August 22, 1999    
This Date's Issues: 3456 • 3457 •

Johnson's Russia List
#3457
22 August 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Adam Tanner, Poverty a driving force in Dagestan unrest.
2. Chicago Tribune: Colin McMahon, RUSSIA HAS MUCH TO LOSE IN TURBULENT 
CAUCASUS.
3. Mark Sowerby: Re Medvedev/3454/Yeltsin' resignation.
4. Robert Devane: Announcement.
5. The Economist: Russia's unreformed banks. The great pretenders.
6. AP: Stalinists Form Political Alliance.
7. The Russia Journal: Alexei Serov, Political 'PR-shchiki' join campaign.
8. James Wade: a dream.
9. Stratfor Commentary: Russian May Be Seeking to Change Status Quo in
Kosovo.
10. Itar-Tass: All Russia Adopts 7 Principles of Proper Conduct in Polls.
11. New York Times: Michael Gordon, Cold Feet in Russia Doom Stepashin's 
Marriage of Convenience.
12. www.polit.ru: Anatoly Levenchuk, Crash Course in Democracy.] 

******

#1
Poverty a driving force in Dagestan unrest
By Adam Tanner

MOSCOW, Aug 22 (Reuters) - Looming behind the fighting in the southern
Russian region of Dagestan is deep poverty, which may prove a more
resilient threat than the rebels there. 

Officials say Russian troops are close to overcoming Moslem rebels in
Dagestan, but many observers call this assessment optimistic given Russia's
painful loss against separatists in neighbouring Chechnya in 1994-96. 

The economic roots of Dagestan's problem will likely prove even more
difficult to address. 

``In the hill regions 80 percent are unemployed,'' Ramazan Abdulatipov, a
Russian minister without portfolio, told the Nezavisimaya Gazeta newspaper. 

``People have been forced to leave these regions, but no one was waiting
for them in the valleys, and they had to join different criminal formations
from Moscow to Chechnya. 

``It is exactly for these social reasons that extremism is born,'' he said. 

Dagestani wages are by far the country's lowest, an average of $17 a month.
Although most of the economy is off the books and hard to assess
accurately, joblessness is very high. 

Compounding the problem is a birth rate more than double the national
average. 

``It's a problem that has built up over a long time,'' Viktor Ilyukhin, the
Communist chairman of the State Duma's Security Committee, told Reuters. 

``First, one has to say the economy of Dagestan has been destroyed.
Dagestan probably has the highest rate of unemployment in Russia today,''
he said. ``It's the most vulnerable region.'' 

Squeezed next to Dagestan in the southernmost tip of Russia is Chechnya,
victor in its liberation war with Moscow but economically isolated. And it
is from Chechnya that seasoned 
warlords have come to lead the Dagestan fight. 

Last week new Prime Minister Vladimir Putin, a former KGB spy and security
chief, acknowledged that force alone would not solve Dagestan's problems. 

``We will not only struggle against terrorism but resolve the
socio-economic situation causing this tendency,'' he said in remarks before
winning parliamentary confirmation. 

Finding the resources to do that will not be easy in a country struggling
through more than a decade of economic hard times, with public sector
workers from nuclear technicians to soldiers sometimes getting their pay
late. 

Putin has, however, found more money to pay soldiers deployed in the
region. In one of his first official acts, he boosted salaries to $1,000 a
month, up from $4-$20 earned by Russian servicemen elsewhere. 

So far, the government's military get-tough strategy has won wide backing,
most surprisingly from liberals who bitterly criticised the Chechen war.
Liberal opposition party Yabloko, for example, called for more military
spending for Dagestan. 

``We see it as a concerted attack by international Islamic extremists,
separatists and terrorists against Russia,'' party leader Grigory Yavlinksy
said last week. 

Some experts back quick action fearing hesitation will only increase the
rebels' following in Dagestan as living conditions get ever worse. 

The way Russia is fighting in Dagestan may also have an important impact on
its ability to afford anti-poverty efforts. 

After tens of thousands died in the Chechen war, the Kremlin is seeking to
minimise losses by attacking from the air, rather than relying ground
troops but an air war could be expensive. 

So far Moscow is wary of one low-cost approach to the war -- giving local
Dagestani volunteers weapons to fight the rebels -- which they fear could
multiply problems in the region even after the fighting ends. 

*******

#2
Chicago Tribune
22 August 1999
[for personal use only]
RUSSIA HAS MUCH TO LOSE IN TURBULENT CAUCASUS 
By Colin McMahon 
Tribune Foreign Correspondent 

TBILISI, Georgia -- Spoils of war are hard to imagine for Russian soldiers
confronting Islamic separatists in the southern republic of Dagestan.

The mountain villages are small, poor and inhospitable, with names that
sound foreign even to Russians. Remote in summer, by late autumn the
villages become prisoners of the snow and cold of the Great Caucasus.

The Russian military has lost once already in the region, the devastating
1994-96 war in Chechnya. Yet Moscow is sending more and more soldiers to
fight, and to die, in Dagestan. Despite their initial bravado, Russian
military officials now admit they might face a long, difficult conflict.

Winning may offer scant rewards, but Russian leaders, Western diplomats and
independent analysts concur that Russia has very much to lose in Dagestan,
a small, remote land at war, far removed from the glare of world media
attention and widespread public awareness in the West.

Less than a decade after the Soviet Union dissolved amid the collapse of
communism, splintering into 15 independent nations, Russia is under
pressure across its giant territory.

Separatist movements are most visible, and most violent, in the North
Caucasus. Yet even in Siberia, in the Far East, in the Ural Mountains,
Russians wonder if the country can or even should remain unified.

If Russia should fail to stop Islamic militants and Chechen invaders in
Dagestan, separatists elsewhere would grow emboldened. Regional leaders,
already dubious of Moscow's value, would lose more confidence. Russia's
breakup, by most accounts not yet inevitable, would accelerate.

"If the big bear is mortally wounded, even small dogs will be biting him,"
said Alexander Rondeli, an international affairs analyst in Georgia's
Foreign Ministry. "Especially if the bear has been oppressing the dogs."

Europe and the United States have much to fear from an unpredictable Russia
at war with itself. The whole Caucasus region is especially important now,
as Western nations seek to develop potentially enormous oil fields in the
Caspian Sea and to transport the oil across Georgia and the other Caucasus
nations to Western markets.

Aside from the rebels in Dagestan, few want to see Russia so weak. Few want
to see another Chechnya, where the war cost more than 30,000 lives, most of
them civilians.

Now Chechnya is an isolated and desperately poor republic beyond Moscow's
control but unable to establish itself as a viable independent nation. It
calls itself Ichkeria and purports to be under Islamic rule, but is beset
by kidnappings, arms trafficking and other criminal activities.

A full-scale war in Dagestan could bleed into neighboring Georgia, further
destabilizing a nation that many consider the key to order and progress in
the strategically critical Caucasus.

"You cannot have a crazy, unstable situation on your border--especially for
a country like Georgia," Rondeli said. "The Caucasus is a seismic zone, in
a direct sense and an indirect sense. You have to have normal states around
you to survive."

Of those, the Caucasus is in short supply. Azerbaijan and Armenia remain
poor and aimless, flirting with authoritarianism and threatening from time
to time a new war over the disputed republic of Nagorno-Karabakh. In
Georgia, separatist groups and political leaders control about a quarter of
the nation's territory.

The players, goals and methods have changed since the imperial days of the
Great Game, the race for power in the Caucasus and Central Asia. The vast
untapped reserves of Caspian Sea oil--who will pump it and ship it, and
where--is now the critical economic issue. The United States has surpassed
Great Britain as Russia's chief rival for influence, and other European
nations and regional powers such as Turkey and Iran have joined the fray.

"We ignore the Caucasus at our own peril," said a European diplomat based
in Moscow. "Everyone is concerned about how Russia is going to handle not
only Dagestan but also the other trouble spots there."

War in Dagestan could send refugees pouring into Georgia. The rebels, who
are funded and directed by Chechen warlords, could also try to use Georgian
territory to travel between their battlefields and bases in Chechnya.

Already Georgia has witnessed the dangers. This month Russian planes
dropped bombs and mines on a sparsely populated area of northern Georgia,
wounding several villagers.

Russia late last week apologized for the incident, surprising Georgian
officials long accustomed to Russian stonewalling.

The Georgians and others in the region blame Russia for much of the tumult
in the Caucasus.

After the collapse of the Soviet Union in 1991, Moscow searched for ways to
hold sway over a region that for more than a century had served as Russia's
southern defensive flank and listening post. But with its military might
waning and few economic levers to wield, Moscow feared irrelevance.

Russia's tactic, regional officials say, was to purposely destabilize the
Caucasus to keep Georgia, Armenia and Azerbaijan from being able to stand
on their own.

"They cannot get used to the idea that it is really over, that these are
really free and independent states," said Peter Mamradze, chief adviser to
Georgian President Eduard Shevardnadze.

Even now, though Russia could use help from its southern neighbors in
dealing with Chechnya and Dagestan, forces within the Russian military and
leadership are targeting Georgia's government, officials charge. Moscow
also is accused of being a stumbling block in efforts to resolve the
Nagorno-Karabakh issue and heal the rift between Armenia and Azerbaijan.

Georgian officials like to trace the Chechen conflict back to the early
1990s, when Moscow gave military support to Abkhazia in its efforts to
secede from Georgia. Abkhazia's break, considered impossible without
Russian help, encouraged the Chechen separatist movement. Georgian
officials even say that Chechen fighters such as Shamil Basayev, now
leading rebels in Dagestan, learned their skills on the Abkhaz battlefields.

Revaz Adamia, who heads the defense and security committee in Georgia's
parliament, said Moscow's strategy was laid out by Yevgeny Primakov, the
former prime minister and foreign minister who is now considered a
formidable potential candidate for Russia's presidency next year.

"The Primakov doctrine was: We will create a lot of problems for `our guys'
(the former Soviet republics) and then they will understand that they
cannot survive independently," Adamia said. "The conflicts were supported
in Moscow. The mistakes were made in Moscow."

Whether stirring up strife was Moscow's plan or not, the war in Chechnya
showed that Russia's military was ill-prepared to deal with its eventual
effects. Russian units were stitched together from various battalions
before being sent off to Chechnya, only to become easy prey for the
experienced guerrillas.

Some of those same mistakes are being repeated in Dagestan, critics say.
Border guards are young, fresh and unwilling to challenge Chechens who
brazenly cross checkpoints brandishing their automatic weapons. Infantry
troops are merely "armed rabble," as one critic put it.

"Today, as was almost commonplace during the Chechen war, competent signal
officers, who should coordinate air and heavy gun bombardments, are absent
at the front," said Pavel Felgenhauer, a military analyst and columnist for
the Moscow Times. "The Russian-led forces command total firepower
superiority but cannot use this advantage efficiently."

Critics also point out that Russia's best troops are often posted abroad on
peacekeeping duties. Highly trained and cohesive units are among the
approximately 3,600 soldiers recently deployed in Kosovo, for example.

"Pristina? What are they doing in Pristina?" one critic wondered, referring
to the Kosovar capital. "Russia's Pristina is in Dagestan."

Another mistake, critics say, was that Russia underestimated the Chechens.
Back in 1993, a source said, Russian intelligence reports warned that
Chechnya would be lost unless social, economic and military steps were taken.

Even now Moscow is accused of underestimating Chechen ambitions. Basayev
has been talking for more than a year of ridding Dagestan of Russians, then
uniting the two republics in an Islamic state like the one czarist Russia
conquered in the 19th Century.

The Chechen leadership, struggling to overcome the isolation that their
victory has brought them, is desperate for a trade and transit route out of
their republic that does not go through Russian territory.

They have built a primitive but passable road from Grozny, the capital, to
the Georgian border. Now they are leaning on Georgia to improve its road
north from Tbilisi.

The Georgians are balking. Politically, linking the roads would
symbolically recognize Chechnya as an independent state, anger the Russians
and complicate Georgia's position on Abkhazia. Georgia also fears that arms
and drug trafficking and other criminal activity would rise as Chechen
criminal groups moved to find other markets.

Another way out for the Chechens, then, is Dagestan. If Basayev and his
fellow militants make good on their pledge to rid Dagestan of all Russian
troops--a tall order, to be sure--the Chechens would have an outlet to the
Caspian Sea. Indeed, about 70 percent of Russia's shoreline on the Caspian
is in Dagestan.

Despite the echoes of Chechnya, Russia has a lot going for it in Dagestan.
Though predominantly Muslim, the people of Dagestan are far more ethnically
diverse than those in Chechnya and presumably less likely to unite for a
cause. Most express unease about, if not hostility to, the goal of
independence.

Perhaps most powerful of all, in the battle for hearts and minds, the
people of Dagestan and other North Caucasus republics have seen the Chechen
model.

"The Chechens have performed so badly in their independence that people
will look at this and say, `Well, we don't need this, if de facto
independence means a criminal society, kidnappings, an Islamic law imposed
on the people,' " Rondeli said. "The Russians can use this to their
advantage."

For a lasting victory, Moscow will have to offer more than just aerial
bombardment. New Prime Minister Vladimir Putin acknowledged Monday that
military methods alone would not solve the problems in Dagestan, that
social and economic changes were needed as well.

Russian authorities estimate the number of fighters in Dagestan at about
1,500. If Russian troops fail to oust them before winter, it would be a
drastic blow to Moscow's prestige and a harbinger of more problems.

Yet even if the soldiers win for now, they will have trouble holding the
villages should the Chechens launch another offensive.

"It's all very difficult to make a prognosis," Adamia said. "Russia is the
most unpredictable country in the world right now, and any extremist
movement is difficult to predict."

*******

#3
From: "Mark Sowerby" <mark_sowerby@hotmail.com>
Subject: Re Medvedev/3454/Yeltsin' resignation
Date: Sat, 21 Aug 1999 

Dear Mr. Johnson:
Your Russia List is an excellent resource for which I am very grateful. 
You provide a remarkable service to the intellectual and policy making 
community.
I was particularly intrigued by the Moscow Times article by Dr. 
Medvedev in issue #3454 which begs another question you might consider 
posing to the List for a rousing speculative debate if nothing else.
What might happen if President Yeltsin were to resign (despite the fact 
this seems very out of character) on or after September 19 and enable the 
possibility of a presidential election together with the parliamentary 
election on December 19 (to be conducted under the guidance of Putin, "The 
Family," and their financial and media advantages)?
Might such an event catch the current candidates off guard? Might n attempt to capture the political center by pulling 
together liberal reformers like Sergei V. Kiriyenko under one banner with 
power brokers like Viktor S. Chernomyrdin, both men also former prime 
ministers. 

Instead, Stepashin surprised much of the country by declaring somewhat 
bitterly that he had failed to pull together the disparate groups. Later in 
the day, each of the groups said they would go their own way and form 
separate coalitions. 

"Bringing people together who cannot be united is impossible," Stepashin, 47, 
told the Russian news service Interfax today. "Their personal ambitions are 
too big." 

Instead of serving as the standard-bearer of a new centrist alternative to 
Yevgeny M. Primakov, the enigmatic former Prime Minister who leads the 
opinion polls, Stepashin now appears determined to run on his own for a seat 
in the Parliament as a representative from St. Petersburg. 

With Russia entering a political season of expedient alliances and back-room 
deals, there is still plenty of tactical maneuvering ahead. But the immediate 
effect of Stepashin's failure to form a broad coalition was to leave Primakov 
as the early favorite in the jockeying for the 2000 presidential race. 

Primakov got another boost Saturday night when his coalition partner and 
former rival, Yuri M. Luzhkov, the pugnacious Mayor of Moscow, suggested that 
he would let Primakov sit at the head of the ticket. Which of the men would 
lead the team had been unclear. 

The goal of the Primakov-Luzhkov coalition is to capture a dominant position 
in the Parliament in elections scheduled for December and to use those gains 
as a springboard in the run for the presidency. 

Apparently aiming at the ultimate prize -- the Kremlin -- Luzhkov Saturday 
assailed Yeltsin and the economic reformers who once served him as a threat 
to Russia. "The country is being robbed in a way that is unprecedented in its 
cynicism and permissiveness," he said. 

Just Friday night, the Russian news media were reporting that a Stepashin-led 
coalition was starting to jell. A key element of the emerging alliance, the 
news media reported, was Chernomyrdin's movement, Our Home Is Russia. 

Saturday, however, aides to Chernomyrdin disclosed that the coalition began 
to fall when Chernomyrdin refused to include the Democratic Choice party of 
Yegor T. Gaidar, yet another former Prime Minister, who played a role in 
building capitalism by liberalizing prices after the collapse of the Soviet 
Union. 

Another deal breaker was Chernomyrdin's refusal to allow Kiriyenko, another 
prospective member of the bloc, to be listed among the top three leaders of 
the alliance in the parliamentary slate. 

Chernomyrdin still hoped Saturday to form some sort of centrist bloc with 
Stepashin at the head. But Stepashin called to say that he was not 
interested. 

After the coalition collapsed, the democratic and capitalist proponents whom 
Chernomyrdin had rebuffed said they would form their own coalition. 

Anatoly B. Chubais, a member of Gaidar's party who is a former director of 
the country's privatization program, announced Saturday night the formation 
of a coalition involving Kiriyenko and other reformers, including those in a 
movement called Just Cause. He denounced Chernomyrdin's demands as a move by 
the "political establishment" to impose its will on the reformers. 

The exact membership and details of the alliance will be worked out over the 
coming weeks. But the effort to ban together is particularly important 
because of the rules governing parliamentary elections. 

To win a place in the Parliament, a party must receive at least 5 percent of 
the parliamentary vote. Gaidar's party was unable to overcome this threshold 
in the 1996 elections and has little chance of doing so this year. 

The Just Cause movement as well as the New Force movement established by 
Kiriyenko face similar problems. 

Earlier Saturday, Chernomyrdin, whose popularity ratings are nothing to brag 
about, indicated that he might try to form a coalition with Kiriyenko, whom 
he apparently envisioned in a kind of junior role. 

"We should not set up sort of one-day unions that are premature," 
Chernomyrdin said, alluding to Stepashin's efforts. "They will fall apart 
quickly afterward." 

But with Kiriyenko's decision to join the reformers, it appeared that 
Chernomyrdin's quest to build a new bloc could be more difficult than he had 
anticipated. 

******

#12
www.polit.ru
Crash Course in Democracy
By Anatoly Levenchuk

One key feature of a genuinely democratic country is that change of 
government in such a country does not bring any radical changes. Russia has 
not yet had a normal democracy, but there is a chance that it will have it 
some day. After a succession of bureaucratic teams led by Kiriyenko, Primakov 
and Stepashin were sent packing there are much fewer Russians who think that 
it is more reliable to deal with the State than with the Market. Even the 
most dim-witted "businessmen" who previously achieved undoubted financial 
success by bribing government officials have been exposed to a hefty dose of 
democracy and have got an impetus to switch to entrepreneurial thinking along 
the "marketing-investment-production" lines. The 
"bribing-authorization-bribing" cycle has proved to be ineffective.

The default, which instantly changed the scale of political and economic 
players in Russia, merely accelerated the process. The soft and nourishing 
body of the state replete with life-giving juices drawn from the taxpayers 
came to be renewed almost on a quarterly basis. And with each such renewal 
the oligarchs who suck this body like leaches were thrown off the gravy 
train. The economy has cleansed itself several times by tearing some of the 
most dynamic people from all kinds of "authorizations" and thrusting them 
into the free market. The salutary effect is there: most businessmen have 
stopped looking forward to the results of elections, the results of the 
distribution of government posts and started making their business decisions 
with an eye not to the state, but to the market. Making decisions in 
accordance with business plans and not the plans of political events. 

The comprador bourgeoisie only stands to lose from any manifestations of 
democracy: the "business people" who have formed a symbiosis with the state 
(all these "authorized officials" and "winning bidders") invest their assets 
in bureaucrats, that is, concrete people occupying concrete posts. If these 
people are frequently replaced, no amount of money or time would be enough to 
quickly "establish a relationship" with a succession of bureaucratic 
courtiers. And then the businessmen, in despair, realize that the way out is 
to invest not in the bureaucrats, but in marketing studies, to promote not 
their "authorizations" and administrative clout, but their market advantages 
and to win in a normal way. To become, not "smart dealers", but normal 
business people. For the first time market business strategies in Russia look 
no less attractive than the strategies of currying favor with bureaucrats. 

Granted, our President, in replacing his prime ministers like battery cells 
in a pager, pursues very different goals. But I am more interested not in his 
goals, but in the positive educational and economic effect of all his fuss. 
He wants the usual thing, and ends up by making things better. 

There is only one way to educate the present generation of Russians in 
genuine democracy and that is to bloodlessly replace the administration 
several times. People were quick to realize that the change of administration 
is not the end of the world. In this educational situation it is not even 
important whether one of the branches of government has been replaced in an 
national election or by appointment/confirmation by some other branches. The 
educational and salutary effect of such a change of government outweighs any 
possible criticism of such dramatic political shifts in terms of its positive 
impact on people and the economy. 

Everything will be fine: expensive oil enables us to have an almost decent 
budget. An almost decent budget gives us a stable ruble. The stable ruble 
makes it possible to write business plans for more than 3 months ahead. The 
whole business community in Russia is now writing business plans regarding 
friendship with bureaucrats as a hobby and not as the main occupation. And 
the replacement of Stepashin with Putin does not impede it. Rather, the 
reverse is true. 

******