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Johnson's Russia List


November 4, 1999    
This Date's Issues: 3604  3605 


Johnson's Russia List
4 November 1999

[Note from David Johnson:
1. Reuters: INTERVIEW-Poverty masks Russian TB figures.
2. Reuters: Healthy economy funds Russia's Chechnya moves - PM.
3. Reuters: Poll-Russians, Germans Coolest on Berlin Wall Fall.
4. Itar-Tass: Russia May Lose Statehood if it Condones Terrorism.
5. Itar-Tass: Rough Draft of Russia New Military Doctrine Ready -Lawmaker.
6. AFP: Putin Breaks Ground In Presidential Poll.
7. The Guardian (UK): Ian Traynor, The Chechen refugees consigned to the squalor of sealed railway carriages.
8. Moscow Times EDITORIAL: Feel-Good Stats Don't Tell Truth.
9. Moscow Times: Andrei Zolotov Jr., Lesin Defends Freedom of Press.
10. RFE/RL: Sophie Lambroschini, Central Electoral Commission Pleads Good Intentions.
12. Washington Post: David Hoffman, Russia's Rookie Capitalists Can't Count on Law. (DJ: Are some Western journalists still too close to their sources? Do I misinterpret this article as an inappropriate puff piece for Chubais in which he appears as the defender of free enterprise against the Kremlin's politically motivated interference? The very Chubais who is at the 
center of the Kremlin's efforts to seize control of the means of financing 
and influencing elections? Perhaps to reinforce the pro-Chubais spin of this 
article the only photo accompanying it is a picture of Chubais with the 
caption: "Former privatization boss Anatoly Chubais deplores unlawfulness."
Or is this subtle irony?)] 


INTERVIEW-Poverty masks Russian TB figures
By Peter Henderson

MOSCOW, Nov 4 (Reuters) - Poverty and homelessness which followed the
collapse of communism and spurred an epidemic in Russian tuberculosis have
also made infections harder to detect, the Health Ministry's chief
tuberculosis consultant said. 

Dr Mikhail Perelman, in an interview with Reuters late on Wednesday, said
the rate of increase in tuberculosis infection was slowing from the
dramatic rises in the immediate aftermath of the collapse. 

But the figures, far higher than those in other ex-communist countries in
eastern Europe, were under-reported. 

``We think about 10 percent of the cases don't show up,'' Perelman said.
``If there were better diagnoses, the infection rate would be higher.'' 

Russia and World Health Organisation (WHO) specialists are also working out
a concerted attack on the disease, which each year kills two to three
million people globally and infects eight million. 

The WHO has a global programme, though Russian doctors say its effects can
only be limited in Russia, where doctors rely more on hospitalisation and
surgery to combat the disease than in the West. 

Western health experts say the lengthy and costly hospital stays are a
waste of scarce resources to fight the disease. 

Perelman said Western criticism of Russia's use of long hospitalisation was
missing the point, given poverty and homelessness. ``Theoretically, I
agree. But where are these people going to spend the night?'' he said. 


Tuberculosis is known as a scourge of the poor, and over a third of the
Russian population is now below the poverty line. It is one of several
diseases, like diphtheria and cholera, which were largely eradicated in the
Soviet era but have made comebacks. 

Russia's tuberculosis infection rate, 76 per 100,000 in 1998, has risen
steadily since 1991 as the health system, already well behind Western
standards, all but collapsed. 

``I think the word epidemic is perfectly appropriate,'' said World Health
Organisation (WHO) Epidemiologist Chris Dye speaking by telephone from

Perelman said: ``The growth is not as catastrophic as reported.'' But Dye
responded it was too early to note a definite slowdown in the infection rate. 

Dye also pointed to a worrying report by the U.S. Center for Disease
Control showing just under 10 percent of new TB cases in one region were
multi-drug resistant, a deadly form generated by incomplete treatments and
now spreading on its own. 

The WHO and Russia are hammering out an agreement on how to attack
tuberculosis under plans to get a $100-150 million World Bank loan for TB
and AIDS around the middle of next year. 

India is also paying back debt owed to the Soviet Union by sending Russia
$40 million worth of tuberculosis drugs and equipment in both this year and

``The framework how to spend the money and how to approach TB control is
prepared and we had an agreement between World Bank and WHO and experts in
Russia,'' said Wieslaw Jakubowiak, the WHO's Tuberculosis Coordinator for

Perelman said the West and Russia had similar approaches but Russian
doctors would not abandon their successful programme. 


Healthy economy funds Russia's Chechnya moves - PM

MOSCOW, Nov 4 (Reuters) - Russia is able to fund its operations in the
breakaway republic of Chechnya thanks to a newly healthy economy, Prime
Minister Vladimir Putin said on Thursday. 

After announcing some of the strongest growth since the fall of communism,
Putin ordered ministers to spur Russian competitiveness abroad and take
advantage of a window of opportunity brought by the devaluation of the
rouble last year. 

``We have succeeded in achieving industrial growth, stabilising the
situation on the currency market, we have succeeded in holding the rouble,
we have begun to raise additional budget revenues, which we can use to
finance anti-terrorist operations in the North Caucasus and on social
needs,'' Itar-Tass news agency quoted Putin as having told a meeting of

Six weeks into Moscow's military advance into the region, fighting in
Chechnya has caused concern abroad and overshadowed economic matters during
Putin's tenure as premier. 

Putin has focused on budget and monetary policy plans for next year during
talks with the International Monetary Fund, due to arrive in Moscow on
November 8 for a one-week visit to review economic performance. 

Russian gross domestic product rose 1.8 percent year-on-year in the third
quarter, Prime-Tass quoted the government information department as saying
on Thursday, indicating the government may meet its target of avoiding
economic shrinkage this year. 

Rouble devaluation last year protected domestic industry from imports by
giving producers a price advantage, though economists disagree whether
producers are restructuring and improving quality to successfully compete

The falling rouble has also impoverished many Russians and consequently led
to a slowdown in retail sales, Putin said. 


He said the government needed to devise ways to improve sales at home and
abroad and revive the securities markets. The advantages of the cheap
rouble ``cannot last long,'' Tass quoted him as saying. 

He added in televised remarks: ``We need to take additional measures for
growth of the real sector of the economy, to enter other countries'

Tass quoted him as saying investors were likely to shun Russia due to
political uncertainty ahead of a December parliamentary poll and a
presidential election next summer. 

He told his ministers to take measures to increase retail sales, noting
they had plummeted an annual 14 percent in the first nine months of the year. 

His call to boost retail sales could easily be taken as a signal for looser
monetary policy in an attempt to put more roubles in consumers' hands on
the expectation they would spend them. But Putin earlier this year demanded
the central bank correct its forecasts for 2000 which proposed exactly that
-- stimulating growth and letting inflation quicken. 

Putin on Thursday also told the government to further tame consumer price
inflation, which slowed to 1.4 percent month-on-month in October compared
with 1.5 percent in September. 

``A rather high level of inflation remains,'' Tass quoted him as saying.
``The sources of inflation need to be found.'' 


Poll-Russians, Germans Coolest on Berlin Wall Fall

PARIS, Nov 3 (Reuters) - An opinion poll published in Paris on Wednesday 
indicated that Russians and Germans were the least enthusiastic among 
Europeans about the fall of the Berlin Wall 10 years ago. 

The survey said a quarter of residents of the former West Germany, and one in 
five in the former East Germany, felt the fall of the wall had negative 

One Russian in five felt the same. 

But the poll published in the French magazine Courrier International showed 
68 percent of Germans in the west and 73 percent of Germans in the east 
believed the event had positive results. 

The French magazine showed the French public believed by a 80-13 percent 
margin that the fall of the Wall was a good thing, compared to margins of 
68-21 in Russia, 73-12 in Hungary, 74-16 in Italy, 80-6 in Poland and 69-24 
for the whole of Germany. 

The poll, carried out by various polling institutes, were also to be 
published in those countries. 


Russia May Lose Statehood if it Condones Terrorism

MOSCOW, November 3 (Itar-Tass) - Prime Minister Vladimir Putin said Russia 
may lose its statehood if it fails to do away with terrorism and separatism. 

"If we do not solve this problem of (terrorism and separatism) in an 
individual region, we may lose statehood as such, because this corrupts the 
country and all state structures and institutes," Putin said at a meeting 
with the rectors of Russia's leading higher educational establishments in 
Moscow on Wednesday. 

He called on the Union of Rectors of Russia to help restore the Grozny 

"This does not mean that we are beginning to restore it today. But we have to 
start thinking about it already now," he added. 

The prime minister noted that the government will provide all the necessary 
material support for their efforts. 

Putin also said that patriotism should underlie Russia's new ideology. 
"Large-scale changes that have taken place in the country in the last years 
have created an ideological vacuum. One ideology was lost and almost nothing 
has been offered as a replacement. A new ideology should be based on 
patriotism and we should not be ashamed of this," he said. 


Rough Draft of Russia New Military Doctrine Ready -Lawmaker.

BARNAUL, November 3 (Itar-Tass) - The rough draft of Russia's new military 
doctrine is ready, State Duma Defence Committee chairman Roman Popkovich 

For the first time in years, the doctrine provides for a possibility of armed 
aggression against Russia, Popkovich said in Altai where he arrived on 

Speaking at a meeting with journalists, the servicemen of the 35th rocket 
division and the directors of defence enterprises, Popkovich said the 
country's military-industrial complex is reviving. The government has secured 
an additional 4.340 billion roubles for defence contracts in the remaining 
two months of this year. The money has already been transferred to defence 
enterprises, he said. 

Popkovich said the 2000 budget draft approved by the State Duma in the first 
reading provides 36 billion roubles for the modernisation of the armed 

On the situation in Chechnya, Popkovich told Itar-Tass that "there are 
somber-minded forces in Chechnya which are ready to act on the side of the 
federal troops at a certain point. It is hard to say when this will happen. 
This will most likely depend on political and perhaps even military aspects." 

Popkovich said he and Vladimir Ryzhkov, head of the Our Home Is Russia 
faction in the Duma, plan to travel to the Council of Europe in Brussels 
shortly in order to discuss "the Chechen events and how much they (in the 
Council of Europe) can interfere in our affairs". 


Putin Breaks Ground In Presidential Poll

MOSCOW, Nov 3, 1999 -- (Agence France Presse) Prime Minister Vladimir Putin 
has obtained the highest rate of vote intentions for a Russian presidential 
election, at 29 percent, according to a poll published Wednesday in Moscow.

Putin had been named by just one percent of those intending to vote in the 
election when a similar poll was conducted just after he was named premier in 

The private Public Opinion Foundation, which made the survey, said that no 
other Russian leader has recorded as high a rate prior to a presidential vote 
since regular studies in the country began about five years ago.

The foundation is run by Alexander Oslon, who is also an advisor to Russian 
President Boris Yeltsin's administration.

A second private organization, VTsIOM, is preparing to release a separate 
survey whose results are expected to be close to those of the first, said its 
vice president, Alexey Grajdankin.

"The military action directed by Putin in Chechnya has not yet caused many 
casualties, and his government has not made any serious economic mistakes," 
Grajdankin said to explain Putin's exceptional rise in the polls.

The Russian premier, a former federal security chief, had no political 
history when he was named by Yeltsin three months ago. ((c) 1999 Agence 


The Guardian (UK)
4 November 1999
[for personal use only]
The Chechen refugees consigned to the squalor of sealed railway carriages 
Under brutal assault almost 200,000 have fled Chechnya - a land where armed 
gangs also meted out savagery
Ian Traynor in Karabulak, Ingushetia

Relatives of Ibragim Aidayev were packed into sealed lorries and trains and 
deported from their ancestral homes to central Asia. That was more than 50 
years ago at the height of the second world war, when the Kremlin summarily 
resettled all Chechens, killing thousands during Stalin's transports to 

The 46-year-old car engineer was born in Kazakhstan. But yesterday he sat 
with his wife and four children in another stinking railway carriage provided 
by the Kremlin. This time the carriages are going nowhere, moored on a siding 
in the tiny region of Ingushetia near the border with Chechnya, makeshift 
homes for Mr Aidayev's family and another 2,000 refugees who have fled in the 
face of Russia's month-long assault on their homeland. 

"All we want to do is to go home. Who needs us here? Who wants to be here?" 
he groaned. 

For the past two weeks the 2,000 Chechens, mainly women and children, have 
been crammed into 44 train carriages - the Russian government's main 
contribution to solving the worsening refugee emergency triggered by its 
bombing of Chechnya, the breakaway republic it deems a terrorist hotbed. 

They are part of a wave of close to 200,000 refugees swamping Ingushetia to 
the west, which itself has a population of only 300,000. 

At the railcar encampment there are no kitchens, no sanitary facilities, no 
running water. The windows are sealed. The air is stale and stifling. 
Latrines have been hastily built in little wooden sheds down the embankment 
from the tracks. 

Each carriage was designed for 81 seated passengers but now has 54 permanent 
residents. Each family lives in one sleeping compartment. 

The weather is still mild here in the valley at the foot of the towering 
Caucasus mountains. But the snow already dusts the peaks and a bitter winter 

"They started giving us food yesterday, sugar, oil, and butter," said Toita 
Saidullayeva, 37, from the bombed Chechen town of Urus Martan, south-west of 
the capital Grozny. "But it's not enough. We can't wash our clothes. There's 
nowhere to bathe. What are we supposed to do with the children?" 

The bread lorry arrived - the sole reliable source of food - and she rushed 
off to claim the share allocated to her and her four children. Musa 
Khadsiyev, the lorry driver, delivered 3,927 loaves of fresh rye bread to the 
railway encampment yesterday. He, too, is a refugee from Grozny. "I haven't 
seen a single Russian here helping and I don't want to see any," he said. 

The Ingush president, Ruslan Aushev, said last night that the refugees now 
number 188,166, most of them staying in private Ingush homes. He appealed for 
help from the international community. 

On the first United Nations visit to the crisis region, Nicholas Usidis of 
the UN refugee agency confronted desperate families at the railway camp and 
another "town of tents" and said: "It's not pleasant, but it's not critical. 
But if we let things develop it's going to get worse." 

Another 2,000 Chechens are subsisting in mud and squalor in tents a couple of 
hundred yards from the railway siding. One man yesterday was building a house 
of bricks made from mud and straw. 

The tent camp administrator, Ruslan Dedigov, 43, who used to be a Grozny bus 
driver, spent much of the day engaged in screaming matches with a throng of 
angry mothers. One widow with seven children who is living in a disused 
factory demanded tent space and a place on the register that would at least 
guarantee her minimal food rations in the camp. 

"I've asked you a hundred times," she screamed at Mr Dedigov, out of her mind 
with worry. "We can't help you," he replied, more in sorrow than in anger. 
"We don't have the tents and we don't have the supplies for any more." 

Magomed Sultigov, 58, the doctor who heads the town's main hospital, said the 
refugees had received lots of offers of help but the promises turned out to 
be empty. 

"There's a lot of problems with colds, with digestive illness, with heart 
disease. There's a danger of tuberculosis in the camps. And there's going to 
be a sharp increase in the illness rate in the winter. We've got thousands of 
refugees here. We've managed to check 700." 

Lyudmila Latirova, a teacher from Grozny who runs the railway camp, said her 
2,000 got their first foreign aid on Tuesday - soap, sweets, sunflower oil. 

"We'll need to build some kitchens. And we need to develop a ration cards 
system. There's no order. It's chaos." 

Amid the mayhem of the rapidly growing Chechen diaspora, Mr Aidayev bristled 
with pain, humiliation, and indignation. "Many of my family died in the 
railway transports in 1944. My parents survived but my father was killed in 
1995 in the last war launched against Chechnya by the Russians", he said. 
"And now we're back in railway carriages. Just look at the conditions we're 
living in." 

Moscow Times
November 4, 1999 
EDITORIAL: Feel-Good Stats Don't Tell Truth 

>From the "lies, damn lies and statistics" department come Russian government 
figures trumpeting a rise in foreign investment. It seems it's up a whopping 
60 percent. 

Those seeking comfort in the idea that Russia is rising from its knees should 
probably move on hurriedly because any sort of dissection of the statistics 
from the Russian Central Bank and the State Statistics Committee provide 
little cause for celebration. 

Yes, it's up 60 percent from last year. And yes, some of that is thanks to 
the ruble devaluation, which makes investing directly into the real economy 
more attractive. 

But consider exactly how little investment is coming in - for the first half 
of 1999, we are looking at a paltry $1.322 billion. That's for the largest 
country in the world. It's not even half the price tag of, for example, Walt 
Disney's new Hong Kong theme park. If you calculate the amount of direct 
foreign investment per person in Hungary and compare it to the amount per 
person in Russia, Hungary has more than 20 times as much foreign money coming 

Then look at 1999's projects. Dandy candy, Wrigley's gum, Caterpillar, 
NestlÎ, Philip Morris - all fine, as far as they go. But, these are old 
projects. They were planned and announced long ago. Where are the new major 
announcements today? 

Most disturbing of all is that of the $1.322 billion that has come in so far, 
well over half is from ... Cyprus. 

One reaction might be that this is wonderful - because it is Russian capital 
flight winging its way back home. Prodigal dollars. But consider the 
estimates of how much capital flight is still fleeing - $10 billion through 
the Bank of New York alone? - and a mere $722 million returning is depressing 

And this also assumes that Cyprus money had already fled in the first place. 
Consider the $440 million sale last week by the government privatization team 
of 9 percent of LUKoil - to a Cyprus-based shell company that is almost 
certainly controlled by LUKoil. 

If LUKoil is buying this 9 percent of itself via the obscure Reforma 
Investment Ltd. company, this will show up soon in government figures as 
another $440 million in direct investment from abroad. Goskomstat and the 
Central Bank will no doubt joyously share the news that foreign investment 
has gone up a few more percentage points - but of course that will be an 
accounting fiction. 

>From Vladivostok to St. Petersburg, foreigners are sinking money in good 
faith into Russian projects - and then getting cheated. Rather than 
trumpeting some truly pathetic statistics, the government ought to be 
listening to, and defending, these frustrated investors. 


Moscow Times
November 4, 1999 
Lesin Defends Freedom of Press 
By Andrei Zolotov Jr.
Staff Writer

Press Minister Mikhail Lesin said Wednesday that the Central Election 
Commission's attempt to severely limit news coverage of political candidates 
would effectively impose a moratorium on free speech. 

Lesin said his ministry is preparing a formal appeal to the Constitutional 
Court to resolve the clash between the law on elections and the Constitution. 

Central Elections Commission chairman Alexander Veshnyakov has said the media 
is forbidden from portraying any candidate in a positive or negative light. 
Veshnyakov said he wants to prevent campaign advertising disguised as 
reporting in the run up to the Dec. 19 parliamentary election and is simply 
implementing the new election law, which puts strict limits on campaign 

"A literal implementation of the law will in fact lead to a moratorium on 
free speech," Lesin said Wednesday. He said this would mean shutting all 
Russian media down during the campaign and the ministry does not want to be 
responsible for a crackdown. 

He said that the ministry's appeal to the Constitutional Court will not 
affect the date of the elections and he planned to meet with Veshnyakov later 
this week to "develop a common approach" to the interpretation of the law. 

Lesin is a Kremlin insider who was appointed earlier this year to head the 
newly formed government agency, which is charged with supervising and 
regulating the Russian mass media. 

His latest move is likely to be aimed at shedding his agency's image as the 
Ministry of Truth and proving that he is not acting just in favor of 
President Boris Yeltsin's entourage. 

Lesin said he is meeting with television executives this week to push them to 
curb the aggressiveness of their campaign coverage, which has assumed a 
"destructive" character. 

"The law is the law, but there is also such thing as political culture. 
That's where the problem is rooted," Lesin said in a telephone interview. 

At the core of the conflict is Sergei Dorenko's show, which airs Sunday night 
on Boris Berezovsky-controlled ORT television. On the past two programs, 
Dorenko has attacked Fatherland-All Russia leaders Yury Luzhkov and Yevgeny 

On Oct. 17, Dorenko accused Luzhkov of taking kickbacks from the mayor of a 
Spanish town and lying about sending humanitarian assistance to Budyonnovsk. 
On Oct. 24, he replayed the statement of a former U.S. spy accusing Primakov 
of involvement in an assassination attempt on Georgian President Eduard 
Shevardnadze and also claimed that Primakov was in poor health following a 
hip replacement in Switzerland. 

Although many Russian journalists and media watchers were strongly critical 
of Dorenko for his evident bias and what was seen as a disregard of 
journalistic ethics, they spoke out in defense of ORT - and themselves - when 
the Central Election Commission came after the channel. 

The commission ruled last week that Dorenko was "carrying out agitation 
activities" against Fatherland-All Russia, which are prohibited under the 
election law unless paid for by candidates out of their campaign funds. It 
also said that publication of any information that "is capable of damaging 
the honor, dignity and business reputation of registered candidates" is not 
allowed and the news organization is obliged to give a candidate an 
opportunity to respond before Dec. 18. 

The commission formally demanded that the Press Ministry punish ORT. 

Lesin said Wednesday that he had to defend the media from the broad 
definition of agitation employed by the commission. 

The Constitutional Court is unlikely to be able to consider the issue before 
the December vote because of a backlog of cases, Lesin said. But he said he 
hoped to resolve the conflict with the election commission through 

Apparently aiming to maintain political balance, Lesin met Tuesday with the 
top executives of two television channels shilling for two opposing political 
camps: Konstantin Ernst of pro-Kremlin ORT and Konstantin Likutov of 
Luzhkov's TV Center. 

Likutov accused Lesin of demanding that the channel shut down its own 
political hit show - Alexander Khinshtein's "Secret Files," which has 
broadcast a series of exposÎs targeted against Berezovsky and has used 
derogatory words such as "regime" and "family" in regard to Yeltsin's 
government and inner circle. 

Lesin vigorously denied he had demanded the show be taken off the air, but 
confirmed that he had expressed his "concern" over the show's "potential" of 
becoming a destructive force. He said he was "categorically against" using 
words that have a negative connotation in regard to Yeltsin, saying that 
would qualify as "agitation." 

Lesin said Ernst had assured him that Fatherland-All Russia leaders will be 
given an opportunity to respond to Dorenko's accusations on his show. 

The press minister said he will meet this week with the chief executives of 
RTR, NTV and TV 6 in an attempt to promote more moderate campaign coverage 
and to persuade journalists to stop the media war. 

"I will use all the means at my disposal to have journalists think it over," 
Lesin said. 

A source in TV Center's management said this week that Khinshtein's show may 
be shut down by the station independently of the Press Ministry because the 
investigative reporter, who is seen by many in Moscow's media community as a 
mouthpiece of the Federal Security Service, plans to run for a seat in the 
State Duma as a candidate of Alexei Podberyozkin's nationalist Spiritual 
Heritage party. 

n Raf Shakirov, the former editor of the Kommersant publishing house, will 
become vice president responsible for news and public affairs programs at TV 
Center, channel spokesman Yulia Goryacheva said. 

Shakirov was sacked from Kommersant when Berezovsky bought the publishing 
house earlier this year. 


Russia: Central Electoral Commission Pleads Good Intentions 
By Sophie Lambroschini

Russia's Central Electoral Commission (CEC) is due to announce later today 
how many parties will be allowed to compete for seats in December elections 
for the State Duma. The announcement follows lengthy discussions in the CEC 
over long lists of alleged violations. RFE/RL Moscow correspondent Sophie 
Lambroschini takes a look at the CEC's role and at its efforts to convince 
the Russian public that it is a serious election monitoring group. 

Moscow, 3 November 1999 (RFE/RL) -- Russia's Central Electoral Commission has 
been trying to convince the public through meticulous inspection of candidate 
property and revenue declarations that this time the law will be strictly 
applied. However politicians and observers have often been critical of the 
commission's work.

Principally, CEC President Aleksandr Vesnhyakov is being criticized for being 
a strict legalist while missing the larger mission of ensuring a fair 
elections process. Politicians say that they are being harassed while 
potential criminals can easily slip through the pre-electoral check. Other 
observers note that because his income declaration was in order, nothing 
could keep the CEC from registering Aleksandr Barkashov, a self-proclaimed 
fascist and racist, from being registered yesterday.

Veshnyakov has also been accused of limiting freedom of the press by saying 
that any news report that portrays a candidate in a positive or negative 
light can be labeled as illegal "agitation".

To all these criticisms, Veshnyakov has just one answer -- he is applying the 
electoral law. He has said, quoting, "It may be far from perfect, but it is 
still the law."

Carnegie Foundation expert Sergey Ryabov tells RFE/RL that "Veshnyakov's 
tactic is to stick to the letter of the law." He says that this gives 
"imperfect results, because the law is imperfect." Ryabov notes that the 
election law says something vague about the need for the media to be 
objective in its coverage of candidates. He says the CEC was wrong to 
interpret this language as barring positive and negative candidate 
portrayals. But Ryabov says the strict interpretation was meant to put some 
order into the media war that is raging between television channels 
controlled by competing political groups.

Many recent sessions of the CEC took on the tone of a court of law. The 
fifteen commission members held sessions almost every day in a room next to 
the presidential administration, right off Red Square. Their main focus has 
been on whether or not to allow various parties to run in the Duma elections. 
Discussion includes the number and accuracy of signatures collected and the 
information given by the candidates about their earnings in 1998 and the 
property they possess. The idea is to bar dishonest people from running.

Across from the commission sit electoral bloc leaders who remain sometimes 
for hours. One top candidate has to be present to answer any questions and 
defend his party's case.

At the same table sit representatives from the tax police and the Interior 
Ministry whose role it is to confirm or deny the information stated by the 
party representative.

The whole process is open to the press and the room is filled with 
journalists. It is a rare sight for the Russian press to observe close up 
political stars like Yevgeny Primakov or Grigorii Yavlinsky answering 
embarrassing questions about their wealth.

Yesterday, Russia's popular television anchor Arina Sharapova declared 
roughly the equivalent of what a pensioner receives and was barred from 
running for hiding part of her income.

But most of the time, the inquiry involves long discussions about car 
ownership. It is a usual practice in Russia to sell a car by giving a general 
power of attorney to the buyer in order to avoid the bureaucratic hassle of 

That is why Primakov received a warning for omitting the ownership of a 
ten-year-old Zhiguli. Since for years cars were considered a profitable 
investment and even-small scale business, this kind of selling and buying is 
very common. The result -- cars appear in the Interior Ministry's computer 
even if hidden financial incomes do not.

The issue of car ownership foiled registration of the Liberal Democratic 
Party of Vladimir Zhirinovsky. Zhirinovsky tried again after cleansing his 
list of dozens of candidates and won approval for his new list under another 

The CEC's Veshnyakov was obviously happy that Zhirinovsky had learned his 
lesson. He praised him, stating that Zhirinovsky had "become disciplined."

The Carnegie Foundation's Ryabov says that although these kinds of scenes may 
seem like a farce, the general effect of the CEC's work is, nevertheless, 
positive. He says that "at least the candidates learned that they are indeed 
responsible before the law." 

Ryabov says that this does not mean that the CEC can keep all candidates from 
cheating, but he says it does act as a restraint. Ryabov says that there are 
many problems with the Russian election process, but he says that "at least, 
some first steps have been taken." 


Date: Wed, 03 Nov 1999 
From: "Sarah C. Lindemann" <> 
Subject: More about Visas and Democracy

Dear David,

I hope the attached helps to provide some concrete data as concerns the
latest turn in the visa dialogue.


I have been fascinated, disheartened and frustrated as I followed the
recent debate on JRL concerning visa policy. Fascinated because of the
vigor with which people are engaged in this issue and the interesting
detours it is taking, disheartened by how experts in America still seem to
be unaware of successful grassroots democratization programs that are
taking place in Russia and frustrated because much of what is being written
is ignoring several obvious points. First I want to say that my
observations are based on almost 8 years living full time in Siberia. 3
years of which were spent teaching at Novosibirsk State University and
lecturing at Universities in Ulan Ude, Kemerovo, Barnaul and Omsk. In the
fall of 1998 I returned to do a lecture series at Novosibirsk State
University so I could see how these young people compared to those I worked
with in 92. Starting in 1995 I focused my energies on supporting
grassroots democratic development working in 12 major Siberian cities. I
must say that a factor in making the decision to change my focus was the
recognition that many of my former students were not returning to Russia
and so my genuine interest in supporting democratic development in Russia
was better served working in another context. 

The Elephants:

1. The reason why it is harder to get a visa now is because people didn't
come back.

Certainly some stayed illegally but many of my former students found
institutions that supported their desire to stay. Some left undecided
about what they would do after their program ended, others went with the
clear intention to stay. The majority of those who returned only made it
as far as Moscow. I took a poll of my students at Novosibirsk State
University in the Fall 1998. Since the seminar series was in English and
participation was voluntary and open to students of all departments it can
be assumed that participants are among those most interested in
opportunities to study abroad. 73 students (41 women and 32 men) were
asked if they had the opportunity would they move to the West. 50% of the
women and 47% of the men said no. One woman said maybe and 2 men said they
would like to go, make money and return. Now, if the various agencies that
are responsible for selecting participants have perfected techniques for
identifying the one out of 2 who want to stay (not to mention return to
Siberia) then these programs make sense in terms of supporting democracy.
As for those who decided to stay, I decided long ago not to pass
judgement. As an American tax payer and former student loan payer, I do
think that if someone has received a Muskie or Freedom Support Act
Fellowship and does not fulfill the terms of their contract, the
scholarship should be converted to a loan that is paid back as it must be
for American graduate students. This cannot be too complicated to implement.

2. The Cold War Soviet Union and Democratic Russia are different countries
and demand different approaches.

I can fully understand and appreciate the value of exchange and other study
programs during the Cold War. For most of the participants this was
probably their first exposure to American society and ideas. 
As concerns Russia today, it is simply wrong to assume that more first hand
exposure to American culture, society or ideas is what is needed to
accelerate the democratic development process taking place here. Russians
are flooded with American culture and ideas. Russia is a democratic
country and the challenge is not to introduce democratic ideas but to
support democratic initiatives in the existing social and economic
environment. I have yet to see anyone go on a short or long term program
whose attitude towards democracy became the least bit more positive. Many
of my colleagues that have taken part in these trips were already very
actively and effectively engaged in trying to improve life in their
communities which is why they were chosen. The most common response I get
when they return is "nice trip" and they go back to the work they were
already doing. Of course there are exceptions such as disabled people who
were deeply moved by the level of accessibility in America and a former
student who got a Muskie in NGO management and is currently Executive
Director of a Moscow based organization. Thus, I do not mean to imply
there should be no trips. I think it is a well deserved perk for these
remarkably committed people and I have upon occasion lobbied hard for
individual trips with specifically targeted goals. The issue remains is
it the most effective mechanism for supporting democratic development in

In response to the question, "What do you need to be more effective?", I
have never once heard the answer "a trip to America". Step number one
in creating an effective strategy is to ask the people, listen to their
answers and plan accordingly. When I say "the people" I mean "the people"
not the powers that be. My experience does not at all match Yale
Richmond's assessment that " change in Russia has always come from above".
Not only have I seen profound and necessary change generated from active
citizens but I would go so far as to say that if we are really interested
in supporting a just democracy in Russia the most effective place to target
our efforts is at a grassroots level. By aiming at only government or
other powerful entities we are only reinforcing the top-down leadership
style and expectations of the people that is contra the very essence of a
democratic society. By targeting the citizens we not only encourage more
people to become active but collaterally the government to become more
responsive to the needs and interests of the population. How are we going
to get government officials to truly grasp the value Americans place in the
average citizen if we ourselves do not support their initiatives? I am
reminded of a very simple moment which had great resonance here. During
George Soro's visit to Novosibirsk a couple of years ago there was a formal
dinner attended primarily by government and business officials. To the
great surprise of the high powered guests Soros asked the Executive
Director of a well respected non-profit organization to sit next to him.
Gestures matter. 

As is the case with trips to the US I am not categorically opposed to
programs for powerful people and institutions but by supporting grassroots
initiatives you will cover all bases. For example, the problems of
transparency of government spending and providing more money to NGOs. The
Siberian Civic Initiatives Support Center's approach was to design a
program of grant competitions with consolidated budgets (government and
private funds). Grant decisions were made by committees made up of
representatives from all three sectors and all money was distributed by an
NGO. The total amount of money distributed in 9 regions of Siberia was
only $23,133. With that relatively small amount of money not only did 82
organizations get the necessary funding to conduct important projects but
the government gained experience in conducting open competitions. Thus, it
is not only instinct but evidence which leads me to the conclusion that in
a post communist transition environment support for grassroots initiatives
have the widest impact. Above all it empowers people to take
responsibility for their society rather than waiting for the government to
solve their problems. All the programs I have been associated with apply an
inter-sectoral approach which brings together all three sectors (business,
government and citizens). We use the word "partnership" which implies
respect and equality between all participants.

3. Cost-benefit ratios, it is cheaper to do things in Siberia than in America.

Here I will simply present to concrete examples. The first is a direct
comparison. The goal was to create NGO trainers who would work in the
Siberian Region. A very well known and respected American institution was
responsible for implementing and designing it. It involved a six week
study trip to the United States and numerous additional trainings in
Eastern Europe. In addition, the participants (English language was a
requirement) received monthly stipends for four days of training that were
half of what we were paying full time employees. I do not know the exact
cost per person but I heard it may have been as high as $60,000. 5 people
from Siberia participated. All did indeed receive good training skills.
However, today, only one of the 5 is providing training in the region on a
regular basis at a reasonable cost. Thus, a 20% success rate at a cost of,
I will be very conservative here and say $20,000 per person, $100,000. 

Rapidly we recognized that the program was not going to solve the program
of providing trainers in the region (one moved to Moscow, another refused
to leave her city). We also found the salary levels now being demanded not
sustainable. We designed a program that took place in the region using
Russian experts. Participants were required to volunteer a certain number
of hours throughout the program in order to continue. Of the 16 people who
started the program 2 were dropped for not fulfilling the requirements.
Out of 14 who finished I know for a fact that 10, or 71%, continue to
provide training on a regular basis. I do not have the total cost of the
training available but it was maximum $20,000 in total (the minimum cost of
one person in the other program). The other key factor here was the
quality of the trainers. In exit questionnaires filled out by subsequent
training participants trainers who took part in the all Russian program
scored equal, and in some cases higher, than those who were in the US
training program. 

The second example could perhaps best be compared to the impact of the cost
of preparing one Muskie Fellow in Education Administration. Depending on
the school a two year program can cost $30,000 for just room and board. My
organization ECHO and the Krasnoyarsk Center for Community Partnerships
conducts a year long program on Community Schools. Funding is very limited
so we can only handle 12 schools. In 1997-98 3 schools from each of 4
Siberian regions were chosen with priority given to village schools. Two
week long training sessions were conducted with site visits in between.
The cost of the first training session with 24 participants (2 from each
school) was approximately $3810. In questionnaires presented at the start
of the second session participants reported working with 8,476 people in
the two month period. This does not include the 5,000 people who turned
out for the village wide celebration to turn on the streetlamps which
materialized as a result of a community campaign initiated on the basis of
our training. In addition, 15 school community funds were created and are
providing desperately needed financial support to schools. All of these
people are now very effectively influencing people in power to help support
the community school movement and civic initiatives in general. I expect
that a returning Muskie Fellow who went to work for the government could
have a similar impact but at 10 times the cost. 

In summary, everything I have seen here has proven to me that Siberia based
programs for grassroots civic initiatives have a greater impact than any
other democractic development mechanism and they are the most cost
effective. With regard to academic programs, I agree with Professor Hough
that high school programs have the most long term resonance. 

Sarah Lindemann-Komarova
ECHO, Inc.


Washington Post
4 November 1999
[for personal use only]
Russia's Rookie Capitalists Can't Count on Law
By David Hoffman

MOSCOW—When the Russian government suddenly decided to dump Dmitri Savelyev
as president of the lucrative Transneft oil pipeline monopoly, Savelyev was
defiant, protesting that the law required a 45-day advance notice of a
shareholders' meeting.

"I told them that I was not going to submit my resignation," he recalled,
"and that there was a certain procedure and it must be followed."

It wasn't. Within days, Interior Ministry riot police used chain saws to
break down doors at Transneft and install a new president, Semyon
Vainshtok. President Boris Yeltsin announced he would not interfere in the
move, which was widely interpreted as an effort by Kremlin insiders to use
the state's clout as majority shareholder to put their man at the head of a
cash-rich company a year before presidential elections.

The episode was one of many recently that have unnerved investors and
called into question some of the basic premises of Russia's troubled
transformation into a market economy. Russian companies have been battered
by arbitrary decisions of national and regional governments, and shaken by
the use of force, rather than the law, to settle property disputes and win
control over some rich corporate jewels.

When Russia underwent a massive sell-off of state-owned factories, mines,
mills and refineries in the early 1990s, the architects of privatization
said the most important goal was the creation of a new generation of
property owners. These new owners, it was argued, would rejuvenate aging
equipment, seek new investment, run their properties in an efficient and
open way, and want a state ruled by laws to settle disputes.

But the new owners have hardly lived up to the goals championed by Anatoly
Chubais and Yegor Gaidar, who spearheaded Russia's first years of reform.
Nor has the Russian government proven to be much better at policing the
rough-and-tumble system of market capitalism.

The ruble devaluation more than a year ago has boosted Russia's economy by
raising the cost of imports thus encouraging the sale of Russian-produced
goods. But recent controversies suggest that profound structural problems
remain concerning who controls Russian companies, how they are operated,
and whether they are restructured and can attract investment. 

Even the highest authorities have shown little regard lately for the law.
"Here in Russia we have the rule of force. We have total arbitrariness,"
said Savelyev, the Transneft executive who is fighting his ouster in court.
"The law is not working."

"I will say openly that this has made a ghastly impression," said Chubais,
who was the first privatization boss under Yeltsin and now is chief of
Unified Energy Systems, Russia's electricity grid. "The way in which this
was done was an outrageous chain of gross violations of the law on joint
stock companies, the Civil Code, the constitution, a consistent brazen
violation of the fundamentals of present legislation."

Chubais said the Transneft move was a bad signal to foreign investors. "How
could you do business with Russia's government if it uses [riot police]
armed with assault rifles and wearing helmets when dealing with corporate
policy issues in the center of Moscow?" he asked.

A stock market analyst, who asked not to be identified, described the
Transneft coup as "an attempt of the current government to ensure the
financing of the reelection campaign. I don't think it is going to be
successful--it is a dire effort to grab control of the major donors."

In another case that has underscored the hazards facing investors here, a
St. Petersburg court recently annulled the stakes held by U.S. investors in
the 255-year-old Lomonosov Porcelain Factory, a world renowned china
manufacturer. The court ruling was based on an error made in the 1993
privatization of the company, but analysts said that behind it appeared to
be an effort by Soviet-era factory managers to keep control of the company
out of the hands of the American investors, the United States-Russia
Investment Fund and the Wall Street firm Kohlberg, Kravis, Roberts & Co.

"It was the 'red directors;' they certainly were looking after themselves
and their own interests in a very big way," said the stock market analyst,
who added that the government came to their aid. The government "put
themselves above the law in Transneft, in the Lomonosov case, and each time
when their interests are endangered, they step in and cut the knot, rather
than resolve the legal issues."

In the Lomonosov decision, the investors were ordered to return their
shares, for which they had paid millions of dollars, to the state. The case
is being appealed.

Another confrontation over ownership has rocked the Vyborg Pulp and Paper
mill, near the border with Finland, where workers and management have been
trying to prevent the British-based Alcem U.K. Ltd. from taking control of
the factory. Violence erupted last month at the plant, which is in
receivership because of past debts, when anti-riot police attempted to
seize the premises on behalf of the owners.

Kakha Bendukidze, a Russian industrialist, told reporters recently that he
admired Western European countries for their sense of order. "In this
sense," he said, "order means laws that are observed by everybody, by both
authorities and the people. These laws are written not in order to please
someone or make life harder, but in order to live by these rules.

"We don't have anything like this in Russia," he added.

Confidence in Russia suffered another setback recently with the resignation
of Dmitri Vasilyev, Russia's top stock market regulator, who had won the
trust of Western investors but had been frustrated in several high-profile
attempts to protect shareholders. He called the Lomonosov case an
"extremely dangerous precedent."

"Only half the work was done on the market from the standpoint of investor
protection, despite the fact that I have been working on this for five
years," said Vasilyev, a former Chubais deputy, when he announced his
resignation. He said he intends to head a consulting firm to carry on the
fight for shareholder rights.

His departure coincided with a major setback for the Russian securities
commission, which he headed, on a test case of minority shareholder rights.
The commission had launched an investigation of Yukos, Russia's
second-largest oil company, which diluted the stock held by minority
shareholders in its oil production subsidiaries. The goal appeared to be to
wrest control of the subsidiaries from the minority shareholders, among
them investor Kenneth Dart.

Yukos is run by Mikhail Khodorkovsky, one of Russia's politically
influential "oligarchs." Vasilyev said his probe ran into a wall of silence
from other government agencies who refused to help his investigation. As
Vasilyev was resigning, the securities commission voted to approve the
share dilution of one of the three Yukos subsidiaries, Samaraneftegaz, a
victory for Khodorkovsky.

In a recent examination of 10 sectors of the economy, the international
consulting firm McKinsey & Company Inc. found that Russia's industrial
landscape remains badly in need of restructuring, but that problems of
corporate governance were of secondary importance.

"In nine out of the 10 sectors, the direct cause of low economic
performance is market distortions that prevent equal competition," the
study found. These distortions, the report said, are often arbitrary
conditions within the same industry--such as different taxes, or energy
costs, or red tape and corruption. The result is that some older,
inefficient factories keep running while newer, potentially more efficient
competitors have trouble making it, the study found.



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