September 18, 1999   
This Date's Issues: 3507 • 3508 • 

Johnson's Russia List
#3508
18 September 1999
davidjohnson@erols.com

[Note from David Johnson:
1. Interfax: RUSSIANS' REAL INCOMES DOWN 14.8% OVER YEAR - GOVERNMENT.
2. The Globe and Mail (Canada): Geoffrey York, Bribery scandal embroils 
Yeltsin, family members. Oil-export money shunted from Kremlin into private
hands, dogged prosecutor says.
3. AP: Bank Scandal, Importers Linked.
4. Itar-Tass: Russia-US Strategic Stability Group Meets in Washington.
5. Itar-Tass: World Backs Russian Efforts to Defend Territorial Integrity.
6. The Guardian (UK): Owen Bowcott, Scrapping Russia's nuclear fleet. 
Fearing an environmental catastrophe on its doorstep, Norway is helping 
Moscow dismantle its decaying submarine reactors.
7. Reuters: Moscow Mayor Says Yeltsin Hostage To Own System.
8. St Petersburg Times: Fyodor Gavrilov, Dagestan Will Alter Elections 
For the Worse.
9. Moscow Times letter: More Than Bombs Wreck Homes After Blasts.
10. USIA: Text: Clinton Extends Condolences to Victims of Bombings in 
Russia.
11. VOA: Peter Heinlein interviews prosecutor Skuratov.
12. Itar-Tass: Russia Experts Doubt Official Grain Statistics.
13. Itar-Tass: Duma Takes Positive Pronouncement of Albright--Lukin.
14. Itar-TAss: Russian FM Says ALBRIGHT'S Speech in Washington 
Commendable. 
15. NTV: Interview with Berezovsky.]

*******

#1
RUSSIANS' REAL INCOMES DOWN 14.8% OVER YEAR - GOVERNMENT

MOSCOW. Sept 17 (Interfax) - Russians' real incomes fell 14.8% over
the past year, the government said, comparing statistics for the first
eight months of 1998 and 1999.
Real wages have plummeted 35.9%, the Russian Statistical Agency
said in a report made available to Interfax.
Calculations based on International Labor Organization methods put
the number of unemployed in Russia by September at 9.1 million or 12.4%
of the able-bodied population.
Unemployment as registered by Russia's employment authorities by
August totaled 1.4 million or 2% of the able-bodied population compared
with 2.6% earlier this year.

*******

#2
Date: Sat, 18 Sep 1999 
From: Geoffrey York <york@glas.apc.org>
Organization: The Globe and Mail
Subject: latest Mabetex revelations

The Globe and Mail (Canada)
September 18, 1999
Bribery scandal embroils Yeltsin, family members 
Oil-export money shunted from Kremlin into private hands, dogged
prosecutor says 
By GEOFFREY YORK 
  
Arkhangelskoe, Russia -- Russian oil-export revenue was diverted to
pay for millions of dollars in renovations to Kremlin buildings at a 
time when the government was so impoverished that it could not pay 
pensions and wages, Russia's suspended prosecutor-general says. 

The prosecutor, Yuri Skuratov, says the oil-export revenue was
diverted to pay invoices from Mabetex, the shadowy Swiss company that 
is at the centre of a corruption scandal that has dogged President Boris 
Yeltsin for months. 

The Kremlin's unorthodox scheme should be investigated to see whether
any of the oil revenue was siphoned off into private hands, Mr. Skuratov 
told The Globe and Mail in an interview this week at his country residence 
near Moscow. 

The diversion of the Russian oil revenue is the latest revelation in
the growing corruption scandal that is threatening to engulf Mr. Yeltsin 
and his entourage. 

Swiss and Russian prosecutors are investigating whether Mabetex paid
bribes to Mr. Yeltsin's family and senior aides in exchange for lucrative 
contracts to renovate Kremlin buildings. 

The Kremlin's property department has spent $823-million (U.S.) to
renovate and restore Kremlin palaces, churches and administrative buildings 
over the past several years, according to an audit by a parliamentary
watchdog. 

Tens of millions of dollars in Kremlin contracts were given to
Mabetex, including a reported $30-million to renovate Mr. Yeltsin's own 
residence at the Kremlin. 

"The government did not have enough money in cash to pay Mabetex, to
pay for the contracts," Mr. Skuratov said in the interview. 

"That is why so-called oil quotas were issued to the presidential
administration, so that the money obtained from selling oil could be used 
to pay invoices. This quota can be sold, and the obtained money is 
transferred to the presidential administration accounts, and then the 
presidential administration pays Mabetex," he said. 

This scheme by itself is not necessarily illegal under Russian law,
Mr. Skuratov said. But he is suspicious of whether the oil money was entirely 
spent on renovation contracts, or whether some of it found its way into 
other people's pockets. "In any case, Russian taxpayers were the losers," 
he said. 

The Kremlin has repeatedly tried to sack Mr. Skuratov, but the
Russian parliament has refused to approve the dismissal. He is still 
officially the prosecutor-general, although he has been suspended from his 
duties since April. 

Mr. Skuratov said he does not know the exact amount of oil money
involved in the Kremlin diversion scheme. However, based on the size of 
the renovation contracts and the size of typical oil-export quotas, it 
appears likely that it would have been in the millions of dollars. 

"As an ordinary Russian citizen, I believe this money could have been
used to pay salaries, pensions and allowances, so that people would not be 
driven to such a state where they blockade railways and highways," Mr. 
Skuratov said, referring to pensioners and coal miners who blockaded railways
to demand their unpaid pensions and wages. 

"Of course, the Kremlin needed reconstruction, but it could have
waited until the state was in a different financial condition. . . . This is 
why Russians are indignant." 

Mr. Skuratov, citing estimates provided by Swiss investigators, has
previously said that Mabetex paid about $10-million in bribes to Russian 
officials. 

Felipe Turover, a former employee of a Swiss bank, has told Swiss
investigators that he saw credit-card statements in the names of Mr. Yeltsin 
and his two daughters. He later told reporters that the Yeltsin family had 
spent about $600,000 on the credit cards since 1994, and the bills were paid 
by Mabetex through an account at his former bank. 

Most of this money was spent by the youngest Yeltsin daughter and
official Kremlin adviser, 38-year-old Tatyana Dyachenko, who spent as 
much as $20,000 a day at shops such as Pierre Cardin and Cartier during 
a trip to Paris, according to reports quoting Mr. Turover. 

Asked whether the President's daughter could have afforded such
shopping sprees on the relatively low state salaries that are paid to 
Kremlin officials, Mr. Skuratov said he is skeptical. 

"I have the same question," he said. "How can she explain this? The
main thing is that this was Mabetex money. Did she know that? How did 
she treat it?" 

Mr. Skuratov, shedding light on another Russian corruption scandal,
confirmed that dozens of well-connected banks and politicians were able 
to profit from insider information and Western loans during Russia's chaotic 
financial situation last year. 

The International Monetary Fund gave a $4.8-billion (U.S.) loan to
Russia on July 23, 1998, in a last-ditch effort to prevent the collapse 
of the Russian ruble. 

Of that money, less than $500-million was sold on the main Russian
currency exchange to support the ruble, Mr. Skuratov said. The bulk of the
loan was sold directly by the Russian Central Bank to 18 large commercial 
banks. 

"The main part of the credit was not used to support the ruble on the
currency exchange," Mr. Skuratov said. "Formally there were no thefts, 
but was it good for the country?" 

By gaining access to the IMF loan, the banks were able to buy U.S.
dollars at a relatively low rate of slightly more than six rubles to the
dollar.
"Then the ruble collapsed, so of course they won," the prosecutor said. 

Mr. Skuratov has compiled a list of 780 former and current officials
who seemed to profit from insider trading in short-term, high-interest 
Russian bonds, known as GKOs, in the weeks leading up to the collapse of 
the Russian ruble in August of 1998. They were able to convert their bonds 
into hard currency and transfer it out of Russia before the crash, Mr. 
Skuratov said. 

"Many of them knew brilliantly what was going on in this market, and
they influenced Russia's financial policy," he said. "We thought this was
against the state's interests."

*******

#3
Bank Scandal, Importers Linked
September 17, 1999
By ANGELA CHARLTON

MOSCOW (AP) - At first, suspicion fell on Russian mobsters. Then it shifted 
to Russian officials accused of sneaking off with foreign aid. But many of 
the billions of dollars allegedly laundered through the Bank of New York may 
have had more mundane origins.

Specifically, Russian tax officials and financial analysts say, the money 
could have come from thousands of small- to medium-sized Russian businesses 
who spirited funds through offshore companies to avoid enormous taxes.

The practice is illegal but extremely widespread in a country where taxes are 
punitive, rules are ever-changing and tax police say up to 99 percent of 
businesses skirt some taxes.

``Capital flight is a huge problem. ... Importers and exporters who evade 
taxes are a significant part of that,'' tax police spokesman Vladimir Biketov 
said in an interview Friday.

Russian officials link the Bank of New York affair to tax-dodging traders 
rather than corrupt officials and mobsters allegedly laundering looted state 
assets, international aid and organized crime cash.

Russian businesses also like this theory, since it lifts the stain of 
organized crime that has tainted Russian companies since the scandal first 
broke.

Russians have long said that the reported U.S. probe into the bank is being 
overblown by Western officials and media seeking to smear Russia. The head of 
a Russian delegation visiting Washington to discuss the probe said Thursday 
that U.S. investigators have yet to provide any evidence of wrongdoing.

U.S. investigators have not commented on the tax-dodger theory. But 
commenting on the Bank of New York scandal during a visit to Moscow, the 
chairman of the U.S. Export-Import Bank, James Harmon, said Thursday: ``I 
wouldn't be surprised if it wasn't largely capital flight.''

Since media reports first emerged that up to $10 billion may have been 
illegally funneled through the bank, the key question has been: Where could 
that much money have come from?

Initial reports linked it to Russian organized crime. But Russian officials 
and analysts doubt even the richest of mob bosses has access to such huge 
sums.

Other reports have said some of the money came from a $4.8 billion 
International Monetary Fund loan to Russia in July 1998. That version 
suggests Russian officials, girding for the financial collapse that hit the 
country last summer, looted IMF funds and laundered them through foreign bank 
accounts.

Russian officials have fiercely denied any such foul play and an IMF inquiry 
found no misuse of the loan.

Russian officials believe that tax-dodging Russian importers probably account 
for most of the laundered money.

A key reported target of the probe is a company called Benex, with offices in 
London and New Jersey. Two Benex accounts in the Bank of New York have 
reportedly been frozen and Benex chief Peter Berlin's wife, Lucy Edwards, has 
been fired by the Bank of New York.

The full extent of Benex's activities is unclear. But former Russian tax 
chief Boris Fyodorov and other officials confirm that Benex is among hundreds 
of companies used by Russian businesses to move money - mainly to avoid 
import and export duties.

Yulia Latynina, a Russian financial analyst who studies capital flight, said 
mob bosses and corrupt officials could be part of the alleged Bank of New 
York scheme. But she estimated that up to 70 percent of Benex's business came 
from Russian importers who used the company to avoid import and export duties.

The way it works, she said, is that a Russian importer makes a deal with a 
foreign supplier for $1,000 worth of shoes. But the contract says the goods 
are worth $300. The importer pays the supplier $300 through his official bank 
account, and pays import and customs duties - which can run up to 50 percent.

The importer then quietly pays the supplier $700 through an illicit offshore 
bank transfer, Latynina explained. She said tax police are often in on the 
schemes.

Official imports to Russia ran to $60 billion in 1998, and Biketov estimated 
that up to 80 percent of importers use offshore companies to avoid import 
duty. Exporters use such companies, too, to hide profits in foreign bank 
accounts.

Capital flight has plagued the Russian economy for years, with Russians 
sending an estimated $10 billion to $20 billion abroad annually, much of it 
illegally. Some is from ordinary people who, after seeing their savings 
repeatedly swallowed by inflation or political turmoil, now put them in 
overseas bank accounts. Others are wealthy entrepreneurs trying to avoid 
taxes.

``For a Russian, it is hard to understand how a sausage importer could be 
considered a drug baron just because he didn't give 114 percent of his 
profits to the government,'' Latynina wrote in a recent analysis.

Fyodorov said nothing would change until tax laws are made more realistic. 
``Our tax system is not reformed, not compatible with a market economy.

******

#4
Russia-US Strategic Stability Group Meets in Washington.

WASHINGTON, September 18 (Itar-Tass) - The Russian -American group for 
strategic stability held its regular meeting in Washington on Saturday. 

Russia was represented at the meeting by Deputy Foreign Minister Georgy 
Mamedov. 

The meeting addressed issues related to Russian-American anti-ballistic 
missile (ABM) and strategic arm reduction (Start) treaties, and prospects of 
adaptation of the treaty on conventional forces in Europe (CFE). 

The American side expressed condolences in connection with Russia's recent 
terrorist acts and confirmed a readiness to assist Moscow in 
terrorism-fighting. 

One of Russian diplomats told Itar-Tass that there has been no headway with 
the ABM treaty. Russia refuses to discuss a revision of this treaty which it 
sees as a bedrock of strategic stability in the present-day world. 

The US is insistently taking the matter to "modifying" the treaty by creating 
its national anti-missile defense system that is banned by the ABM treaty of 
1972. 

US Secretary of State Madeleine Albright said in Washington on Thursday that 
the US could pass the decision to deploy a "limited" anti-missile defense 
system as early as in the summer of the next year. 

Some observers say the administration of US President Bill Clinton is seeking 
to leave its trace in history by forging a solution to this issue before the 
US' presidential elections and before its going from the political arena. 

Asked how Moscow could respond if Washington throws away the AMB treaty in a 
year, the diplomat said Russia is likely to be left with the need to 
reconsider the whole range of its disarmament accords with the US, including 
the Start-1 and Start-2 treaties and the considered Start-3 treaty. 

Mamedov's visit to the US was brief, about 24 hours. He travelled on to 
Ottawa to accompany Russian Foreign Minister Igor Ivanov on his visit to 
Canada. After the visit, both will go to New York to attend a regular session 
of the UN General Assembly working there. 

******

#5
World Backs Russian Efforts to Defend Territorial Integrity.

MOSCOW, September 18 (Itar-Tass) - Major Western countries, CIS states, Latin 
America and Asia, including many Islamic countries, have fully supported 
Russia's efforts to "safeguard constitutional order, ensure territorial 
integrity, protect the peaceful population and prevent further escalation of 
terrorism," the Foreign Ministry said on Saturday. 

"The criminal activity of bandits in the North Caucasus encounters 
increasingly growing opposition from the world community," the ministry said 
in a statement transmitted to Itar- Tass. 

"In connection with the bomb blasts and numerous casualties among peaceful 
citizens, the leadership of the Russian Federation continues to receive, 
including through diplomatic channels, messages from the heads of state and 
government, the heads of foreign services, politicians and public figures who 
strongly condemn the acts of terrorism and express their sincere 
condolences," the statement said. 

"Russian embassies have noted the growing number of telephone calls, letters 
and appeals from various public organisations and ordinary people who express 
their profound grief for those killed and solidarity with the Russian 
people," the ministry said. 

*******

#6
The Guardian (UK)
18 September 1999
[for personal use only]
Scrapping Russia's nuclear fleet 
Fearing an environmental catastrophe on its doorstep, Norway is helping 
Moscow dismantle its decaying submarine reactors
By Owen Bowcott in Severodvinsk

The gigantic bulbous hull of a Russian nuclear submarine towers above the 
quay. 

Its multiple launch tubes - capable of firing intercontinental missiles - are 
battened down. Beneath an array of cranes, the Typhoon class warship awaits 
the breaker's yard. 

Smaller submarines are moored upstream, their towers menacingly low in the 
waters of the Severnoye Dvina river. A nuclear-powered cruiser stands at the 
dockside. 

This is Russia's military-industrial complex. Severodvinsk, for decades a 
closed Soviet city whose nuclear arsenal threatened western capitals with 
annihilation, is the largest submarine dockyard in the world. 

This month a new phase begins in Moscow's cooperation with Norway, a 
Scandinavian and Nato neighbour, to clean up the cold war's legacy of 
radioactive waste. Last Friday Jarle Skjorestad, Norway's foreign secretary, 
promised to support further decommissioning. 

But there remain widespread doubts about how swiftly the fuel rods and 
reactors of the communist regime's once formidable northern fleet can be 
taken out of service. 

Upgrading storage tanks for liquid nuclear waste at the shipyard has already 
cost Norway close to £3m - but that is only one element in a programme aimed 
at dismantling the world's largest concentration of nuclear reactors. The 
Oslo-based Bellona Foundation, which monitors nuclear pollution, estimates 
that there are 240 nuclear reactors around the edge of the Arctic circle. 
Most vessels have two reactors. In total, the region accounts for nearly 20% 
of the world's reactors. 

The Typhoon class is the largest submarine ever built. Lack of funds for 
maintenance is believed to be behind the decision to begin scrapping the 
vessels, which can carry 200 nuclear warheads each and were only launched in 
the early 1980s. 

The Norwegian-sponsored storage plant was, unusually for Russia, on time and 
on budget. 

But, recognising that a network of nuclear waste treatment plants is needed, 
Mr Skjorestad remained cautious about claims of rapid progress. 

"The legacy of the cold war has placed a heavy burden on Russia and raised 
grave problems of environmental waste," he said. "They have to be addressed, 
but not by Russia alone." 

Situated alongside ageing Soviet warehouses, the new plant built by Kvaerner 
Maritime appears to be from another world. Its automated processes, operated 
by three technicians, can handle 2,000 cubic metres of radioactive water from 
submarine reactors. 

By comparison, visitors to the Russian-built Atomflot treatment plant in 
Murmansk are greeted by an ominous notice of the death of a 53-year-old 
engineer after a "long and painful illness". But many Russian workers are 
resigned to their fate. "Radioactive pollution is not the first question you 
think about if you are looking for food," said one. 

Arctic ice has scarred the plant's external brickwork. Inside there are 
cracks in the walls. Dust and discarded face masks litter the corridors. The 
yellowing plastic matting on the floor has not been changed for years. The 
plant's reopening date has been repeatedly postponed. But Atomflot's 
director, Alexander Sinjaev, insists that the plant represents progress. 
"Before 1983, nuclear waste was dumped into the sea," he said. 

Short-cut solutions and delays have characterised Russia's naval nuclear 
industry. "Waste is deposited haphazardly throughout yards and bases," said 
Thomas Nilsen, of Bellona. "A recurrent theme is lack of civilian control 
over northern fleet facilities, leading to disregard of international 
recommendations on the handling of nuclear waste." 

Another problem is that the US-funded decommissioning programme, which paid 
Russia $230m (£142m) last year to dismantle nuclear warheads, does not cover 
reactors and fuel rods. 

The spectre of a radioactive Barents sea and north Atlantic, their lucrative 
fish stocks contaminated, reinforces Norway's enthusiasm for international 
cooperation. Oslo has good reason to be scared. In 1989 a Soviet nuclear 
submarine caught fire off Bear Island and sank; 42 crewmen died. It now sits 
1,800m (6,000ft) down on the Arctic seabed. 

At Andreeva bay, a fjord between Murmansk and the Norwegian border, the 
Soviets found water from storage pools for spent fuel rods leaking as long 
ago as 1982. At one stage 10 tonnes of water was gushing out every day. 

The danger of a nuclear catastrophe remains. Last year a deranged sailor shot 
dead eight fellow crew members on a submarine near Murmansk and tried to 
detonate a torpedo inside the vessel before he was killed by security guards. 

Meanwhile the storage ship Lepse, once used to hold damaged nuclear rods, is 
now so contaminated that it is now regarded as radioactive waste. It lies in 
Murmansk harbour, just off the main shipping channel. 

Norway and Russia say the nuclear presence has had no significant impact on 
public health. Overall radioactive dosages are low. It is the potential for 
future disaster that alarms Olso. 

Severodvinsk has not stopped building nuclear submarines, but now only 
delivers one every few years. Several years ago it ran out of cash to pay 
electricity bills, and the local generating company turned off the power. 

The docks now repair non-nuclear vessels and have diversified into propeller 
blades for cruise ships and oil platforms for the Atlantic. 

******

#7
Moscow Mayor Says Yeltsin Hostage To Own System
September 18, 1999

VIENNA, Austria (Reuters) - Moscow mayor Yuri Luzhkov was quoted as saying 
Saturday that Russia's constitution should be changed to stamp out cronyism 
and that President Boris Yeltsin was hostage to a political system he had 
created.

Luzhkov, Yeltsin's friend-turned-foe widely seen as a potentially strong 
candidate in presidential elections next year, launched a strong attack on 
Yeltsin's entourage in an interview with Austria's mass-circulation Neue 
Kronen Zeitung.

``I can't say to what extent his entourage is manipulating him, but the fact 
is that such an entourage exists which has its own interests to realize,'' 
said Luzhkov, who is to visit Austria next week.

``I think that Boris Nikolayevich has become a hostage of the political 
system that he himself has created,'' he added.

The powerful Moscow mayor, who has joined forces with former prime minister 
Yevgeny Primakov to fight parliamentary polls in December, called for 
constitutional change.

``It is high time that the mandates between the president and the government 
are newly ordered by way of a change to the constitution,'' said Luzhkov.

``The last years have clearly shown that that a series of questions could 
have been solved through a redistribution of functions in favor of the 
government.

``Quite a few facts prove that the current power structures ignore many 
constitutional and legal rules,'' he added.

Luzhkov went on: ``I very much regret that our president is under severe 
pressure from personal interests which I certainly don't think represent the 
principles that Boris Yeltsin followed in the early 1990s.

``All too often we're hostages to the problem of the president's limited 
capacity to act. That has destabilized the situation in the state to a 
considerable extent,'' he said. 

*******

#8
St Petersburg Times
September 17, 1999
NOTES OF AN IDLER
Dagestan Will Alter Elections For the Worse
By Fyodor Gavrilov

THE recent explosions that have taken place in Moscow, and now also far from 
the capital in the city of Volgodonsk, bring the front line of the Dagestan 
war startlingly close to every one of us. The difference between dirty, 
hungry and scared boys recently recruited into the Russian army and well-off 
city dwellers is almost erased. Many of us today are reminded of another 
front line - the infinitely more terrifying front line of the Chechen War.

We can draw at least one conclusion from the recent tragic events - the 
Chechen War of 1994-1996 was by no means as pointless as it seemed to many at 
the time. Although memories of that war in the public conscience are 
extremely gruesome ones - mud, blood, mutual cruelty, pointless loss of life, 
shame in the face of defeat (this last factor is particularly important) - 
there are few people in Russia today who would admit to sympathising with 
Chechen independence. It is obvious that the leaders of the day were trying, 
as far as they could understand the situation, to stop what is happening in 
Russia now.

Many people have now changed their views. Most striking of all, Grigory 
Yavlinsky, well known for his pacifism and who six months ago called for 
Boris Yeltsin to be held accountable for unleashing the "massacre in 
Chechnya," now demands that the war in Dagestan be fought until victory is 
declared. It would be interesting to know what difference the Yabloko leader 
sees between this war and that one.

As I see it, there is hardly any difference at all. The republic of 
Chechnya-Ingushetia, ruled in part from 1991 by the hysterical Dzhokhar 
Dudayev, was as much a subject of the Russian Federation as Dagestan. Local 
national and religious minorities (among them persecuted Russians) had the 
same right to be protected from separatists and Islam extremists as they do 
in Dagestan. The Russian military had the same constitutional rights to move 
into Chechnya as they do now in Dagestan. Today this is obvious. Why then was 
the move into Chechnya labelled an act of aggression, when this move into 
Dagestan is called a manoeuvring of forces?

The main difference between these two conflicts is that the ethnically more 
homogenous Chechnya turned out to be easier to control. But the change in 
attitude can also to a large degree be attributed simply to the passing of 
time: Over the last few years, a class of people has emerged in Dagestan who 
political scientists tactfully call the "regional political elite" (we all 
know what these words really mean). This elite refuse to budge, and not God, 
not the Devil, not the Wahhabis of bin Laden, and above all not any Russian 
overlord is going to move them one inch.

I read a smart comment in a Moscow magazine this week: "Now Dagestan has its 
own Modzhakeds, only they're 'good' Modzhakeds;" they also have their own 
field commanders, and only because they are financed by the federal center do 
they call themselves heads of regional administration. For the moment, this 
"elite" is playing on the "federal" side, arming volunteers and so on. But 
their mood may quickly change.

Though all these things are important, they are still just details. The 
overall result of the latest turn of events is that the framework for 
creating political balance in Russia - the belief shared by all that Russia 
requires foreign investment - now has a powerful rival. The election 
cornerstone for politicians and their parties has become an internal 
political issue - how to react to the challenge from Chechnya. The political 
wrestling match, which in the absence of any other provocation could not have 
started with such fury, is now given a powerful impetus.

The consolidation of society by dealing with economic collapse, which had a 
positive influence on the situation in the country a year ago, is now being 
replaced by a purely political consolidation. No one needs to be told just 
how bad this is, as the only interests which are articulated for Russian 
citizens are economic interests. And no one needs to be told that Russian 
politics is a dark and murky forest, with God knows what kind of monsters 
lurking within.

Fyodor Gavrilin is the editor of the Russian-language weekly Kariera-Kapital.

*******

#9
Moscow Times
September 18, 1999 
NAILBOX: More Than Bombs Wreck Homes After Blasts 

In response to stories dealing with the bombings of three apartment 
buildings, in Moscow and Volgodonsk, and to the resulting heightened security 
measures. 

Editor, 

I live in Moscow. Do I live in fear? Yes, but not of terrorists. Moscow Mayor 
Yury Luzhkov is the one I fear, though I am pretty sure he's not the one 
blowing up buildings. The reason I fear Luzhkov is because I don't have a 
propiska, that great Soviet-era residence permit that Moscow authorities 
require everyone in the city to have - or else face fines or worse. 

After the bombing and Luzhkov's announcement of stiffened propiska and 
registration regimes, my fears only increased. And not without cause. On 
Monday, after the second apartment building was blown up, police came by on 
their rounds to check the apartment where some friends of mine live. The 
members of this family are seven-year residents of Moscow and they have a 
small daughter. They don't, however, have a Moscow propiska, a fact that had 
never caused them trouble until now. After police checked their passports and 
noted that they had no propiska, they were told they had 24 hours to leave 
their home of seven years and get out of the city. 

Nightly, the television shows police breaking their way into what are 
supposedly "suspicious" abandoned apartments. But much of the time, the 
camera forging in after police officers reveals apartments that have been 
vacated for at best three or four weeks while the residents are away on 
holiday. 

The need for such measures is being blamed on Chechen rebel leaders like 
Shamil Basyaev and Khattab. But is this really any way to chase them? After 
all, journalists found both of these men up at a press conference in the 
Chechen capital, Grozny, earlier this week. And if journalists can find them, 
don't you think our crack commando special forces troops could find them as 
well? 

Many law enforcement officers have an answer for that. They say they are 
underpaid and that, therefore, their incompetence is justified. The trend 
among many officers, in fact, is to leave the police altogether and work for 
private security firms where they make twice as much. But don't potential 
police officers understand that their pay is likely to be quite low? 
Government jobs not just in Russia but around the world don't pay so great. 
So why is the salary issue such a hindrance to doing what is traditionally 
not a well paying job? Besides, their pay doesn't put them at such a 
disadvantage compared with everyone else in Russia. My parents, who work in 
the private sector, routinely don't receive their salaries for months at a 
time. When they do, they certainly aren't much. My mother, who is a 
psychologist, makes $20 a month when she gets paid at all. Law enforcement 
agents on the other hand are paid regularly and receive many state-sponsored 
discounts on everything from transportation to utilities. It's one of the 
job's big appeals. 

So, people in law enforcement should quit excusing their own incompetence 
with low salaries and just do their jobs the way their countrymen do. Low 
salaries and bad attitudes are no excuse for human rights violations. Haven't 
these bombings ruined enough lives as it is? 

Name withheld by request. 

*******

#10
USIA
17 September 1999 

Text: Clinton Extends Condolences to Victims of Bombings in Russia 
(U.S. will intensify cooperation with Russian authorities) (430)

"The American people share the world's outrage over these cowardly
acts," President Clinton said September 17, extending condolences to
the victims of the recent bombings in Russia.

"These attacks were aimed not just at innocent people across Russia,"
Clinton continued. "They also targeted fundamental human rights and
democratic values, which are cherished by Russia and other members of
the international community. We must not allow terrorists to achieve
their underlying objective, which is to undermine democratic
institutions and individual freedoms."

The United States will intensify its cooperation with Russian
authorities "to protect our citizens from this common threat," Clinton
said.

Clinton also took note of President Yeltsin's and Prime Minister
Putin's having "made important appeals to their countrymen that these
attacks should not lead to new incidents of intolerance or bigotry and
that the public should remain calm and unified in response."

Following is the White House text:

(begin text)

THE WHITE HOUSE
Office of the Press Secretary
September 17, 1999

STATEMENT BY THE PRESIDENT

Recent Bombings in Russia

On behalf of the American people, I want to extend our deepest
condolences to the families of victims of recent bombings in Russia.
Our thoughts and prayers are with the loved ones of the nearly 300
people whose lives were tragically lost.

The American people share the world's outrage over these cowardly
acts. These attacks were aimed not just at innocent people across
Russia. They also targeted fundamental human rights and democratic
values, which are cherished by Russia and other members of the
international community. We must not allow terrorists to achieve their
underlying objective, which is to undermine democratic institutions
and individual freedoms.

People across Russia who have been affected by these attacks are now
beginning the hard task of rebuilding their lives. Their courage and
resilience sets an example for all of us. President Yeltsin and Prime
Minister Putin have also made important appeals to their countrymen
that these attacks should not lead to new incidents of intolerance or
bigotry and that the public should remain calm and unified in
response.

In the days and weeks ahead, we will intensify our cooperation with
Russian authorities to help prevent terrorist acts. The struggle
against terrorism is a long and difficult road, but we must not lose
our resolve. America stands ready to work with Russia to protect our
citizens from this common threat.

*******

#11
Voice of America
DATE=9/17/1999
TYPE=BACKGROUND REPORT
TITLE=RUSSIA / CORRUPTION / SKURATOV
BYLINE=PETER HEINLEIN
DATELINE=MOSCOW

INTRO: Russia's suspended chief prosecutor is calling 
for an investigation into charges that President Boris 
Yeltsin diverted oil revenues to finance Kremlin 
renovations. The allegation is the latest in a string 
of corruption scandals that have implicated members of 
Mr. Yeltsin's inner circle and damaged Russia's 
international reputation.

President Yeltsin suspended Chief Prosecutor Yuri 
Skuratov earlier this year as the prosecutor's office 
was looking into reports that Kremlin insiders were 
using a variety of schemes to loot the public 
treasury. Since then, the prosecutor has spent much 
of his time in virtual seclusion at a country home 
outside Moscow, where correspondent Peter Heinlein 
spoke to him. 

TEXT:

/// SFX: ARRIVAL AT HOUSE, IN AND FADE UNDER ///

Russia's top law-enforcement officer is in his 
shirtsleeves as he answers the door at his modest 
dacha. Somehow, this short, balding, overweight man 
does not seem like Kremlin enemy number one. Nor 
does he look like the star of a pornographic video 
sold on Moscow's streets.

But Yuri Skuratov is said to be all these. 

President Yeltsin tried to fire Mr. Skuratov early 
this year after Russia's state-run television channel 
showed excerpts of a video in which he -- or a man 
strongly resembling him -- was seen in bed with two 
prostitutes. The upper house of parliament refused to 
accept Mr. Skuratov's resignation, however, so the 
president suspended him.

The prosecutor has been barred from his office. But 
that has failed to silence him. In a series of 
interviews with reporters, Mr. Skuratov has outlined 
and elaborated on the investigations of Kremlin 
corruption, which he says were behind the effort to 
compromise him. 

The main investigation, he says, involves a Swiss 
firm, Mabetex, which won huge contracts to renovate 
the massive Kremlin complex.

/// 1st SKURATOV ACT IN RUSSIAN, W/ TRANSLATION ///

The essence of the Mabetex case, according to 
investigators, was that contracts were 
apparently signed in return for kickbacks to 
Kremlin officials. The amounts listed in the 
contracts seem to have been larger than the real 
ones. The amounts stolen from the Russian 
budget were returned in bribes that were spent 
on who knows what?

/// END ACT ///

Mr. Skuratov told V-O-A he has several other questions 
to ask about the Mabetex contracts. Among them is why 
and how the Kremlin used oil revenues to pay for 
elaborate renovation projects at a time the government 
was saying it had no money to pay workers' salaries.

/// 2ND SKURATOV / TRANSLATOR ACT ///

The government did not have enough cash to pay 
Mabetex. So oil quotas were issued to the President's 
office, so hard currency obtained from selling Russian 
oil abroad could be used to pay those bills.

/// END ACT ///

// OPT // Mr. Skuratov says the use of oil revenues 
may have been legal. But he says, as an ordinary 
citizen, he believes the money would have been better 
spent on salaries and pensions instead of driving 
angry workers to protest demonstrations to demand 
their money, as happened last year. // END OPT //

The prosecutor says his office was also investigating 
another matter that has unfolded lately in the United 
States, involving the possible movement of as much as 
10-billion dollars out of Russia over the past five 
years, through the Bank of New York.

/// 3RD SKURATOV / TRANSLATOR ACT ///

Here we are talking about the channel for, so to 
say, transferring finances from Russia abroad, 
in particular to America. This is a different 
kind of money. There is surely dirty money 
there, money obtained by criminal means, then 
sent out of the country and laundered.

/// END ACT ///

Mr. Skuratov has recently added several new 
allegations during interviews with reporters. Last 
week, he told of a list of 780 current and former 
government officials under investigation for using 
insider information to reap huge profits from Russia's 
treasury-bill market. 

Law enforcement agencies are said to be looking into 
evidence that the treasury-bill scheme was used to 
transfer billions of dollars out of the country last 
year, days after the International Monetary Fund 
deposited a four-point-eight-billion-dollar loan into 
Russia's central bank. 

// OPT // Mr. Skuratov says he has a lot more 
evidence about alleged criminal activity, but is 
withholding it because, as prosecutor, he is sworn 
not to reveal details of investigations. But he says 
he may release such evidence if the government tries 
to close those cases.

Mr. Skuratov says in the wake of his recent 
revelations to reporters, the government appears to be 
stepping up efforts to harass and intimidate him.

/// 4TH SKURATOV / TRANSLATOR ACT ///

They are monitoring my activities, collecting 
various materials, sending requests to various 
financial institutions to find my accounts, and 
accounts of my relatives.

/// END ACT /// /// END OPT ///

Mr. Skuratov ended the V-O-A interview by saying he 
still believes Boris Yeltsin is honest. He says he is 
not so sure about the president's two daughters. The 
prosecutor also says he is saddened by recent news 
reports that portray Russia as a totally corrupt 
country.

/// REST OPT ///

/// 5TH SKURATOV / TRANSLATOR ///

It is not right to say all of Russia is 
corrupt. It reminds me of [former President] 
Ronald Reagan's old slogan that the Soviet Union 
was the Evil Empire. It is an ideological stamp 
that can ruin us.

/// END ACT ///

Kremlin spokesman Dmitry Yakushkin has also spoken out 
strongly against the corruption allegations, saying 
they violate the rights of the accused and resemble a 
20th-century version of the Spanish inquisition.

Noting that most of the publicity has come in United 
States and other foreign media, Mr. Yakushkin charged 
the reports are part of a foreign smear campaign. 
Western diplomatic sources say President Yeltsin is so 
angry about the news reports that he has threatened to 
block negotiations on a request by the Clinton 
administration to amend the 1972 Anti-Ballistic 
Missile treaty. 

*******

#12
Russia Experts Doubt Official Grain Statistics.

MOSCOW, September 17 (Itar-Tass) - Russia is expected to harvest 62,000 to 
64,000 tonnes of grain this year, an source in the analytical department of a 
big Russian grain-trading company told Itar-Tass on Friday. 

These figures are 6.5 to 10 per cent higher than officially expected results 
because part of the harvest is concealed from statistical authorities in an 
attempt to whip up the grain market and raise prices, the source at OGO said. 

Lack of transparency is a feature of official statistics as well, and it is 
sometimes "difficult to understand who has produced how much grain", he said, 
adding Russian statistics lacked "trustworthiness and openness". 

The director of the analysis and forecasting department of the government's 
centre for economic situation, Anatoly Manellya, said 22 per cent of 
participants in a poll said information about agricultural production was 
concealed. 

The poll was held by the centre and the Federal Agency for Government 
Communications and Information (FAPSI) in April. 

"If we held such a poll today, the number of affirmative responses would 
higher," Manellya said. 

As of September 13, 42.7 million tonnes of grain had been threshed from 69.6 
per cent of Russia's farm land, which is a 5.3-million-tonne increase from 
1998, according to the Agriculture Ministry. 

Deputy Prime Minister in charge of agriculture, Vladimir Shcherbak, told 
Itar-Tass that it is possible to collect 60 million tonnes of grain. 

*******

#13
Duma Takes Positive Pronouncement of Albright--Lukin

MOSCOW, September 17 (Itar-Tass) - The State Duma took positive the 
pronouncement of U.S. State Secretary Madeleine Albright urging the need to 
expand the cooperation with Russia, Chairman of the Duma International 
Committee Vladimir Lukin told Itar-Tass on Friday. He referred to the speech 
of Albright at the Carnegie Endowment for International Peace on Thursday. 
"That pronouncement is rather realistic," Lukin said. 

"True, there is corruption in Russia but there are other things than 
corruption as well and it's good they understand that on the Capitol Hill," 
the law-maker noted. In his opinion, the United States shall deal with Russia 
both in the interests of that country and the Americans themselves. 

"The current problems of Russia have become an element of the internal 
political struggle in the United States," Lukin remarked. "The nearing 
presidential elections overseas have a negative effect" on the relations 
between Moscow and Washington, he noted. The Republicans are accusing the 
Democrats now, but if the Republics come to power the roles will change 
immediately, Lukin said. 

"Thus, we must take calmly the attacks on Russia which have grown frequent 
due to the corruption accusations in address of Russian officials," Lukin 
said. "There is no reason for the American government to quarrel with Russia 
because of these attacks: both Moscow and Washington must think about 
tomorrow." 

*******

#14
Russian FM Says ALBRIGHT'S Speech in Washington Commendable.

REYKJAVIK, September 17 (Itar-Tass) -- Russian Foreign Minister Igor Ivanov, 
now here on a working visit, on Thursday expressed appreciation of an address 
made by US Secretary of State Madeleine Albright at the Carnegie Endowment 
for International Peace in Washington. 

"Her address was positively oriented," Ivanov said. "The US administration is 
showing its commitment to the agreements forming a foundation for the 
relations between our two countries, and such an approach is close to the 
policy pursued by the Russian leadership," Ivanov emphasized, adding that 
those were the positions for Russia to proceed from during the talks with the 
US administration due in New York. 

Ivanov also commented on the problem of control over the international 
credits' spending in Russia. "It is only natural that no one should open 
credit lines to another country without being sure in that the money will be 
used for its proper purpose and serve the interests of the target-state," 
Ivanov said. 

"That is why it is not blameworthy for the USA to follow the ways the credit 
money will be spent for different purposes, including on the liquidation of 
the Russian nuclear weapons," the head of the Russian diplomacy noted, adding 
that "we share the position and come out for a close interaction with the US 
side so that the funds should not get into dishonest hands." 

*******

#15
Berezovskiy 'Critical' of Moscow Mayor 

NTV
16 September 1999
[translation for personal use only]
>From the "Segodnya" newscast 

[Presenter Grigoriy Krichevskiy] Entrepreneur Boris 
Berezovskiy, who is suffering from hepatitis, accused all the country's 
power-wielding departments today of poor work in preventing acts of 
terrorism. He also commented on the latest issue of 'Moskovskiy 
Komsomolets' which carried the transcript of an alleged telephone 
conversation between someone whose voice resembled that of the 
ideological mouthpiece of the Chechen radicals, [Movladi] Udugov, and 
someone whose voice resembled that of Berezovskiy himself. More about all 
this from our observer, Pavel Lopkov. 
[Correspondent] The scandal surrounding Boris Berezovskiy has forced him to 
interrupt his treatment for hepatitis. His face and the whites of his 
eyes are still rather yellow. He was introduced to the journalists as the 
celebrated entrepreneur. Berezovskiy immediately said that the tape of 
his telephone conversations with the Chechens had been commissioned on 
political grounds by a specific group. 
[Begin Berezovskiy recording] They're all one group today - 'Moskovskiy 
Komsomolets', NTV, Ekho Moskvy - the group that placed this order. True, 
they've placed this order this time but in my time they've placed others. 
[end recording] 
[Correspondent [Moscow mayor Yuriy] Luzhkov and [rival media tycoon]
Vladimir 
Gusinskiy are behind these articles. At the same time, this was the first 
time the former CIS executive secretary had revealed the details of a 
conversation he held a long time ago with Gusinskiy, from which it 
follows that the latter allegedly received money from Chechnya. The 
conversation related to the release from captivity of NTV journalists. 
[Begin Berezovskiy recording] Gusinskiy told me a certain story. He said, 
"You know, the situation is such that you can't free them without money. 
I said, "Why are you so certain about it?" - I'm missing out all kinds of 
subtle details. The explanation was very simple. He said, "You know, our 
position on Chechnya, in the Chechen war, has been far from 
disinterested." [end recording] 
[Correspondent] Essentially, Berezovskiy has launched an open media war. We 
couldn't 
help asking how genuine the transcript actually is of the conversation in 
which Berezovskiy and Udugov talk about secret units - millions of 
dollars, it would seem. 
[Begin recordig][Journalist] Boris Abramovich, did the conversation 
actually take place - the one that's been published? And what was it 
about? 
[Berezovskiy] The conversation did not take place. It did not take place in 
the 
form in which it was published. I had very many conversations with 
Udugov, with [Chechen Deputy Prime Minister Kazbek] Makashev, with [field 
commander Shamil] Basayev and [field commander Salman] Raduyev and 
[Chechen President Aslan] Maskhadov, both on the telephone and not on the 
telephone. Moreover, I hardly interrupted those contacts even for a day. 
[end recording] 
[Correspondent] According to Berezovskiy, then, the tape has been put 
together from 
fragments of different conversations with Chechen fighters. As for 
responsibility for the acts of terrorism, Berezovskiy laid this on the 
Russian special services, which he said had been bought off. 
[Begin Berezovskiy recording] For at least two and a half years on the 
territory of Dagestan, the Wahhabis, together with the local population, 
were creating fortified areas. For at least two and a half years. It's 
Russian Federation territory. It was known to the special services. Let's 
list the heads of the special services during that time. [end recording] 
[Correspondent] He was unusually critical of Luzhkov. No-one had ever seen 
Berezovskiy like this in public. 
[Begin Berezovskiy recording] That man in the cap [Luzhkov] is a liar, he 
talks too much and laughs too much. That's all I can say about him. He 
deceives people, takes them in cruelly. He's not the only one but his 
deceit is more blatant. [end recording] 
[Correspondent] Once, commenting on the mayor's stance about cordoning off 
Moscow, 
Berezovskiy scarcely concealed his gloating. 
[Begin Berezovskiy recording] Before bellowing about cordoning off, you 
have to think about the fact that other places are vulnerable and really 
vulnerable. We've had another terrorist act today. It's obvious that the 
more we hole ourselves up in Moscow, the more other territories will be 
left exposed. Of course, Moscow is the priority. Of course, forces are 
being brought into Moscow but at the cost of the security of other cities 
and regions. We can be quite clear about that. [end recording] 
[Correspondent] What does the former executive secretary recommend is done 
now? What 
he said can be summed up as holding talks with, as the entrepreneur put 
it, the bosses and entering real talks with the Arab countries in which 
terrorism originates. Evidently, he knows who could do that. In any case, 
the name of Gen [Aleksandr] Lebed [governor of Krasnoyarsk Territory] was 
the only one mentioned in a positive context and thus Berezovskiy 
evidently wants to return the situation to 1996 or 1997 when he and Lebed 
were the only mediators between Russia and the Chechen fighters. 
[Video shows news conference] 

*******