June 25, 1999    
This Date's Issues: 3360 • 3361 •

Johnson's Russia List
#3361
25 June 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Financial Times letter: Carol Saivetz, Russian bear needs a hug.
2. Jamestown Foundation Monitor: POLITICAL OBSERVERS CONTINUE TO PUSH 
RUSSIA-BELARUS UNION SCENARIO. 
3. Reuters: Russian Duma Passes Tax Laws As IMF Mission Due.
4. Moscow Times: Sarah Karush, Crises Sap International Aid for Russia.
5. AP: Russian Lawmakers OK Troops.
6. Financial Times: John Thornhill, LUZHKOV: Squaring up for a fight.
7. Baltimore Sun: Russell Working, Russia resists recycling old ships.
8. Interfax Views Kremlin Reaction to Luzhkov, Primakov.
9. Moskovskiy Komsomolets: Aleksey Borisov, The Difficult August of 1999. 
Unfortunately, Stepashin Is Not a Roosevelt. And Not Even a Pinochet.
10. Itar-Tass: Berezovskiy: No Candidate to Support for President.
11. Washington Post: Robert G. Kaiser and David Hoffman, Russia Had Bigger 
Plan In Kosovo. U.S. Thwarted a Larger, Secret Troop Deployment.
12. Washington Post editorial: Exporting Democracy. (DJ: I'm interested
in views about US programs to "export democracy" to Russia, particularly
those funded by the US government. What laws in Russia govern these
activities? My personal bias is to doubt that Americans can be nonpartisan
and impartial in dispensing money and advise in Russia. Favoritism toward
those perceived as "friends" and "reformers" is likely. And the consequences
of systematic interference in Russian politics are unlikely to be 
constructive. But perhaps I am wrong. What does the record show?)] 

******

#1
Financial Times
June 25, 1999
Letter
DIPLOMACY: Russian bear needs a hug 
>From Ms Carol R. Saivetz. 

Sir, Quentin Peel ("The cold peace", June 17) is right to emphasise the
deep "gulf in understanding" between Moscow and the west that was revealed
by the crisis in Kosovo. He is wrong, however, to separate the impasse from
the issue of Nato expansion. Timing is everything. It is precisely because
Kosovo comes on the heels of Nato expansion and the devastating economic
collapse that such deep anti-westernism has emerged.

The general public believes that western advice has led to their
impoverishment and the prolonged elite debates about Nato expansion have
begun to resonate among the populace.

It should also be noted that the political elites, including Boris Yeltsin,
are already gearing up for the next parliamentary and presidential elections.

In that context, appealing to the hardliners by deploying troops at
Pristina airport makes perfect sense whether we like it or not.

The lesson to be learned from Kosovo is that a weak and marginalised Russia
is dangerous. It is willing and capable of becoming more than a nuisance.
The west should be working to engage Russia, not to isolate it.

Carol R. Saivetz, 
research associate, 
Davis Center for Russian Studies, 
Harvard University, 1
737 Cambridge St., 
Cambridge, MA 02138 
US

*******

#2
Jamestown Foundation Monitor
25 June 1999

POLITICAL OBSERVERS CONTINUE TO PUSH RUSSIA-BELARUS UNION SCENARIO. In a
recent interview, President Boris Yeltsin reiterated that his constitutional
term as president ends next summer and that he thus has no plans to run
again for the Russian presidency (Der Spiegel, June 20). Yeltsin's comments
in this regard may have been part of an attempt by the Kremlin to end, or at
least reduce, the frenzied Russian press speculation that Yeltsin will try
to engineer a third term in office. If so, they did not succeed,
particularly when it comes to one possible scenario which some observers
believe the Kremlin may use to try and extend Yeltsin's authority: a union
between Russia and neighboring Belarus and the ensuing creation of a new
union leadership post, which Yeltsin would assume. Two leading
analysts--Vyacheslav Nikonov, president of the Politika Foundation
think-tank, and Sergei Markov, director of the Institute for Political
Studies--yesterday told the Interfax news agency they believe this scenario
will indeed come to pass. Nikonov noted that Slobodan Milosevic did
something similar several years ago, when, having reached the end of his
constitutional term as Serbian president, he got himself elected president
of the rump Yugoslav Federation. Nikonov said that a Russian union with
Belarus could serve as a pretext for canceling both parliamentary and
presidential elections in Russia, but warned that it would be "dangerous" to
play "the Slobodan Milosevic variant." Nikonov, it should be noted, is an
ally of Moscow Mayor Yuri Luzhkov, one of the main contenders to succeed
Yeltsin, who is currently in a propaganda battle with the Kremlin.

For his part, Sergei Markov said that the "Milosevic variant" is "a very
attractive model for the Russian president [because] it possesses that
extremely vague legal gray area which Boris Yeltsin is so fond of." Markov
predicted that if Yeltsin becomes head of a Russia-Belarus union, the
Russian presidential elections may go ahead as planned, but key Russian
powers, including over the armed forces and the Central Bank, may be
transferred to the union government (Russian agencies, June 24).

Meanwhile, Russian Prime Minister Sergei Stepashin and Belarus President
Alyaksandr Lukashenka had a telephone conversation yesterday in which they
discussed expanding trade and economic ties, deepening political cooperation
and integrating the two countries. Lukashenka's press service reported that
First Deputy Prime Minister Nikolai Aksenenko will visit Minsk on June 26-27
(Russian agencies, June 24).

Yeltsin, in his interview with "Der Spiegel," said that the idea of a union
between Russia and Belarus is rooted in "the commonality of the historical
fate and friendship of the two peoples." Yeltsin said the people of Russia
and Belarus are close in "culture and spirit" and that the two countries
have "common strategic interests." He called the union idea a "voluntary
step of the states and peoples in one another's direction" (Der Spiegel,
June 20).

However, in an interview published today, Lukashenka complained that Yeltsin
had done nothing to forward the genuine integration of the two countries,
and charged that members of Yeltsin's inner circle were torpedoing efforts
to create a Russia-Belarus union (Tribuna, June 25). Lukashenka has made
similar charges in the past.

******

#3
Russian Duma Passes Tax Laws As IMF Mission Due
June 25, 1999
By Patrick Lannin

MOSCOW (Reuters) - Russia's Communist-dominated lower house of parliament
gave the final green light
Friday to several laws needed to win vital new loans from the International
Monetary Fund.

A top minister said talks with an IMF mission next week would be tough but
he expected new credits to be unlocked to help
the ex-Soviet nation beat the effects of last August's financial crisis and
cope with its $140 billion foreign debt.

``Of course it will not be very easy but I hope that our delegation will
manage (in the talks),'' Tax Minister Alexander Pochinok
said late Thursday in St Petersburg.

The IMF has said it is ready to lend Russia $4.5 billion over 18 months but
that Russia must take a number of steps to boost
revenues before approval can be granted.

``I am not sure that next week (credits will be approved) but I think it is
90 percent certain there will be a positive decision,''
Pochinok added.

The loan will be enough for Russia to repay what it owes the IMF and avoid
the humiliation of joining those countries, mainly
the world's poorest, that have defaulted to the Fund.

IMF approval for Russia's economic program is also key to easing the way in
talks with creditors in reducing foreign debt.

Pochinok said the passing of laws required by the IMF was a good basis for
the talks with the IMF team.

The State Duma lower house, traditionally hostile to the monetarist Fund,
gave the government a boost by passing third and
final readings of two laws requested by the IMF as a condition for fresh aid.

The laws are on restructuring the bank system, badly damaged by the August
crisis, and a new tax on luxury cars.

But the government's progress on meeting the loan conditions and passing
the IMF laws has been patchy, with some bills and
revenue-raising steps falling by the wayside.

Suggested new excise duties on alcohol were quietly dropped while the Duma
rejected a new tax on petrol stations, fearing it
would cause petrol prices to rise and a voter backlash in December
parliamentary elections.

Even the luxury car tax was watered down.

Despite these setbacks, the government has benefited from a delay in a
planned cut in value added tax to next year and has
been gradually increasing the amount of taxes collected.

It has also pleased the IMF by pledging to end some restrictions on trade
in the rouble, which were said to contravene IMF
currency conversion rules, and has put pressure on the country's gigantic
oil companies to pay all their taxes.

The IMF's main representative in Russia, Martin Gilman, has said the
mission would examine to what extent Russia had fulfilled
its promises on meeting the terms of the loan and whether the government's
economic plans were realistic.

Some commentators say a political decision has already been made in
Washington to lend to Russia, still a world nuclear
power. But the Fund, stung by criticism it should have foreseen and
prevented the August crisis, says Russia must prove itself. 

*****

#4
Moscow Times
June 25, 1999 
Crises Sap International Aid for Russia 
By Sarah Karush
Staff Writer 

The international response to wars and natural disasters elsewhere has
left Russia and its poverty problems out in the cold, the Red Cross said in
a report released Thursday. 

In its World Disasters Report, the organization said that donor countries
and organizations react more strongly to dramatic events than to a chronic
crisis like Russia's, caused largely by political decisions and compounded
by the bitter Russian winter. 

"Money available to countries like Russia has fallen off by about
one-third, and that's a trend that will continue," Daniel Prewitt, head of
the Moscow delegation of the International Federation of Red Cross and Red
Crescent Societies, said at the Moscow presentation of the report Thursday. 

Oleg Chestnov, director of the Russian Red Cross Society, said that while
$150 million in aid has been sent to war-ravaged Kosovo, Russia - where one
in three people lives below the poverty line - receives only $30 million
to $50 million a year. 

"That's the way the system and human psychology are made," Chestnov said. 

The Red Cross provided relief for 1.5 million people in Russia last year,
but it estimates that 44 million need assistance. 

The report, which devotes an entire chapter to Russia, criticized this
year's controversial U.S. and European Union food deals, worth some $950
million and 470 million euros ($485 million), respectively. The food aid is
to be sold at market prices - "no use to the poor who could barely afford
it in the first place, while threatening those farmers trying to sell their
own wheat on domestic markets," the report said. 

The report also called on the Russian government to fulfill its social
obligations. 

"The full implementation of social policy must be through state
institutions and public administration. Successful disaster mitigation and
relief for Russia will need to address the state's inability to play its
proper role in supporting the poorest," the report said. 

After the presentation Thursday, representatives of Johnson & Johnson
Russia ceremonially handed over to Red Cross officials part of $1 million
worth of hygiene products that the company is donating. 

The aid will most likely be sent to Sakha, Chukotka, Buryatia, Magadan and
Kamchatka - remote areas where the Red Cross has concentrated its efforts
in Russia. 

*******

#5
Russian Lawmakers OK Troops 
By Barry Renfrew
June 25, 1999

MOSCOW (AP) -- The deployment of 3,600 Russian peacekeeping troops in
Kosovo was approved today by lawmakers, despite fears the soldiers may be
threatened by the province's ethnic Albanian population. 

The Federation Council, the upper chamber of parliament, gave approval for
the move after closed-door hearings. The vote clears the way for the rapid
dispatch of several battalions of Russian paratroopers. 

Oleg Korolyov, the chamber's deputy speaker, said the deployment was needed
to help preserve Yugoslavia's territorial integrity and to ensure stability
in that part of Europe. Russia opposes any move for independence for Kosovo. 

Some council members opposed the plan, saying the troops could be
threatened by the Kosovo Albanians. Russia is an ally of Yugoslavia and
expressed strong support for Belgrade during the conflict with NATO. 

The Kosovo Liberation Army has said Russians would be unwelcome because
Russian mercenaries allegedly took part in wartime Serb atrocities. 

A Defense Ministry spokesman said the government had no information about
any Russian volunteers having fought in Kosovo. 

Other lawmakers complained that Russia did not have a commanding position
in the peacekeeping force and would be junior to NATO commanders. Mintimer
Shaimiyev, president of the Tatarstan Republic, said the Russians would be
``incapable of radically influencing the situation.'' 

There was also concern about who would pay for the deployment, estimated to
cost $60 million a year. The Russian government is desperately short of
money and already unable to fund much of the defense budget. 

Senior defense officials had said the deployment could begin within hours
of approval, but other commanders said today it would be a week before the
first troops arrived. 

The force is to join 200 paratroopers who dashed into Kosovo 12 days ago
from their camp in Bosnia, where they were serving as peacekeepers. 

The Russians entered Kosovo before any NATO troops and quickly seized the
province's airport. Russian and U.S. representatives subsequently reached a
compromise on the peacekeepers' deployment. 

Russia dropped its initial demand for a separate sector in Kosovo, agreeing
to place its forces in the U.S., British, French and German sectors.
However, it insisted that its soldiers remain under Russian command. 

Also today, the Russian airline Aeroflot said it had resumed regular
passenger flights to Belgrade. 

Aeroflot will provide four flights a week to the Yugoslav capital, the
ITAR-Tass news agency reported. The service was suspended March 26 after
the start of NATO air attacks on Yugoslavia. 

Plans to resume the passenger service earlier were stalled after Hungary
delayed permission for Aeroflot flights to cross its territory en route to
Yugoslavia, according to Russian officials. 

******

#6
Financial Times
25 June 1999
[for personal use only]
LUZHKOV: Squaring up for a fight 
Moscow's popular mayor wants to be Russia's next president. But he has
fallen out with Boris Yeltsin. John Thornhill assesses Yuri Luzhkov's chances

One of the few infallible rules of Russian politics this century has been
that the bald succeed the hairy. Russia's follically-challenged leaders -
Lenin, Khrushchev, Andropov and Gorbachev - have alternated power with the
more hirsute Tsar Nicholas II, Stalin, Brezhnev and Chernenko.

This electoral pattern should favour Yuri Luzhkov, Moscow's populist mayor,
who has set his sights on succeeding the silver-maned President Boris
Yeltsin. Though covered for much of the time by his trademark leather cap,
Mr Luzhkov's head is as bare as most Muscovites' car tyres.

"As a potential presidential candidate, Luzhkov beats everybody," says Igor
Bunin, director of the Centre for Political Technologies, a think-tank. "If
there were elections tomorrow, Luzhkov would win."

There are two problems with this simple forecast. First, the elections are
not due tomorrow but in June 2000. And second, Mr Yeltsin and his entourage
do not want this particular bald man to win. As Moscow's mayor admits, he
has become the Kremlin's "enemy number one".

The first shots have been fired in what is likely to be a long and dirty
conflict. The anti-Luzhkov media have been stepping up their criticism of
how Moscow is run. Sergei Kiriyenko, the boyish former prime minister who
held office for five months last year, has joined the fray. Mr Kiriyenko
has declared he might stand for mayor if the elections are brought forward
from June 2000 to December 1999 as Mr Luzhkov wants - presumably to give
him time to stand for re-election and plan his presidential campaign. In
the meantime, Mr Kiriyenko is being given plenty of television time to
attack the incumbent.

Kremlin watchers predict there will soon be attempts to shut off some of
the money flowing to Moscow from the federal budget and investigations will
be launched against the mayor's business allies. "The theory is that if you
drop a little poison in the pond then all the minnows will swim to the
other side," says one seasoned observer.

It is not immediately obvious why the dynamic Mr Luzhkov should be the
target of such venom. In many respects, he embodies some of the finer
achievements of Mr Yeltsin's regime: he has been particularly voluble in
support of constitutional order, religious freedom and foreign investment,
and has emerged as one of Russia's most respected regional leaders, winning
more than 90 per cent of the vote in 1996.

Moreover, on at least two occasions, Mr Luzhkov has intervened decisively
to prop up Mr Yeltsin's tottering regime. In October 1993, Mr Luzhkov's
assistance was vital in suppressing the unruly Supreme Soviet. In June
1996, the Moscow mayor helped deliver a massive vote in the capital for Mr
Yeltsin's re-election.

To be sure, Mr Luzhkov's calls for the return of Crimea to Russia have
alarmed neighbouring Ukraine, while his rough-handed treatment of minority
groups in Moscow has drawn the fire of human rights groups. The Kremlin's
allegation that the Moscow administration is linked to some shadowy
business groups also appears to have some foundation.

But none of these concerns has troubled the administration in the past.
Besides, the Kremlin, which has itself been the subject of investigations
by the prosecutor general, is hardly in a position to impugn the integrity
of others.

Rather, the conflict appears to boil down to matters of personality.

Mr Bunin suggests Mr Luzhkov has fallen out with Mr Yeltsin over three
issues. First, Mr Luzhkov helped to frustrate the president's plans to
reappoint Victor Chernomyrdin as prime minister last September. Second, the
Moscow mayor has given his strong support to Yuri Skuratov, the prosecutor
general, who is investigating allegations of corruption in the Kremlin.
Third, MPs loyal to Mr Luzhkov voted for Mr Yeltsin's impeachment last month.

"Like Peter, Luzhkov has betrayed his master three times. Yeltsin knows
that he has been disloyal. He will not forgive," says Mr Bunin.

But Mr Luzhkov is also a worrying presidential candidate for the oligarchic
clans that control many big companies and media outlets in Russia and
helped finance Mr Yeltsin's re-election. In particular, Boris Berezovsky, a
modern-day Rasputin - labelled an "evil genius" by George Soros - has been
conducting an open feud with Mr Luzhkov for years.

In the oligarchs' view, Mr Yeltsin has been a "democratic" president
because he has allowed several clans, including Mr Luzhkov's, to coexist.
They fear Mr Luzhkov could squeeze them all out if he became president,
dispersing their property and perhaps pursuing prosecutions against Mr
Yeltsin's closest relatives and supporters.

"If you look at Luzhkov as the symbol of a system that has been built in
Moscow then what matters is not whether it is good or bad but whether there
is a place in it for any other clan. The prospect of this system spreading
to all of Russia is frightening for all other players," says one observer.

More worthy concerns are aired by Yegor Gaidar, the former prime minister
who has been one of Mr Luzhkov's fiercest critics. He says Moscow's mayor
would introduce "nomenklatura capitalism" if he became president,
distorting the development of a free market economy. "It is evident that
Russia would be a country with different rules of the game for different
players," Mr Gaidar says.

But Mr Luzhkov's supporters say Russia's economic liberals, including Mr
Gaidar, have brought the country to the brink of disaster and only he can
prevent a disintegration into chaos.

Andrei Kokoshin, a former deputy minister who sits on the board of Mr
Luzhkov's Fatherland party, says his leader believes it essential to
rebuild the authority of the state. But he denies this means a return to
Communism or a worsening of crony capitalism. Mr Luzhkov believes in the
values of "a modern economy, political democracy and traditional
patriotism", he says.

Mr Luzhkov, who has not formally declared his bid for the presidency, has
proved to be a formidable political bruiser and he might well deflect the
blows aimed at him. He may even calculate that the fiercer the assault the
more his appeal will grow as an anti-establishment candidate. The oligarchs
may believe themselves powerful enough to pick - or block - Mr Yeltsin's
successor but there is still the small matter of Russia's 100m-strong
electorate.

******

#7
Baltimore Sun
25 June 1999
[for personal use only]
Russia resists recycling old ships
Scrap: Hulks float or sink in bays along the Sea of Japan because of
bureaucratic lethargy and corruption.
By Russell Working
Special To The Sun

VLADIVOSTOK, Russia -- At the end of a bay filled with the sunken hulks of
the once mighty Soviet navy, a former military vessel called the Pallada is
moored at a private dockyard, waiting to be cut down to scrap.
It might be a long wait.<p> Business at the Svatko Ltd. scrap yard
should be booming. The bays around Vladivostok, once a closed naval-base
city of 700,000 on the Sea of Japan, are filled with rusting battleships,
submarines and troop transports -- at least 101 large- and small-tonnage
vessels, many sunken.
Foreign firms are eager to buy the ships for scrap metal. But Svatko has
not scrapped a ship for months. The regional government refuses to renew
its license.
Combined with 43 corroding nuclear submarines in nearby Bolshoi Kamen
and dozens more vessels around the Russian Far East, the rusting hulks pose
an enormous environmental hazard.<p> Private companies are trying to clean
up the derelict ships and make a buck in the process, but they say Russia's
bureaucracy, corruption and insider politics are driving them out of business.
"I have all the necessary technologies for underwater work, but I can't
do it," says Yevgeny Biryukov, president of Epron Co., a firm that salvages
ships. "Bureaucrats at all levels ignore the [environmental] problem.
"And it is the same all over the Far East. In Kamchatka, one of their
submarines sank. They raised it, but it sank again."
Contemporary Russia is in economic paralysis, but the problem predates
the current troubles. For decades, the Soviet Union mothballed old ships
simply by abandoning them in local bays. But as the ships grow older, the
ecological costs of using the sea as a junkyard become increasingly evident.
"Sea water is very aggressive," says Boris Preobrazhensky, chief of the
Laboratory for Undersea Studies with the Pacific Institute of Geography in
Vladivostok. "When a ship sinks, the water quickly destroys it, forming
heavy metal salts. This forms compounds with organic substances and spreads
all over the sea."
There are other dangers. Of the 43 nuclear subs moored 12 miles from
Vladivostok across Lazurnaya Bay, Biryukov says, "If any of them sinks, it
would be such a disaster that nobody will ever come to help raise it from
the sea floor."
At least a start has been made on the Bolshoi Kamen subs.
U.S. firms, with funding from Japan, are assembling a floating facility
to recycle nuclear waste from them, although that effort has run into
delays. But other scrap ships lack high priority for cleanup and are
probably destined to sit on the bottom unless a private business can be
persuaded to help.
Salvage can bring in $70 a metric ton, down from $140 in 1996 but still
more than an average monthly salary in Vladivostok. And that is "hard"
foreign currency, not unstable rubles -- international trade with Russia is
often done in U.S. dollars.
That kind of money can tempt officials to get in on the deals, and
everyone from fire inspectors to health officials has been demanding
extravagant inspection fees, according to Anatoly Kovalyov, head of Svatko,
which employs 107 people.
Scrap-metal dealers have been the targets of more ominous pressures
because, they say, the regional government has been hinting that it is
interested in reasserting state control of scrap-metal exports.
One dealer says that a ranking official showed up drunk with a carload
of cronies and began shooting at buoys out in the bay. The director of the
firm happened to be a former member of an elite police force, and he phoned
some of his former colleagues, who came and shooed off the drunks.
Until 1996, the Russian navy owned its abandoned and sunken ships. Thus
salvage businesses could cut a deal with the navy to buy hulks and sell
them to South Korean scrap-metal dealers.
But when the State Property Committee assumed control, the ships became
tangled in a growing web of bureaucracy and corruption, Kovalyov says. He
must fly to Moscow to get permission to clean the bay, and he is often met
with open demands for bribes.
Recently the government denied Kovalyov's application for a new license,
although he had already invested hundreds of thousands of dollars into
Svatko.<p> The federal government blames Svatko for its own problems.
Nadezhda Kolosyuk, head of the licensing department for the Federal
Committee to Protect the Environment, says Kovalyov didn't submit the
necessary papers and has been guilty of bad ecological practices.
"He made a lot of infringements of environmental laws," she says. "He
didn't clean up his company's property, and he burned oil inside an
abandoned ship."
The problems in cleaning up sunken ships don't lie only with Russian
companies and bureaucrats. Foreign firms hired to clean up the bays have
also proved to be less than reliable, says Altair Tyumenev, director of
Transfes-Eco.
Tyumenev is one of a handful of classmates from the Far Eastern Marine
Academy who decided, upon graduation, that they really weren't interested
in going to sea. Instead they formed a business to clean the bays.
The effort may sound hopelessly optimistic here. The city pumps its raw
sewage into the sea; it deals with garbage by dumping it off a seaside
cliff; and it has done nothing about the contaminated soil around an old
Stalin-era oil reservoir that leaked tons of petrochemicals over the years.
Who would expect to make money on maritime cleanup in Vladivostok?
But Transfes-Eco found its niche removing garbage from visiting
freighters and contracting to encircle offloading fuel ships with a boom
that contains oil spills.
The firm provided its boom services to a South Korean scrap-metal
company in Trud Bay on Vladivostok's Russky Island. But the company cut off
the tops of ships at water level, leaving the vessels even more dangerous
to navigation because they are hard to see from the bridge of a moving
ship. The Korean company also failed to pay Transfes-Eco for its work,
Tyumenev says.
The ecological hazards are exacerbated by vagrants who steal nonferrous
metal from the ships.
During the four months of the year when the sea is frozen, they can walk
out to a ship, break in and steal whatever they can carry. In spring and
summer, vagrants steal boats along the shore, row out to the ships and even
build fires on decks. They often know just what they are looking for.
"They are ready to sink a ship for a bottle of vodka," Biryukov says.
"They sneak out on a boat and steal a metal valve, and the boat will sink.
"I saw myself how a tugboat sank within 40 minutes after one guy
unscrewed a valve to get [10 pounds] of metal."

******

#8
Interfax Views Kremlin Reaction to Luzhkov, Primakov 
By Nataliya Timakova, Interfax political observer 

MOSCOW, June 22 (Interfax) - The tug-of-war over 
the recent weeks between the Moscow mayor and the Kremlin has been 
attributed to the resistance of the president's entourage to Yuri 
Luzhkov's bid for power in the 2000 presidential elections. Because 
Luzhkov is a likely winner, the exchanges of respect are becoming 
increasingly muddled. The situation can, however, change radically once 
former Russian Prime Minister Yevgeny Primakov re-emerges on the 
political scene. With Luzhkov's support, he may become the favorite in 
the presidential race. Despite his retirement, the Kremlin's bureaucrats 
have not doubted that Primakov will stage a comeback. His month-long 
silence did not lull their vigilance. The president's entourage 
interpreted Primakov's cautious statement about the possibility of his 
return to political life as an unambiguous declaration of his 
presidential ambitions. Observers are speaking at the moment only of 
Primakov running for the State Duma. There are numerous signs of this. 
Luzhkov in his capacity of the leader of the Fatherland movement has been 
saying repeatedly that he would be happy to see Primakov joining it. At 
their meeting after Primakov's resignation, Luzhkov offered him 
Fatherland's support. In a telephone conversation last week, Luzhkov told 
Primakov again that "the door is forever open for his joint participation 
with Fatherland in elections." If he joins Fatherland, Primakov is 
certain to become the State Duma chairman and provide powerful backing to 
Luzhkov's presidential campaign, most analysts say. What they ignore are 
Luzhkov's own remarks that he will not run for president if there is a 
worthy contender. He told the faculty and students of the Academy of the 
Federal Border Service last Friday that he would support "normal people 
running for the presidency" and would join the race unwillingly if 
"dangerous figures appear who act outside the law and seek bloodshed." 

Political figures and the man on the street tend to view such remarks as 
a political stunt, but those who know Luzhkov well say that he is 
absolutely sincere when he says that he would not trade his current 
office for the presidency. "Luzhkov enjoys absolute power and support of 
the population in the capital city and knows full well that he can lose 
both if he becomes president," one of his close associates has told 
Interfax. As an ambitious political figure, he would like to have a go at 
running for the presidency. On the other hand, Luzhkov is unwilling to 
lose, which may easily happen in 2000. Furthermore, he may try his luck 
in the 2004 elections. Against this background, his remark that "it would 
be better to see a worthy man running for the presidency" may be 
absolutely sincere. Primakov is the kind of man who would suit quite a 
lot of people. In nine months in office, he became, justly or otherwise, 
a symbol of stability, and enjoys unprecedented popular support. Today's 
Kremlin is not likely to resist a tandem of President Luzhkov and Prime 
Minister Primakov. 

******

#9
Russia Seen Facing Economic Crunch 

Moskovskiy Komsomolets
19 June 1999
[translation for personal use only]
Article by Aleksey Borisov: "The Difficult August of 1999. 
Unfortunately, Stepashin Is Not a Roosevelt. And Not Even a Pinochet" 

Sergey Vadimovich Stepashin has been very fond 
recently of saying that Russia's situation is critical now and that if 
Duma deputies fail to adopt the 30 "IMF laws," then toward the fall there 
will be...well, if not the end of the world, at least the end of the 
country. The country will lose its economic security. 

Meanwhile, because of NATO's war in the Balkans, many Russians believe today 
that Russia's only enemy is the West. And that the nefarious West does 
all it can to create trouble for us. Whether or not this is true is open 
to question. The important thing is that the debt lasso, the dependence 
on foreign countries for food supplies, and the authorities' 
unwillingness to do anything in the real economy are capable of dragging 
Russia to the bottom even without the "Kosovo millstone." In the very 
near future.... 

For starters, a bit of history. We started to borrow money in large 
amounts in 1962. But the Soviet debts were not only "systemic" debts 
taken out directly by the USSR Council of Ministers and Finance Ministry 
for wheat purchases, the Urengoy gas pipeline, and projects such as the 
Volga Automobile Plant and the Kama Truck Plant. Money was also borrowed 
from the West by ministries and their subordinate enterprises (with 
guarantees from the same departments). There were also trade credits for 
union and republic trade organizations -- they had to have at least 
something with which to fill the shelves in empty stores. Thus we 
currently owe about $38.7 billion to the Paris Club alone (nonstate 
credits). And the total USSR debt, which was successfully shifted onto 
Russia, is more than $100 billion. 

Post-Soviet officials have brilliantly continued the old traditions.
According 
to the latest Finance Ministry data, the "new Russia" now independently 
owes -- to the IMF, the World Bank, and the European Bank for 
Reconstruction and Development -- 120 percent of its GDP. At the current 
Central Bank exchange rate, this is $197.5 billion! The explanation for 
this whole orgy of debt is very simple: The helm and sails have been in 
the hands of the same old communist officials who are not accustomed to 
doing anything but are in the habit of saying "gimme" -- they don't care 
whether it is to their own people or Western leaders. The so-called 
"short" GKO-OFZ [short-term state bonds-federal loan bonds], on which we 
now owe $30 billion to foreign speculators, belong to the same series. 

This year alone Russia must pay its creditors $17.5 billion, and $32 
billion in each of the two following years. There are no resources to 
make such payments: The positive foreign trade balance is melting away 
like a snowball in June, and citizens, though they have increased their 
bank deposits recently, have done so by very little -- people simply do 
not trust these institutions after Kiriyenko's rule. 

Russia's credit rating has dropped so low that the now-habitual operation of 
"taking out a new debt to repay an old one" is very problematic. The 
cancellation of 75 percent of Soviet debts, which Primakov and now 
Stepashin fought for so hard, is unlikely -- for the same reasons. The 
world does not usually forgive those who first amass debts and then not 
only refused to repay them but even ask for more loans.... 

When specialists have been talking about Russia's financial condition 
recently, they for some reason forget to mention its domestic debt. 
Namely, what the state owes its own citizens. Yet this is a colossal 
figure. 

To be fair, we should say that Yevgeniy Primakov did his best to reduce 
it: Whereas before the new year the authorities owed the Russian people 
almost 90 billion rubles [R] (in the form of wages), they owed them R67.7 
billion in April. Under Primakov the White House also "cleared" R8 
billion owed to the military-industrial complex in respect of the state 
order. But, despite all these achievements, the debt is still very high, 
and the authorities owe pensioners a monthly norm -- R18 billion. 

God alone knows where the state treasury is going to get almost R86 
billion. Particularly as the government is preparing a decision to 
considerably increase the minimum wage in July -- to R200. To remind you, 
it is R83.49 today. How much money will have to be printed then -- 
hundreds of billions? When each billion translates into 1.5 percent 
inflation.... 

Will we be able to pay $17.5 billion from our own reserves? No, because 
the Central Bank's reserves contain only a little more than $12 billion 
in so-called "gold and hard currency." And currency makes up less than 
half this sum. And we cannot sell gold (like other valuables from the 
State Depository of Valuables) in massive quantities -- the world market 
reaction would immediately be a decline in prices of precious metals. 

So what is it going to be, default? An official refusal by the state to 
meet its obligations? This is exactly what we "need" for total happiness 
and what the West dreads. 

It dreads it because the lack of money in the treasury will cause a) a 
dramatic decline in food imports and, consequently, empty stores and 
shortages of goods, and b) social explosions in most regions of the 
country. The Kremlin, which the West finds unpredictable, may pull off 
any stunt in this case -- even including a nuclear salvo. This is why 
[IMF Managing Director] Camdessus is now trying to persuade our leaders 
to at least observe the proprieties before receiving money from the IMF. 

Of course, we could tell all the creditors to go to hell, isolate 
ourselves from world politics, and busy ourselves with our own economy. 
The point is, however, that we now have no people in our country capable 
of really reviving production at the state level, rather than the level 
of hamlets. Just as we do not have money for this revival. 

Meanwhile, the 1999 crisis may well outstrip the 1998 crisis in terms of its 
consequences. Particularly as it will come on top of the elections -- 
first the Duma elections, then the presidential elections. Can you 
imagine who the crazed population will finally elect?... 

******

#10
Berezovskiy: No Candidate to Support for President 

MOSCOW, June 22 (Itar-Tass) - Russian mogul Boris 
Berezovsky said on Tuesday he saw no potential candidate for Russian 
president whom he could support. 

Although, he said he was sure many new people would surface in the
forthcoming 
elections to the State Duma lower parliament house. 

"I do not know a man whom I saw as Russian president, but we shall see 
many new people, among whom there might be such a person," Berezovsky 
told the Congress of Russian-language media. 

He said he was sure in the forthcoming Duma elections, leftist forces 
would not be able to retain the positions they reached in 1995 since the 
regional elites had realized their responsibility and would not support 
these forces. 

According to Berezovsky, liberal democratic forces should set a definite goal 
in the parliamentary elections, i.e. to make parliament a constructive 
opposition distinguishing it from the "non-constructive Duma" of the 
present day. 

He also stressed that the West now has a distorted picture of Russia 
and it was up to the Russian-language press to help the West adequately 
interpret the processes that are under way in the country and comprehend 
those people who are trying to improve the situation.

******

#11
Washington Post
25 June 1999
[for personal use only]
Russia Had Bigger Plan In Kosovo
U.S. Thwarted a Larger, Secret Troop Deployment
By Robert G. Kaiser and David Hoffman

Russia's surprise deployment of 200 troops to the Pristina airport on June
12 was part of a scheme to send into Kosovo a contingent of 1,000 or more
men who could have tried to stake out a Russian zone in the northwest
sector of the province, Western intelligence analysts have concluded. 

The carefully planned operation was thwarted when the governments of
Hungary, Bulgaria and Romania, prodded by the United States, denied Russian
requests to use their airspace to fly more Russians into Kosovo. 

When senior U.S. officials realized what the Russians had in mind, they
lobbied the Eastern Europeans on overflight rights and began pursuing their
Russian counterparts by telephone "at ungodly hours" on Sunday, June 13,
according to one official. The Americans warned the Russians that their
unilateral military moves risked obliterating the good will generated by
their help in reaching a peace agreement. 

Western analysts still dispute whether Moscow's intention was to seize a
Russian zone in Kosovo or simply to send in more troops to strengthen
Russia's hand in negotiating peacekeeping arrangements. Either way, the
unilateral deployment of a large contingent would have caused "grievous
harm to support for Russia" in Washington, said one senior State Department
official. 

The Russians nearly succeeded in adding to their forces on the ground,
briefly winning permission from Hungary for six IL-76 military transport
planes to fly over that country on June 11, before it was clear that the
Russians were sending 200 men from their Bosnian peacekeeping force to the
airport in Pristina, Kosovo's capital. But before those Ilyushins could get
into the air, the United States asked Hungary to deny the Russians use of
its airspace, and the Hungarians agreed, telling the Russians that only an
act of the Hungarian parliament could grant overflight rights. 

A reconstruction of the events surrounding the Russians' unexpected
deployment into Kosovo, based on reporting in Washington, Moscow and
Brussels, indicates that the Russian operation was thoroughly planned,
deliberately deceptive and considerably more ambitious than its
accomplishments would suggest. Many questions remain about who in Moscow
was in charge of the decision-making that led to the operation. 

When the NATO allies realized, late on June 11, that the Russians were
moving men toward Pristina, Gen. Wesley K. Clark, the NATO commander,
speedily devised a plan to deploy NATO troops by helicopter to the Pristina
airport, creating the possibility for the first NATO-Russia confrontation
since the end of the Cold War. But British Gen. Michael Jackson, head of
the peacekeeping force, argued that such a move would upset the delicate
arrangements he had negotiated with Yugoslav officers on their withdrawal
from Kosovo, and Clark's plan was dropped. 

In Moscow, Russian generals were openly frustrated at their inability to
complete the deployment. 

"When the Russian military saw how popular their first little glorious
victory was," said one senior U.S. official, referring to the arrival of
the 200 troops at Pristina's airport, "the effort to score again [with
additional deployments to Kosovo] became more intense, and more important
from their point of view. If they'd been able to keep on going, you could
have had a very serious breakdown in confidence, and maybe in our ability
to organize a peacekeeping effort in Kosovo." 

Western officials are still debating the Russian moves, wondering both why
the Russian military took the risks it did and what role President Boris
Yeltsin played in the decisions. 

Senior intelligence analysts in Washington have concluded that there was a
strong consensus among Russian officials in Moscow, including Yeltsin, that
Russian troops had to play a role in Kosovo after Yugoslav President
Slobodan Milosevic accepted peace terms. One official said Yeltsin agreed
in general terms that Russian troops would have to be deployed in Kosovo at
least as soon as NATO forces were. "Whether he [explicitly] approved the
idea of going in first, we aren't sure," this official said. 

In Moscow, Russian sources said Yeltsin did approve the deployment in
advance, during a telephone conversation with Gen. Anatoly Kvashnin, chief
of the Russian general staff. 

Russian military officials have boasted that the deception involved in the
Pristina airport operation was deliberate. "The operation was very
carefully prepared," Gen. Georgi Shpak, commander of Russia's paratroopers,
told a Russian newspaper. "The main difficulty was to hide the fact that
the operation was being prepared." 

One question is the degree to which Yeltsin, frail and ill, participates in
detailed discussions of complex issues. Western intelligence analysts and
many Russian sources say his involvement is minimal. 

In late April, Yeltsin complained in a closed meeting of his national
security advisers about Russia's inability to influence the Yugoslav war.
"Why are they not afraid of us?" he lamented, according to a source in
Moscow. His generals had no answer. 

Western nations were alarmed when the Russians moved into the Pristina
airport, though not afraid of the small force of 200. Within two weeks the
British were providing food and water for the isolated contingent. 

But Clark took the Russian deployment seriously, which led to his plan to
dispatch U.S. troops by helicopter to the airport. Defense Secretary
William S. Cohen and Gen. Henry H. Shelton, chairman of the Joint Chiefs of
Staff, supported Clark's plan. But Jackson and the British government
demurred, and Russian Foreign Minister Igor Ivanov assured U.S. officials
that the Russian force moving toward Kosovo would stop before it crossed
into the province. 

The Russians' premature arrival in Pristina despite Ivanov's assurance
complicated the diplomatic exchanges over the peacekeeping arrangements.
The Russians insisted that they be given a separate sector within Kosovo,
contributing to the conclusion of some Western intelligence analysts that
they had intended to establish such a sector unilaterally. Other Western
officials argued that the Russian goal was to create a presence on the
ground as a bargaining chip. 

The negotiations sharpened U.S. officials' questions about who was in
charge in Moscow. At the meetings in Helsinki to decide on Russia's role in
the Kosovo peacekeeping operation, U.S. officials perceived open
disagreements between Russia's civilian and military officials. They also
saw manifestations of the splits within the Russian military. Marshal Igor
Sergeyev, the defense minister, is regarded skeptically by many of his
colleagues, according to Russian sources. Several sources said Sergeyev may
not have been told by Kvashnin, his chief of staff, about the surprise move
to Pristina's airport. 

An especially problematic figure for the Americans was Gen. Leonid Ivashov,
a former Communist Party commissar in the old Soviet Army who runs the
Russian Defense Ministry's international cooperation department. Ivashov is
a long-time hard-liner who has admitted that he agitated in favor of a
military coup against Mikhail Gorbachev in 1990 and who is clearly
skeptical of any Russian cooperation with NATO. 

In the Helsinki negotiations, U.S. officials said, little progress was made
until Cohen drew his Russian counterpart, Sergeyev, into private meetings
from which Ivashov was excluded. Even then, disagreement persisted on
whether Russia would have its own sector in Kosovo. 

Yeltsin announced last Friday that he had firmly instructed Sergeyev to win
approval for a separate Russian zone, saying he "categorically does not
agree" with the idea of Russian troops patrolling sectors controlled by
other countries. But several hours later, for reasons still not clear to
the non-Russian participants, the Russians agreed to a plan that dispersed
their troops through the British, French, German and American sectors, with
no zone of their own. 

At the end of the long negotiations, Sergeyev and Ivanov said they had to
make one last phone call to Yeltsin for his approval of the final deal.
They adjourned to the Russian Embassy in Helsinki, then came back to accept
the arrangements. Had they spoken personally with Yeltsin? "They said it
was Yeltsin," according to one U.S. negotiator. 

Correspondent William Drozdiak in Brussels and staff writers Bradley Graham
and John F. Harris in Washington contributed to this report. Hoffman
reported from Moscow. 

******

#12
Washington Post
25 June 1999
Editorial
Exporting Democracy

THE NATIONAL Endowment for Democracy is one of the less known but, in the
foreign policy universe, one of the more appreciated aspects of the Ronald
Reagan legacy. Congressionally funded but largely independent in its
operations, it mainly gives grants to the two political parties and leading
business and labor groups to spread the word of civil societies, party
development and election procedures, and democratic and human rights
advocacy. Recognized abroad, it is scrutinized closely at home, which is
fine but a bit unnerving to its supporters all the same.

This week, for instance, Sen. Russell Feingold (D-Wis.), in an
authorization bill, sought to strip the endowment of its favor for and
reliance on the four "core" groups and to put the whole of the
institution's $30 million budget up for competitive political bidding. It
sounded like a reasonable, even democratic proposal, but three-quarters of
the Senate wisely accepted the response that the endowment, with its
support for the two parties and the AFL-CIO and Chamber of Commerce,
already builds in a wholesome set of checks and balances true to the spirit
of American democracy.

A lingering difficulty arises from Sen. Judd Gregg (R-N.H.). Making use of
the deference enjoyed by Appropriations subcommittee chairmen, he has held
up all funds sought for the endowment. He would prefer that the
administration take the money out of the State Department, which, he points
out, funds democracy promotion under its own budget.

Mr. Gregg is right that the Cold War is over. But considerations of
strategy as well as sentiment require that the effort to sustain fledgling
democratic societies and initiatives ought to be a permanent part of
American policy. To tuck the endowment into the State Department, moreover,
would deprive it of precisely the independence wherein its chief value
lies. Can you imagine, for instance, the "engagement"-minded State
Department sponsoring Chinese nongovernmental organizations?

In sum, the endowment is an experiment in exporting democracy that has been
working, openly, for 15 years. It has been tested in heavy political
weather, some of it churned up by its own early miscues. There is reason to
believe the Senate would support the appropriation if Sen. Gregg were to
let it register its judgment. That would be the democratic thing for him to
do. 

******