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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

August 25, 1999   
This Date's Issues: 3462  3463  



Johnson's Russia List
#3463
25 August 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Bloomberg: Swiss Corruption Probe Finds Yeltsin Credit Cards, Paper Says
2. Reuters: Yeltsin not seeking fight with West -- minister.
3. Reuters: Suspected IMF diversions tied to Russian Mob-WSJ.
4. Reuters: Russian ex-PM Stepashin joins up with Yavlinsky.
5. Segodnya: Fatherland Endangered. YURI LUZHKOV HAS FOUR DAYS TO AGREE
WITH 
ALL RUSSIA.

6. Helen Womack: reply to yuri luryi/3460.
7. Charles Holmes: job opening in Moscow with Cox newspapers.
8. Nancy Herring: unpublished letter to the WSJ on US aid to Russia.
9. Moscow Times: Yulia Latynina, When a Rich Land Has No Heat or Light. 
(Kamchatka).

10. Financial Times letter from John Odling-Smee, Why IMF is standing by 
Moscow.

11. Obshchaya Gazeta: Primakov Interviewed on Fatherland Coalition.
12. RFE/RL: Sophie Lambroschini, Failure To Unite Compromises Center-Right 
Chances.

13. Transitions Online: Gregory Feifer, Luzhkov Readies for the Trenches.]

*******

#1
Swiss Corruption Probe Finds Yeltsin Credit Cards, Paper Says

Milan, Aug. 25 (Bloomberg) -- Credit card files traced back to Russian
President Boris Yeltsin and his two daughters were found when Swiss
prosecutors raided the Lugano, Switzerland, offices of an engineering and
construction group they were investigating for allegedly laundering
kickbacks on Russian contracts, Milan daily Corriere della Sera reported,
citing sources close to the investigation. The address to which the
statements for the cards were sent was a shop owned by the wife of an
official in the Russian section at Banca del Gottardo, a Lugano-based bank
specializing in portfolio management for wealthy clients, the paper said.
The statements, which were not found in the Yeltsin file, later were handed
over to investigators by the Kosovar Albanian owner of the company under
investigation, who said the cards were for ``out of pocket expenses,'' the
paper reported. 

The Swiss Federal Department for Police and Swiss courts said they've
confiscated 6 million Swiss francs ($3.8 million) in money earned from
criminal activities since a new law took effect in April 1998. 

*******

#2
Yeltsin not seeking fight with West -- minister

BISHKEK, Aug 25 (Reuters) - Russian Foreign Minister Igor Ivanov tried to
explain President Boris Yeltsin's comments about doing battle with the West
by saying on Wednesday that his boss had been talking about the need for a
balanced global order. 

Yeltsin, well known for his puzzling off-the-cuff remarks, said on his
arrival in the Kyrgyz capital Bishkek on Tuesday that he was ``ready for
battle, especially with Westerners.'' 

``You remember there were worries, an operation on my heart. Now all is
past. I am in fighting form, ready for battle, especially with
Westerners,'' the 68-year-old leader, who had a quintuple heart bypass in
1996, told reporters. 

Yeltsin, whose last trip to Central Asia was cut short by a cold, gave no
more explanation of his remarks. 

Ivanov said Yeltsin had been speaking of the need to build a
``multi-polar'' world in which no single power dominated -- a common
Russian expression which targets the United States' perceived desire to set
the post-Cold War agenda. 

``(Yeltsin) was talking about the fact that now...there is an active
struggle over the future of global order. China and Russia and a lot of
other governments are for a multi-polar world in the interests of all
states,'' he told reporters. 

``There is also an attempt to introduce another structure, polar or
bi-polar. Russia has spoken out against this. Now there is a serious
struggle for the future -- what the world order will be in the 21st
century,'' Ivanov said. 

Russia's ties with the West, especially the United States, were badly
strained by NATO's bombing of Yugoslavia, though Russia is now cooperating
in peacekeeping operations in Kosovo. Yeltsin was in Bishkek for a summit
of the ``Shanghai Five,'' named after the Chinese city where a 1996 treaty
on easing border tensions in the region was signed. 

Also in Bishkek were Chinese President Jiang Zemin and the presidents of
Kyrgyzstan, Kazakhstan and Tajikistan. 

Ivanov said the Russian side had briefed the Chinese on its recent arms
talks with the United States in Moscow. 

Russia and China are both strongly opposed to U.S. plans to develop an
anti-missile defence shield designed to counter possible attacks by ``rogue
states'' like North Korea and Iran. 

Moscow and Beijing say such an umbrella would violate the landmark 1972
Anti-Ballistic Missile (ABM) treaty and would undermine the global security
order. 

********

#3
Suspected IMF diversions tied to Russian Mob-WSJ

NEW YORK, Aug 25 (Reuters) - Authorities probing possible money-laundering
now suspect Russian mobsters may have been involved in the diversion of
some International Monetary Fund money and other foreign aid to Russia, the
Wall Street Journal reported in Wednesday's online edition. 

Citing ``people familiar with the matter,'' the paper said the development
is the first time law enforcement officials made the link between suspected
money laundering by Russian organised crime through the Bank of New York Co
Inc. and the possible diversion of IMF and other aid money. 

The IMF has lent about $20 billion to Russia since 1992 with investigators
having focused on $200 million that ended up in a Channel Islands account
held by a Russian commercial bank, the paper said. 

The IMF said on Monday it was looking into reports of diverted funds but
that it had made payments only to the Central Bank of Russia. 

The Journal said New York state authorities have also been looking into
account activity at other U.S. and foreign banks in New York to determine
whether they could have served as conduits for the diversion of IMF loan
money. 

These bank names and the exact amount of funds that may have been diverted
could not be determined, the paper said. 

The scrutiny is part of a larger probe that began with an investigation
into the handling of billions allegedly tied to Russian mobsters in what
could be one of the largest money laundering schemes in U.S. history. 

The Bank of New York, which has said it is cooperating with investigators,
has put two employees on leave in connection with the investigation. 

*******

#4
Russian ex-PM Stepashin joins up with Yavlinsky
By Adam Tanner

MOSCOW, Aug 25 (Reuters) - Russia's pre-election political landscape has
taken on sharper contours with the formation of an alliance between the
opposition party of liberal economist Grigory Yavlinsky and recently sacked
premier Sergei Stepashin. 

The men, who announced their move in St Petersburg on Tuesday night, offer
a potentially attractive mixture of Stepashin's security background as a
former general and interior minister with Yavlinsky's credentials as a
pro-reform economist. 

``We are unified by a general approach to corruption in Russia. We are
unified by our approach to the pulling apart of the government by various
oligarchs and clans,'' Yavlinsky, the head of the Yabloko party, told
reporters. 

The tough law-and-order angle could help differentiate the alliance's
campaign for December's election from those of other liberals -- often
blamed for the wide corruption and lawlessness that have accompanied market
reforms since 1991. 

Tuesday saw the completion of an election alliance between three more
prominent liberals: Anatoly Chubais, father of Russia's controversial
privatisation programme, his protege, one-time reform-wunderkind Boris
Nemtsov, and young ex-premier Sergei Kiriyenko. 

Both groupings are to hold founding party congresses over the weekend where
they will set out their strategies. 

Kremlin spokesman Dmitry Yakushkin said Yeltsin considered Yavlinsky a
constructive political player but declined comment on the new political
alliance. 

``He supports all forces that make constructive proposals,'' Yakushkin told
reporters in Bishkek, the capital of Kyrgyzstan, where Yeltsin was
attending a summit meeting with the leaders of China and three Central
Asian republics. 

Yakushkin said Yeltsin's main priority was that the presidential election
in mid-2000 should ``ensure the civilised transfer of power from one head
of state to another for the first time in Russian history.'' 

Yeltsin fired Stepashin unexpectedly and without explanation earlier this
month to appoint former KGB spy Vladimir Putin. 

The president appeared unhappy that Stepashin had failed to prevent a
centre-left alliance between his foe, Moscow Mayor Yuri Luzhkov, and
ex-premier Yevgeny Primakov which, with a grouping of regional leaders also
in harness, has quickly emerged as the election front-runner. 

Stepashin, who once served in the Soviet-era parliament, had served Yeltsin
loyally for years. He also played a major role in Moscow's disastrous war
against the rebel region of Chechnya in 1994-96. 

Yavlinsky was one of the most vocal critics of the war, which split liberal
opinion in the run-up to the 1995 parliamentary election. But he has
apparently decided to let bygones be bygones. 

Stepashin said he had agreed with Yabloko's suggestions that he should run
for a constituency seat in his home town of St Petersburg as well as on the
Yabloko national list. 

Half the seats in the State Duma are allocated by proportional
representation and the rest go to constituency winners. 

An alliance between the two men seemed to have fallen through last week
when Yavlinsky said Stepashin would be too susceptible to pressure from the
Kremlin. 

*******

#5
Russia Today press summaries
Segodnya
24 August 1999
Fatherland Endangered
YURI LUZHKOV HAS FOUR DAYS TO AGREE WITH ALL RUSSIA
Summary
The Fatherland-All Russia bloc is yet unformed, and questions remain 
surrounding its future. First, three ballot leaders must be chosen, but 
neither Moscow Mayor Yuri Luzhkov nor St. Petersburg Governor Vladimir 
Yakovlev wants to enter the Duma. The same goes for Bashkiria President 
Murtaza Rakhimov and his colleague from Tatarstan Mintimer Shaimiev. Former 
Prime Minister Yevgeny Primakov has yet to state his position, and as a 
result, no one knows who is actually going to run for a Duma seat from the 
coalition.

Forming the rest of the party ballot is the second problem. All Russia 
members in the city of Ufa refused to approve the list of 350 candidates 
agreed upon with Fatherland because regional leaders complained the ballot 
included too few names from their movements. Regardless, under the Russian 
law a party ballot can contain no more than 270 names, so it has to be cut 
even more.

The problems with Fatherland – All Russia do not end at that. And no one 
knows how the bloc is going to solve them in the four days prior to the 
coalition’s joint meeting on August 28.

*******

#6
From: "Helen Womack" <goblin@sonnet.ru>
Subject: reply to yuri luryi/3460
Date: Tue, 24 Aug 1999 

Dear Yuri, I absolutely agree with you that the oldest profession exists
everywhere. What I found moving about the girls on the roadside of Tver
region was that they dressed in white and appeared to identify themselves
with the statue of Mother Russia. Thus, it seemed, they were not only
selling themselves but making a statement of protest or despair. The story
really was about rural poverty, not prostitution. Thanks for your interest
and best wishes from Helen Womack, The Independent. 

*******

#7
Date: Tue, 24 Aug 1999 
From: Charles Holmes <113210.201@compuserve.com>
Subject: job opening in Moscow

Atlanta-based Cox Newspapers is seeking to fill an opening for a
correspondent in Moscow. The position is being advertised within our
newspaper chain and my editors have asked me to be on the lookout for
outstanding candidates already in the region. They've asked me to conduct
the initial interviews in Moscow, and I'll pass along my top three or four
recommendations. Final interviews will be conducted in our Washington
bureau in late September and early October.
Those interested in applying for the job may contact me at
chuckh@coxnews.com, or send your resume and clips to Cox Newspapers Moscow
Bureau, Dmitria Ulianova 16, Kor. 2, Kv. 264, Moscow 117292. 

PLEASE, NO PHONE CALLS.
Charles W. Holmes
Moscow Bureau Chief
Cox Newspapers

Job posting:
http://www.coxnews/careers and click on the Job Listings button. Potential
applicants in the U.S. should apply directly to Foreign Editor Rick
Christie. See below.

Cox Newspaper Job Description 
Cox Newspapers
Newsroom Job Site 
Applicants interested in a job listed on the Cox Newspapers' Job site
should contact the person listed at the bottom of the job
description. 
Job Title:
Moscow Correspondent
Number of Positions:
1
Job Description:
We're seeking an experienced, adventurous reporter to cover Russia
and the former East Bloc countries. The ideal candidate is a tireless
self-starter who can work alone and juggle numerous assignments for the
various Cox newspapers. Ideal candidate should be capable of covering
breaking stories -- sometimes in distant locales -- and producing clean and
coherent copy on deadline. This person should also have the range to write
for all sections of our papers, including business, technology, religion
and travel. The job involves frequent travel on short notice. 
Job Requirements:
Broad reporting experience, mastery of computer filing methods and
proficiency in shooting and filing digital photographs. Fluency in Russian
is a plus, but we will pay for immersion Russian classes for those who have
language aptitude. 
Contact Information:
Rick Christie, Foreign editor, Cox Newspapers 
Cox Washington Bureau 
400 North Capitol Street, N.W. Suite 750, Washington, DC. 20001-1536 
Phone: 202-887-8316 
Fax: 202-331-1055 
E-mail: rickc@coxnews.com 

*****

#8
From: Nancy Herring <nlherring@glasnet.ru>
Subject: unpublished letter to the WSJ
Date: Tue, 24 Aug 1999

Dear David - I thought this might be of interest to you. I have received
no response from the WSJ. Regards, and thank you for the excellent work on
JRL - Nancy Herring

From: nlherring [SMTP:nlherring@glasnet.ru]
Sent: Wednesday, August 18, 1999 8:50 PM
To: 'editors@interactive.wsj.com'
Subject: 
Dear Editors:

I am an American living and working in Russia and I am highly critical of US
policy toward Russia. US aid to Russia is not intended to help
Russia or Russians; it's primary purpose is to further US foreign policy
goals.
It is both simple and logical: the US (Clinton now and Bush, Sr. before him)
seeks to eliminate Russia as a threat to the US's super-power status
world-wide. A tried and true method of the US is to turn the political elite
into kleptocrats as it did in Zaire with Mobutu, in Haiti with Duvalier or
way back when with Batista in Cuba. The US has had enormous success to date
with Yeltsin the willing instrument of US policy goals. In this sense the US
gets enormous value for its foreign aid expenditures. Democracy and
capitalism for Russia is not a emphatically not a policy goal.

A look at IMF funding and other aid to Russia clearly indicates this. The
droning piety of donor countries is merely mendacious, especially coming
from the likes of Stanley Fisher claiming that the Russian Central Bank
hood-winked the IMF over the FIMACO scandal. On the one hand Mr. Fisher
poses as an economics wunder-kind able to prescribe infallible economic
policies for Russia and on the other hand he is just an innocent dupe of
corrupt Russians, even though the IMF received an audit in 1992 criticizing
FIMACO.
We perhaps should also ask why an institution as expert as the IMF, which
certainly has forensic accounting resources at its fingertips, did not
undertake to learn more about FIMACO. This is usually a cue for some more
piety about sovereignty and meddling in politics, but surely economists of
Mr. Fisher's stature, or Lawrence Summers for that matter, understand that
macro-economic policy is deeply intertwined with politics. The IMF has done
little good for Russia but it's been extremely valuable to Yeltsin. I for
one don't think the Russian people or the US taxpayer should accept the
liabilities created for them by the hacks and ideologues in the IMF. Hacks
because they merely do the bidding of the US State Department and other
"national security" apparatchiks; ideologues because no matter what the
empirical evidence of failure and inappropriateness, the IMF insists on the
same policies. 

There can be no doubt that the aides to Megawati Sukarno, the apparent
front-runner for President in Indonesia, are on to something. If the IMF,
the World Bank and other lending agencies knew of corruption and released
funding anyway then why don't they bear at least some the responsibility
for outcomes?
Is this not moral hazard but simply on the other foot? It is quite clear
that these government and non-government agencies are careless about
accounting, accountability and transparency because they can get away with
it and it serves their goals. They use aid money to bribe Bosnians, Russians
and the rest to further their political goals. They aid and abet corruption
- they are not innocent victims. They behave as if they are completely free
to burden a nation's citizens with debt for decades because the sovereign
may not default. Quite a neat trick when the IMF and World Bank can be used
by US foreign policy officials to get the citizens of the target nation to
pay for their own demise. 

Sincerely, 
Nancy Herring

******

#9
Moscow Times
August 25, 1999 
INSIDE RUSSIA: When a Rich Land Has No Heat or Light 
By Yulia Latynina
Special to The Moscow Times

Last week I found myself in Kamchatka, a territory where, thanks to the 
specifics of geography, the paradoxes of the Russian economy are pushed to 
the limit. In this region there is one automobile for every five residents f 
the highest per capita car ownership in Russia. The earnings of a simple 
fisherman in one season range from $20,000 to $40,000. A dollar invested in 
the fishing industry gives back $12 in profit, and experts estimate that 
poachers make off each year with catches worth up to $4 billion. 

There is money in Kamchatka. But there is no light and no heat. This winter 
in the territorial capital of Petropavlovsk, locals burned all of the fences. 
In Ust-Kamchatka, a town six kilometers to the north, electricity and heating 
were completely cut off. People moved to the top floors of five-story 
buildings, and used the first floor as a public toilet. Around June, all of 
that began to melt and to run off in the direction of the lone local fish 
cannery. 

While Kamchatka has sat without light, the local administration has 
reportedly been buying heating oil from a Korean company for 2,800 rubles a 
ton. Russian heating oil costs 1,500 rubles. Asked for the exact name of the 
Korean firm in question, officials in the administration spread their hands 
in a gesture of helplessness. "It's not us doing the buying, it's 
Kamchatenergo," they say. At Kamchatenergo they also gesture helplessly. 
"It's not us doing the buying, it's Slavneft." At Slavneft they also don't 
know anything f after all, they say, the contracts were signed by the 
administration. 

Poaching in Kamchatka is consciously and broadly encouraged by the 
authorities. After all it is the local administration that has given catch 
quotas on fish and other seafood to 594 (!) different companies. Everyone 
knows that each company receiving a quota for, say, 50 tons of crab is 
obviously a poacher: Crab are caught at a rate of 4 tons a day, and there's 
not much profit in working just 12 days a year. A quota of 50 tons is simply 
a front for unregulated fishing. 

At the same time, this stolen money nurtures nothing in Russia, thanks to the 
insatiable minute-by-minute greed of local bureaucrats. The ports are empty 
because any Russian ship that pulls in is fallen upon by a pack of hungry 
regulators. The shipyards are empty because Russian taxes make it cheaper to 
do repairs in Korea. 

The fish processing factories are idle because the cost of electricity makes 
fish processing in Kamchatka unprofitable. And electricity is expensive 
because taxes and bureaucrats have destroyed all of the other tax payers f 
that is to say, the ports and shipyards. 

If Russian factories could swim, then all of Russia would be like Kamchatka, 
and the factories could sail off to be repaired in Korea. On Kamchatka, 
however, the laws of economics are as refined as fine sugar. The more 
bureaucrats rage out of control, the more ships are serviced abroad. The more 
that added value slips over the border, the more tireless the bureaucrats. As 
a result, the governor's office buys heating oil for twice its price, 
fishermen buy their own personal generators, and that remainder of the 
population that has no relationship to the sea goes hungry, and on winter 
nights throws rocks to break the windows of apartments where the lights are 
on. 

******

#10
Financial Times
23 August 1999
[for personal use only
Letter
RUSSIA: Why IMF is standing by Moscow 

>From Mr John Odling-Smee. 
Sir, 

Naturally I disagree with Martin Wolf that Russia neither deserves nor needs 
new International Monetary Fund money, which will only damage Russia, the IMF 
itself, and the rest of the world ("Price of forgiveness", August 11). To me 
the case for lending is simple: the Russian authorities are implementing an 
economic programme that will maintain the cautious monetary policy pursued 
since January, reduce the fiscal deficit, reduce the slippages in structural 
reforms that occurred after August 1998, and make modest progress with other 
reforms.

Of course, many serious problems remain. Much more radical reforms are 
needed. As Mr Wolf says, the culture of non-payment and pervasive corruption 
are rampant. And he is right to deplore Russia's behaviour to its creditors 
last year and its lies to the IMF.

But the IMF should not walk away and wait until Russia solves its own 
problems. The IMF does not lose "credibility as a setter of standards and 
enforcer of conditionality" by lending in current circumstances.

This could be the case in the eyes of those who think that the IMF should be 
able to prevent all the slippages in countries' economic policy and official 
behaviour. But those who are close to the realities of Russia know that the 
IMF' s influence is greatest when there is a continuous dialogue between 
Russia and the IMF, in the context of a loan or the preparations for one. 
Hence the improvement in Russia's relations with its creditors since August. 
Hence the restrained monetary and fiscal policies since the beginning of the 
year and the absence of a major reversal of market reforms, despite some of 
the rhetoric of the government that took over after August. Hence the long 
time it has taken for the IMF to persuade the Russian authorities to adopt 
their current programme and implement the first steps.

Of course, we share the frustration of other friends of Russia about the 
failures of economic policy. But the right response for the IMF is to remain 
engaged in the long, hard business of trying to improve policies through 
persuasion and strict loan conditionality. It is not to stand aside, 
especially when Russia is showing signs of resolve in tackling the difficult 
problems it faces.

John Odling-Smee, 
director, 
European II Department, 
IMF, 
Washington DC 20431, 
US

******

#11
Primakov Interviewed on Fatherland Coalition 

Obshchaya Gazeta
19 August 1999
[translation for personal use only]
Interview with Yevgeniy Primakov, conducted by correspondent Yegor 
Yakovlev: "Vacation Is Over; Time For Political Lessons" 

[Correspondent] What, ultimately, dictated your 
decision to accept the offer of the Fatherland-All Russia bloc? 
[Primakov] Before making any decision, I had to pause for awhile. 
This was not some planned tactic. I needed time to make sense of the 
situation in which I had found myself, to exchange opinions with my 
friends whose position I respect very much. And finally, to think one 
more time how things would be with my health--the latter, you must 
agree, is also very important. And when I was convinced that nothing 
stood in the way of my decision to participate in political life, I took 
this step. I do not want to pronounce any lofty phrases, but in 
principle I do not consider it possible to move aside at such a moment. 
This contradicts my understanding of civic duty. 
[Correspondent] To what degree was your decision dictated by the 
dismissal, which evoked general condemnation, which for present-day 
Russia is rather unexpected? 
[Primakov] There can only be one connection with my dismissal. 
Prior to it, that is before my dismissal, I ruled out my participation 
in any political struggle whatsoever. Why? Why, because the post of 
Chairman of Government obligates one to maximally concentrate on the 
solution of those problems which are facing the government. This 
conclusion of mine is universal, and concerns not only me personally. 
After all, the tasks of the pre-electoral struggle far from always 
coincide with state interests. Let me cite a simple example. I believe 
we must press the local authorities to spend in an absolutely goal- 
oriented manner those transfers which are given from the Center, 
ensuring timely payment of wages to local budget workers--those same 
doctors, teachers and others. However, if you are participating in the 
pre-electoral struggle, if you are interested in the votes of the 
electors, then you cannot ignore relations with the local authorities. 
But as the head of government, you are free of outside considerations, 
for you the main thing is to make provision for the tasks aimed at 
improving the life of the people, and you resolve them in spite of 
everything and all. Today, I am in an entirely different situation. 
But nevertheless, I would like to emphasize: I have no sentiments of 
revenge, no "insulted man complex." I am absolutely free of this. 
[Correspondent] You and both recall--in 1989, during the 
elections of USSR People's Deputies, the candidate's programs played a 
large role. Then they became more and more devalued. Today, it seems 
that the programs are no longer of any interest to anyone. Does this 
not prompt you to seek out the most profitable populist moves? Such as 
yesterday's announcement by Putin that there should not be any poor 
people in Russia. 
[Primakov] I personally am not ready for populism. When the Duma 
approved me as Prime Minister, I said that I could not bring the country 
to quick prosperity or to a quick way out of the difficult position in 
which it found itself, because I am not a wizard. And already by this, 
I indicated my non-acceptance of populism. I believe that with the 
voters, and with the people in general, we must speak only in the 
language of truth, and not promise them two birds in the bush when they 
have none in the hand. 
[Correspondent] What ties you with Luzhkov--human sympathies, 
respect for a leader, or long-time friendship? Not everyone speaks of 
Luzhkov in a complimentary tone. Some have rather negative sentiments. 
[Primakov] I am one of those who takes a positive view of 
Luzhkov. I consider him to be a good economic manager. A decent man 
who has never betrayed his colleagues. He, undoubtedly, is not standing 
still, but is growing--including also as a politician. At the same 
time, I would like to stress: In accepting the offer to head up the 
electoral list of this bloc, I do not intend to enter into any other 
structures which make up this bloc. I agree to join only the coalition 
of centrist forces. I believe that this coalition must be open to all 
who pursue the common goal--the good of Russia. There should be no room 
there only for extremists who destabilize the situation, or for those 
who would like to retain the "murky waters" in which they can catch 
"golden fish" through dishonest means. 
[Correspondent] What do you expect from the Duma, if your bloc 
occupies leading positions in it? 
[Primakov] First of all, I would not like to talk now about how 
many percent we will get, or whether the role of the bloc will or will 
not be decisive. I am far from euphoria. Everything depends on how the 
voters understand us, to what degree we will be able to stand before the 
people as that force which speaks out for unity, for accord, for 
stability, and for prosperity of the country. And finally, for the 
necessary reforms and transformations to be implemented in the interests 
of all the people. 
[Correspondent] The Kremlin and the President's inner circle are 
not concealing their dislike of Luzhkov. They are even more irritated 
by the creation of the Fatherland-All Russia bloc. And finally, by your 
entry into this bloc... 
[Primakov] In one of my rare interviews--I granted it to 
Komsomolskaya Pravda--it was stated that this bloc must in no way be 
directed against those forces which set constructive tasks for 
themselves. At that time, in responses to Interfaks, I stated that this 
bloc cannot and must not be an anti-presidential force. We must find 
coordinated decisions. Moreover, as I recall, the President never once 
spoke out against this bloc, or against my participation in it. As for 
individuals who whisper in the corridors, perhaps even Kremlin 
corridors, this, honestly speaking, does not affect me. 
[Correspondent] And nevertheless, do you see that extreme option 
which an unhappy Kremlin may choose? 
[Primakov] I believe the President, who said that he does not 
intend to introduce a state of emergency. 
[Correspondent] Recently, you had a long talk with Stepashin. 
Your good relations with him evidently remain unchanged. Can you become 
competitors in the electoral struggle? 
[Primakov] I do not think so. I would not like to be Stepashin's 
competitor. And I would not like him to be a competitor of our bloc. 
It all depends on the platform which he will present--it cannot be 
destructive. 
[Correspondent] How do you appraise what is going on in Dagestan? 
How unavoidable were these unpleasant occurrances? There is talk today 
about certain instigators of the conflict. They supposedly have far- 
reaching plans. 
[Primakov] I do not want to build my discussions around rumors. 
I do not have the facts in hand, and I am accustomed to drawing 
conclusions in intelligence and in politics and to evaluating the 
situation on the basis of the facts, and not of talk. As for the 
situation itself, I am convinced: It is very dangerous. There is 
aggression directly against Russia. An attempt is being made to tear 
away from Russia a vital part of it, which adjoins the Caspian Sea. If 
this were to happen, God forbid, it could entail great unpleasantness 
for the Northern Caucasus as a whole. I believe that this action of the 
insurgents could have been predicted and foreseen. Since we were very 
well aware of the various opinions which existed even within the 
leadership of Chechnya. Some believed that the main thing for Chechnya 
was to retain its boundaries, to strengthen its independence and 
sovereignty. Others--and they were supported by certain circles abroad- 
-strived to export the "Chechen experience," if you will, the Islamic 
revolution, to neighboring territories. And, of course, we can say with 
certainty that one of them is Dagestan. Therefore, it seems to me that 
political measures, which could have been implemented primarily in 
Dagestan, would have reduced this danger. 
[Correspondent] Over 10 years ago, walking around Reykjavik, we 
shared our impressions about the first steps of perestroyka. And you 
told me that you would never betray its ideals, that there was nothing 
higher for you. Are you prepared to repeat these words today? 
[Primakov] Yes... I might add that, at that time, we addressed 
each other in the familiar form of address. And here is what I will say 
to you, in the familiar: If I did not believe that even today there is a 
continuation of what was begun, perhaps in a zig-zag fashion, perhaps 
sometimes in distorted forms, perhaps with some setbacks--after all, 
from the very beginning everything was far from ideal... In short, if I 
were not convinced that the movement is nevertheless proceeding, I 
would, of course, step aside from it. 

******

#12
Russia: Failure To Unite Compromises Center-Right Chances
By Sophie Lambroschini

Consultations that have been going on for several weeks in Russia aimed at 
creating a center-right coalition collapsed over the weekend. Analysts 
predict the failure will deprive the Kremlin of direct leverage in upcoming 
Duma elections. 

Moscow, 24 August 1999 (RFE/RL) -- Difficult consultations to create a 
center-right coalition boasting four former prime ministers collapsed on 
Saturday. The aim of an alliance between politically weak reform-inclined 
parties and Kremlin loyalists was to join forces in order to win the 5 
percent of votes necessary to be represented in the next Duma.

Former Prime Minister Sergei Stepashin, whom public opinion polls show as a 
popular figure, was supposed to consolidate these forces, otherwise divided 
by the personal ambitions of their leaders and antagonistic political 
platforms.

But Stepashin announced on Saturday that he would not run for a Duma seat as 
a list candidate for the planned center-right coalition. He decided instead 
to run on his own in his hometown of St. Petersburg.

Meanwhile, former Prime Minister Viktor Chernomyrdin refused to cooperate 
with the more right-wing parties. 

Initial hopes were for a coalition including most of the so-called "young 
reformers" of the "Right Cause" movement, including former Prime Minister 
Yegor Gaidar and former Deputy Prime Minister Boris Nemtsov, along with a 
movement led by former Prime Minister Sergei Kirienko and the "Our Home 
Russia" bloc led by Chernomyrdin.

According to Kirienko, Chernomyrdin did not want to place himself in third 
position on the electoral list. Chernomyrdin also reportedly rejected 
Gaidar's participation.

The daily Nezavisimaya gazeta reported that "Our Home Russia" was afraid to 
compromise itself with politicians who are held responsible for Russia's 
economic woes. Chernomyrdin's government was fired by President Boris Yeltsin 
several months before last year's financial collapse, which came with 
Kirienko in the prime minister's post.

Gaidar was replaced by Chernomyrdin in 1992 after his shock therapy unleashed 
inflation. His poll ratings are running as low as Kirienko's.

Vladimir Ryzhkov, head of the "Our Home Russia" Duma faction, tells RFE/RL 
that most party members "have an allergy" to many of the leaders of "Right 
Cause," particularly to the chairman of the energy monopoly UES, Anatoly 
Chubais.

Yevgeny Volk, political analyst at the Moscow-based Heritage Fund, tells 
RFE/RL that the whole idea of a center-right bloc had little chance of 
success. According to Volk, "Our Home Russia" and the "Right Cause" coalition 
are "antagonistic by nature," since the former represents the local and 
central bureaucracy and the latter represents people with strong pro-reform 
views. 

This failed attempt at coalition building was widely seen as a desperate 
strategy of weak parties. Indeed, Nemtsov recently told RFE/RL that its 
failure would leave the parties with dwindling electoral chances. 

"Each one [of the leaders] understands, at least in the depth of his heart, 
that getting into the Duma will be very difficult. Let's remember the fate of 
[Gaidar's] Democratic Choice of Russia. When it was the party of power, it 
got enough votes during elections to get into the Duma [in 1993]. However 
when Democratic Choice lost its status of party of power, it simply didn't 
get into the Duma in 1995. That same fate is awaiting Our Home Russia if 
[they] go alone."

The failure also reduces the Kremlin's opportunities to find a lever in the 
next Duma against its two main enemies, the communists and Moscow Mayor Yuri 
Luzhkov's "Fatherland-All Russia" bloc. 

Analysts say the Kremlin looked upon the center-right bloc as a political 
base that would save the existing political status quo. A Duma dominated by 
Luzhkov's party, by communists, and to a lesser extent by Grigory Yavlinsky's 
reformist hard-line opposition could end up being even more uncontrollable 
than the present lower house where "Our Home Russia" is the second largest 
group.

Pavel Bunich, a Chernomyrdin ally, told the daily "Novye Izvestya" that "the 
executive branch presently finds itself without any party on which it could 
rely for support. Nothing like this has happened before. Naturally it makes 
the Kremlin and the White House nervous."

Yevgeny Volk agrees. He tells RFE/RL that with the failure at coalition 
building, the Kremlin doesn't have the time to launch a new strategy. Volk 
says it looks increasingly likely that the Kremlin will not have much weight 
with any effective party or bloc competing in the December Duma elections.

Arriving in St. Petersburg yesterday to launch his own campaign, Stepashin 
explained that the failure of the center-right coalition was not a tragedy. 
He said it "just shows that you can't associate people that doǹt fit 
together." But he said there will be a real chance to associate those that 
represent the right-center in different factions once Duma elections have 
taken place. 

******

#13
Date: Tue, 24 Aug 1999
From: Luke Allnutt <allnuttl@ijt.cz>
Subject: Transitions Online--Luzhkov article

Dear David,
I hope that this profile of Yuri Luzhkov, which we posted on our site
(www.transitions-online.org) yesterday, will interest your readers.
Best Wishes,
Luke Allnutt
Assistant Editor
Transitions Online

Luzhkov Readies for the Trenches
by Gregory Feifer
Gregory Feifer is a freelance writer living in Moscow.

Moscow--In late June, the mayor of Moscow, Yuri Luzhkov, stood in the
middle of a sunny field near the city of Tver, 150 kilometers northwest of
the capital. Gripping a cabbage in one hand and clenching his other into a
fist, he swore revenge on the federal government. "This is a very dangerous
precedent in our society," Luzhkov growled in front of Russian television
cameras.

That morning, the air force had nearly thwarted a mayoral publicity stunt
by denying him permission to helicopter to Tver on the grounds that
President Boris Yeltsin was to leave for a Group of Eight summit in Germany
the following day. Instead, Luzhkov's ballyhooed inspection of farms in
regions surrounding Moscow began with a bumpy, humbling car ride. He
declared that the Kremlin had made him "enemy No. 1."

The media attention given to Luzhkov's gripe demonstrated the vast extent
of the mayor's power. The incident has also helped set the stage for a
confrontation with the Kremlin ahead of parliamentary elections, slated for
19 December, and presidential ones in 2000. Moscow's ambitious
mayor--widely considered the front runner for the presidency--seems
set to dominate the elections, despite the Kremlin's open desire to do
everything in its power to prevent him from doing so. The burgeoning
conflict will take center stage in Russian politics between now and next
year's elections.

The Kremlin has good reason to fear Luzhkov, who has skillfully captured
the electorate's imagination and respect. Well-crafted demagogic appeals,
combined with the ability to keep Moscow's budget in the black; when
the rest of Russia's economy has imploded--have made him the most
popular figure in the capital. And his recent alliance with former Prime
Minister Yevgenii Primakov has made his candidacy all the more formidable.

FROM BUREAUCRAT TO RISING STAR

Luzhkov spent most of his career in a series of managerial positions in the
Chemical Industry Ministry before winning a seat on the Moscow City Council
in 1987, where he earned praise as a defender of city consumers. In 1991,
he was elected deputy mayor on the ticket of mayoral candidate Gavril
Popov, who had vowed to reshape Moscow's city government along U.S. lines.
When Popov resigned in 1992, Yeltsin appointed Luzhkov mayor. From that
time, his fame and fortunes have grown exponentially. Late last year,
Luzhkov founded a political party named Otechestvo (Fatherland) to help
deliver him to the Kremlin.

The move came only after the mayor had gained firm control over Moscow.
City Hall now has a stake in almost every large business venture within the
capital. The mayor's office directly and indirectly controls billions of
dollars' worth of the city's real estate, industry, and media. It
constructs new, Western-style office and residential buildings and in many
cases retains more than 50 percent of ownership.

Some of the profits from such ventures--such as Manezh Square, an
underground shopping mall adjacent to Red Square completed in 1997--are
channeled into grandiose architectural projects smacking of Stalinist
neo-classicism and public works that include sprawling parks and garish
monuments. Money also goes into filling potholes, paying pensions, and
building Soviet-style concrete-slab apartment blocks.

Luzhkov has successfully combined free market economics with a Soviet
command-style administration that micro-manages most aspects of city life.
Moscow swarms with inspectors of all kinds ostensibly making sure the
city's myriad of regulations are observed. Shop owners, for example, need
licenses just to change their window displays--not to mention the
products sold inside. Such documents are easier to obtain through bribes
than through proper procedures. But the administration has attained the
chief prize sought by many Russian political regimes: stability.

Luzhkov's administration is widely acknowledged to be run in a closed,
conspiratorial fashion, rife with corruption. Western construction
companies, for example, complain about recently passed legislation that
forbids moving large shipping containers into the city center during
working hours. Only one enterprise is authorized to unpack large loads into
acceptable smaller ones. That company belongs to the mayor's brother.

Such favoritism, Muscovites say, is also true of most other Russian
politicians. But Luzhkov gets things done. In 1996, the capital expressed
its gratitude by sweeping the mayor back into office with a 96 percent
vote.

MYTH-MAKER EXTRAORDINAIRE

Luzhkov's populism reaches far beyond demagoguery and public works
projects. He is particularly popular because he caters to the desire of
many Russians for identity amid the trauma of the reform process. Such
sentiments include a yearning for continuity with the country's past
achievements. Criticizing Russia's mass privatization program, Luzhkov
recently re-nationalized two ailing auto-makers, ZiL and AZLK, by directing
the city to buy controlling stakes in the ventures. He vowed to resurrect
the symbols of Russian industry his way. Real restructuring, which would at
the very least entail firing hordes of workers and managers, is something
the mayor's administration has so far proven unwilling to do.

Luzhkov's myth-making talent--expressed by raiding centuries of Russian
history to exploit certain themes and images for his own
purposes--contributes to his political power and serves to camouflage
his lack of adherence to any one particular ideology. That is nothing new
to Russia: Soviet citizens were used to hearing their leaders preaching a
communist utopia in order to hide a reality plagued by corruption.

At Luzhkov's request, huge banners showing Soviet military medals have been
hung on central buildings. During public events, the mayor often dresses
up--in chain mail and armor--as Yuri Dolgorukii, believed to be
Moscow's 11th-century founder. But the behemoth sculptures carved by Zurab
Tsereteli, dubbed Luzhkov's court artist, project perhaps the most visible
images of Russia's newly imagined past. Tsars and Russian fairy-tale
characters have a special place in Tsereteli's statues. Despite harsh
criticism from art critics and the intelligentsia, the artist's work is
popular among most Russians.

"In many ways, Tsereteli satisfies not just the mayor of Moscow," says
Yevgenii Bunimovic, a poet and member of the State Duma. "[His work] also
appeals to a certain type of everyday consciousness--specifically the
conviction that no normal person should undertake to deeply and seriously
grasp all the details of history."

THE FIGHT AHEAD

With the political climate heating up, Luzhkov has other assets working in
his favor. He almost never grants interviews to media not directly
connected to him, but appears frequently on TV-Center, the national
television channel set up in 1996 by his supporters. Luzhkov is shown at
dedication ceremonies and other public events wearing his trademark leather
cap, surrounded by his deputies and beaming with the assured smile of
someone firmly in control. He especially likes to man wrecking cranes
during well-publicized campaigns to tear down Khrushchev-era apartment
buildings and build new ones in their place.

But Luzhkov's jovial public demeanor gives away nothing of his most
pressing concerns. In July, the Federal Security Service (FSB), a successor
to the KGB, launched a criminal investigation into charges that
Inteko--a plastics-manufacturing company belonging to Luzhkov's wife,
Yelena Baturina--had engaged in money laundering. Describing that as
part of a Kremlin campaign to pressure him, Luzhkov singled out
controversial tycoon and Kremlin insider Boris Berezovskii as one of those
behind the alleged attempt to gather compromising information. NTV--the
independent television station owned by Luzhkov's close ally Vladimir
Gusinskii--and other Gusinskii media outlets soon became involved in a
vitriolic war of rhetoric with Berezovskii-controlled ORT television and
the president's chief of staff, Alexander Voloshin.

Vycheslav Nikonov, president of a Moscow-based think tank Fond Politika and
a board member of Luzhkov's Otechestvo movement, was not visibly concerned
by the investigation into Inteko.

"It's unpleasant," he acknowledges, "but it's expected and nothing new. And
it enables Luzhkov to present himself as an anti-Kremlin candidate. That's
good for him, since the Kremlin is the most disliked political force in the
country."

Although Yeltsin and Luzhkov have publicly cooperated--such as during
Yeltsin's 1993 victorious confrontation with a rebellious parliament and
Yeltsin's 1996 re-election campaign--the mayor has never been
personally close to the president. The two came to loggerheads earlier this
year, when the mayor began bolstering opposition to Yeltsin as part of his
attempt to gain prominence ahead of the presidential elections by creating
a united opposition to the Kremlin.

Seeking to spread his popularity beyond the capital, on 22 April Luzhkov
made an alliance with Vsya Rossiia (All Russia), a regional political
movement headed by Tatarstan President Mintimer Shamiev. As the first
regional leader to negotiate a bilateral treaty with Moscow in 1992,
Shamiev still symbolizes resistance to the Kremlin. The alliance was given
renewed vitality in late July when Shamiev announced that Otechestvo was
Vsya Rossiia's "best partner."

Luzhkov has the financial and media backing to wage a strong campaign. But
politics in the provinces--where he has significantly less support, as
many see him as a representative of the wealthy capital--has much more
to do with alliances and the delivering of votes than platforms, rhetoric,
and campaigning.

That's where Primakov comes in. The widely popular figure received support
from the Communists in the Duma in his successful bid to become prime
minister in the wake of last year's economic collapse. On 17 August,
Primakov formally signed up to lead the centrist bloc of Otechestvo-Vsya
Rossiia into the parliamentary elections as head of the bloc's coordinating
council.

Little seems to stand in the way of Otechestvo's stated goal of forming the
largest faction in the Duma this December. The Luzhkov-Primakov alliance
will most likely produce an unbeatable 25 to 30 percent of the vote.

Luzhkov's critics had hoped the former premier would decline. A prominent
reformer, former Finance Minister Boris Fyodorov, predicts that if Luzhkov
becomes president, his people will take every prominent position they can
grab. "Having that kind of system in Moscow is one thing, but it would be
quite another for the whole country," he says. "With foreign investors, I
joke that under President Luzhkov, the country will be renamed Luzhkov,
Inc."

******



 

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