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Johnson's Russia List


September 3, 1999   
This Date's Issues: 3479  3480  


Johnson's Russia List
3 September 1999

[Note from David Johnson:
1. Reuters: Bush adviser wants IMF to be given ``hard look''.
(Condoleezza Rice)

2. The Moscow Tribune: John Helmer, JEKYLL & HYDE OF RUSSIAN POLICY.
3. Reuters: Russians No Longer Bitter towards US Over Kosovo.
4. AP: Russians Get Lessons in Democracy. (In US).
5. Reuters: Sebastian Alison, The Volga, Russia's river of lost opportunity.
6. Christian Science Monitor editorial: Is Russia a Campaign Issue?
7. The Economist: Did Al Gore Lose Russia?
8. Itar-Tass: Primakov Adds No New Votes to Fatherland-All Russia: Forecast.
9. Bloomberg: Russian Pollster on Views of Money Laundering Probe: Comment.
10. Turin's La Stampa: Giulietto Chiesa, Rumors in Moscow: Yeltsin Moving 
in Direction of Resignation.

11. Milan's Corriere della Sera: Former Yeltsin Aide Ready To Testify on 
Corruption. (Korzhakov).

12. Izvestia: Small Iron Curtain.] 


Bush adviser wants IMF to be given ``hard look''
By Alan Elsner, Political Correspondent

WASHINGTON, Sept 2 (Reuters) - Republican presidential front-runner George W. 
Bush's chief foreign policy advisor is calling for a investigation of the 
International Monetary Fund in light of reports that billions of aid dollars 
may have been siphoned off by Russian criminals and corrupt officials. 

Condoleezza Rice, who served on the National Security Council under Bush's 
father, former President George Bush, told Reuters in an interview Wednesday 
the scandal had severely undermined the IMF among U.S. politicians and the 
public, where support for the institution had already been shaky. 

``We need to conduct a hard look at IMF operations and how foreign assistance 
gets funnelled and what system of accountability they have,'' Rice said. 

``To learn that they didn't have a proper system for accounting for IMF money 
would be a devastating blow,'' she added. 

Regulatory authorities in the United States and elsewhere are investigating 
claims that Russian mobsters, businesses and senior officials may have 
funnelled more than $15 billion from Russia via the respected Bank of New 
York, and some newspapers say the money might have included IMF aid. 

``I had always assumed as a U.S. taxpayer that when IMF money goes to a 
country, it is used for the purpose for which it was intended,'' Rice said. 

``The gravest indictment coming out of this scandal is if we now believe this 
money made its way into the hands of Russian criminals, or even worse Russian 
government officials. The chances are very great that was the case,'' she 

Rice said the crisis was likely to undermine further the will within Russia 
to achieve real economic reform while simultaneously eroding the ability or 
desire of Western countries to provide Moscow with further aid. 

Russia is still mired in economic chaos despite massive foreign aid, 
including $21 billion in IMF loans, over the past seven years. Rice said 
Clinton administration officials had spent many of those years trumpeting 
Russian economic reforms that were now exposed as illusory. 

The IMF says it has no evidence that its funds were diverted and laundered 
through the Bank of New York, and bank officials have argued that Russia 
still needed help from abroad. 

But Rice said she could not support new IMF loans for Russian until the 
scandal was cleared up. Bush, who leads the field for next year's Republican 
presidential nomination by a wide margin, has yet to speak in detail on the 

Some Republicans have seized on the reports of money laundering as a way to 
attack Vice President Al Gore, the leading Democratic presidential candidate 
for 2000. 

Gore co-chairs a U.S.-Russian joint commission which meets twice a year to 
foster closer economic ties and develop joint projects. It is not clear 
whether the commission will continue. 

But Rice, who advised former President Bush on Russia policy in the period 
immediately after the collapse of the Soviet Union, said she thought a debate 
on ``who lost Russia'' would be misguided and unproductive. 

``It will be an issue in the presidential campaign but I don't care for the 
term, 'Who lost Russia?' We must all hope that Russia is not lost and the 
American people don't want to hear just about what went wrong but also how we 
can go forward to the future and how we should structure this relationship,'' 
she said. 

At the same time, Rice said there was little chance of getting anything done 
with Russia until the presidential election scheduled there next summer. 

``If we can still send a message to the Russian government, it should be that 
we expect that election to be democratic and fair,'' she said, 


Date: Thu, 2 Sep 1999 
From: (John Helmer) 

The Moscow Tribune, September 3, 1999
John Helmer

If you believe in the evil men do, then you probably remember the 
story of Dr. Jekyll and Mr. Hyde. 

Written in 1886, before the Viennese quack Dr. Freud started 
fussing about innocence and guilt, Dr. Jekyll conducted his famous 
experiment on wickedness by inventing a disinhibitor drug, and consuming it 
himself to record the effects. 

These, according to his inventor, Robert Louis Stevenson, eliminated the 
good doctor's morals, and exaggerated his lusts, transforming his behavior on
nighttime binges, so that, as Mr. Hyde, the hero becomes a perverse 
torturer and murderer.

The tale reaches its climax when Jekyll discovers he cannot escape from
the evil Hyde commits, or from the body that houses them both. Hyde's
fate seals Jekyll's. At least in Stevenson's fable, evil ends up destroying
itself. Phew! What a relief, breathed the nineteenth century moralists.

Now consider today the twin personality known as Strobe Talbott, who is
the Deputy Secretary of State in Washington, and Lawrence 
Summers, the Secretary of Treasury; and the potion they have been concocting 
and drinking for years -- the drug called Russian reform.

Now that the U.S. Congress, the law enforcement organs, and the intelligence
agencies have all become aware of the wickedness committed in the name of
Russian reform -- money-laundering, racketeering, theft, and larceny on a 
grander scale than ever before -- it is worth asking whether Talbott is the
Jekyll of Russian reform, and Summers the Hyde; or is it the other way 

According to Talbott, everybody should "calm down". The growing volume of 
disclosures about Russian and American involvement in wickedness is nothing
new. Talbott knew it all along, he said last week. "We have been aware that 
crime and corruption are a huge problem in Russia, and a huge obstacle to
Russian reform."

Talbott was speaking especially carefully, because what he meant by "crime
and corruption" is much narrower than the average district attorney, FBI
agent, or even Russian prosecutor means. Talbott was also speaking 
fastidiously when he chose the geographical term "in Russia". 

The reason for the Jekyll-like precision is that Talbott knows
a great deal about what was decided and done in the United States to
pay Russian politicians to follow Washington's bidding. Talbott knows
what payments were made to the Kremlin, and to the so-called reformers,
to enable them to expand the power of the Yeltsin government between
1991 and 1993, toppling first Mikhail Gorbachev; then the Russian
parliament; and finally to capture Yeltsin's re-election in 1996.

Those payoffs were experiments in Russian reform, according to 
Jekyll Talbott. They had nothing in common with Hyde-type crime and

This week Summers sounded tough and determined to get to the bottom
of Russian crime, hinting he is ready to halt multinational lending to 
Moscow until that is done. It appears as if he believes he can climb
right out of the Hyde suit he wore for several years, and reassume the
Jekyll proprieties, just as Talbott has done. 

This may be more troublesome for Summers than for Talbott.
That's because on his Hyde-like jaunts in the past, Summers had associates
who made financial gains -- fortunes is a better word -- from their
inside knowledge of the policies Russian officials, paid by Washington,
had agreed to implement. Some of Summers' associates had wives and partners,
who did the fortune-hunting on their behalf.

The money that was made, as many investigative reports
over the years have shown, came from privatization of Russian state property; 
from trade in short-term government securities; from the sale of state
stocks of diamonds, gold, platinum, and palladium; from churning state and 
foreign cash through Russian and other bank accounts; from tolling
contracts in aluminum, steel, titanium, and other metals; from false
invoicing and customs fraud; from Kremlin trade concessions in oil, gas, tea,
sugar, and vodka; from smuggling, bribery, and kickbacks.

In short, once Talbott and Summers had invented the Russian reform drug, 
there was no limit to the imagination it released of the riches that could be 
plundered. To say this was nothing but a noble scientific experiment
performed for the welfare of the Russian section of the human race -- well,
not even Stevenson's fictional doctor turned out to be so arrogant when
the truth began to dawn.

There was also no stopping the Washington pair of Jekylls from passing on 
their magic potion. Every nighttime since 1992, in the corridors of the 
Kremlin and Spaso House [the U.S. embassy], there have been dozens of Hydes 
on the prowl.

"I was conscious of a heady recklessness," Dr. Jekyll recorded
in his diary, a few seconds after turning into Hyde for the first time.

Of course, he was a fiction, and we know his recklessnesss put an end to 

What Talbott and Summers have been confiding to their diaries isn't known. 
But two things are beyond doubt. They aren't fictional. And they expect 
everyone to believe they are innocent of all evil.


Russians No Longer Bitter towards US Over Kosovo

MOSCOW, Sept 2 (Reuters) - Anti-western feelings which swept Russia during 
NATO's air war against Yugoslavia have started to fade, an opinion poll 
expert said on Thursday. 

Yuri Levada, director of the VTSIOM public opinion research centre, told a 
news conference the 11-week NATO bombing of Yugoslavia led to a dramatic rise 
in anti-Western feelings among Russians. 

"In March-April it seemed that we were on the brink of a new Cold War which 
could easily turn into a hot one," he said. 

In March, when the air war began, polls showed 49 percent of Russians thought 
"badly" or "very badly" about the United States and only 39 percent kept 
their favourable attitude, down from 67 percent in December 1998. 

The poll did not include any questions about Russian attitudes to Britain or 
any of the other NATO member countries that took part in the war. 

Moscow fiercely opposed the U.S.-led action and suspended ties with the 
alliance. But Russia later played a strong role in negotiating a deal between 
NATO and Yugoslav President Slobodan Milosevic. 

"In May and especially in June when the first coordination between Moscow and 
the West was achieved the hostility started to dwindle," Levada said. 

"(In August) for the first time since the beginning of the year we have 
recorded a positive balance in Russians' attitude towards the United States," 
he said, noting that the figures were still well below 1998 results. 

VTSIOM put the number of those viewing the United States favourably in August 
at 49 percent while 32 percent still had a negative attitude. In December 
1998 only 23 percent of the polled had negative feelings about the United 

Levada said that the main reasons behind the double U-turn were Russians' 
overwhelming aversion to a new war and their subsequent inability to 
influence the situation. 

VTSIOM conducted the research in 83 different localities in 32 Russian 
regions, polling a total of 1,600 people. 


Russians Get Lessons in Democracy
September 2, 1999

WASHINGTON (AP) - Russian grocer Maxim Ananyev wants to make democracy stick 
in Russia. The opposition Yabloko Party advisor envisions a day when 
reformers like him will dominate the State Duma and possibly the country. 

So he and about 2,100 colleagues who span the political spectrum - from 
Communists to Liberal Democrats - have come to the United States to learn 
about baseball, hot dogs and Uncle Sam. They divided up into groups of 
anywhere from a dozen to several dozen for separate tours of the country. 

Ananyev, sporting a trim, Western-style beard, spent five days each in 
Washington and Michigan on a whirlwind tour of sightseeing and meetings with 
civic and government leaders. 

``Russia can hope for the best democratic future,'' said Ananyev, who's from 
Yaroslavl, northeast of Moscow on the Volga River. ``We can pick up many 
things and bring them to Russia,'' he said, speaking through a translator. 

That included a lesson in baseball earlier this week. At a minor league game 
with the Michigan Battle Cats, one of Ananyev's colleagues threw out the 
first pitch - a strike - for the Battle Creek team. 

Thanks to a $10 million congressional appropriation for the Russian 
Leadership Program, the participants traveled the country learn how American 
democracy does - and doesn't - work. 

After World War II, the Marshall Plan that rebuilt Europe also brought German 
leaders to the United States to learn about democracy. But it took nearly a 
decade after the Cold War ended for Russians to be invited for a close-up 

James Billington, the Librarian of Congress, said he thought the United 
States owed Russians the opportunity to see how American democracy works and 
spearheaded efforts to appropriate the money for the program. 

``It was important that we did some dramatic things to get through to the 
Russian people that America as a society cares about them and is willing to 
extend a friendly hand to help them change,'' Billington said. 

``It's not a magic bullet,'' he added. ``Their future depends them.'' 

All younger than 50, the Russians were selected from a pool of 6,000 
applicants and matched with coordinators from international outreach groups 
that organized tours, including the United Methodist Church and the American 
Foreign Policy Council. 

The leaders stay in hotels or live with host families, and spend their days 
meeting with leaders from the likes of the local Chamber of Commerce or 

They've watched babies being born at hospitals, attended city council 
meetings about funding road construction, visited the NASA Goddard Space 
Flight Center in Greenbelt, Md., and seen fish swim at the National Aquarium 
in Baltimore. 

The packed itinerary has proven a bit much for some. 

``I don't think we had sufficient time to digest the information and let the 
steam out,'' said a tired Yelena Nebabina, a Ministry of Economy official. 

The Russians planned an ``insurrection'' Saturday, however, with a night of 
Washington club-hopping in mind, said interpreter Anastassia Kouzmina. 

Thursday night, a group hosted by Rep. Steny Hoyer, D-Md., was dining at the 
Hard Rock Cafe after catching a few innings of a Baltimore Orioles game. 

The Russian government has been in the U.S. headlines during their tour, with 
stories of alleged mob money-laundering and corruption. 

Yuri Gusakov, deputy chairman of the city council of Arckhangelesk, near the 
White Sea, said he has bigger problems to worry about, like making sure 
workers in his city get paid. 

``We do not pay so much attention to the Mafia and corruption,'' said 
Gusakov, a chemist turned politician. ``The Mafia is where the money is, and 
the money is in Moscow.'' 

When the money runs out, the Mafia will leave, he added, before heading off 
to tour the domed U.S. Capitol, undergoing a facelift. 

Last week, a group of Russians were mesmerized by Democratic congressional 
Delegate Eleanor Holmes Norton of the District of Columbia as she talked 
about a ``Soviet-esque'' element of the legislature: D.C. residents have no 
voting representation in Congress. 

Norton told the Russians that she yelled at her colleagues on the House 
floor: ``If you want to teach Russians democracy, teach them what you are 
doing to bring democracy to every person in the United States.'' 

The Russians nodded in agreement. 


The Volga, Russia's river of lost opportunity
By Sebastian Alison

ASTRAKHAN, Russia, Sept 2 (Reuters) - The Volga, rising northwest of Moscow 
and flowing 3,530 km (2,193 miles) to the Caspian Sea, is the longest river 
in Europe, and Russia's greatest trade route. 

Canals link it to other rivers, so shipping can move freely through the heart 
of Russia from the Baltic Sea to the Black Sea and beyond, from Scandinavia 
to the Mediterranean. 

Some of Russia's biggest and finest cities line its banks, and it spans the 
whole of the country's varied climates and landscapes, from the endless 
forests of central Russia to the desert of the central Asian steppe. 

Lying on such an important trade route, Volga cities ought to be prosperous. 
In any other country, they surely would be. 

Many of them clearly have been. Visits to Tver, Yaroslavl, Samara, Volgograd 
or Astrakhan, ancient cities all, show that up to the time of the Russian 
revolution of 1917, they were well on their way to becoming important 
European trading centres. 

But they now present an overwhelming impression of opportunities lost, with 
fine but shabby centres surrounded by the ubiquitous monotony of dreary and 
often hideous Soviet-style suburbia that surrounds almost all Russian cities. 


Samara, 1,000 km (620 miles) southeast of Moscow, is a good example of a city 
which has been thwarted by Russia's history. 

Its centre, with many fine 19th century merchant's mansions and 20th century 
art deco palaces, and a mass of impressive public buildings such as theatres 
and art galleries, speaks of a city which was economically and culturally 

Its magnificent setting by the vast river makes it feel almost like a seaside 
town, with families enjoying splendid sandy beaches in warm summer weather 
while others stroll through beautiful riverside gardens. 

A trip to the city's art gallery reveals a flourishing late 19th century 
local school of art. Popular subjects include landscapes of farmland, and a 
gallery attendant explains that Samara was then known as ``little Chicago.'' 

And why not? Nineteenth century Chicago became rich on the back of its 
location at the centre of the grain growing, livestock rearing heartland of 
the United States. 

Its status as a railhead meant it became the key transit point for the 
region's produce, and it duly became the commodities trading capital of the 
United States and the world. 

Samara, like Chicago, has mile upon mile of marvellous farmland, a climate 
with bitter, freezing winters and baking summers, and instead of a railway it 
has the Volga, giving it access to the world. By the time of the revolution, 
prosperity was coming, and it shows. 

One senses now that the city was on the verge of becoming a European version 
of Chicago, and could now perhaps be the farming capital of Europe and a 
wealthy town. 

But with the revolution came civil war, forced collectivisation of farming, 
and years of social and economic experiments which wrecked Russian 
agricultural output. 

Last year Russia's grain harvest failed and, unable to feed itself, the 
country is now receiving a billion dollar's worth of grain and meat in aid 
from the United States. Oceans of surplus produce from Chicago's hinterland 
is providing what ``little Chicago'' cannot. 


The same sense of lost opportunity is felt in the handsome city of Astrakhan, 
where the Volga branches out into a huge delta, Europe gives way to Asia and 
Russia comes to an end. 

It is extremely evocative and exotic, dominated by a huge Kremlin, or 
fortress, atop an imposing hill with views across the river to the delta 
beyond, a whitewashed architectural gem which stands comparison with its 
counterpart in Moscow. 

The weather in summer is hot enough to meet the taste of the most demanding 
sun-worshipper. The city is full of colourful streets, with pretty, 
pastel-coloured 19th century classical Russian mansions and public buildings 

Top attractions include the river delta itself, a unique ecosystem which 
supports large mammals including wolves, wild boar and wild goats, every kind 
of bird of prey, and huge fish including the caviar-producing beluga, the 
size of a shark, as well as beautiful and unique flowering lilies. 

Astrakhan is a pleasure to stroll in, dotted with bars and cafes, with the 
huge and mightily impressive Volga ever present in the background. Anywhere 
else in southern Europe, the visitor feels, such a place would be teeming 
with tourists in the summer, ever eager for a new and exotic destination. 

Yet on a recent visit, this reporter did not spot a single person who looked 
like a foreign tourist. Once again, a chance for prosperity is going to 


Mediaeval Yaroslavl, some 250 km (155 miles) northeast of Moscow, is another 
great Volga city which is turning down with alacrity the opportunity to put 
itself on the map. 

Yaroslavl is barely known outside Russia, but it has a spectacularly 
beautiful 19th century centre which can fool the visitor into thinking it is 
St Petersburg, and a host of fine mediaeval churches and fortresses. 

Three years ago the International Ice Hockey Federation awarded it the right 
to co-host the 2000 world championship, which would involve building a new 

As of now, says Sports Minister Boris Ivanyuzhenkov, ``they just dug a huge 
hole in the ground and called it a foundation. Nothing is ready in 
Yaroslavl.'' He has ruled it out as host, consigning to the dustbin a golden 
opportunity for this magnificent city to show itself off to the world. 


Tver, northwest of Moscow and a third of the way up the main road and railway 
to St Petersburg is another Volga city which, because of its location, should 
be a major trading hub. The kindest thing one can say about it is that it is 

Volgograd, formerly Stalingrad, is a special case. It has an air of 
prosperity and order quite unlike other Volga cities, but it was completely 
destroyed in the war and rebuilt entirely in Stalin-baroque style in the 
1950s, and cannot easily be compared with its neighbours. 

A flight from Moscow to Astrakhan on a clear day is a good way to see the 
wealth of variety that makes up Russia. 

The flight takes off from Domodedovo airport, which from the air is revealed 
as simply a clearing in the woods, and heads south over the endless forests 
of central Russia. As it heads south, the trees give way to the green 
farmland of the centre. 

This in turn gives way to hotter, drier farmland of yellows and browns, 
before the land becomes harsh-looking desert. 

Just before landing, the huge filigree of waterways which make up the delta 
comes into view and the terrain softens again. 

Russia's greatest river is huge, impressive, laden with potential, and 
endlessly varied. It should have brought prosperity to those who live along 
it, and it has not. 

In this the Volga, Russia's lifeblood, accurately reflects the paradoxes of 
the whole country. 


Christian Science Monitor
3 September 1999
Is Russia a Campaign Issue?
What is to be done with Russia? 

Allegations of corruption in Moscow are at a peak. A New York bank is caught 
up in a money-laundering probe involving the Russian mob and perhaps billions 
of dollars. Federal agents say Russian "moles" in Western banks might be 
assisting in illegal transfers. Auditors are trying to learn what happened to 
IMF funds the Russian central bank shifted offshore. 

The reason all this is now a big topic is that it may become an issue in the 
American presidential race. That's because Vice President Al Gore is 
co-chairman of the bilateral commission overseeing US-Russian relations. 

Critics, including former US diplomats, say Mr. Gore and his staff ignored 
clear evidence of widespread corruption in Russia. Gore's defenders say he 
often warned the Russians about corruption's dangers. Critics also attack the 
Clinton administration for engineering billions in IMF loans to Russia while 
winking at Moscow's lack of sound economic practices. 

There's plenty of blame to go around. Most of it lies in Moscow. But before 
Washington plays a "who lost Russia" game, it's worth considering the roots 
of this problem. 

Seventy-four years of communism in Russia created a Potemkin economy that 
collapsed of its own internal contradictions. Trying to build a market 
economy from scratch shook every ex-Communist state. 

Some had an advantage. Poland, the Czech Republic, Hungary, and Slovenia are 
Western in culture and could remember the old capitalist days. But those 
countries from the Byzantine tradition, especially Russia, didn't have that 
cultural background to draw on. 

Moscow has yet to build the infrastructure for a market economy to flourish. 
It still lacks laws allowing land-ownership, safeguarding investors' rights, 
or providing for contract enforcement. Accounting standards are shoddy. 
Soviet-style bureaucratic meddling in business continues. 

Like thin grass on a lawn, these weaknesses, combined with a legacy of 
official secrecy, leaves ample room for the weeds of corruption, cronyism, 
and gangsterism to sprout. 

The West overestimates how much it can influence Russia. It can help on the 
margins and use IMF credits to prod actions necessary for progress. The 
Clinton administration is correctly cautious in deciding whether to support 
more IMF loans. 

But there is hope. Younger Russians are more attuned to what must be done. 
And many entrepreneurs flourish and create jobs - without mob tactics. The US 
and its allies need to find ways to aid them, while ensuring new loans don't 
end up enriching gangsters and oligarchs. 

Other aid or credits should continue if they can aid democracy and arms 
control or serve humanitarian purposes. Paying to help Russia dismantle 
unsafe or aging nuclear weapons and reactors, for example, is well worth it. 

Reforming Russia takes patience, perhaps decades of it. The West should learn 
from its mistakes with Moscow, while not letting politicians at home exploit 


The Economist
September 4-10, 1999
[for personal use only]
Did Al Gore Lose Russia?
Money-laundering and politics 
Dodging the Russian bullet 
W A S H I N G T O N , D C 

AS INVESTIGATORS beaver away at the Bank of New York and as rumours and 
accusations swirl around Moscow (see article), the aftershocks of Russia’s 
latest financial scandal are also rippling through Washington. Allegations of 
massive money-laundering and the possible diversion of financial assistance 
from the International Monetary Fund (the former rarely distinguished from 
capital flight, and the latter, so far, wholly unsubstantiated) have shone a 
critical spotlight on the Clinton administration’s Russia policy. The matter 
may yet become a rare foreign-policy debate in the fledgling presidential 

Most vulnerable is Vice-President Al Gore, long-time co-chairman (along with 
the Russian prime minister) of a commission that helped co-ordinate relations 
with Russia. Until recently, Mr Gore’s advisers had been playing up their 
boss’s Russian connections as an example of his foreign-policy expertise. Now 
they are keen to dispel the idea that Mr Gore was knowingly dealing with 
crooks. They argue that he knew nothing of the money-laundering 
investigation, that he has long urged the Russians to crack down on 
corruption, and that anyway Russia policy was the administration’s, not his. 

Those answers are unlikely to cut much ice with Mr Gore’s Republican 
opponents. Steve Forbes has already announced that Mr Gore shares blame for 
the scandal, and that he intends to make Russia an issue. George W. Bush has, 
so far, been more cautious in his criticism, conscious perhaps that the 
first, and some would say pivotal, years of Russia policy after the collapse 
of communism were during his father’s presidency. Nonetheless, Mr Bush’s 
advisers are no fans of Clintonian policy. Condoleezza Rice, one of Mr Bush’s 
main gurus, complains that “We accepted the rhetoric of reform, but 
fundamental reform hasn’t been made.” She has no doubt that if the latest 
scandal “does involve IMF money, the tenuous support for engaging with Russia 
will disappear.” 

Judging by the reaction from Capitol Hill, she is right. Well-known critics 
of the IMF, such as Dick Armey, the House majority leader, are already 
calling for a suspension of IMF loans to Russia. Even Jim Leach, the moderate 
chairman of the House banking committee, has called for the IMF to halt 
lending until it can establish controls to stop the diversion of funds. 

Mr Leach has also called for hearings on the scandal by the Banking Committee 
in mid-September. No doubt other committees will follow, as Republicans sense 
an opportunity to embarrass the administration. At the very least, 
congressmen will ask probing questions of the administration’s top Russia 
officials, such as Strobe Talbott, deputy secretary of state, and Larry 
Summers, the treasury secretary. Quite probably, according to one 
congressional source, there will be demands for large swathes of documents 
from government departments, in an attempt to ascertain who exactly knew what 

These hearings could produce a useful debate about America’s policy towards 
Russia. With the country paralysed politically, stumbling economically and 
plagued with corruption, it is hard to argue that Russia policy has been a 
great success. Understanding what went wrong, and whether setbacks could have 
been avoided, is an important part of fashioning a more sensible policy in 
future. And there are plenty of criticisms to discuss. Most recently, Joe 
Stiglitz, the chief economist at the World Bank and former head of the 
Council of Economic Advisors, has weighed in with a damning indictment of 
Russia’s privatisation programme. Others trace the fault back to 1992, 
claiming that insufficient support for early reforms lies at the root of 
today’s problems. Yet others say American policy relied too much on a few 
“reformers” in Moscow, ignored their shady dealings and failed to cultivate 
the powerful regional governors. 

Unfortunately, Washington is unlikely to get any such substantive debate on 
Russia policy. Politically, the Republicans’ goal will be to try and prove 
that administration officials knew that they were dealing with serious 
corruption and turned a blind eye, say by ignoring or suppressing 
intelligence reports. For, as Richard Haass of the Brookings Institution 
points out, it would take that kind of political scandal to elevate Russia to 
a serious campaign issue. 

The question of whether the Clinton administration dealt adequately with the 
corruption it encountered is an important one, and deserves scrutiny. 
Administration officials themselves have no illusions about the kind of 
people they were dealing with. But corruption is a hallmark of many 
third-world officials, and rumours of corruption are not the same as concrete 
evidence. Refusing to deal with any individual of whom there was any 
suspicion of corruption could, in some countries, make it hard to find anyone 
to deal with. The tougher and more important question is how serious the 
corruption must be, and how clear the proof, before engagement is curtailed. 
Yet in a pre-campaign environment, even that question is unlikely to get a 
serious answer. 


Primakov Adds No New Votes to Fatherland-All Russia: Forecast.

MOSCOW, September 2 (Itar-Tass) - According to the All-Russia public opinion 
poll centre VTSIOM, ex-premier Yevgeny Primakov has not added votes to 
Fatherland-All Russia, a powerful new political alliance forged by Moscow 
Mayor Yuri Luzhkov, Primakov and a group of regional governors. 

Previous opinion polls showed that if Primakov lent his weight to the 
alliance, its rating would grow by up to 30 percent. "Nothing like that has 
happened," VTsIOM politologist Leonid Sedov told a press conference on 

According to the latest opinion poll by VTsIOM, held on August 20 to 24, only 
four election blocs and alliances have chances to win seats in the State Duma 
lower house of parliament. They include the Communist Party of the Russian 
Federation (CPRF), Fatherland-All Russia, Yabloko and the Liberal Democratic 
Party (LDPR). 

Sedov and VTsIOM director Yuri Levada have warned against making sensations 
out of those forecasts, as they are rather preliminary. According to the 
opinion poll results, if the elections were held now, CPRF could get 30 
percent of votes, Fatherland-All Russia - 18 percent, Yabloko - ten percent, 
while LDPR - five percent. 

According to Sedov, if Kemerovo governor Aman Tuleyev joined the Communists 
their chances could grow by another four percent. So far as the right-wing 
forces are concerned, their prospects are rather vague. 

Each of the parties joining the alliance could expect to get 2.5 percent of 
votes on the average, however their votes can not be automatically added 
together. So far, the Alliance of the Right-Wing Forces can only expect to 
win a meager four percent of votes. The same can be said about the Our Home 
is Russia movement, led by ex-premier Viktor Chernomyrdin. 

According to Sedov, the efficiency of winning Sergei Stepashin to the side of 
the liberal Yabloko faction is also rather dubious, all the more as his 
electorate is mainly right- wing. The politologist said that real election 
forecasts can be made no earlier than two weeks before the elections. So far, 
they only show tendencies in election processes. 

VTsIOM director also focused on differences between the election situation 
now and in 1995 and especially in 1996, when a sharp polarization of forces 
was obvious. 

Fight between the "white" and the "red" forces was somewhat artificial, with 
making a "devil" out of the political opponent. 

However, that political polarization "did not leave place for plain dirt," 
Levada stressed. Polarisation ahead of the forthcoming elections is not that 
distinct, but all kinds of compromising materials are being used in that 

Levada said that the only relief in that situation is that people are not so 
gullible. "Politicians make a lot of fuss, while people have other problems," 
he stressed. 

According to the VTsIOM director, the electorate will be defined much later, 
that is why the current forecasts are only approximate, "and there is no 
sense in making sensation out of that." 


Russian Pollster on Views of Money Laundering Probe: Comment

Moscow, Sept. 2 (Bloomberg) -- The 
following are comments by Yuri Levada, director of the Russian Public Opinion 
Research Center, on the impact that a U.S. probe into alleged Russian money 
laundering through the Bank of New York Co. may have on upcoming Russian 
parliamentary and presidential elections: 

``An average respondent wouldn't have any intelligible reaction on this. The 
issue is at the center of a very complicated struggle, and people don't 
understand it much and aren't much interested in it. I believe (the probe) 
won't much affect the electoral chances of various political forces in 
Russia. So far, such scandals have been interesting to a limited circle while 
the general public have shown a weak reaction.'' 

On chances of parties at the parliamentary elections in December and of 
candidates at the presidential elections in June: 

``Communists may take as much as 30 percent of the vote (at the parliamentary 
elections), Otechestvo - Vsya Rossiya (led by former Prime Minister Yevgeny 
Primakov and Moscow mayor Yuri Luzhkov) about 18 percent and Yabloko (led by 
Grigory Yavlinsky) about 10 percent. Among presidential hopefuls, Primakov 
and (Communist leader Gennady) Zyuganov have strong chances to come to the 
second round. Primakov so far looks stronger. 

Earlier, Zyuganov was expected to lose to any other candidate in the second 
round, as his rival would unite all non-communist voters. The most recent 
results show that Zyuganov would beat Yavlinsky, should they meet in the 
second round.'' 

On Russians' attitude towards the U.S.: 

``Anti-American feelings were on the rise from March till May on the bombing 
of Yugoslavia. Russians were unexpectedly unanimous in deploring actions of 
the U.S. and the North Atlantic Treaty Organization. But no one wanted real 
war, rather than cold war, (against the U.S.) and the attitude has swung back 

According to the Center's poll, 49 percent of Russians currently view the 
U.S. positively or rather positively and 32 percent negatively or rather 
negatively. In May, 32 percent felt positive or rather positive towards the 
U.S. and 54 percent negative or rather negative. 


Turin Paper: Kremlin Staff Prepare Yeltsin Resignation 

Turin's La Stampa in Italian 
31 August 1999
[translation for personal use only]
Report by Giulietto Chiesa: "Rumors in Moscow: Yeltsin Moving in 
Direction of Resignation" 

Is Yeltsin about to step down? According to a 
reliable source, the idea of getting Yeltsin to resign has been making 
headway over these last few, dramatic days even among the presidential 
staff itself. Before it is too late, and in exchange for an amnesty that 
would allow him a secure pension and give a number of members of the 
"family" an air ticket enabling them to emigrate. In other words, a 
solution that, our source says, "from some points of view resembles 
Nixon's exit from the scene after Watergate and, from others, Philippino 
President Marcos's." 

But there is very little time left. Plans are already said to be ready 
for a solemn declaration by Yeltsin on television (the only thing still 
remaining to be written in being the reasons, but he would presumably be 
got to write "on health grounds"), although it absolutely has to be read 
by 9 September. 

Why? Because that is the deadline beyond which it would no longer be 
possible to hold parliamentary and presidential elections simultaneously. 
The family strategists, or at least those who are still hoping to clear 
out before further damage is done, are aiming to turn the defeat into a 
more or less orderly withdrawal that will allow them to save bag and 

According to the Constitution, current Prime Minister Vladimir Putin would 
assume the head of state's powers, call a presidential election, and 
announce that he is to run. Whether he can manage to win against 
heavyweights such as Yevgeniy Primakov and Yuriy Luzhkov remains entirely 
to be seen. However, he would have the advantage of the initiative, plus 
the powers of the state (viz. many mass media and two nationwide 
television channels). It also remains to be seen who would count the 
votes. There are, in other words, people inside the Kremlin still hoping 
to win. 

It cannot be denied, however, that the blow has been very hard, not so 
much on account of the scandals that are now going the rounds worldwide, 
as because all the previous scenarios diligently drawn up by the 
presidential administration's team of sappers now have to be abandoned. 

A postponement of the elections, whatever pretext is cited -- and 
enough had been studied to make up a considerable shortlist (from the war 
in Dagestan to the outlawing of the Communist Party and the disorders 
that followed) -- would be interpreted by everyone, both inside and 
outside Russia, as the extreme act of defiance by an oligarchy out to 
defend itself at all costs. Nor can Yeltsin pin his hopes on Washington, 
where everyone, from Clinton down, is now under the same hail of 
criticism. Our informer, who has in turn been the recipient of leaks from 
the Federal Security Service, explains that Yeltsin has few chances of 
getting away at this stage. "Where can they go? Allies outside: zero. 

Allies inside: either compromised (like Chubays and Chernomyrdin) or 
split. The Right is in danger of not even getting into the Duma. It lacks 
a strong presidential candidate and will not be able to find one. They 
have been cornered and have no option but to surrender..." 

But has the idea of getting Yeltsin to resign and calling an early 
presidential election come from inside the Kremlin or from those who have 
launched the offensive? It would appear that the idea took shape within 
the presidential administration after a week of secret meetings (and 
bargaining with the enemy as well). 

All that is lacking, it seems, is Boris Yeltsin's consent, and this is 
where the picture becomes unclear, because not everyone in the family 
seems to agree, as is borne out by Boris Berezovskiy's frantic shuttling 
about by plane, traveling in a few hours, with no sleep at all, from 
Moscow to Krasnoyarsk (Siberia), then to Kemerovo (Siberia), Nizhniy 
Novgorod (Central Russia), Kursk (Central Russia), and other regions in a 
desperate attempt to found a movement of "tough men" with Aleksandr 
Lebed, Aleksandr Rutskoy, Aman Tuleyev, and others. 

Berezovskiy took no heed of the governors' pedigrees: generals, former 
communists, former coup leaders. Anything goes in the attempt to right 
the boat. But all he got was refusals: another bad sign, another blind 
alley. What if the hardliners' refusal were to form a solid block with 
Yeltsin's? This is the real unknown factor, and even if this is the 
toughest hour for Boris Yeltsin, he will atempt to the very end to get 
out of the corner. 


Former Yeltsin Aide Ready To Testify on Corruption 

Milan's Corriere della Sera in Italian 
1 September 1999
[translation for personal use only]
Interview with former Yeltsin bodyguard Aleksandr Korzhakov by 
Andrea Nicastro in Moscow; date not given: "Former Staunch Yeltsin 
Champion: 'I Have Seen Money Moved to Many Accounts'" -- passage 
between slantlines is Corriere introduction 

Moscow -- [Nicastro] You were at President 
Yeltsin's side for 10 years, Aleksandr Korzhakov. Did you ever see him 
sign a credit card receipt? 
[Korzhakov] I saw him sign a lot of things, but when you are not in power,
best for you to set certain information aside until the right moment. 
[Nicastro] Would you be willing to tell the prosecutor, if not the press, 
what you know? 
[Korzhakov] Sure, I am ready. 
//The man who used to be the world's most powerful bodyguard has started 
talking again. He was tanned, relaxed, and wearing his old green two-star 
general's uniform. He said he was just back from vacation in [the Federal 
Republic of] Yugoslavia. That is what he said, "Yugoslavia," as if the 
world had not changed since he was Comrade Yeltsin's security chief and a 
member of the Soviet Union Politburo in 1986.// 
[Nicastro] Do the President and his daughters have current accounts abroad? 
[Korzhakov] I know their deposits were frequently moved to different
accounts, but I do not know where they ended up. The sums varied greatly 
as well. I do not want to say any more: I will be happy to answer the 
question for the examining magistrate. 
[Nicastro] Easier said than done. The assistant prosecutor who has been 
investigating the credit cards of which Mabatex allegedly made him a gift 
has been taken off the case, nor is Chief Prosecutor Yuriy Skuratov, who 
opened the investigation, still in the same post either. 
[Korzhakov] Strong pressure is undoubtedly being applied on the
Office. However, I know about certain mechanisms from personal 
experience. I have seen how the judiciary investigated the boxes full of 
dollars that came out of government headquarters. 
[Nicastro] The Russian Government's secret funding of the President's 
campaign is one of Korzhakov's war horses. He it was in 1996 who accused 
Yeltsin's "entourage" of embezzling public funds to the tune of at least 
half a million dollars in this way. The investigation by the Chief 
Prosecutor's Office (of which Skuratov was head) came to nothing at the 
[Korzhakov] Skuratov obeyed the phone calls he received from on high, and
someone ignores the dictates of his conscience once, he can happily 
continue riding roughshod over it. 
[Nicastro] But with or without Prosecutor Skuratov, with or without
on the Russian Chief Prosecutor's Office, will the blame for the Mabetex, 
Bank of new York, and Aeroflot scandals ever be established? 
[Korzhakov] Not as long as Yeltsin and his family are still with us. Maybe 
with a different government. 
[Nicastro] Do you share the view that the allegations that have ended up in 
the press are part of a conspiracy against the President? 
[Korzhakov] Conspiracy, what conspiracy? It takes me no more than three 
to tell whether Yeltsin is drunk. Did you look at him when he was pinning 
the decorations on the troops back from Dagestan? Either he had already 
downed half a liter or he had not yet got over the previous evening's 
hangover. What conspiracy can there be against a president who appears in 
public in such a state? 
[Nicastro] Not even if there are foreigners orchestrating it? 
[Korzhakov] The West has already said so many things about Russia. What 
difference does one more or less make? The attitude to us changed some 
time ago, in the early nineties, say. 
[Nicastro] Some people think Yeltsin might attempt a coup to defend
[Korzhakov] He cannot organize one. Who would go into it with him? 
[Nicastro] You it was who said that the financier close to the Yeltsin 
Boris Berezovskiy, asked you one day to kill the Mayor of Moscow, Yuriy 
Luzhkov, to stop him running for election. Luzhkov is a strong candidate 
today as well. In view of your allegation, might the Kremlin find someone 
else willing to do the job this time? 
[Korzhakov] Our President is not the lord of Russia; for the time being, he 
is just the lord of the Kremlin, and he shares power with other people even 
there. It is true about Berezovskiy: He asked me to kill Luzhkov, but I 
do not think he will find anyone to carry out his criminal orders. 
Everyone knows he has a death sentence hanging over him. 
[Nicastro] A death sentence? 
[Korzhakov] He himself has been asking for it, with his way of life. It may 
be today, tomorrow, or in a week's time, but something is bound to happen 
to him sooner or later. 


2 September 1999
Small Iron Curtain 
Alexei Nikolsky, Dmitry Kuznets 

"Imperceptibly for Russian citizens, clouds have gathered over Russia,"
writes IZVESTIA in a lead article. "For the reason unknown to any, the West
has became nostalgic of the Cold War and Iron Curtain times. A dirty
campaign has been unleashed against Russia and Russian business. It is
based on suspicions which, unfortunately, may partially be true. It is
quite possible that IMF money was really spent in Russia 'not fully for the
purpose it was designed for.' But it is absolutely impossible for anyone in
the world to prove it. But this is not important now. On Wednesday
[September 1], a new Iron Curtain ceased to be only a fruit of imagination
of Western reporters -- the U.S. Administration made its first modest
contribution to the anti-Russian campaign." 
"U.S. Treasury Secretary Larry Summers said in an interview for U.S.A.
TODAY that America would not support giving new IMF loans to Russia without
adequate guarantees that the earlier loans had been spent correctly," the
paper says further. "There is no doubt that the IMF will do what the U.S.
Treasury Secretary says -- the influence of the U.S. Administration on the
Fund is decisive." 
As for the IMF itself, its officials are more cautious, the daily points
out. It quotes IMF head Michel Camdessus as saying: "There is no need to
halt cooperation with Russia because of the scandal around the Bank of New
York. This aid [IMF credits] is transferred from one IMF account into
another. Consequently, there is no need to block it." Officials at the IMF
Office in Moscow say the scandal is outside the competence of the IMF
mission now working here and checking how the economic program agreed upon
in July is being carried through. From their point of view, the economic
situation in Russia is not bad now, so they say the Fund is inclined to
provide its next tranche of 640 million dollars. 
The paper recalls that the world-known audit company,
PriceWaterhouseCoopers, audited the spending of the now-notorious IMF
"extraordinary" credit granted in July 1996 and believed to be stolen
through the Bank of New York. The check-out lasted for more than three
months and nothing wrong was found then. Now, it seems, another audit is in
coming. Most probably, the same company will do it again. The participation
of foreign and Russian law enforcement bodies is also possible. 
In any way, the paper notes, this new checking may last for several
months -- possibly, till the December parliamentary elections. During that
time, the Russian government will have to pay back its IMF debts out of the
budget. The sum involved is 1.2 billion dollars, which amounts almost to
Russia's one-month budget. This will result in a deterioration of the
economic situation in Russia. What is worse, all this time the West will be
watching Russia at least with suspicion, and the country will be rolling
back to economic isolation more and more. Political isolation will come
next and the curtain will be dropped again. 
In the meantime, the paper concludes, Russian Foreign Minister Igor
Ivanov has warned: "Russia will never accept the current attempts in the
West to cast a shadow on this country with the help of unconfirmed facts.
The scandal around the 'laundering of Russian money' is a policy pursued by
certain circles which would not want Russia to affirm its great-power role
in the world arena." 



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