August 13, 1999    
This Date's Issues: 3437 • 3438 •

Johnson's Russia List
#3437
13 August 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Itar-Tass: Lukashenko: IT'S Not Very Easy to Be RUSSIA'S Ally.
2. Financial Times: John Thornhill, Primakov set to challenge Kremlin.
3. Nezavisimaya Gazeta: Will Primakov Join Luzhkov?
4. Segodnya: The Kremlin Is Hoping For A State of Emergency.
5. The Times (UK): Alice Lagnado, Alcoholism spreads.
6. The Guardian (UK): Jonathan Steele, Keeping it in the family.
In today's Russia, politicians and businessmen are carving up power 
between them - and that's how to see Yeltsin's latest manoeuvres.
7. Philadelphia Inquirer: Dave Montgomery, Former KGB operatives clinging 
to the old ways.
8. The Globe and Mail (Canada) editorial: The Soviets in Russia.
9. Moscow Times: Brian Whitmore, Loyal Putin Couldn't Save His Last Boss.
10. Reuters: Caucasus battle gives Russia deja vu feel.
11. Reuters: Chronology of Russian involvement in N.Caucasus.
12. The Economist editorial: Russian roulette. But when Boris Yeltsin 
pulls the trigger, it’s always his prime minister who dies.
13. RFE/RL: Floriana Fossato, Fears Wane, Shadow Lingers Of August 1998 
Economic Meltdown.
14. Reuters: U.S., Russia urged to lower missile alert for Y2K.]

******

#1
Lukashenko: IT'S Not Very Easy to Be RUSSIA'S Ally.

GOMEL, August 12 (Itar-Tass) - Byelorussian President Alexander Lukashenko 
lamented on Thursday that "it is not very easy to be Russia's ally." 

"Not because body motions -- incomprehensible for me, the union leader 
(Lukashenko is chairman of the Supreme Council of the Byelorussian-Russian 
Union) -- are occurring there, but because other decisions which require 
counselling and joint coordination of our policies are sometimes made without 
thinking," Lukashenko told reporters in the course of his visit to the 
Gomselmash production association. 

Lukashenko does not wish so far to come up to the Russian leadership with any 
initiatives. He noted that a meeting of the Customs Union is to take place in 
Byelorussia in September. 

"In order not to lose the last which has remained after the breakup of the 
USSR, this meeting should be held by all means," the president said. 

*******

#2
Financial Times
13 August 1999
[for personal use only]
Primakov set to challenge Kremlin 
By John Thornhill in Moscow

A big challenge to the Kremlin is set to be mounted by Russia's popular 
former prime minister, Yevgeny Primakov, who looks likely to lead a powerful 
left-leaning political movement - Our Fatherland is All Russia -for the 
parliamentary elections.

The move could transform Mr Primakov into the leading presidential contender 
and pitch him into a fierce head-to-head battle with Vladimir Putin, the 
newly appointed prime minister and President Boris Yeltsin's preferred 
successor.

The Our Fatherland is All Russia bloc, which was founded by several powerful 
regional governors this month and quickly labelled the "new party of power", 
invited Mr Primakov to lead the movement on Wednesday.

Party officials said they had been led to believe Mr Primakov would accept 
the offer but would not reply until early next week.

The stolid 69-year-old former spymaster is viewed as the most popular 
politician in Russia in spite of his dour public image and seemingly meagre 
achievements during nine months as prime minister.

An opinion poll conducted by the VTsIOM polling agency in late July showed 
that the Fatherland movement would win 28 per cent of the vote if it was 
headed by Mr Primakov, but only 16 per cent if he refused to join. The poll 
was conducted before Fatherland merged with the All Russia movement.

But there appear to be latent tensions within the Our Fatherland is All 
Russia bloc which political opponents - and the Kremlin - might seek to 
exploit. The highly ambitious Yuri Luzhkov, the mayor of Moscow and founder 
of the Fatherland movement, may find it difficult to work under Mr Primakov.

Some governors may also clash with the former premier, given his view that 
Russia's regional leaders should be appointed rather than elected.

Mr Primakov's supporters, though, suggest Mr Luzhkov may settle for the post 
of prime minister, especially if the constitution is revised to transfer more 
power from the presidency to the government.

"If Luzhkov is the number one presidential candidate and loses, that is the 
end of him. He will prefer to have Primakov as a shield," said one observer. 
"If Primakov is elected, Luzhkov will be his natural successor."

The left-of-centre electoral bloc appears to have galvanised Russia's 
fragmented right-of-centre parties into action. Russia's liberal politicians 
are split between several political movements boasting prominent leaders but 
minimal public support.

However, Sergei Kiriyenko, the former prime minister who leads the New Force 
movement, suggested many of these right-of-centre parties might unite under 
the leadership of Sergei Stepashin, who was sacked as prime minister on 
Monday.

"Stepashin can consolidate a new right opposition," Mr Kiriyenko said. "This 
is not a struggle for 5, 10, 15, or 20 per cent [of the vote]. This is a 
struggle for the future power in the country and in this struggle we must not 
stand aside.

"After the sacking of Stepashin I do not see grounds for believing the 
assurances of the powers-that-be guaranteeing honest and clean elections." 

******

#3
Russia Today press summaries
Nezavisimaya Gazeta
12 August 1999
Will Primakov Join Luzhkov?
FORMER PM WON’T BECOME MAYOR’S HUMAN SHIELD
Summary
Even though he hasn’t made any political waves and has rarely appeared in 
public since his dismissal in May, Yevgeny Primakov has become a charismatic 
figure in the Russian political establishment. Politicians are appealing to 
Primakov to join their party as if they were talking about the second coming 
of Christ.

The myth of Primakov signals the clear and utter political defeat of the 
ruling powers (led by the president) in Russia. For the eight years of 
Yeltsin’s presidency, the country has not been able to achieve political or 
economic stability. Yeltsin has not been able to ensure a smooth transition 
of power either. His nomination of Putin as heir to the Russian presidency 
cannot be taken seriously. Further, none of the country’s incumbent 
politicians has sufficient support to secure any type of national political 
leadership.

The Russian political elite view Primakov as an opportunity to take a small 
step backwards to a command economy. The country wants a little stagnation 
after the unpredictable Yeltsin. However, Primakov not will join Luzhkov’s 
Fatherland – All Russia coalition before winter as he does not want to a seat 
in the Duma, nor does he want to take fire from all of the mayor’s political 
opponents.

*******

#4
Russia Today press summaries
Segodnya
August 12, 1999
The Kremlin Is Hoping For A State of Emergency
DAGESTAN MAY PROVE INSUFFICIENT TO CANCEL ELECTIONS
Summary
There could be two underlying reasons for the war in Dagestan. First, the 
Kremlin wants to destroy the reputation of acting Prime Minister Vladimir 
Putin so that the Duma, in turn, will not be able to confirm him without 
losing considerable public confidence. Otherwise, the ruling powers are 
interested in imposing a state of emergency in Russia in order to cancel the 
upcoming parliamentary elections. Both variants have the same endgame: if the 
Duma does not confirm Putin, it will be dismissed, and the Kremlin can do 
anything with respect to the elections.

A state of emergency will not be adopted immediately. Putin met yesterday 
with Federation Council [Russia’s upper chamber of Parliament] 
representatives to gauge the senators’ moods about the measure. The senators 
told him to first bring order to Moscow first, then to the Caucasus.

In related news, rumors have been circulating in Moscow about a secret 
meeting between the Chechen leader of the rebel insurgency Shamil Basayev and 
the head of the presidential administration Voloshin.

Regardless, if the Kremlin stakes its claim on the situation in Dagestan, it 
will get out of control very soon. And to cancel the elections, the state of 
emergency should encompass other parts of Russia, not simply the 
constantly-troubled Caucasus.

******

#5
The Times (UK)
13 August 1999
[for personal use only]
Alcoholism spreads
Moscow: Forty per cent of Russian men are alcoholics, according to figures 
from the country's Health Ministry (Alice Lagnado writes). 

The Segodnya newspaper made the disclosure yesterday, citing ministry 
statistics. 

Alcoholism also afflicts 17 per cent of Russian women. The average Russian 
consumes the equivalent of 14.5 litres of pure alcohol each year, equal to 
170 half litres of vodka. 

Alcohol is the prime cause of the short life expectancy of Russian men

*******

#6
The Guardian (UK)
13 August 1999
[for personal use only]
Keeping it in the family
In today's Russia, politicians and businessmen are carving up power between 
them - and that's how to see Yeltsin's latest manoeuvres
By Jonathan Steele

"Russia does not elect a president," says Yulia Latynina, one of Moscow's 
best economic analysts. "It elects a super-oligarch. His first act will be to 
devour his predecessors - and they are panicking." 

Given just a day after Boris Yeltsin appointed a virtually unknown man as his 
chosen candidate for next year's presidential election, her view was more 
cutting than any other reaction. But it was surely accurate. Knowing that his 
two terms are over, Yeltsin is trying to ensure that the carnivore who takes 
over the Kremlin next summer is a loyalist whose appetite will be directed 
away from the Yeltsin family. 

In the seven years since Russia followed western governments' advice to set 
up a private banking system and start privatising the large state monopolies 
which control the country's industry and raw materials, a small number of men 
have become fabulously wealthy. For the first years of Yeltsin's rule they 
were too busy making money to worry much about politics, but in the run-up to 
the last presidential election in 1996 they began to quiver. 

The Communist party had revived and it seemed possible that its candidate 
could win the poll. In desperation the country's top businessmen combined to 
pour money into Yeltsin's campaign and financed an anti-communist media blitz 
which successfully changed the expected result. Now the process has moved a 
stage further. 

Many other countries have similar problems. Crony capitalism, in which top 
politicians give import/export licences, government contracts or 
state-subsidised loans to their businessman friends in return for kickbacks, 
is common in developing countries. Three things make Russia different. 

First, it has a developed economy which has passed the stages of 
urbanisation, industrialisation and universal secondary schooling which 
places like Brazil, Nigeria and Indonesia are still undergoing, and it has 
reached this point under state ownership and with minimal foreign investment. 
This means that capitalism as a system is starting from scratch in Russia, 
but on the basis of a huge national reserve of industrial, mining and 
technological assets. Russia's new businessmen were able to take control of 
the whole national wealth. 

Second, the switch to capitalist ownership took place at a time of economic 
stagnation when domestic growth was hard to achieve, whatever policies were 
adopted. This reinforced the tendency for new businessmen to be conservative, 
and look for profit by taking their newly gotten money abroad rather than 
investing at home. Currency speculation and money laundering became the name 
of the game. 

But the most important factor which distinguishes Russia from other 
capitalist states is that businessmen are intertwined with government at 
every level. That is why it is not called crony capitalism here, but 
oligarchy. 

The person who claims credit for first using what has become the standard 
word (supplanting the phrase, the mafia, which was common in the early 90s) 
is Olga Kryshtanovskaya of the Institute of Applied Politics, who wrote a 
piece in Izvestiya in 1994 called The Financial Oligarchy in Russia. Her 
thesis was that the monolithic Communist party, where the Politburo took all 
political and economic decisions, had given way to a system in which 
government and private business were mixed, but the same people remained in 
charge. 

"I analysed the new capitalists and found that 7% had been party secretaries 
at various levels. Another 60% had indirect or secret links with the 
nomenklatura. It was impossible to be a self-made man in Russia. You had to 
have links to officialdom to get started, or at least to get on." 

Russia has now moved into a new stage in which ownership of the largest 
companies is being consolidated into complex conglomerates based in Moscow 
and run by fewer and fewer hands. They include the lucrative energy and raw 
materials sector as well as TV and media empires. 

Around the country in Russia's 89 regions and republics a process of 
peri-privatisation is under way. Since most industrial and manufacturing 
companies are loss making, their future depends on the whim of the local 
political governors. "If he likes the owners, he leaves them alone or lobbies 
for them to get subsidised. If not, he will send in the tax inspectors or 
take them to the arbitration court to be declared bankrupt," Ms 
Kryshtanovskaya explains. "Then the local government takes over the company 
and its debts. This is not really re-nationalisation, because they usually 
sell the company off by auction after making sure their own friends or 
relatives get it." 

The process has moved fastest in republics like Tatarstan, Bashkortostan and 
Kalmykia, where one "family", ie the president of the republic and his 
friends, own the commanding heights of the local economy. In the regions the 
process has not yet stabilised because in most of them a struggle is going on 
between two families - those of the governor and the mayor of the largest 
town. 

Russia's top family is, of course, the one in the Kremlin. Boris Yeltsin, his 
two daughters and their husbands are at the centre of a web where people move 
seamlessly from government jobs to chairmanships of companies and back again. 
Jealousies abound, and the main instrument for defeating rivals is not a 
takeover bid on the capital market but the use of administrative power. The 
president can issue decrees or use the security services to dig up dirt on 
people's private lives. 

In a classic case of its kind, Yeltsin last week nominated Aleksei Ogarev, a 
42-year-old aviation engineer, to head Rosvorruzheniye, the huge state 
monopoly for selling Russian arms. Ogarev's main qualification is that he is 
a close friend and classmate of Aleksei Dyachenko, the husband of Yeltsin's 
favourite daughter, Tatyana. 

In a fortnight's time, in another Yeltsin-inspired move, the government is 
calling an emergency general meeting of Gazprom, Russia's biggest company, in 
an attempt to increase the number of state representatives on the board. 
According to speculation in the Russian media, the aim is to remove Gazprom's 
chief executive, Rem Vyakhirev, and stop Gazprom from funding the private 
television channel, NTV. 

NTV's mistake is that its main owner, Vladimir Gusinsky, is supporting the 
mayor of Moscow, Yuri Luzhkov, in his bid to win the presidency next year. 
Inherently, there is no reason why Luzhkov and the Yeltsin family should not 
see eye-to-eye. But Yeltsin has always been afraid of anyone who does not 
agree with him absolutely. His fear is that if Luzhkov is elected, the new 
president and his friends may try to prosecute the Yeltsins or strip them of 
their wealth. 

Rather than trying to win Luzhkov over at this stage, Yeltsin this week 
decided to pick Vladimir Putin, a trusted member of the political family and 
head of the federal security service, to take over as prime minister. Putin's 
first task is to persuade, browbeat or buy enough regional and republican 
governors and their "families" so as to swing the December parliamentary 
elections behind pro-Kremlin candidates and deny Luzhkov's block of would-be 
MPs a strong showing. If he succeeds, Putin will be re-confirmed as Yeltsin's 
candidate for the presidential elections next summer. If he fails, Yeltsin 
still has time to do a deal with Luzhkov. 

Putin is a former spy. A few hours after he became prime minister the 
Kommersant newspaper asked him about his relationship with the oligarchs. Not 
bridling at the term, he replied with admirable directness "I have never 
quarrelled with any of the oligarchs". If proof were needed, the remark 
showed he well understands who politicians need to woo in today's Russia. 

*******

#7
Philadelphia Inquirer
12 August 1999
[for personal use only]
Former KGB operatives clinging to the old ways 
The new security agency appears to be stepping up its methods - and
overstepping boundaries into citizens' lives. 
By Dave Montgomery
KNIGHT RIDDER NEWS SERVICE

MOSCOW - Seven years after the Soviet Union collapsed, the Russian economy
is moribund, the military is threadbare, and people struggle to survive.
But one institution from the old order is expanding its power - the Russian
security apparatus that was largely recycled from the remnants of the
Soviet KGB. 

In a bewildering series of government shake-ups ordered by Russian
President Boris Yeltsin, three of the last five prime ministers have been
drawn from the nation's powerful security network: two from the former
communist intelligence service and secret police force and one from the
Interior Ministry. 

Moreover, thousands of ex-KGB officers have taken leading roles in Russian
business, journalism and politics, and also in some of the country's
booming organized-crime enterprises. Many were among the best and the
brightest communism had to offer, and their privileged positions gave them
access to education, exposure to foreign cultures - and often the secret
police files on potential business and government rivals in the new Russia. 

Now many analysts fear the KGB's successors in Russia's Federal Security
Service (known by its Russian acronym, FSB), which is controlled directly
by Yeltsin, may be reverting to old habits and overstepping their authority
by snooping on private citizens. 

The KGB's main descendant "has picked up some power and influence over the
last several years," said former CIA director James Woolsey.
"Unfortunately, the FSB is starting to keep a sharp eye on dissidents
inside Russia, and that is not a positive development." 

The latest premier to be nominated from the ranks of the Soviet secret
services is Vladimir Putin, an ex-KGB spy and head of the FSB, whom Yeltsin
hopes will be elected president next summer. 

By anointing Putin on Monday, Yeltsin appears to be building up an
intelligence arsenal to use against Kremlin adversaries during the campaign
season.

Before Putin came Sergei Stepashin, the former interior minister who
oversaw Russia's national police force, and Yevgeny Primakov, a KGB veteran
who had served as Russia's intelligence chief. 

Primakov, forced on Yeltsin as a compromise premier in 1998, never earned
the president's trust, and was dumped nine months later. However, in
consolidating his power before his dismissal, Primakov brought dozens of
former KGB agents into his administration, and many presumably retained
their jobs after he left. 

As many as 30 former KGB agents occupy senior positions in the Russian
government, in addition to hundreds of lesser positions, estimated Mark
Galeotti, a British defense analyst.

The naming of Stepashin, who barely served three months, and now Putin
seems to be part of a move to strengthen Yeltsin's ties to the security
forces rather than an aggressive attack on Russia's problems. 

"We're entering a period of Russian history where this is again important,"
said Toby Gati, former assistant secretary of state for intelligence and
research and now senior international adviser at Washington's Akin Gump law
firm. "Which to me is rather sad because it's a step backward." 

While the FSB by no means rises to the horrendous stature of the KGB -
which killed millions in the Stalinist purges and tortured thousands in
Moscow's Lubyanka Prison - it has a reputation for intimidation and
snooping into private lives. 

Domestic eavesdropping is still carried out, including selective taps on
the phones of foreign officials and journalists, said Yury Kobaladze, a
former KGB general who now works for the state-owned news agency,
ITAR-Tass. "It's the name of the game," said Kobaladze, who spent much of
his career as a Soviet operative in Britain posing as a journalist. 

Alexander Sokolov, a human rights lawyer, said he and other attorneys have
been tailed during legal cases involving the FSB. He acknowledged that
Russia's move toward democracy has ended many of the abuses of the KGB, but
said many longtime agents clung to the old ways and "were unable to adapt." 

Many Russians suspected, without proof, that the FSB had a hand in the
release in March of videos showing Prosecutor General Yuri Skuratov
cavorting with two prostitutes at a time when he was pursuing a corruption
case against the Kremlin. Russians are waiting for a barrage of similar
tactics with the approach of parliamentary elections in December and the
presidential election next June. 

The FSB has 120,000 employees, including 75,000 officers. It is essentially
Russia's version of the FBI, charged with counterespionage and fighting
organized crime and terrorism. Unofficially, it serves as a political tool
for the Kremlin, gathering intelligence on Yeltsin's adversaries. 

Russia's foreign intelligence service, which Primakov headed, has about
12,000 officers engaged in spying abroad, according to Galeotti. 

Significantly, the agencies answer directly to the president, giving
Yeltsin a vast arsenal if he should choose unconstitutional means to stay
in power, as his detractors suggest. Yeltsin reasserted this week that he
will step down at the end of his term. 

*******

#8
The Globe and Mail (Canada)
August 11, 1999
Editorial
The Soviets in Russia

Social norms don't get much press because they are impossible to quantify
and come loaded with fuel for prejudice. But an experienced observer of the
world understands that the social norms prevailing in various cultures have
enormous consequences for their quality of life. Similar legal and economic
systems often exist in wildly different communities. Community norms
determine how systems and principles play out in the streets.

And so we see the fifth prime minister in Russia in 17 months, appointed by
a Boris Yeltsin raised through maturity in a corrupt, faction-based
dictatorship in which personal struggles for power played out behind the
façade of single-party rule.

While Mr. Yeltsin appeared on the scene in the early 1990s as a
neo-democrat, facing down the forces of communist reaction against an
elected Duma, he is essentially a party hack, schooled in the arts of
personal survival through manipulation of rules, arbitrary acts and
unpredictable alliances. In this, he is in the dark company of most members
of the Russian Duma and provincial legislatures, a generation of former
Soviet officials thrown into democratic forums for which they have no
instinct and little respect.

It will take more than one generation before the ways of a bureaucratic
dictatorship give way to those of a liberal democracy, whatever Russia's
legal framework says. Indeed, it is remarkable how well Russian society is
adapting to democratic capitalist values in the short run, given the depth
of the Soviet experience. The political and economic corruption that
pervaded Soviet society are fully on view in the new Russia, but they have
not deteriorated into a full counter-revolution. The instruments of
democratic capitalism are strong enough now to work their wiles on a
younger generation as the dialectic between norms and systems evolves.

Mortality will provide the solution to many of Russia's transitional
problems, systematically weakening the formative experiences of Soviet
rule. It is not so much a revival in commodity prices or financial markets
that offers Russia hope; it is the ticking of the clock.

*******

#9
Moscow Times
August 13, 1999 
PARTY LINES: Loyal Putin Couldn't Save His Last Boss 
By Brian Whitmore
Staff Writer

The inside skinny on why President Boris Yeltsin replaced Sergei Stepashin, a 
loyal 40-something former spymaster from St. Petersburg, with Vladimir Putin, 
a loyal 40-something former spymaster from St. Petersburg, is supposedly 
simple. 

Stepashin was weak. Putin is tougher. With yet another round of decisive 
elections on the horizon, toughness matters. 

Despite the Kremlin's best efforts, Moscow Mayor Yury Luzhkov managed to 
unite his Fatherland party with the All Russia movement of regional leaders. 
This was a wake-up call for Yeltsin's inner circle - the legendary "family" - 
which dreads a Luzhkov presidency, and the reckoning, and possible 
indictments, they are convinced would surely follow. 

Stepashin, the "family" reportedly believes, was either unable or unwilling 
to thwart the Luzhkov juggernaut. Enter Putin - former KGB, master of 
backroom intrigue, the gray cardinal of St. Petersburg. If Stepashin isn't 
able to keep Luzhkov out of the Kremlin, surely Putin can get the job done. 

Or can he? 

The image I will always have of Putin is that of former St. Petersburg Mayor 
Anatoly Sobchak's most powerful and trusted deputy. When Sobchak didn't want 
to deal with the media, he sent the dour Putin - who would scowl, tell us 
nothing and frighten the more timid among us away. Putin was also rumored to 
be the most powerful player in Sobchak's Cabinet. 

So when Sobchak's other deputy, Vladimir Yakovlev, announced in the summer of 
1996 that he was challenging his boss and running for St. Petersburg's top 
job, few took it seriously - at least at first. The conventional wisdom was 
that Sobchak's loyal deputy Putin would destroy this pretender to the throne. 
As is often the case, the conventional wisdom was wrong. 

Sobchak employed the usual dirty tricks - including handing nice new 
apartments, for a nominal fee, to his supporters. Among them were the editors 
of influential local newspapers like Nevskoye Vremya and Chas Pik and, by the 
way, Putin's mother. 

Considering the depths the Sobchak-Putin team sank to, however, it was all 
surprisingly ineffectual. Sobchak lost to Yakovlev by a slim 27,000 vote 
margin. Sobchak was named in a corruption probe and later fled the country, 
spending 20 months in self-imposed exile in Paris, from which he returned 
only last month. (He apparently felt safer with allies like Stepashin and 
Putin in such high places). 

How could Sobchak-Putin lose to an unknown like Yakovlev? Because a key 
backer of Yakovlev's successful campaign was none other than Luzhkov. For 
Yakovlev, the co-chairman of All Russia, it is now payback time - as he and 
other regional barons who owe Luzhkov favors are trying to help the mayor 
move from 13 Tverskaya to the Kremlin. 

Paradoxically, failing to re-elect Sobchak was probably the best thing that 
ever happened to Putin's career. He was immediately brought to Moscow, where 
he climbed the "corporate" ladder to become acting prime minister. 

Yeltsin and the "family" may think they can relax. The loyal Putin, after 
all, is on the case. He will destroy this pretender to the throne. Right? 

Maybe not. If Putin's previous showdown against Luzhkov and his proxies in 
St. Petersburg is any indication, the Kremlin travel office should start 
booking tickets to Paris for next July. 

******

#10
Caucasus battle gives Russia deja vu feel
By Peter Graff

MOSCOW, Aug 13 (Reuters) - A warplane swerves across the television screen,
firing rockets that blaze two white trails in the sky. Cannon roar.
Terrified soldiers huddle in trenches. 

The news broadcast cuts away to a woman in peasant dress fleeing her home,
clutching a bundled infant. ``We don't even know who is left behind,'' she
sobs. 

Later comes video filmed by the rebels. They fire an artillery round and
whoop with joy when a Russian helicopter bursts into flame in the valley
below: ``God is Great! God is Great!'' 

After nearly a week of fighting, the first images from a new conflict have
begun to appear on television, reviving Russian memories of their
humiliating defeat by Chechen separatists in 1994-96. 

Russian leaders insist there will be no new war, and the invasion of
Chechen-led guerrillas into the neighbouring province of Dagestan will be
crushed in a matter of days. 

But their words seem all but identical to the optimistic pronoucements that
accompanied Russia's invasion of Chechnya in 1994. 

Shamil Basayev, the guerrilla leader whose self-confident smile was etched
on Russian memories in 1995 when he held more than 1000 hostages in a
southern Russian hospital, has returned to television screens. 

Basayev brought journalists into the mountains to announce that he was
personally at the helm of the new revolt. His face brought a chilly deja vu
into living rooms across Russia. 

``Even the leaders are the same,'' wrote military analyst Pavel Felgenhauer
in the English-language Moscow Times. He said once again the Russian
military command had failed to field a professional force to counter the
battle hardened rebels. 

``Today in Dagestan they meet again: the well-trained, highly mobile
fighters trained in Chechnya, and a Russian-led armed rabble,'' Felgenhauer
wrote. 

``If today Basayev seriously presses forward in Dagestan, the Russian
military may be in for another major disaster.'' 

The blame game has started in Moscow, where officials are already reeling
from President Boris Yeltsin's surprise sacking of Prime Minister Sergei
Stepashin's government on Monday. 

``We are paying the price for the weakness of our central authorities,''
another former premier, Sergei Kiriyenko said. 

``Nobody has the will to solve the Dagestan problem.'' 

Even if the latest rebellion is quickly extinguished, as Russian leaders
promise, it has already resurrected disturbing doubts about the state's
ability to protect its citizens. 

``For our great power -- humiliating,'' read the headline atop Thursday's
Izvestia newspaper. 

Below, a picture of displaced children, with a caption reminding readers
that children suffer most in war. 

For now, the main symbol of Russia's resolve has been the defiant demeanor
of the new acting prime minister, Vladimir Putin, a former KGB spy with a
dour public image. 

In one public appearance this week he said the only reason the rebels had
not yet been defeated was that they were refusing to come out of the woods
for a fair fight. 

But next to him, the quietly nodding figure of the speaker of the upper
house of parliament seemed to better express the national mood. 

``There was so much treachery in Chechnya,'' Yegor Stroyev said. ``Can we
allow this again?'' 

*******

#11
Chronology of Russian involvement in N.Caucasus

MOSCOW, Aug 12 (Reuters) - Russia is facing the most serious challenge to its 
authority in the North Caucasus region since its ill-fated 1994-6 bid to 
crush rebel guerrillas in Chechnya. 

Moscow has sent troops to Dagestan, which borders Chechnya, to combat 
Chechen-backed fighters who have vowed to drive Russia from the region and to 
build an Islamic state. 

Here is a brief history of Russia's involvement in the North Caucasus region, 
which neighbours the oil-rich Caspian Sea and the former Soviet republics of 
Azerbaijan and Georgia. 

1722 - Peter the Great annexes Caspian Sea regions of Dagestan at start of a 
150-year military campaign to absorb North Caucasus region into Russian 
Empire. 

Mid-19th century -- Legendary Imam Shamil uses Islam to weld mountain tribes 
of Dagestan and Chechnya into formidable fighting force. His ambition is to 
create a theocratic, Islamic state but he is eventually defeated by Russia's 
superior numbers and technology. 

1917 -- Russian revolution brings Communists to power but Islam and 
traditional clan system remain strong in North Caucasus despite persecution 
from atheistic Moscow regime. 

1944 - Soviet dictator Josef Stalin deports entire Chechen people and their 
neighbours the Ingush to Central Asia for ``collaboration'' with German Nazi 
troops. Tens of thousands die. 

1957 - Soviet leader Nikita Khrushchev allows the Chechens back to the 
Caucasus, setting up the Checheno-Ingush republic. 

Oct 1991 - Following the overthrow of local communist ruler Doku Zavgayev, 
Soviet air force general Dzhokhar Dudayev wins a disputed local poll and 
declares Chechnya independent. 

Russia rejects any talk of independence but takes no action against Dudayev 
and allows him to run Chechnya. 

Dec 1994 - President Boris Yeltsin sends troops to Chechnya to crush the 
independence movement. Tens of thousands, mostly civilians, die in ensuing 
20-month war. The capital, Grozny, is reduced to rubble. Rebels are driven to 
the mountains but are not defeated. 

Aug 1996 - Rebels seize Grozny. Moscow signs a truce on August 31 providing 
for a Russian pullout and deferring issue of Chechen independence for five 
years. 

Jan 1997 - Former rebel chief of staff, Aslan Maskhadov, a relative moderate, 
wins Chechen presidential election with almost 65 percent of vote. Last 
Russian troops leave Chechnya. 

Jan 1997 - Unidentified kidnappers seize two Russian journalists in Chechnya, 
first in a long series of abductions for ransom money which fuel tensions 
with Moscow and effectively block the reconstruction of the shattered 
economy. 

May 12 1997 - Yeltsin and Maskhadov sign peace accord but Chechnya's final 
status still unresolved. Moscow says Chechnya must stay part of Russian 
Federation, albeit with wide autonomy. 

September 1998 - Chechen warlords demand the resignation of President 
Maskhadov, saying he is too conciliatory towards Moscow. Maskhadov also under 
pressure from Russia, which says he is failing to combat organised criminal 
gangs whose frequent kidnappings have turned Chechnya into no-go zone for 
outsiders. 

July 1999 - Russian troops clash increasingly fiercely with Chechen fighters 
near Chechnya's border with Dagestan. 

Aug 7 1999 - Russian helicopters pound positions held by Islamic militants in 
Dagestan said to have come from Chechnya. Moscow vows firm action to dislodge 
intruders. 

Aug 8 - Russian Prime Minister Sergei Stepashin visits Dagestan to discuss 
crisis with local commanders and officials. 

Aug 9 - Yeltsin sacks Stepashin and nominates security chief Vladimir Putin 
as Russian prime minister. Stepashin says Russia could lose Dagestan just as 
it lost Chechnya. 

Aug 10 - Islamic fighters declare Dagestan an independent state and call for 
holy war of liberation against Moscow rule. 

Aug 11 - Feared Chechen warlord Shamil Basayev declares he is behind Dagestan 
rebellion and vows to drive Russian ``infidels'' from whole North Caucasus 
region. Russian officials say 10 federal troops have died and 27 more wounded 
so far. 

Aug 12 - President Yeltsin says he is confident of victory over the rebels. 
Warplanes and artillery continue to pound the rebels' positions as more men 
and supplies arrive in Dagestan. 

******

#12
The Economist
August 14-20, 1999
[for personal use only]
Editorial
Russian roulette 
But when Boris Yeltsin pulls the trigger, it’s always his prime minister who 
dies 

IS BORIS YELTSIN at heart a tsar, or at least a caudillo who would 
manufacture any old pretext to override the constitution and thus hang on to 
power? Or is he at heart a democrat, who fears that if he does not take 
action Russia will descend into authoritarianism when he leaves the 
presidency next year? 

His latest little sensation—the sacking of one prime minister and the 
appointment of another, his fifth in 17 months—is consistent with either
view. 
The dyspeptic old man could be preparing the way for a state 
of emergency, a union with Belarus or some other stratagem he could use to 
stay in office beyond the end of his second term next year. Or, despairing of 
the prospects of the outgoing prime minister, Sergei Stepashin, successfully 
carrying the democratic torch in an election, he could simply be putting in 
place an alternative, in the person of Vladimir Putin. That is actually what 
he claims to be doing, and perhaps he should be believed. He is, after all, 
the man who faced down a communist coup in 1991 and presided over the 
break-up of the Soviet Union. He has not yet acted unconstitutionally, and it 
is plausible that he thinks his first duty is to safeguard democracy. The 
trouble is that he does not understand the meaning of the word. 

For Mr Yeltsin, democracy means elections. These he has secured for Russia, 
even if their character has owed more to the late Mayor Daley of Chicago than 
to Pericles. In December, a round of voting will take place to elect a new 
parliament and then, next summer, another round will elect a new president. 
Mr Yeltsin understands the importance of these polls. Unfortunately, he does 
not understand the importance of continuity of government, of building 
parties, of fighting corruption, of enforcing the law and of generally 
establishing the institutional framework that democracy demands. 

Mr Stepashin has not done badly in his three months as prime minister. The 
economy has perked up a bit; the IMF has agreed to a $4.5 billion loan, even 
though it says it was lied to three years ago; and Russia has managed to 
snatch some diplomatic kudos by helping to end the Kosovo war. Perhaps the 
prime minister deserved little of the credit for these events, but he was in 
office when they occurred. No great change of policy is heralded by his 
successor, or expected by onlookers. 

Poor Mr Stepashin’s shortcoming was that he looked like being a feeble match 
for the political opposition in the forthcoming elections. Whereas his 
predecessor, Yevgeny Primakov, was sacked because he was starting to look too 
strong and too independent, Mr Stepashin was loyal but lightweight. In truth, 
anyone seen as loyal to Mr Yeltsin will be doomed at the polls, as Mr Putin 
will discover (if he lasts long enough). But Mr Yeltsin and—perhaps more 
importantly—those around him are evidently rattled by the emergence of an 
alliance between Yuri Luzhkov, the powerful mayor of Moscow, and several 
regional leaders, who may yet unite together behind Mr Primakov as their 
presidential candidate next year. 

That could be potent indeed. But whoever takes charge of Russia will find it 
hard to rescue a country that has gone so definitively to pot under Mr 
Yeltsin. Another year of his fitful and capricious rule will make that task 
even harder. By then Belarus, run by the even more autocratic and demagogic 
Alexander Lukashenka, may have joined in full union with Russia. And perhaps 
even Ukraine, which is to hold a presidential election in October, will be 
linking up again too in a bid to re-create the glory of old Soviet days. 

Look to the fringes 

If so, it would not be surprising if bits of Russia were to want to split 
off, or at least win greater autonomy. Islamists in Dagestan may be trying to 
do that already. They are as unlikely to establish a model free-market 
democracy as are their neighbours the Chechens. But other republics, such as 
Tatarstan, whose president, Mintimer Shaimiev, leads the regional governors 
allied to Mr Luzhkov, are more enterprising. If regeneration is ever to take 
hold in Russia, it may start in places like Tatarstan before it reaches 
Moscow. 

Meanwhile, it will be hard for the rest of the world to take seriously a 
country whose president appoints and discards prime ministers with such 
whimsical indifference. Mr Yeltsin may not be a tsar; he may well consider 
himself a democrat. But perhaps it does not matter. If he treats his 
governments as playthings, to be plucked from the toy cupboard and petulantly 
thrown aside, he can hardly be surprised if others regard him as a brattish 
autocrat. 

******

#13
Russia: Fears Wane, Shadow Lingers Of August 1998 Economic Meltdown
By Floriana Fossato

Next Tuesday, August 17, will mark the first anniversary of the Russian
financial meltdown. In the first of two features, RFE/RL Moscow
correspondent Floriana Fossato reports that many of the worst fears
following the events of last summer have not been realized. However,
widespread pessimism over the future persists. 

Moscow, 12 August 1999 (RFE/RL) -- Many analysts who assess the state of
Russia's economy one year after the August 1998 financial meltdown focus on
the fact that their worst fears have not come true. Some even feel that it
was a healthy development for Russia.

Thus, former economics minister Yevgeny Yasin recently told RFE/RL that
last August's economic meltdown brought about an important transition in
Russia:

"In my opinion, August 17 was a moment of truth for us. We found out that
it is impossible to live on debts and impossible to live with an inflated
ruble exchange-rate. The market has brought everything back to normal. Now
we stand on a more realistic footing. We may like it or not, but it is
better to dance to this music than to live on illusions."

A year ago next Tuesday, the Russian government of then-prime minister
Sergei Kiriyenko effectively devalued the ruble and defaulted on some
domestic debt. Within three weeks, the ruble plummeted from six to 16 to
the dollar, banks refused to return clients their savings, most business
activities suffered huge losses and foreign investment dried up. As a
result, many people lost their jobs, and most of those who managed to keep
them saw their salaries reduced or delayed.

When the crisis peaked last August, Russians emptied shop shelves and
started stocking up goods, getting ready for the worst. They again showed
their endless capacity for enduring cataclysms. 

Nor was there any major social unrest. A new Left-leaning government led by
Yevgeny Primakov talked much about implementing measures that could have
led to hyperinflation. But in the end it avoided a full economic crash by
enforcing a policy that some observers called "positive inaction."

As a result, the ruble continued its fall, but finally found firmer ground
at a rate of about 24 to the dollar.

Following the ruble devaluation, imports fell drastically --by 46 percent
in the first half of this year-- and this helped boost domestic production.
Demand has increased for a wide range of domestically produced goods, made
cheaper by the devaluation, from food products to construction materials. 

Another reason for Russia's improving trade balance is the upward trend of
world prices for oil and other raw materials. A barrel of Russian oil was
worth only $8.58 in February, but the price rose to $19.34 by July.

Yasin, however, notes that the current positive trend came at a high price
and that Russians now are poorer than a year ago.

"It is impossible to say that everything [that happened as a consequence of
August 17] had a positive result, because people had great losses. The
positive trends we notice now in industry and in several other sectors
--the increase of exports, the production growth to replace imports, the
improved budget situation-- has been paid for by the people. The
population's standard of living has decreased by 25 to 30 percent."

Official figures released in July say that the number of Russians living in
poverty has increased from 33 million last year to 55 million this year.
This means that nearly four of every 10 people live below the official
subsistence level, defined as a monthly income below 829 rubles. That is
the equivalent of about $34.

The average monthly wage now equals about $50. It was worth about $200
before last August. The average pension now equals only some $17 per month.

Some economic analysts argue that government policies have contributed
little to the current positive trends. Denis Rodionov, an analyst with
Brunswick Warburg, told our correspondent that "deeper reforms --structural
and institutional-- are still not there." He said that the main policy
needs have not changed. He lists them as reform of monopolies,
introduction of bankruptcy legislation, reduction of barter practices,
improvement of tax collection and restructuring of the banking system. 

Others argue another huge problem is what they say is persisting corruption
and inefficiency displayed by authorities, as well as by state and private
businesses.

The government and central bank program outlining economic policy to the
end of 1999 states that Russian authorities are committed to more
structural reform. The program was submitted to the International Monetary
Fund (IMF) ahead of the fund's long-awaited decision late last month to
issue $4.5 billion in new loans to be delivered over the next 18 months.
The money is intended to help refinance previous loans that are coming due.

The IMF decision has been of critical importance for Russia. It unlocked
additional funds from the World Bank and Japan's Eximbank. It also made
possible an agreement with the Paris Club of foreign debtors on postponing
the payment of some Soviet-era debts.

But the Fund's new loan was accompanied by unusually strong words from IMF
officials. Citing an audit that found Russia's central bank had falsified
the size of its reserves in 1996 by secretly channeling funds through an
offshore company [FIMACO], IMF first deputy managing director Stanley
Fischer said the Fund had "made clear to the highest levels of Russian
government" that what happened was "unacceptable".

Peter Westin, an economist at the Moscow-based European Center for Economic
Policy, wrote recently in the English-language "Moscow Times" that the IMF
decision "was mainly political." He said it "re-confirms the suspicion that
creditors view Russia as too big to fail."

One year after the meltdown, most analysts seem to agree that the shadow of
August 1998 still lingers. 

*******

#14
U.S., Russia urged to lower missile alert for Y2K
By Jim Wolf

WASHINGTON, Aug 12 (Reuters) - Citing the risk of an accidental nuclear
war, activists are pressing the United States and Russia to take nuclear
missiles off hair-trigger alert during the technology-challenging year 2000
rollover. 

A network of international groups announced a drive this week to try to
persuade U.S. President Bill Clinton and Russian President Boris Yeltsin to
"stand down" the approximately 2,500 nuclear-armed missiles now poised on
each side for immediate firing. 

Standing down the missiles means adding steps before they can be fired. The
idea is to give commanders more time to make sure they are acting on solid
information, not scrambled data caused by a computer glitch. 

Rep. Ed Markey, a Massachusetts Democrat, introduced a sense of the
Congress resolution last week calling for the "de-alerting" of as many U.S.
nuclear weapons "as is feasible and consistent with national security." 

"Today the Russian command-and-control system is decaying," Markey said. 

He said the so-called Y2K bug in computers not programmed to recognize the
year 2000 made the date change a particularly dangerous period. 

The stated fear is that Y2K-related computer glitches could cause the
Russians in particular to conclude they are under attack, triggering
mistaken retaliation. Russia acknowledges that it lags far behind the
United States overall in making its systems ready for 2000 changeover. 

Friends of the Earth, an Australian environmental group, spearheaded an
effort to send a letter to Clinton and Yeltsin that was signed by 271
groups, including Greenpeace International. 

"If Y2K breakdowns produce inaccurate early-warning data, or if
communications and command channels are compromised, the combination of
hair-trigger force postures and Y2K failures could be disastrous," the
groups said in their letter. 

They added that there should be a "safety-first" approach to Y2K and
nuclear arsenals. 

Alice Slater, president of the New York-based Global Resource Action Center
for the Environment and a U.S. coordinator of the letter campaign, said
activists were organizing grass-roots efforts in many countries to
highlight the issue. 

"In a sense, Y2K is a crisis and an opportunity," Slater said in a
telephone interview. 

She described the current drive to de-alert missiles temporarily as a
"first step" in a larger effort to ban nuclear weapons altogether. 

The Pentagon has invited Russia to send military officers to a proposed
temporary joint "early-warning center" in Colorado Springs, Colorado, to
avoid any possible missile-launch miscues as the new century dawns. But
Russia has not responded since the U.S.-led NATO bombing of Yugoslavia, its
ally, earlier this year. 

Bruce Blair, a former U.S. nuclear missile launch officer who analyzes
targeting issues at the Brookings Institution in Washington, said the Y2K
glitch itself could not cause accidental missile firings because people had
to make the ultimate decisions on both sides. 

But he said permanently de-alerting all or most nuclear missiles made sense
in the post-cold War world as a safety precaution. 

"Yeltsin's the last person you'd want to wake up in the middle of the night
with a request for permission to launch" on what might be a false alarm, he
said. 

******