September 8, 1999   
This Date's Issues: 3487 •3488  • 

Johnson's Russia List
#3488
8 September 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russian military sceptical on US arms talks.
2. Bloomberg: Mabetex Paid Yeltsin's Credit Card Bills, Washington Post
Says.
3. Bloomberg: US Ambassador to Russia Collins Speaks on Money Laundering.
4. Tom de Waal: Re Dagestan coverage and Khatab.
5. Interfax: Communist Party Presents Election List.
6. Itar-Tass: Russian Top Officials Allowed To Run for Duma.
7. The Independent (UK): ITALIAN FIRM `LAUNDERED MONEY FOR KREMLIN' 
8. Washington Post: David Ignatius, Was the Looting Of Russia Avoidable?
9. Jerry F. Hough: response to comments on 3477/Hough.
10. John Wilhelm: A piece for your list.
11. Rossiyskaya Gazeta: Premier Putin Addresses Students.
12. Moscow Times: Gwynne Dyer, Communism Extinguished Without a Shot.]

*****

#1
Russian military sceptical on US arms talks
By Martin Nesirky

MOSCOW, Sept 8 (Reuters) - An upbeat U.S. Deputy Secretary of State Strobe
Talbott arrived in Moscow on Wednesday for arms talks but a Russian
military official made clear the going would be tough. 

Diplomatic sources said Talbott was meeting Russian Deputy Foreign Minister
Georgy Mamedov and they would meet again on Thursday morning before Talbott
returned to the United States. 

``I'm going to be concentrating particularly on strategic matters, laying
the ground with my colleagues at the Ministry of Foreign Affairs for talks
that are coming up,'' Talbott told reporters after arriving at Moscow's
main international airport. 

The talks will focus on the prospects for a START-3 nuclear weapons
reduction pact and Washington's desire to change the 1972 Anti-Ballistic
Missile (ABM) treaty, diplomats said. 

The Cold War-era ABM treaty banned defence systems designed to shoot down
enemy missiles, under the logic that such shields would only tempt the
United States and the Soviet Union to build more missiles in the hope one
might pierce the enemy's umbrella. 

The White House wants to review the treaty to allow it to develop a shield
to protect its troops and Asian allies from possible attack by rogue
states. Republicans in the U.S. congress have said they want to ditch the
treaty altogether. 

But Russia regards the treaty as a cornerstone of arms control and strongly
opposes making major changes to it. 

Talbott said he planned ``to continue the good discussions we have been
having with our counterparts in the Russian government over the last
several months.'' 

But an unnamed senior Russian military official sounded decidedly less
enthusiastic in comments to Interfax news agency. 

``The Americans are trying to drag us into negotiating on ABM to secure
Russian agreement for the United States to deploy its own limited national
anti-ballistic missile defence,'' the official was quoted as saying. 

``The Russian side will not go along with this,'' he said. ``Our position
is that deploying a national ABM system would lead to an arms race,
including in missiles.'' 

Itar-Tass news agency quoted diplomatic sources as saying both sides had
agreed not to disclose where they would meet on Wednesday and Thursday. It
is not yet clear whether either side will brief reporters. 

After a previous round of preliminary talks on ABM and START-3 in Moscow in
mid-August, a top Russian military official lashed out at the United States. 

Colonel-General Leonid Ivashov, head of the Defence Ministry's
international relations department, said that meeting had been unproductive
and Washington's insistence on altering the ABM treaty could undermine the
whole disarmament process. 

The sides were also expected to discuss START-3, a new treaty aimed at
adding to cuts in nuclear arsenals agreed under the 1993 START-2 treaty,
which has yet to be ratified by Moscow. 

The military official told Interfax Russia was ready to discuss START-3
because it would cut the U.S. arsenal and make it easier for cash-strapped
Moscow to maintain rough parity. 

Mamedov is scheduled to visit Washington later this month for more detailed
talks. 

U.S. Defence Secretary William Cohen is scheduled to visit Moscow on Monday
for talks with Russian Defence Minister Igor Sergeyev. Russian Prime
Minister Vladimir Putin is expected to meet U.S. President Bill Clinton at
an Asian-Pacific summit in New Zealand next week. 

*******

#2
Mabetex Paid Yeltsin's Credit Card Bills, Washington Post Says

Geneva, September 8 (Bloomberg) -- Mabetex, a Swiss company that won major
construction contracts from the Russian government, paid tens of thousands
of dollars to credit card companies on behalf of Russian President Boris
Yeltsin and his daughters, the Washington Post reported, citing unnamed law
enforcement authorities. Swiss investigators have also found that Mabetex
paid $10 million to $15 million to benefit high Russian officials and their
families, including Yeltsin, and was the source of $1 million that was
transferred to a Hungarian bank account for Yeltsin several years ago, the
newspaper said, citing an official familiar with the Swiss inquiry.
Mabetex's top official, Behgjet Pacolli, has denied paying any bribes and
Yeltsin has denied any wrongdoing, the Post said. 

Another investigation by U.S. law enforcement authorities is looking into
allegations that about $10 billion of illegally obtained funds were
circulated through the Bank of New York, the 16th-largest U.S. bank, by
associates of a Russian crime syndicate. 

*******

#3
US Ambassador to Russia Collins Speaks on Money Laundering

Moscow, Sept. 8 (Bloomberg) -- Russian law enforcement officers will travel
to Washington next week to help U.S. agencies investigate claims that
Russian money was laundered through U.S. bank accounts, officials of the
two countries said. 

The following are comments by U.S. Ambassador to Russia James Collins on
Russian radio station Ekho Moskvy: 

``There are serious problems with corruption and crime,'' he said. ``We and
the Russian government should work together to fight crime. The Russian
government is ready to send law enforcement officials to the U.S. They will
leave soon. 

``We will investigate all allegations. Our law enforcement officials have
cooperated for four to five years. We have confidence they will work as
professionals. 

``We support International Monetary Fund programs to allow them to help
transform Russia's economy to an effective market economy. That's the
beginning and end of our position. We don't support handing out loans if
they aren't used to support those aims. If those conditions are fulfilled,
then we will continue to support the programs of the IMF. Neither our
taxpayers nor Russian taxpayers would agree to that. There are methods of
checking on the use of the funds. 

``Today there's an agreement between the IMF and the Russian government.
The conditions of the loan pertain to the budget as well as audits, most of
which have been completed. One audit must still be completed. 

``We have no proof Russia misused U.S. humanitarian aid money. We agreed on
strict controls. We are happy with the fulfillment of the program. 

``Our main principle is we support democratic order which protects human
rights and establishes an economy based on market principles. Some say we
are supporting specific individuals by doing this. We tried from the
beginning to show clearly that we support these principles. That hasn't
changed. 

``Elections are the business of the Russians. It's not our affair. 

``In October, here in Moscow there will be a meeting of G-8 ministers to
discuss how to deal with modern, technological economic crimes. It's a
threat to the entire world economy. 

``All those allegations of crime give Russia an opportunity to take action.
Russia has a weak banking system. We hope to see two things: a serious
approach to the investigation -- and we are starting to see that now-- and
the creation of a stricter legal foundation that is more strict on economic
crime.'' 

*******

#4
Date: Tue, 07 Sep 1999 
From: Tom de Waal <tom.dewaal@bbc.co.uk> 
Subject: Re Dagestan coverage and Khatab

Dear David,

May I make a couple of points about Dagestan and send you a recent profile I
did for the BBC on the Arab fighter Khatab?

Best wishes 
Tom de Waal

1. The term "Islamic rebels" has started to become ubiquitous in
Western reporting on Dagestan. I shudder at it, first because the whole of
Dagestan is "Islamic" - and was for several centuries before Islam reached
Chechnya. The rebels are just more militant - and very unpopular in much of
Dagestan for trying to shut down Sufi shrines and holy places. Second
because Basayev does not have a track record as an Islamist radical. Like
most other Chechen fighters, he discovered Islam during the Chechen war. I
see his main agenda as being simply the desire to carry the fight to the
Russians wherever and whenever. 
2. Some of the looser talk about "Islamic fundamentalism,"
"international Jihads" and Osama Bin-Laden seems to be creeping from Russian
press coverage into the Western press. There is a personal Afghan link to
Chechnya via Khatab (see below) but I have yet to see any evidence at all of
strong organizational links between Afghanistan/Central Asia and the North
Caucasus. I think we should be very cautious. Maybe this tells us more about
the paranoia of Russian and Central Asian governments than anything else? 
3. Khatab is an interesting special case, but even he is a not a
straightforward Islamic fundamentalist. I attach a profile I wrote of him
for the BBC World Service on 18 August. I have seen him referred to as
"Jordanian" or even "Jordanian Chechen." Both I, from my brief encounter
with him, and Carlotta Gall, my co-author of "Chechnya" got the impression
that he was actually Saudi.

KHATAB: A PROFILE

Unlike many of his Chechen comrades-in-arms the Arab fighter known as
Khatab, "Emir Khatab" does not seek publicity. For one brief moment it
seemed as though he might break his silence. It was last July in the Chechen
capital Grozny outside the house of his close ally and fellow fighter Shamil
Basayev. Khatab was there. He has a dark swarthy face and thick curly black
hair down to his shoulders. He spoke a few words of English and promised a
short interview for the BBC, but a few minutes later he had disappeared.

Khatab is a professional Islamic revolutionary. The few facts known about
him are as follows: he comes from the Bedouin region of north-west Saudi
Arabia. The region he comes from borders Jordan and it's possible that
Khatab spent some time in Jordan, alongside Jordanian Chechens, creating
some confusion about his origins. According to one Russian newspaper
journalist who met him (Zamid Ayubov of Trud) Khatab comes from a wealthy
family and spent some time at an American university, but then dropped out
and moved to Pakistan. There are reports that he is wanted by Interpol in
connection with terrorist attacks on Israeli and French citizens. What is
known is that he fought with the "mujahideen" in Afghanistan and then moved
to Chechnya in February 1995, bringing with him a small group of Arab

fighters. It's possible that Khatab's arrival was arranged through the
Saudi-Arabian based Islamic Relief Organization, a militant religious
organization, funded by mosques and rich individuals which channeled funds
into Chechnya. 

It was Khatab who led the devastating ambush on a Russian armed column high
in the mountains near Yaryshmardy in April 1996. Almost 100 soldiers were
killed and there were demands in the State Duma for the Russian Defence
Minister Pavel Grachev to resign because of it. A grisly video of the attack
was on sale in Grozny market filmed by one of the fighters. It showed Khatab
walking down a line of blackened Russian tanks, pointing to dead Russian
soldiers and shouting "Allah Akbar!"

Since the end of the Chechen war Khatab resisted attempts by President
Maskhadov's regime to force him to leave the region. He set himself up in
the Vedeno region of south-east Chechnya, where he befriended the local
field commander Shamil Basayev and his younger brother Shirvani. It is this
alliance which has now exported the armed struggle across the border into
the Botlikh region of Dagestan. Khatab is married to a Dagestani woman from
the Islamic village of Karamakhi.

Khatab is certainly an Islamic radical -- although Basayev when asked if his
friend was a "Wahabist" responded "No, he is a Khatabist." But he is not a
political figure -- he is a hardened fighter, who has spent most of his time
in Chechnya training other fighters.

*******

#5
Communist Party Presents Election List 

MOSCOW. Sept 4 (Interfax) - KPRF and its allies 
will register at the Central Election Committee for elections to the 
State Duma as an all- Russian political public organization "The 
Communist Party of the Russian Federation." This decision by the KPRF 
congress, the first stage of which took place in Moscow Saturday, has 
been announced to journalists by Deputy Chairman of the party Valentin 
Kuptsov. He explained that TsIK can register the party's election bloc 
only in strict compliance with its registration at the Justice Ministry. 
The congress endorsed the party's election platform, its emblem and the 
overall federal list of candidates for the Russian parliament's lower 
house. KPRF deputy chairman reported that apart from Zyuganov, Seleznyov, 
Starodubtsev, Tuleyev, worker of the Kirov plant in St.Petersburg Iva 
Zakharov and Kuptsov himself, the main part of the list includes 
economists Sergei Glazyev and Gennady Seligin, Vice President of the 
Russian Academy of Sciences Zhores Alferov, leader of the agrarian group 
in the State Duma Nikolai Kharitonov, film actress Yelena Drapeko, KPRF 
deputy chairman Ivan Melnikov, editor-in-chief of the Sovetskaya Rossiya 
newspaper Valenti Chikin, physician Ashot Sarkisian, State Duma lawmakers 
Vladimir Yurchik and Sergei Reshulsky, and one of the leaders of the 
All-Russia Society of Blind People Oleg Smolin. There is a total of 270 
places in the list. The communists will run in elections from 20 "major 
zones" into which they have divided the territory of Russia. The Congress 
will be reconvened for its second session around the 20th of September

*******

#6
Russian Top Officials Allowed To Run for Duma 

Moscow, 4th September, ITAR-TASS correspondent 
Tamara Ivanova: Governors, ministers and other top officials can feature 
in the lists of candidates of electoral associations and blocs. In line 
with the constitution, they have the right to be elected as deputies to 
the State Duma. Aleksandr Veshnyakov, the chairman of the Central 
Electoral Commission, stressed this at a press conference today. 
At the same time the law says that officials who are candidates in the 
elections cannot exploit their positions, he stressed. 
Sanctions that go as far as annulling their registration can follow over 
misuse of office, Aleksandr Veshnyakov said. 
The head of the Central Electoral Commission drew attention to another 
aspect of the problem. For example, if a governor is a candidate deputy, 
workers who are directly subordinate to him cannot be members of the 
electoral commission, he said. 

*******

#7
The Independent (UK)
8 September 1999
[for personal use only]
ITALIAN FIRM `LAUNDERED MONEY FOR KREMLIN' 

A SQUEAKY-CLEAN Italian family firm has come under suspicion of laundering 
money for the Kremlin as the Russian financial scandal widens. 

A report in the leading Italian daily Corriere della Sera alleges that a 
thriving furniture business that provided designer sofas for hotel lobbies 
around the world received large sums of Russian cash and channeled them into 
bank accounts in London, Ireland or Canada that could be accessed safely by 
members of the Yeltsin "family". 

The paper said the cash, usually in pounds 100,000 tranches, was delivered to 
the company, Oak Industria Arredamenti, every fortnight by Russian couriers 
who drove down from Switzerland. One of those couriers, identified by Italian 
police, is now dead. He is thought to have been killed in a car accident. 

Investigators in Como, near the Swiss border, have ordered the managing 
director of Oak Arredamenti, Virgilio Pologna, to stand trial for tax 
evasion. But behind that mundane charge investigators are pursuing the 
suspicion that the company was used to launder millions of dollars, possibly 
as a condition for lucrative contracts in the Kremlin. 

The Italian connection first came to light after a routine tax inspection, 
and the alleged existence of the couriers was confirmed by a former local 
bank director. "Towards the spring of 1995 a courier used to come down from 
Switzerland every two weeks bringing me up to 400 million lire (pounds 
130,000) at a time," he told Corriere della Sera. 

After months of investigations, Italian police managed to identify one of two 
Russian citizens who had acted as couriers and sought to question him. But 
the man was already dead, reportedly the victim of a car crash. Details of 
the accident have not been revealed. The police are still searching for 
another Russian citizen who they suspect acted as a courier. Oak is one of 
countless small export-orientated businesses that flourish in Brianza, 
Italy's furniture valley, which runs from Milan almost as far as the Swiss 
border. 

It has close ties with Mabetex, the Swiss-based company, which has landed a 
lucrative reconstruction contract for the Kremlin. 

The director of Mabetex, Behgjet Paccoli, is under investigation for 
allegedly paying large kickbacks to win the tender, money that is reported to 
have ended up in the pockets of Boris Yeltsin's two daughters, Tatiana and 
Yelena. 

Mr Virgilio Pologna told The Independent his company had produced couches, 
tables and wall coverings for the Kremlin makeover on order from Mabetex, but 
had never had any direct contact with the Moscow authorities. 

"These accusations are totally unfounded and nonsensical," he said. "I have 
never met any Russian couriers. And anyway, why would anyone want to send 
money down to Italy and then to Britain or Canada when they could send it 
directly?" 

Mr Pologna added: "My company has worked with Mabetex for many years, as have 
many other suppliers in Cantu. We are not associates or partners - and we 
have always been paid promptly and treated well." 

*******

#8
Washington Post
8 September 1999
[for personal use only]
Was the Looting Of Russia Avoidable?
By David Ignatius

To critics who ask why the Clinton administration has done so little to
curb the looting of Russia, the administration has responded with a
pragmatic question of its own: What would the critics have done differently
that might have prevented the Russian debacle? 

Yes, the administration concedes, things in Russia haven't worked out as
the West had hoped: The country is weak and demoralized; its resources have
been plundered by corrupt oligarchs and outright thieves; and now, it
appears, its crooks have been using our banks to hide their money. As
national security adviser Sandy Berger said on this page Sunday, "There are
indeed plenty of troubles in Russia today." But Berger and others have
implicitly asked: What alternatives might have spared Russia this fate? 

Good question. Because unless we understand what went wrong during the past
few years in Russia -- and how our mistakes or inaction contributed to the
mess we now encounter -- we have little hope of helping the Russians get it
right in the future. 

Russia's transition from communism was bound to be messy, no matter what
the United States did. One observer likens the administration's dilemma to
that of a gambler who has to bet on a roll of the dice with these rules: If
a 1, 2 or 3 comes up, you lose $5,000. If you get a 4, 5 or 6, you lose
$10,000. Obviously you'd make the first bet, but you wouldn't feel good
about the choice, or the outcome.

But privately, some of the people who have been intimately involved in
framing our Russia policy concede that they'd like to do some things over
again. Here's my list of those misjudgments, drawn from conversations with
policymakers and Russians who were on the receiving end: 

(1) The Clinton administration should have been warier about the short-term
scheme the Russians adopted to finance their budget deficit. The
U.S.-backed plan was to sell ruble-denominated bonds, known as "GKOs,"
bearing very high interest rates. The GKOs were a form of Russian junk
bonds, and they were certainly a better idea than simply printing money. 

But short-term financing schemes often come a cropper, whether in Mexico or
Russia. And the GKOs blew up disastrously. Indeed, they appear to be at the
center of both aspects of the Russia problem -- the policy failure
symbolized by the Russian government's Aug. 17, 1998, default on the GKOs,
and the corruption scandal symbolized by the alleged $10 billion money
laundering scheme through the Bank of New York. Indeed, some insiders
speculate that the $10 billion may have included flight capital from
Russian oligarchs who were tipped off about the impending GKO default. 

A better way to finance the Russian deficit would have have been more
aggressive tax collection. In addition to reducing the GKO mess, a workable
tax system would have checked Russia's gangster capitalism and made it a
more lawful society. 

(2) The administration should have pushed harder to stop Yeltsin's
"reformers" from embracing a 1996 privatization scheme known as "loans for
shares." This corrupt deal allowed Russia's new business tycoons to acquire
the crown jewels of the economy -- the mining and natural resource
companies -- in exchange for cheap loans to the government.

Loans for shares was "the reformers' original sin," argues journalist
Chrystia Freeland. In the mind of ordinary Russians, it linked capitalism
with thievery. 

The worst of it was that key U.S. Treasury officials suspected then that
loans for shares was a potential disaster. The administration protested --
but not loudly, because it feared that without U.S. support, Yeltsin might
lose the elections. The Russian people are now paying for our mistake. 

(3) The administration should have allied directly with the Russian people,
rather than with Yeltsin and his reformers and the corrupt oligarchs who
stood behind them. 

In practical terms, this would have meant relying less on macroeconomic
policies -- and the hope we could create instant capitalism -- and more on
grants and aid programs. Targeted aid programs, focused on such areas as
health care, would have helped ordinary Russians feel their lives were
improving in measurable ways, thanks to help from the United States. 

Administration officials accept this criticism. But they are right that
much of the blame should go to the Republican Congress, which wouldn't fund
even the modest aid programs the administration requested. 

(4) The administration should have been more honest. Perhaps it was
inevitable that Russia's transition to a market economy would produce a
generation of robber barons. But we didn't have to embrace them quite so
enthusiastically. We didn't have to call Boris Yeltsin another Abraham
Lincoln, as Clinton did. And we didn't have to watch quite so idly as
supposed capitalists looted Russia's wealth. 

Truth, in the end, is America's most powerful weapon. When Ronald Reagan
called the Soviet Union an "evil empire" in 1983, critics laughed. But his
blunt remark gave hope to a generation of Russians. We need that kind of
honesty now. 

********

#9
Date: Tue, 7 Sep 1999
From: "Jerry F. Hough" <jhough@duke.edu>
Subject: response to comments on 3477/Hough

I have received a number of private and public comments on my 
last piece, and I would like to amplify.

First, Mike McFaul says I misread his last piece on Luzhkov and 
that he is now more favorable to him as a lesser of evils. I would like to 
apologize to him. 

Second, I am not inclined to apologize about Yavlinsky. I was 
using corrupt in the most generic sense, which does not only mean bribes. 
I have my suspicions about Yavlinsky in more venal ways. As a 
correspondent reminds me, Boldyrev (the "bl") in Yabloko left him making 
charges. But the most venal corruption is Russia has been legal: 
state banks pretended to be private, made subsidy-loans but paid dividends
to stock holders, with the shares bought with loans 
that were interest-free and/or reduced by inflation. The West understood. 
The Europeans gave a loan to Tokobank and tried to get them to stop giving
dividends. Tokobank refused, the West did not respond, and Tokobank 
naturally went bust. My guess is that Yavlinsky had a lot of bank shares,
especially in Nizhnyi.

But let us say that Yavlinsky was not in on this "dividend" theft 
of state assets. Yavlinsky still strikes me as quite unprincipled. 
His role in the 500 day plan was shameful, and he has played a game of 
pretending to be a centrist while being to the right of the government. 
He has pretended to be a democrat, but when people call him arrogant, 
they mean that this is just pretense. Standing above it all is not
being principled, but the opposite. He has created a party of academics 
that has made no effort to make alliances with other forces. He has survived
and failed to become more responsive to the public because the West supports 
him for his neoliberal economics, including with money for speeches, 
democratization, etc. This may not be billions, but the money is
substantial by Russian standards and I think Yavlinsky has frozen his 
political position and his political alliances to keep getting it. In my 
opinion, the West has made a terrible mistake supporting him. My help is
not necessary to help him lose, but I would be delighted if it did.

The main point of my last comment in JRL was to complain about a 
tendency to focus only on Russian corruption and mafia and gangsters. 
and then secondarily on the IMF money. As I indicated, I 
suspect that the money coming here is less IMF money than that taken from 
Western investors. Nemtsov agrees, talking about the ill-fated GKOs. 
But they weren't ill-fated. They were a deliberate con in a pyramid 
game in which Nemtsov and Chubais were the chief con men.

The first point to keep remembering is that most of the money went
to a subsidy of consumption. The big story remains that 3/4 of electricity
is not paid for, and that means that the same is true of gas and oil. The 
US press publishes hundreds of articles about "oligarchs" who actually are
patrimonial state officials and still writes about "barter" that does not
exist, but only JRL writes, so far as I see, about the annual meeting of the 
Energy Company which illuminated Chubais' role in the Yeltsin family like 
a searchlight. The problem is the economic model and not Russian 
corruption. It is the lack of incentives to invest corrupt money at home.

The IMF is as independent from Treasury as the Comintern was from 
the Politburo, and its role is to be a scapegoat to distract attention
from more serious problems. We should not play the game. Since I think
the main problem are the neglect of investment in Russia and the great 
incentives to send capital abroad, I am actually more concerned about 
Immigration and Naturalization than anything else in US policy.

The New York Times recently published a big article about 
Lazurenko's riches in California. Little is said about corruption in 
Ukraine, which has more recent aid from IMF et al than Russia, Lazurenko's
money in California obviously came from the West in one form or 
another. Yet, clearly the US facilitated the flight of this money not 
only through banks, but through INS.

Shumeiko was universally thought the most corrupt man early in 
Yeltsin's administration. It seems unquestioned that the US let his 
pregnant daughter come to the US to have her child. Then the new 
American citizen could invite his parents for family unification. Surely 
grandpa is not far behind. Does one really believe that we are not 
getting the benefit of his money?

I am much interested in another case that has more political 
significance--that of Brevnov, Nemtsov's chief lieutenant before he 
became head of the Energy Company. The biggest US investment and AID 
money went to Nizhnii, and there are many rumors about Nizhnii. There 
are strong rumors that Brevnov married one of those involved with one of the 
biggest projects and is now in Tennessee. That should be easy to clear 
up and refute.

As I have said many times, I am not against corruption in Russia 
per se. It is the inevitable solution to developing the trust necessary 
for investment in early capitalism. If Lazurenko and Shumeiko had 
invested their money at home and supported the policies to make their 
money grow, they would have played a highly useful role. But corruption 
coupled with capital flight is an utter disaster. For the US government 
to have participated not only in the flight of capital but the flight of 
those associated with it is completely inexcusable, and it is difficult 
to think of benign reasons that it is done.

I fervently hope that Jim Leach and others will look closely into the 
mechanisms by which INS facilitated this and why. In Moscow, some say 
that just as Berezovsky was given Israeli citizenship, so all the 
reformers already have green cards. I cannot believe that this is true, 
although surely we intend to accept them if they leave. But again since 
the capital flight was the crucial problem, it is of the utmost 
importance that the US not only created the incentives for those who adopted 
the IMF line to engage in capital flight, but then helps them get out.

Or maybe the New York Times will investigate. There has been 
sniping in JRL at John Lloyd's piece in the The New York Times. It was 
a great article and it went to the juggler, what is going on in 
Washington. Anyone who did not read it should absolutely go back and do 
so. I have read Financial Times twice, and Lloyd made mistakes. But his
review of the Yeltsin memoirs (reproduced in my Democratization) was on the
money, and he was the best there was other than some outsiders like John
Helmer. But for us old Kremlinologists, what is crucial is that the New 
York Times published it. The New York Times, unlike the Los Angeles Times,
censors sensitive op-eds and letters fairly heavily. When they published a
frontal attack on Summers in the Magazine, that was ne sluchaino. As I have
said, the worst monetary corruption has involved not IMF money, but the 
fleecing of American investors in New York banks, etc., etc. The New York
Times was a part of that process of misleading, and it obviously was lied to
by the Administration. That seems to have angered it, and if it is going to
put its investigatory resources in finding out what happened, we will know 
a lot. The Wall Street Journal was also misled and has investigatory 
resources as well. It had some great articles last fall and should 
follow up on the U.S. side.

*******

#10
Date: Tue, 07 Sep 1999 
From: John Wilhelm <jhw@ams.org> 
Subject: A piece for your list.

David Johnson, After you published my piece on the homeless boy
Volodya I sent a copy of it to a former student of mine who then
sent me the following which I think might be of interest to the
list. (I have permission to share this with others).

John Howard Wilhelm

Date: Tue, 31 Aug 1999 15:54:51 -0400 (EDT)
Subject: Re: Getting in touch with you.

Dear Dr. Wilhelm:

Regarding your e-mail, I witnessed countless such stories as you wrote about 
from your recent Russian trip. It is a human tragedy. I had a friend who 
worked through her previous UN contacts to help orphanages in the Novgorod 
Oblast, but with mixed success. Corruption with the on-site administrators, 
resistance/obstruction from some of the older bureaucrats, etc... As you 
probably know, it's nearly impossible for foreigners to officially adopt 
healthy babies/children - only those with medical or mental/physical 
handicaps. Seeing this, she tried to simply bring aid to orphanages, and did 
not attempt to ship the kids out. 

In my nearly seven years of living in Russia, I can't remember ever meeting 
an influential political leader, at the city, Oblast or Federal level, that 
showed any genuine, altruistic concerns for the downtrodden. The political 
system is rotten to the core. As long as this is, I believe it will be 
difficult to make progress. For instance, with your case of Volodya, five 
years ago if someone had gone to the OVIR office and offered a substantial 
bribe to a high level official, then miraculously Volodya would have had 
official documents and an exit Visa; but this would probably have taken 6 
weeks of persistent effort -- and for one person! There must be ten million 
Volodyas. In order for quick action in Russia, one needs two things: 
patronage and money. Without this, you can get things done, but it will be a 
long battle of attrition. Sorry to sound so pessimistic, but my memory of 
Russian officialdom is still fresh in my memory, and it makes me sick.

Conservatively speaking, 50% of the university educated Russians under the 
age of 35 that I know have either left Russia over the past few years or are 
actively trying to leave with no interest in returning. The future is being 
compromised. 

I would like to see all financial aid to Russia stopped. Recently
I've begun to think that it might even be better for the average
Russian if the centrist wing of the communists were to come back to
power. I say this because I see no "market reform" alternative to the
rottenly corrupt Yeltsin Govt. With prominent Russian politicians,
etc..it would simply be the emptying of the den of one set of thieves
for another. Russian leadership throughout is totally devoid of any
character, altruism, principal or virtue. I became so sick of hearing
Russian officials preach to me about the "Russian way" of doing
everything, and how if I were to "succeed" I too must walk down this
gloriously debauched road. Russian leaders need a very hard and very
painful lesson, and foreign aid only serves to lessen the pain of this
lesson. They need to be humbled, and severely. If for US domestic
reasons (i.e., political) aid must go forward, I would make it
conditional on as many things as possible (i.e., adoption reform,
religious freedom, etc.). In this way, it may be possible to get the
thousands of Volodyas out of the orphanages and streets before it's
too late, as seems the case now.

This diatribe probably isn't what you were looking for, but as you can see I 
have some pretty strong feelings about the situation in Russia. 

******

#11
Premier Putin Addresses Students

Rossiyskaya Gazeta
2 September 1999
[translation for personal use only]
Speech by Russian Prime Minister Vladimir Putin at the Lomonosov 
State University in Moscow 1 September: "Where To Go Next" -- first 
paragraph is Rossiyskaya Gazeta introduction 

On Knowledge Day [1 September] Russian Federation 
Government Chairman Vladimir Putin attended the student initiation 
ceremony at the M.V. Lomonosov Moscow State University [MGU]. Vladimir 
Putin delivered an official lecture, the first lecture that opened the 
new academic year at the country's oldest unive sity. 

Official Lecture of the Prime Minister

The last academic year of the 1990s begins today. It is now that it is 
time to think what lessons all of us must learn better before the year 
2000 comes in 122 days' time. This is how Prime Minister Vladimir Putin 
began his speech at the student initiation ceremony held at the MGU. 
Much has been said and written about the year 2000 throughout the entire 
passing century. Science fiction writers would send their heroes into 
this year, and politicians would ascribe the fulfillment of their 
promises to this date. Common people would build their personal plans 
around it. The figure 2000 is a mythical one. 

And it is true that there is something fascinating in a change of 
centuries and millennia. And the changeover year is starting to acquire a 
special importance. For politicians it is becoming doubly important. It 
will be in the year 2000 that a new State Duma and president will start 
working. It will be a year when it will become clear what choice all of 
us have made. It will be a year that will determine the following: 
whether we again complain about the difficult Russian fate; 
whether, like masochists, we gloatingly say that we have the form of rule 
that we deserve; 
whether we continue to look with envy at our neighbors not only in the West 
but also in the East; 
and whether we still quote Chaadayev, who wrote that Russia sets an 
example for the world of what should not happen. 

Although the year 2000 will become the year of our choice, we will not win a 
prize for it instantly. It will not be a year of a fundamental turning 
point and transition to general peace and prosperity. It will not be a 
year when milk and honey start flowing throughout the country. It will 
not be a year when we leave everyone and everything in our wake and 
resolve the problems that have accumulated for decades. (Those who 
promise all this within a short period of time are charlatans). 

But it will be a year when we determine where to go next. And the main 
thing is that this choice must be a wise one. 

It is no accident that this is the topic of conversation today, 1 
September -- Knowledge Day. After all, intellect is based on knowledge. 
People who have an opportunity to learn from someone else's mistakes are 
lucky. We have not been lucky in the 20th century. However, people who do 
not even use their own sad experience are insane. And we must recall the 
main lessons that the 20th century has taught us. 

Addressing the Russian history of this century raises many questions. The 
answer to each one of them may become a lesson to every one of us. Let us 
selectively turn to certain events of the recent past. 

Why, for example, did the huge Russian Empire lose a war with little 
Japan at the beginning of the century? Partly because the war remained 
incomprehensible to the people anyway. But mainly because it is 
impossible to enter a new century with an old army. This is the first 
lesson. The lesson of military reform. It remains current for this and 
the next centuries. In this room there are many people who have already 
gone through army schooling, and they will certainly agree with me that 
changes in the army must not lag behind the changes and transitions that 
are taking place in the world. And because of this military reform is a must. 

Why did the 1917 revolution take place in the country, or the October 
Revolution, as it is also called? Because the unity of power had been 
lost. Because within the ruling elite everyone fought against everyone 
else. And also because the material well-being of the main segment of the 
population fell below the lowest limit. 

>From this it is necessary to learn the second and third lessons. The 
lesson of well-being as a guarantee of social stability. A recipe better 
than all revolutions is to increase the number of people who have 
something to lose. The more owners there are in society, the more stable 
and calmer the political situation is and the fewer surprises await this 
society. And this means that state officials must understand that the 
authorities have a vested interest in successful and well-to-do people. 

Here is the third lesson. The lesson of the unity of power. We often 
forget that the separation of power exists only in laws, but in the minds 
of the common people all authorities are united. The president, the 
government, the parliament, the governor, the judge, the prosecutor, the 
popular TV anchor, even the prominent entrepreneur -- all of them are The 
Authorities. Their debate on ways and methods to achieve the public good 
is useful. Discord and petty squabbles among them, public explanations of 
personal relations, and information wars are ruinous. Also because they 
discredit the authorities as such in the eyes of the common people. 

The strength of the authorities lies in lawfulness and order. But laws 
must be wise and fair. Only then are they able to work. Only then will 
they be obeyed by citizens. All our history demonstrates that bad laws, 
no matter how rigid they are, are anyway sabotaged and ignored, and turn 
the majority of citizens into lawbreakers. Because of this the essence of 
the fourth lesson lies in the fact that only laws based on the realities 
of life are effective. The passage of unwise laws merely results in a 
situation whereby legal nihilism and disrespect for the law appear in 
society. Meanwhile, there must be no local, selective violations of the 
law. Any exception in this area already means lawlessness. 

Laws, just as the economy, must be oriented toward people. The lessons 
from the collapse of the Soviet Union mean the lesson of a system that 
began working not for the individual but itself. The state will never 
achieve anything if it is unable to activate the specific interest of a 
specific individual. Passive citizens will bring it to collapse and 
ruination. This is why, from the perspective of a wise state form of 
government, to neglect the interests of people is not only inhumane but 
also ineffective. This is yet another, the fifth, lesson of the passing 
century. The 20th century has left us unaccomplished lessons and tasks. We 
have 

to find the answer to them in the 21st century. This refers to something 
that can be called the lesson of spirituality. 

The majority of those present here are evidently materialists. You must 
agree, however, that the individual is much broader and bigger than his 
stomach. Therefore, every society must have its own idea, its own dream. 
Court philosophers and professional propagandists are unable to invent 
this idea. It must not be imposed on someone from above or introduced by 
decree. It must be born and demanded by society itself. 

The everyday dream of the Soviet paradise, dating back some 20 years now 
and whose symbols were sausage and freedom, has almost come true -- we 
have plenty of both things. But even given the presence of the second 
component of freedom -- in the shape of the national idea -- this is not 
quite enough for Russia. Perhaps you are the ones to answer the question 
"What is the Russian national idea?" After all, who if not Moscow 
University students should ponder of this question? 

First of all, however, we have to resolve immediate tasks: 
to act to stop our boys dying in so-called hot spots, to stop Russian 
civilians dying there; 
to cool not only these hot spots but also the heads of our public 
activists and politicians. 

I personally dream of not beginning my workday by calculating our wage 
and pension arrears. 

We are obliged to act in such a way that the population stops 
perceiving the state as a crude and heartless machine. 

And together we will without fail achieve a situation whereby our best 
graduates will remain in Russia, and only adventure seekers will go 
abroad in search of happiness. 

And finally, we will achieve a situation whereby each one of us, no 
matter where he is, will be able to proudly say: "I was born and live in 
Russia." I have named just the most immediate goals. The main thing, 
however, 
is to make your dreams brighter, better, and bigger, because the future 
of Russia lies in your dreams. 

******

#12
Moscow Times
September 8, 1999 
ESSAY: Communism Extinguished Without a Shot 
By Gwynne Dyer
Gwynne Dyer is a London-based independent journalist. He contributed this 
essay to The Moscow Times. 

Ten years ago this weekend I sat in a stuffy office arguing about the 
possibility of German reunification with Sergei Plekhanov, then a star 
researcher at the USA/Canada Institute. He thought it might happen in 20 
years or so. I said that it could well happen before the end of the century. 
And we both thought ourselves quite daring and farsighted to be having such a 
conversation right in the heart of Moscow. 

I had been farsighted, in a sense, for after a 1987 visit to Moscow I 
persuaded a radio network to give me a travel budget on the grounds that 
something big was going to happen in the Soviet Union, and I would give them 
a series when it did. 

I had spent the summer of 1989 traveling all over the Soviet bloc from Berlin 
to Baku, talking to everyone from Andrei Sakharov to Boris Yeltsin, and by 
now I was sure that some kind of democratization was coming soon both in the 
satellites and in the Soviet Union itself. But I really did not imagine how 
much, how soon - and then, one week later, I got on a plane to Budapest. 

You could see that it had started (whatever "it" was going to be) even on the 
way in from the airport. "Trabis" (Trabants, the pathetic two-stroke East 
German excuse for a People's Car) were simply abandoned everywhere in the 
streets. 

On Sept. 10, the Hungarian government, which was still formally Communist, 
but with "reformers" now in the majority, had abolished exit controls on its 
border with neutral Austria. On Sept. 11, East Germans realized that they 
could travel without visas to the fraternal People's Republic of Hungary, and 
thence defect via Austria to West Germany without having to brave the mines 
and machine-guns that sealed off the inter-German border. And on Sept. 12 the 
hemorrhage began: up to 10,000 East Germans a day traveling to Hungary for 
"holidays" and then fleeing West. By Sept. 13, when I arrived, the Hungarian 
government had opened a refugee camp with the world's fastest turnover in a 
Young Pioneer facility in the hills behind Buda. The East Germans mostly 
arrived by taxi from the city center, and convoys of coaches bore them away 
to West Germany within hours of arrival. I stood outside the gates for a 
couple of hours, interviewing them as they arrived - they were mostly young 
couples with good academic or technical qualifications - and it suddenly 
became clear that the jig was up now. 

I remember writing a piece on the plane back to London about how East 
Germany's Communist regime was like one of those Disney characters that runs 
straight off a cliff, but doesn't fall until he looks down. As soon as I 
landed, I booked a ticket back to Berlin. But it was frankly a bit 
frightening, because in Europe, revolutions have traditionally been served up 
with buckets of blood. The question was not whether the Communist regimes of 
the continent were finished. They were obviously at the end of their tether, 
utterly out-performed economically by the West and politically discredited in 
the eyes of their own people. But nobody knew how to get rid of them safely, 
and as late as 1956 in Hungary the Communists had shown their willingness to 
kill large numbers of people to defend their power. There was one slightly 
more hopeful precedent, the "Prague Spring" of 1968 - but apart from the 
discouraging fact that it had been easily suppressed by a show of force, you 
couldn't depend on everybody else to be as moderate and patient as the 
Czechs. This time it was going to start with the Germans, not exactly a 
historical model of moderation. 

There was good reason to worry that the Communists would take a lot of their 
fellow countrymen with them on the way down - and maybe lots of other people 
as well, given that this would be happening in a divided and hugely 
militarized country with six foreign armies on its soil. The Cold War, after 
all, was still officially on. 

I think that's why most of the analysts employed by Western governments 
denied that the collapse of Communism could happen. It seemed unthinkably 
dangerous. Even those of us who did believe it was coming were scared - but 
we were all wrong. It was fast and smooth and almost completely peaceful. The 
demonstrations against the East German regime in October, the opening of the 
Berlin Wall followed by the "Velvet Revolution" in Prague in November, 
practically all of Eastern Europe free of Communist rule by New Year's Day - 
and scarcely a life lost in the entire process, except in Romania. 

It was the biggest and best surprise of modern history. Ten years later, 
though we know all the details of what happened, there is still no consensus 
on why it happened as it did: Not just the abrupt collapse of Communism in 
Europe, but the overwhelmingly non-violent character of the change. Having 
taken note of their own regime's isolation and inability to stop the mass 
exodus through Hungary, the East Germans got out on the streets of Leipzig 
and Berlin and used the same tactics with total success. They correctly 
calculated that the local Communists, unlike the Chinese variety, had lost 
the will to massacre their own citizens - and once that was clear, the game 
was quickly over, not only in East Germany but all over the Soviet bloc. 
Three hundred and seventy-five million people in what are now two dozen 
countries removed their rulers and dismantled an empire with hardly a shot 
fired. 

There have been quite a few shots fired subsequently, mostly down in the 
mountainous and ethnically tangled southern borderlands of the former empire, 
but that is just the usual post-imperial turmoil. The revolution itself was 
bloodless almost everywhere, and despite the economic miseries that the 
transition has brought to many people, the planet is a much better and safer 
place as a result. No more gulags, no more obsessive discussions of nuclear 
throw-weight, no more bipolar world where to reject the local orthodoxy was 
to "defect." It was the first time that Asia has led the way politically for 
at least several hundred years, and the expanded scope for nonviolent action 
in a media-saturated world has continued to show its power throughout the 
decade in new democratic revolutions from South Africa to Indonesia. In 15 
years we have gone from a world where two-thirds of the people lived under 
tyrannies to a world where over two-thirds of the people live in more or less 
democratic societies, and we have done so without the great explosions of 
violence that historically accompanied change on this scale. 

Even as I write this, I can sense a million lips curling in scorn at my 
naivete, a million myopic quibbles being composed about the highly imperfect 
nature of these new democracies and the wickedness of the new global economy 
and the thousand other things that are still wrong with the world. If 
historical ingratitude were a crime, then the entire chattering classes of 
the West would be serving life sentences at hard labor. 

Never mind. It was a miracle created by millions of other people whose 
imagination and courage triumphed over their natural cynicism. They have 
given the world a powerful new political strategy that tilts the scales in 
favor of human rights, and in a sense they have freed us all. 

*******