial
behavior of the Serbian troops in Kosovo from the first days of the
conflict? We would have stopped the carnage much earlier, because our
pressure on the Western countries would have been much more convincing and
enjoyed the support of public opinion there, and because such a position
would have robbed the Milosevic regime's illusion of having a Russian
political "roof." We would have ended up at the center of the peacekeeping
process as its moral leader, radically raising our standing in the European
security system. 

We took a different route. Moscow first took its anti-Western hysteria to
the extreme, and then provided serious services to the West when NATO found
itself in a difficult situation, and at the end again began to raise a
scandal over status issues. In Cologne, the West spoke to us politely and
tenderly, endlessly lavishing compliments, but at the same time firmly, the
way a professional psychotherapist is supposed to talk to an almost
hopeless patient. 


From: (Loren Gerlach)
Date: Wed, 23 Jun 99 
Subject: Response to Ira Strauss/3354

I read with interest Ira Straus' letter of 21 June ("US Attitude vs Russia in
Central Asia and Caucasus"). His criticisms of American policy (based on the
assumption that any Russian influence in Central Asia or the Caucasus is a
threat) are very insightful. I think his analysis also applies to the
opposition sometimes expressed against the proposed Russia-Belarus union - we
are told that this would be harmful to US and NATO interests but no one has
explained why, and as long as clear majorities in both countries favor a union
it is hard to see how the US can oppose it.

However I find Mr. Straus' sweeping generalizations about "Islamic
influence" to
be as thoughtless and jingoistic as the US policy that he criticizes.
There are
over two billion Muslims in the world; does Straus really believe that all of
them are fighting to perpetuate despotism, violence, hatred, and
illiteracy? In
Northern Afghanistan the Uzbeks have spent several years fighting exactly that
sort of extremism as promulgated by the Taliban. Is the Islamic influence of
Pakistan or Turkey really more sinister than the racist rantings of Viktor
Alksnis or Vladimir Zhirinovsky? Have even the Iranians harmed the causes of
peace and democracy in Central Asia to anywhere near the extent that the
enlightened Christians of Serbia have done in Bosnia and Kosovo? The idea
only European influence can make Muslims behave like civilized human beings is
strikingly racist and ignorant of both Islamic teachings and 1500 years of

Mr. Straus' hope that Central Asia will gradually be subsumed into a grand
all-Western sphere of influence seems unlikely. In the post-World-War-II era
several regimes in Muslim countries did align themselves with the US out of
of Communism, Islamic fundamentalism, and/or powerful neighbors. But the
Communist threat is dead, and Islamic extremism while still alive is no longer
growing, because it has failed to provide a sustainable solution to the
and disenfranchisement that gave rise to it (witness Iran); a free Palestine
will put it further in retreat. The Central Asian nations will logically look
to their neighbors for markets, allies, and role models, and they will find
Turkey, Iran, Pakistan, and Russia all useful at differing times and in
differing roles. But given that all of those players have shifting and often
conflicting interest in Central Asia, and given that no one power can
single-handedly provide adequate support or protection in such a vast,
landlocked region, the more astute Central Asian leaders will play all of
countries as well as NATO off against each other to their best advantage. In
that respect, 21st-century foreign relations in the region will look more like
the 19th century than the 20th. If the US can get past outdated prejudices
towards both Russia and the Muslim world, it can devise a sensible policy that
will promote peace and stability in the region within that framework.

Loren Gerlach
London, UK
The author is an American businessman who studied and worked in Russia for
several years.


From: (Ira Straus)
Date: Wed, 23 Jun 1999
Subject: Re: Response of Loren Gerlach to Ira Straus

I want to thank Loren Gerlach for his kind words in support of my main point. 
Regarding his criticism of me for "sweeping generalizations about "Islamic 
influence"", I'm not aware that I made any general statements on that 
subject. I certainly do not share the generalized views of Moslems that he 
rhetorically attributes to me for the sake of shooting them down. I do share 
his optimistic view about the trend in Iran. I note his appreciation of the 
efforts of Afghani Uzbeks to fight Taliban; he might have mentioned Russia's 
backing of these efforts (the point of my article was that America should 
also be backing them, rather than standing back or on the other side for the 
sake of pairing off against Russia). And I share his hope that political 
Islam has peaked and will decline.

I don't find it very useful to put racial generalizations in other people's 
mouths and then call those people "racist"; this doesn't help us in thinking 
about real problems. Jerry Hough, for example, has made a serious 
contribution to thinking about the subject at hand, based on a comparative 
view of the extent of democratic practices in the titularly Islamic regions 
of the former Soviet Union and the titularly European-Russian regions; we 
would only harm our own thought processes (and encourage a real, underground 
racism as well) if we were to misrepresent that contribution and then brand 
it "racism".

There have been serious dangers and instabilities arising out of many groups 
and some states in the Islamic world in recent decades, and there will almost 
surely continue to be such dangers for some years to come, including perhaps 
new ones which are inherently unpredictable as yet but for which a serious 
potential can be seen in present-day realities. To my mind, the above 
sentence is a statement of facts, and of pragmatically important facts at 
that, not an editorial comment, much less a racial generalization on Moslems. 
The generalization that I do make regards the Western countries and Russia: 
that they share common risks and interests in regard to these dangers and 
instabilities, as they also do in regard to many other dangers in the world, 
and that they are better off following a joint strategy most of the time than 
following a mutually opposing checkerboard strategy. Also, that by following 
a joint strategy and giving joint support to moderate and liberalizing 
regimes, they would be better able to encourage and help stabilize the 
hopeful tendencies in the Islamic world and elsewhere, and to reduce the 
prominence of the dangerous tendencies.

I agree with Mr. Gerlach that dangers can arise also from the likes of 
Zhirinovsky within Russia. It seems to me that this risk has been linked in 
practice to Russian alienation from the West, not to Russian unity with the 

The reason for the commonality of interest between Russia and the West is not 
at root because of having a common enemy, but because of some positive 
commonalities of society and tradition, which create a greater than ordinary 
degree of community of destiny. I would agree if Mr. Gerlach were to add that 
all of humanity has a greater degree of community of destiny than has yet 
been recognized, and that this universally shared destiny also needs to be 
upgraded through strengthening of universal projects and institutions. The 
regional and global levels of community of destiny have a complex intertwined 
logic. The European-based societies, having invented what is now deemed 
"modernity", have played a special role in the global process of 
modernization. This role is by no means exclusive, indeed some other 
societies have already substantially integrated themselves into it, and if we 
survive long enough, the particularity of the role is destined ultimately to 
dissolve by the very logic of modernization; but it seems to be far from 
already finished today.

I take Mr. Gerlach's point that Islamic countries are likely to try to play 
Russia and the West off against one another. This is natural and is not 
always harmful. However, if such a policy were to succeed as a general rule, 
Russia and the West would both become more vulnerable to such instabilities 
and dangers as will persist within the Islamic world. The more reason, it 
seems to me, why Russia and the West should in most cases work toward a joint 
strategy and avoid letting themselves get played off too easily against one 


Date: Wed, 23 Jun 1999
From: Greg Austin <>
Subject: Soviet Era Military Leaders Database

ANU has available a database of Soviet-era biographic files on military
commanders built up over 24 years from 1966 to 1990. The primary sources
were Krasnaia zvezda and Kommunist vooruzhionnykh sil. It contains over
11,500 records. For many officers, reasonably detailed biographical
accounts are available. We also have paper copies of obituaries from
Krasnaia zvezda for the same period.

Would you mind circulating on JRL to see if any budding researcher has any
use for this material (before we dump it). The system is Macintosh
Filemaker (quite old) but it is I understand compatible with IBM PC.

Greg Austin
Northeast Asia Program
Research School of Pacific and Asian Studies
The Australian National University
TEL: 61-2-6249-2172
FAX: 61-2-6279-8010


From: Mariette Stigter <>
Subject: Russian orphans
Date: Wed, 23 Jun 1999 

To whom it may concern,

My name is Jet stigter; I am a caseworker with the Human Rights Department 
of the Carter Center in Atlanta (GA) USA. At the moment i am working on a 
brief that regards the living conditions of Russian orphans and stresses 
those of the orphans living in mental institutions. In order for the brief 
to be as accurate as possible I am looking for as much (diverse) background 
information as possible. Therefore, I would be very grateful for any and all 
material that you can forward to me. I do thank you all up front for your 
co-operation. Looking forward to hear from you soon.

Jet Stigter - Human Rights
The Carter Center
One Copenhill
453 Freedom Parkway
Atlanta, GA 30306


Date: Wed, 23 Jun 1999 
From: Janine Wedel <>
Subject: op-ed piece in today's Washington Times

Baiting the Bear
The Washington Times
June 23, 1999
By Janine R. Wedel
Janine R. Wedel is the author of Collision and Collusion: 
The Strange Case of Western Aid to Eastern Europe, 
recently released by St. Martin's Press. 

The Clinton administration has succeeded where 
Soviet propaganda failed: The reputation of the United 
States in Russia is tarnished, and, despite Russia's help
in resolving the Kosovo crisis, U.S.-Russia relations are 
far from the friendly partnership envisioned at the end of the Cold War. 

Angered by NATO's bombing in Serbia, 
many Russians who steadfastly admired the United States 
during and after the Cold War, now spurn America. In a recent
nationwide public opinion poll, nearly half of the 
respondents said their view of America was "mainly bad" 
or "very bad." Although NATO bombing was
the immediate detonator of the anti-American explosion, 
the artillery has long been primed. Anger has
accumulated over economic "reforms," many of them urged, 
designed, and funded by the U.S. government. The reforms 
have left many Russians worse off than before the breakup 
of the Soviet Union and some blame Western aid and advice, according to an
U.S. Information Agency survey. Many Russians now believe that the United
States deliberately set out to destroy their economy. 

Unfortunately, U.S. policymakers are a long way from coming to terms with
this shameful record. Lawrence Summers, who has been nominated to
replace Robert Rubin as Treasury Secretary and is up for
Senate confirmation this week, shares responsibility for the
Russian fiasco. As a key architect of the administration's economic policy
toward Russia with pivotal influence over U.S. economic aid and the
International Monetary Fund, Mr. Summers served the agendas 
of a closed circle
of people. The administration gave virtual control over hundreds of millions
of dollars in U.S. and Western taxpayers dollars to a small group of
self-interested insiders, to the detriment of the legal and 
regulatory backbone of a market economy which supports 
property rights, the sanctity of
contracts, and the rule of law.

The chief Russian beneficiary of U.S. economic aid was a small clique of
political and financial powerbrokers known in Russia as the "Chubais Clan,"
named after its leader Anatoly Chubais, the main architect of economic
programs since 1992. Although consistently among the most 
hated figures in Russia, Chubais and his "young reformers" 
were promoted by Summers as the chief brokers with the West. 
The "dream team," as Summers called it, presided over the
economic "reforms," including privatization -- which was more about wealth
confiscation than wealth creation -- and helped to create a system of tycoon
capitalism run for the benefit of a half dozen corrupt oligarchs. The
result is that many Russians have come to associate "economic reform" and
"capitalism" with looting, capital flight, and dubious activities in which a
handful of people benefit.

The Chubais Clan had substantial help from Summers' colleagues from his
Harvard days. Summers backed an arrangement whereby the Harvard Institute
for International Development was given, as the U.S. General Accounting
Office determined in 1996, "substantial control of the U.S. assistance
program." With "foreign policy considerations" as the justification for
this highly unusual arrangement, the Harvard Institute was handed uncompeted
awards. Summers' co-author and protege, Harvard economist Andrei Shleifer,
directed the Institute's Russia project.

The Chubais-Harvard partnership not only failed to achieve viable economic
reform but also served to undermine democratic and state institutions. With
U.S. support, the partnership set up and ran a network of aid-funded
"private" organizations. The "private" Russian Privatization Center
negotiated loans with the IMF on behalf of the Russian state, bypassed the
Duma, the elected Russian parliament, and served as the Chubais Clan's
political and financial resource. The Center attracted some $4 billion in
Western aid, according to its CEO, which the Chamber of Accounts, Russia's
rough equivalent of the GAO, said "was not spent as designated." And, while
private individuals were reaping the benefits of loans that went missing, it
is the Russian people who are expected to repay them.

Harvard, too, had its troubles. In 1996, the GAO found that U.S. oversight
over Harvard was "lax," and, following allegations in 1997 that Shleifer and
the other Harvard principals used their positions and inside knowledge as
advisers to profit from investments in Russia, the U.S. government cancelled
the last $14 million earmarked for Harvard. Shleifer and others are under
criminal and or civil investigation by the U.S. Justice Department.

As Russia roiled in economic ruin last July, Summers entertained Chubais,
who had been appointed a month earlier to be Yeltsin's envoy in charge of
relations with the IMF, in his home for brunch where officials worked out
the details of an emergency IMF loan. The meeting was crucial in obtaining
the release of the funds, according to a New York Times 
report. After the crash just a month later, Chubais 
congratulated himself for having "conned"
from the IMF its last $4.8 billion tranche. The money was 
found to have disappeared shortly thereafter.

What should be done now? Our challenge is to foster friendship with the
Russian people after having facilitated bad policies and anti-American
sentiment. We should act before the international crisis worsens. It is
time to face up to the U.S. role in the economic meltdown and in fostering
Russian ill-will. We must stop our policy of support-at-all-costs for
Yeltsin and the Chubais Clan, with whom Summers and other key U.S. officials
remain tight.

In Washington several weeks ago, Chubais, now chairman of the
electricity monopoly United Energy Systems, made the rounds with U.S.
officials. These included Summers, Treasury Secretary Robert Rubin,
Secretary of State Madeleine Albright and Undersecretary Strobe Talbott,
and National Security Adviser Sandy Berger, as well as top officials from
the IMF and the World Bank. It is clear that Chubais remains a favored
son; his comeback in the new Russian government may well be 
promoted in Washington. But this
would be seen in conspiratorial terms in Russia and anti-American sentiment
may be one of the very few sentiments capable of unifying Russia's
fragmented political clans. If we are finally to promote policies that
build goodwill over the long haul, we must cease to select specific groups
or individuals as the recipients of a blank check.

Although a reversal of policy will require a long and resolute process of
diplomacy, administration officials can take steps, by, for example, meeting
with members of the Duma and a diversity of Russian elites. As a
demonstration of our commitment to the rule of law, the United States should
launch a high-level drive to recover monies that have ended up in private
unregulated bank accounts outside of Russia. This would show concern for
the Russian people, who otherwise would be held responsible for paying back
loans from which they did not benefit. 


Moscow Times
June 24, 1999 
ORT to Filter Election News Content 

The general director of Russia's largest television channel, ORT, said
this week that as the electoral campaign starts, his station will filter
the political coverage in accordance with its views. 

Speaking at the World Congress of the Russian-language Press, Igor
Shabdurasulov said that the tactics used to manipulate the media for
political gain will be much dirtier in the 1999 and 2000 elections than the
tricks used in 1996. 

The television executive added that he has already received many blunt
proposals for paid coverage of events. 

"We will not be omnivorous," he said. "We will determine for ourselves
which political parties and movements correspond to our political

While any political group will be able to buy advertising time on ORT, the
state-owned channel will be more selective when it comes to showing
political parties on news broadcasts or public affairs programs. 

ORT's programming will not reflect the views of all political parties
fighting for power, Shabdurasulov said, adding that "there is no place for
the 'mirror' approach." 


From: "Robert Devane" <>
Subject: Re: Bjorn Kaupang/JRL3357/Russian law 
Date: Thu, 24 Jun 1999 

My heart goes out to Bjorn out there in Nizhny. His story reminds me of an
old Russian joke. There is a game in Russia called "Chapayev" after a
famous Russian civil war cavalry here Vassily Ivanovich Chapayev. The rules
are simple. You take a checkers set, line up all the white pieces on one
side, and all the black pieces on the other side, and then proceed to try
to "shoot" the other guy's pieces off the board without "shooting" your own
pieces off the board. 

As I read Bjorn's account, I couldn't help but to think that he was trying
to play a regular game of checkers, while his opponent was playing
Chapayev. (That's the joke). One approach would be to surprise your
opponent, and bring a hockey stick to the next game.

Seriously though, Bjorn, have you tried contacting NAUFOR, the Federal
Securities Commission, etc.?


Workers Want Russian McDonalds Union 
By Angela Charlton
June 23, 1999

MOSCOW (AP) -- Natalya Gracheva is giving McDonald's heartburn. 

A security guard at the company's ``McComplex'' factory outside Moscow,
Gracheva wants to form a trade union. The company has blocked her efforts.
The struggle is tarnishing the once-golden reputation of a pioneer among
foreign companies in Russia, and observers warn its fallout could stain
other multinationals here, too. 

On Wednesday, a Moscow court opened hearings for a former McDonald's worker
who says he was fired because of his union activity. The company says he
was drunk on the job. 

Gracheva and several other workers accuse McDonald's of intimidation and
maintain it is illegal for the company to stop them from establishing a
union. McDonald's denies mistreating employees and says it is obeying
Russian labor laws. 

``I've always thought it was a good company. I never expected them to react
so strongly,'' Gracheva said Wednesday. Her main demands are pay raises and
more rest periods. 

Gracheva started working for McDonald's in 1990, and once voluntarily
recruited friends to join the company because of its generous benefits and
progressive, decidedly non-Soviet management style. 

Times have changed. Russia's economic meltdown last year forced McDonald's,
like virtually every company in Russia, to trim some fat and rethink
management plans. 

Some employees were laid off. Inflation and devaluation have whittled down
salaries. Gracheva's monthly salary was 2,500 rubles a year ago, or $416 at
the time. It's now 3,000 rubles a month, but that's worth only $122. 

McDonald's customers praise the restaurant for keeping prices low despite
the economic crisis. A Big Mac now costs about 30 rubles, equivalent to
$1.25, much less in dollar terms than a year ago. 

McDonald's paved the way for foreign investors in Russia, opening its first
restaurant in the Soviet-era Moscow of 1990. That restaurant is now the
world's busiest, serving 20,000 customers a day. 

>From the start, hiring was highly selective, and employees were compensated
with good salaries, free meals and summer camps for their children. 

The company opened its own factory to ensure quality amid the political and
economic turmoil that has rocked Russia through the 1990s. It now has 47
outlets and nearly 7,000 employees, almost all Russians. 

Gracheva and a dozen other employees started talking about a union in
November. There is no union or labor organization in U.S. McDonald's, said
company spokeswoman Lisa Howard in Chicago. 

McDonald's Russia, as the McDonald's joint venture in Russia is known,
responded by forming a company-supervised ``workers' council'' to address
complaints. Hundreds of employees signed a document saying they didn't want
a union. 

Gracheva and other workers trying to organize say the workers' council has
not responded to their basic pleas. Instead, she said, the company has
revoked their bonuses and rearranged their schedules so they cannot hold

The company chairman, Glen Steeves, issued a statement this week saying:
``McDonald's Russia categorically denies any allegations related to the
mistreatment of our employees. We respect the wishes of our employees and
continue to abide by local labor laws.'' 

The head of the International Labor Organization's Moscow office, Frank
Hoffer, said he was surprised at McDonald's stance. 

``McDonald's has been extremely successful in Russia by having good
cooperation with the Russians and by taking their interests seriously,'' he
said. ``If McDonald's continues this resistance ... that would set a bad
example and have very serious repercussions for Western companies.'' 

The union fight could also fuel nationalist anger against the West, which
many poor Russians blame for their post-Soviet troubles. 

Some Russian labor leaders have warned that the battle will prompt them to
push for tougher laws protecting workers outside a union. 

Russian labor legislation -- which draws strongly on Soviet-era laws --
provides strong protection for union members, though in practice many of
those laws are ignored. 

Most Russian employers are struggling financially and cannot pay workers on
time. Employees are often sent on indefinite unpaid leave for months at a

Against that backdrop, Gracheva admits her job is enviable. ``At least I
still know I'll get paid,'' she said. 


Date: Mon, 21 Jun 1999
From: ABC in Saint Petersburg <> (Andrew Miller)
Subject: Crime and Punishment

Crime and Punishment

The ghost of Raskolnikov, the murderer in Theodore Merit's 
(a/k/a Fyodor Dostoevsky's) masterpiece Crime and Punishment (the 
greatest novel ever written) still haunts The Haymarket (Sennaya 
Ploshchad) in Russia's St. Petersburg. I have a part-time job that 
takes me to this famous place on Thursday and Saturday evenings (truth 
be told, the fact that it brings me there is the main reason I do the 
job), and I can tell you that in the teeming, seedy outdoor market and 
the canal-side promenades and the twisting narrow darkened sidestreets, 
which are all still, gloriously, as Merit vividly described them a 
century ago, Raskolnikov's presence is still palpable.

I was in the subway station at The Haymarket last Thursday 
evening when the giant concrete awning over the entryway collapsed, 
injuring a score with half a dozen fatalities. Luckily, I was 
downstairs waiting for a train at the time. The explanation for this 
disaster which was shortly forthcoming from the authorities was hardly 
necessary, as any Russian knew as soon as he heard the creaking, 
snapping, groaning and sickening, thunderous crash: The awning had been 
put up nearly four decades earlier and hadn't been touched, not even 
with the eyeballs, since. Not even a lick of paint in forty years. Not 
even a look-see.

The local prosecutor thundered, louder than the awning, that 
heads would roll for "criminal negligence" and general barbarity. But 
this hardly seems a civilized way of referring to the status quo in 
Russia. Because it was spending such godawful sums on Gulags, strategic 
weapons, palatial country dachas for aparachiks and space stations (and 
struggling so mightily with the poor production that results from a 
communist police state, having started at a level near zero), the Soviet 
government never had the money to build anything twice, and never did. 
Anyone who lives in Russia sees the evidence of this every day, 
unavoidably. The former Soviet state is crumbling like a sand castle, 
and had been doing so since the very day it was brand spanking new. For 
the tourist this may have a certain offbeat charm, making the place 
look and feel as old as it actually is (a sensation that one never could 
receive in a place like Vienna, Austria, which seems younger than New 
York City), but for the people who actually have to live here it can be 
a bit, well, ominous.

The fact is, then as now, that these kinds of things happen 
because the government really doesn't care about individual human lives, 
and the human lives themselves give no sign of caring about that not 
caring. Thus, the government can divert funds from medical attention 
for the elderly because they've served their purpose and are really just 
a burden to the state. And so on. There are those in the Duma who 
scream about "genocide" by Boris Yeltsin as the population continues to 
contract, but this is a nationalistic concern, not a personal one. It's 
not that too many people are dying, it's just that not enough are being 
born to overcompensate and make Russia "great." The Soviet regime 
taught that the individual had to subordinate his own interests to those 
of the State and the collective good. 

There is no mechanism even today by which the families of those 
hurt and killed in the collapse could sue the government for negligence 
or damages, the pat response being, even now, for the prosecutor to get 
involved and jail somebody. If a few people must die in order that the 
state be allowed to redirect vital funds to the building of a new prison 
camp or ICBM, those people perish in a valiant and heroic service to the 
state. A monument will, in time, be erected - and what more could you 
want, after all. Besides, the local government of its own generous 
volition provided each affected family with a stipend of $400. That's 
one time, of course.

Rather than actually try to solve any of these problems of 
social life, Russians have other strategies. An average American, for 
example, drinks about half a gallon of pure alcohol via hard spirit 
drinking each year. An average Russian consumes at least six times as 
much - three gallons per year. In the city of St. Petersburg, Russia, 
at least 15 million licensed bottles of spirit (containing 25% or more 
alcohol by volume) are sold every month, and there is a vast illegal 
trade in moonshine (fatalities from the consumption of toxic contraband 
hooch are reported regularly). St. Petersburg has a population of 5 
million so in effect it works out that, on average, each man, woman and 
child in the city drinks four bottles of vodka per month, one per week, 
throughout the year. For every person who doesn't drink a bottle, there 
is somebody who knocks back two that week. Thus the February 17, 1997 
issue of Newsweek magazine, wherein former gold medal winning Olympic 
figure skater Oksana Baiul, then 19 years old, was quoted as having 
said, on the Oprah Winfrey Show, that she wasn't "drunk" when she was 
involved in a high-speed car crash the month before, with a blood 
alcohol level of 0.17, because "I'm Russian." 

So the Russian government is too impoverished to inspect 
dangerous overhangs at subway stations. It lacks the funds to keep a 
leading symbol of national prestige, the Mir space station, in orbit 
(much less to prevent its Mir-iad of mishaps in flight of late). It 
can't even scratch up the scratch to keep one of Russia's favorite TV 
programs, the US soap opera Santa Barbara, on the air. 

It can, however, manage a forced march of an armored battalion 
from Bosnia into Kosovo. It can, apparently, manage to support that 
unit in the field indefinitely, for the purpose of further alienating 
members of NATO and brewing up some flat cold war hostility. Meanwhile, 
the Russian government has also neatly and cleverly solved the problem 
of flagging value in national currency by simply refusing to allow 
anyone to trade it. By at the same time printing lots of new money 
(about 5 billion new rubles in the first two weeks of this month alone), 
it manages to inflate the pockets of its many minions, who with nothing 
better to do invest the money in the valueless stock market, thereby 
inflating it as well. It seems the Russians have unlocked a veritable 
Pandora's Box of economic insights and miracles which heretofore escaped 
the attention of the world's economic elite.

Speaking of which, enter America's new financial Czar, the "most 
influential academic in America," Lawrence Summers. As reported on the 
op-ed page of The Wall Street Journal on May 13, 1999, in an interview 
"on the patio of a sandwich shop on Cape Cod" with Cambridge Energy 
Research Associates' head honcho Daniel Yergin, Summers stated, in 
response to a question about whether, in the light of the Clinton 
administration's abject abandonment of the Democratic Party's principles 
of socialist economics in favor of the "invisible hand of the market" 
(according to Summers, the "single most important thing to learn from an 
economics course today" - nonetheless, the Republican Party is 
supposedly down and out as well, perhaps simply having been beaten at 
its own game):

In 1955 it was not unreasonable to focus on the
Depression and the impact of World War II
[because] the autarkic countries of Latin America
were doing well, and the Soviet Union seemed to
be growing at three and a half times the rate of the 
United States.

The operative phrase, of course, being "seemed to be." A marginally 
better choice of words might have possibly been "wasn't." It must now 
be viewed as a cold hard fact that no one, but no one, had the slightest 
clue about the economics of the former Soviet Union between the time 
Roosevelt shook Stalin's hand at Yalta and the time Carter kissed 
Brezhnev on the lips in Moscow. 

Boris Yeltsin is a democrat. No, he's an autocrat.
The Russian economy is booming. No, it's a Depression.
Anatoly Chubais is a young reformer. No, he's a huckster.
Russians longed for democracy. No, they didn't.
Yuri Luzhkov is a dynamic new presence. No, he isn't. 

Andrew Miller
St. Petersburg


International Herald Tribune
June 24, 1999
While Europe Dithers, NATO Advances Eastward
By William Pfaff 

FLORENCE-The full consequences of NATO's intervention in Yugoslavia have
yet to be felt. It has changed NATO, and also the European Union, and has
made the two rivals for influence over Europe's future. 

For Europeans, the war was a painful demonstration of military inadequacies
and strategic dependence on America. Existing plans for closer European
cooperation in arms manufacture and development, and for new military
cooperation between Britain and France (probably to incorporate Germany),
have found new support. But Europe's record on non-NATO military
cooperation inspires little confidence. 

NATO has made an unprecedented political investment by acquiring a Balkan
protectorate - confided to it, on its own urging, by the UN Security
Council. So long as Serbia presses its sovereign claim to Kosovo, the
province will not be secure, not even as a Kosovo largely emptied of its
Serbs. The clash between Serbian irredentism and the Kosovar Albanians'
demand for independence will continue, and NATO now is the military arbiter. 

The success of the Kosovo Liberation Army in assuming civil power in much
of the province - with international community administrators yet to arrive
- is a foretaste of troubles to come. 

The European Union wants to assume responsibility for civil reconstruction
in Kosovo and, eventually, for Serbia's reintegration into Europe. The EU
foreign ministers decided on Monday to ask the United Nations to appoint
someone from the EU to head the international civil mission.

Taking charge of Kosovo will change the European Union. By acting on the
(justified) assumption that Balkan stability and reconciliation are
essential to European stability, the EU puts itself in the Balkans for the
long term. More important, this changes the direction and significance, as
well as the nature, of EU expansion. 

The choice implicitly promotes the Balkan states to the head of the list of
those waiting to join the European Union. They will acquire a new status,
possibly designated as ''autonomous states'' or ''autonomous regions'' of
the EU (a proposal under informal discussion in Brussels). 

The Central and East European applicants for EU membership thus lose their
priority. They already have found their wait irksome, even unreasonable.
While the EU has ostensibly been assessing their qualifications and
awaiting internal changes to conform to EU norms, the real reason for the
delay has been that the West Europeans have not decided what Europe they

If they want a ''federal'' Europe they cannot, in the foreseeable future,
take in the Central and East European candidates. The cost of reducing
existing economic and social differences would be too great for a Western
Europe suffering high unemployment and sluggish economic performance. 

The head of Poland's Stefan Batory Foundation, Alexander Smolar, told a
European University Institute conference in Florence last week that some
Central and East Europeans now think NATO membership preferable to EU
membership. They are disillusioned with Western Europe. 

They say that the EU has been arrogant in its demands for reform, and
highly protectionist in defending its domestic agriculture and industry
against prospective competition from new members. NATO, in contrast, seems
''a welcoming community of values and destiny.'' 

This judgment perhaps has more sentimental than practical content, but it
shows a marked change in how the EU's present candidates view the future.
And it changes the strategic prospect that lies before both the EU and NATO. 

Less than a decade ago, the plan had been that an expanding European Union
would absorb the former Communist countries, who would find their security
in becoming integral members of the Western community. At the time, NATO
was expected to remain Europe's military guardian, but only that.

Then Washington took up the idea of NATO expansion. A new peacekeeping
mission was proposed to rationalize an enlargement that otherwise seemed
without much military value, or even a reduction of NATO's efficiency.

NATO expansion required the alliance to sponsor the democratization of
Central and East European armies and Westernize military norms and
production in the newly allied countries.All this put Washington into
competition with the European Union over the shape of a new European
geopolitical order. Washington wanted NATO to integrate all of Europe, and
even expand beyond Europe to some former Soviet states. The plan envisaged
the EU as a subordinate regional grouping of West European members of an
expanded, Washington-led NATO. 

This was displeasing to many West Europeans, who nonetheless offered no
coherent alternative while, as Mr. Smolar notes, offending many Central and
East Europeans whose brightest dream, a decade ago, was EU membership. 

Misfortune offers opportunities, in that Balkan responsibility requires
resolution of the conflict between ''deepening'' and ''widening'' the EU.
Possibly, new forms of membership can be created for countries that lack
the qualifications for full membership. 

Or the EU could finally make a choice between full political integration -
intellectually attractive but unlikely to be achieved, since a strong
minority of voters oppose it - and consolidation of a flexible and expanded
nonfederal Europe of autonomous nations. 

Europe's risk is to find itself politically outflanked by NATO in Central
and Eastern Europe, at a moment when the Kosovo war has revealed its
military dependence on the United States. Such a loss of independence may
be the price of indecision. 


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