November 18, 1999    
This Date's Issues: 3630 •3631  •

Johnson's Russia List
#3631
18 November 1999
davidjohnson@erols.com


[Note from David Johnson:
1. AP: Clinton Warns Yeltsin on Chechnya.
2. Reuters: Russian media say Clinton backs Chechnya campaign.
3. Reuters: Putin wins high marks in Russia after 100 days.
4. Russian Regional Report: MCFAUL ON STATE DUMA ELECTION PROSPECTS. 
5. Reuters: US intelligence says no end in sight in Chechnya.
6. Financial Times: Pipeline dispute fuels west's fiery relations.
7. Financial Times: Quentin Peel, A bully in its own backyard.
8. Itar-Tass: Russia Shoigu Gives Press Conference on Chechnya, Refugees.
9. Moscow Times: Yevgenia Borisova, Putin Hits Political Jackpot in Oil
Boom.
10. Reuters: Time is ripe for Chechnya talks - Berezovsky.
11. Interfax: DUMA BACKS GOVT ON N CAUCASUS.
12. St. Petersburg Times: Igor Semenenko, Russia Could Qualify for 
$12 Billion in Debt Relief.] 


*******


#1
Clinton Warns Yeltsin on Chechnya
November 18, 1999
By ROBERT BURNS


ISTANBUL, Turkey (AP) - President Clinton today warned Russian President
Boris Yeltsin against feeding an ``endless cycle of violence'' with his
military offensive in Chechnya. A defiant Yeltsin told world leaders not to
criticize his fight against ``bandits and murderers.''


``If the attacks on civilians continue, the extremism Russia is trying to
combat will only intensify,'' Clinton told the opening session of a
54-nation European summit meeting.


Clinton said the United States believes ``Russia has not only the right,
but the obligation to defend its territorial integrity,'' yet the world
should not stand by idly as the toll on civilians mounts.


Addressing the same forum just minutes before Clinton, Yeltsin offered a
tough defense of his military offensive in the breakaway region and
rejected American and other international criticism as ``humanitarian
interference'' in Russian's internal affairs.


``You have no right to criticize Russia for Chechnya,'' Yeltsin told the
Organization for Security and Cooperation in Europe. The often-ill Yeltsin
appeared vigorous and steady.


Yeltsin and Clinton later held their first meeting since June, with Yeltsin
giving Clinton a bear hug. Yeltsin adviser Sergei Prikhodko said the
leaders discussed Chechnya, arms control and other issues.


``Yeltsin conveyed the Russian vision of that problem, talked about the
government's efforts to normalize the life in regions freed from rebels,''
Prikhodko said.


Clinton later told reporters Yeltsin was ``very vigorous and so was I,''
but no minds were changed.


``I urged him to try to listen to Russia's friends at this conference,''
Clinton said. ``I'm hopeful we will see some progress here before we
leave.'' The conference ends Friday.


A short distance outside the summit venue, about 100 protesters, mainly
from two small leftist parties, protested Clinton's visit. Demonstrators
burned the American flag and carried banners saying, ``Yankee go home!''
the Anatolia news agency reported.


The Chechnya issue dominated today's opening session of the OSCE summit,
which was supposed to have culminated with the signing by all member
countries of a Charter on European Security meant to continue the OSCE's
adaptation to a post-Cold War role in preventing conflicts, promoting
democracy and protecting human rights.


The signing ceremony was postponed until Friday, officials said, to allow
time for additional negotiations. Prikhodko blamed the delay on
``conflicting viewpoints,'' including on Chechnya.


Opening the summit, Norway's foreign minister, Knut Vollebaek, who is the
OSCE chairman, said Moscow's tactics in Chechnya are ``reason for serious
concern,'' and said Moscow should realize that in combating terrorism,
``the means must be proportional to the threat.''


French President Jacques Chirac declared, ``The current offensive is a
tragic error.''


Yeltsin said the use of military force in Chechnya was necessary to defeat
terrorists who had slaughtered innocent civilians. ``There will be no
negotiations with bandits and murderers,'' he said.


Clinton, who didn't take a harsh public tone, referred to Yeltsin as his
friend and recalled the Russian leader's courageous role in facing down
efforts by the communists to block Russia's transition to democracy in
1990, and said then - as now in the case of Chechnya - the world community
could not stand by.


``When you stood up on the tank in Moscow, ... if they had put you in jail
instead of electing you president, I would hope that every leader of every
country around this table would have stood up for you and for freedom in
Russia and not say, well that is an internal Russian affair that we cannot
be a part of,'' Clinton said.


Clinton said world leaders worry Moscow's efforts to fend off terrorists
could backfire and prompt ``ordinary Chechens who are not part of the
terror or the resistance'' to reject Russian rule.


The president warned, ``The strength Russia rightly is striving to build
could be eroded by an endless cycle of violence.''


But a stern Yeltsin said Russian ``cannot accept'' other countries trying
to influence its policy.


``Appeals for humanitarian interference in the affairs of another state''
is merely a ``pretext for protecting human rights and freedoms. We all know
already what disproportionate consequences such interference can cause,''
he added, mentioning the U.S.-led NATO bombing over Kosovo.


Clinton said in response, ``I have to respectfully disagree with my friend,
President Yeltsin.''


Chechnya is a territory that has been beyond Russia's control since the
army withdrew at the end of a 1994-96 war.


On a related issue, Russia objects to the U.S. push for a new pipeline from
Azerbaijan to the Turkish port of Ceyhan on the Mediterranean to transport
Caspian Sea oil to Western markets. Russia wants to extend and build up
Soviet-era pipelines from the Caspian, but Clinton and the former Soviet
states in the region - including Azerbaijan - want alternate routes, partly
to avoid new dependence on Russia and partly to sidestep unstable areas
like Chechnya.


U.S. officials said Clinton today would witness the signing in Istanbul of
an agreement among Turkey, Azerbaijan and Georgia that sets a legal
framework for building a million-barrels-a-day pipeline through Turkey.
Construction would start in 2001.


Russia also strongly objects to the Clinton administration's insistence
that the 1972 Anti-Ballistic Missile treaty be amended to permit the United
States to build a nationwide defense against ballistic missile attack.
Moscow sees the U.S. plan as a threat to its security and a likely trigger
for a new nuclear arms competition.


*******


#2
Russian media say Clinton backs Chechnya campaign

MOSCOW, Nov 18 (Reuters) - U.S. President Bill Clinton may have thought he
was talking tough to Russia over Chechnya at Thursday's summit in Istanbul,
but key Russian television stations and news agencies heard his remarks
their own way. 


``U.S. President Bill Clinton has in effect supported the activities of the
Russian authorities in Chechnya,'' an announcer for ORT, Russia's largest
television network, said shortly after Clinton finished his speech to a
European security conference. 


Itar-Tass and RIA news agencies ran reports with similar headlines,
emphasising what they said was Clinton's support and making little
reference to any criticism. RTR state television's announcer read a text
compiled mainly from RIA's report. 


During his speech, Clinton indeed said Russia had a right to defend itself
from ``terrorists,'' which has been the position of most Western leaders
since Russia's campaign against Islamic rebels in Chechnya began. 


But like other Western countries, the United States has accused Russia of
using indiscriminate and disproportionate force in its campaign, causing
widespread civilian casualties. 


``In order to isolate and undermine the terrorists there must be a
political dialogue and a political settlement,'' Clinton said. He also
responded pointedly to a speech by Yeltsin in which the Russian president
had said other countries had no right to intervene in each Russia's affairs. 


``I do not believe there will ever be a time in human affairs when we will
ever be able to say we simply cannot criticise this or that action because
it happened within the territorial borders of a single nation,'' Clinton
said. 


Of Russia's three main news agencies, only the privately-owned Interfax
emphasised Clinton's criticism. ``President Bill Clinton has again called
on Russia's leadership to use political means to resolve Chechen
problems,'' it said. 


*******


#3
Putin wins high marks in Russia after 100 days
By Patrick Lannin

MOSCOW, Nov 18 (Reuters) - War has been good for Vladimir Putin. 


One hundred days ago he was a colourless former KGB official. 


On Thursday a newspaper likened the Russian prime minister to Hollywood
hardman Bruce Willis for leading the fight against Chechen rebels. 


``The Russian Bruce Willis,'' said Moskovosky Komsomolets, commenting on
Putin's performance in the 100 days since his shock appointment by
President Boris Yeltsin. 


Even Yeltsin's support, normally a death blow for any aspiring politician,
has not stopped Putin soaring in opinion polls. 


His popularity is linked with the war in Chechnya, where troops and
aircraft are trying to crush Moslem rebels. 


Although the campaign has been criticised abroad it is popular at home
where a poll reported by Itar-Tass news agency on Thursday showed 66
percent of the 2,000 people surveyed backed it. 


``Putin as a politician is sharply gaining points, becoming not only one of
the candidates for president of Russia but the most realistic candidate,''
said the daily Komsomolskaya Pravda. 


Yeltsin wants Putin to replace him in next year's presidential election.
Putin's surge in popularity comes as Russia heads for a parliamentary
election on December 19. He is not standing but the vote will show how
political forces are shaping up. 


While his predecessors were bogged down in efforts to prise more loans from
the International Monetary Fund and deal with a crisis-ridden economy,
Putin has been able to fly fighter jets near the North Caucasus war zone
and vow to crush what Russia calls terrorists and bandits wherever they are
found. 


With the election to the State Duma lower house of parliament approaching,
parties have been quietly trying to associate themselves with the prime
minister. 


Former prime minister Yevgeny Primakov has called Putin a ``worthy''
politician while virtually no one has dared criticise him while the
Chechnya war is going on. 


But while all seems rosy now a set back in Chechnya would hurt Putin. 


No one in Russia wants a repeat of the 1994-96 war against the separatists
which killed tens of thousands of people and cost Moscow control of the
region. 


The attitude of Yeltsin and those in the Kremlin around him, known as ``The
Family,'' will also be crucial. Russian media have reported Putin is out of
favour with the Family and that they want him sacked. 


The economy is also cruising for now, benefiting from high oil prices, one
of Russia's key exports, and a bigger than expected boost from last year's
devaluation. 


While Putin's policy in Chechnya is clear, his economic plans are more vague. 


``By a policy of benign neglect he has managed to follow the policies of
Stepashin and Primakov. There has been no major push on the legislative
front,'' said Roland Nash, an economist at finance house Renaissance Capital. 


``There is a veneer of stability in the economy, a veneer of activity and
signs of growth,'' he added. ``My big question is how sustainable that is.''


*******


#4
From
EastWest Institute
Russian Regional Report
Vol. 4, No. 43, 17 November 1999


MCFAUL ON STATE DUMA ELECTION PROSPECTS. The 1999 State Duma elections are
remarkable precisely because they are so "unremarkable," since Russians have
become used to regular elections in their country, according to Michael
McFaul,
a Senior Fellow at the Carnegie Endowment for International Peace and a
professor at Stanford University, speaking at a luncheon organized by the
U.S.-Russia Business Council on 8 November in New York City.
McFaul's talk emphasized several other key features of the campaign.
Rules
of the game and electoral districts are firmly in place and no serious
challenge
to their composition is in the making, which bodes well for party development
and the consolidation of democracy.
Additionally, political parties are further consolidating their position
during this electoral season. Although 28 parties are currently registered,
voters are likely to dismiss most of them and not waste their votes on clear
losers, as they did in 1995. Accordingly, many of the same major parties will
dominate the next Duma, which implies a further step toward formation of a
coherent party system.
Party platforms have become more centrist, as radical groups on both
sides
of the spectrum are marginalized. The Otechestvo-Vsya Rossiya (OVR) bloc in
particular has become a locus of centrist forces, which means that a true
centrist party is possibly emerging in Russia.
At the same time, the political left is more divided than ever, and the
Communists, who are likely to retain their usual 30 percent of the
proportional
representation vote, will most likely lose their current grip over the
parliament.
In contrast to the 1995 elections, regional leaders are aggressively
involved in the campaign, aiming to push candidates loyal to them into the
Duma,
making it even more likely that the future Duma is moving toward the center.
Consequently, the Duma elected this year will look more like the 1993 Duma
than
the present lower house. It will be more centrist, with no single party
commanding a majority, resulting in coalition-driven politics. It is also
likely to be more coherent and play a more important role in Russia's
policymaking, provided that the future president is willing to cooperate.
Acknowledging some negative trends, McFaul pointed out the heavy presence
of criminal elements on the party lists, the high probability of falsification
in many single-member districts, and rampant violations of campaign finance
rules. In this context, the Central Electoral Commission can emerge as a
dangerously powerful body because it can arbitrarily prosecute and disqualify
candidates it does not like on the grounds of legal violations, even though
virtually everybody will be violating these rules.
Looking toward the June 2000 presidential elections, the current Duma
campaign is a referendum on the political future of former Prime Minister
Yevgenii Primakov, but not on the future of sitting Prime Minister Vladimir
Putin, whose "referendum" is now taking place in Chechnya, McFaul concluded. -
Natan Shklyar in New York


******


#5
US intelligence says no end in sight in Chechnya
By Charles Aldinger

WASHINGTON, Nov 17 (Reuters) - The head of U.S. military intelligence said on 
Wednesday there was no end in sight for the Russian armoured assault in 
Chechnya and predicted Moscow's forces would move carefully to capture the 
capital of Grozny. 


``They have that whole underbelly of Russia that they have concerns about,'' 
Navy Vice Adm. Thomas Wilson, director of the Defence Intelligence Agency 
(DIA), told reporters in a rare, wide-ranging interview at the Pentagon. 


``They (the Russians) clearly have made the decision to prosecute this one 
pretty vigorously right now and I don't see any end in sight,'' Wilson said. 


Despite strong U.S. criticism over Russian military rocketing and bombing of 
civilian areas and Moscow's failure to provide help for thousands of refugees 
from the breakaway region, Wilson said he expected Russian forces to press on 
to capture Grozny as winter sets in. 


``I think they certainly want to control Grozny -- establish that control and 
create some kind of a buffer between that and the insurgent infrastructure in 
the mountains of Chechnya,'' the admiral told reporters. 


Wilson, who became DIA chief nearly four months ago, spoke on a number of 
world hot spots and said one of his major priorities would be to establish 
updated computer databases of information in areas from counter-terrorism to 
rogue states that could threaten the United States with nuclear, chemical or 
biological weapons. 


The DIA is a major arm of the U.S. intelligence community and Wilson presides 
over a civilian and military information-gathering force of more than 7,000 
personnel. 


DOMESTIC THREAT FROM BIN LADEN HAS NOT GROWN 


Sitting at a long table in a DIA conference room in the Pentagon, the admiral 
also told reporters: 


The threat of a terrorist attack in the United States by followers of 
Saudi-born Islamist Osama bin Laden had not grown in recent months, but the 
U.S. intelligence community was watching the situation carefully. 


Iraq appeared to be rebuilding some infrastructure that could be used for 
making weapons of mass destruction and President Saddam Hussein remained 
firmly in power, ``relatively secure'' from internal overthrow by dissidents. 


China was unlikely to launch a military assault on Taiwan in the near future 
and would await the results of next year's election and statements by newly 
elected Taiwanese leaders. 


While military intelligence was keeping a close watch on North Korea, which 
has promised to halt development of long-range missiles, ``we don't see 
anything there that is alarming.'' 


Wilson spoke as Russian troops continued their campaign against Moslem rebels 
in Chechnya, pressing relentlessly toward the devastated capital Grozny with 
bombers and fighter jets roaring over advancing armour and artillery. 


President Bill Clinton was due to meet Russian President Boris Yeltsin at a 
conference in Istanbul on Thursday and U.S. officials there said Clinton 
would press concerns about the number of civilian casualties and refugees 
from the Chechnya conflict. 


Wilson said Russia, with apparent strong public support at home and with 
fears about similar uprisings by Moslems in other areas to the south, 
probably would press an attack on Grozny while being careful to avoid major 
Russian military casualties like those suffered in a war in Chechnya in 1996. 


``The degree to which they actually want to go up into the mountains to try 
to root out insurgent groups is less clear,'' he said. 


``But I think that they certainly want to take the lowlands and control the 
city of Grozny. That's a logical, I think, projection based on their current 
force alignment and what they did in January of 1996 when they had, as you 
know, some very significant loses in urban warfare as they tried to take 
Grozny,'' Wilson added. 


``My guess is that they will not forget the lessons of 1996,'' he said. 


Wilson refused to predict when any final assault on Grozny might come, but 
said it likely would be made with the idea of holding down military 
casualties. 


WILSON SEEKS BETTER DATABASES 


The admiral told reporters that one of his highest priorities in his new post 
would be to develop better databases of information ranging from maps to 
profiles of terrorist suspects in order to better analyse threats to the 
United States. 


``We have to do more work on databases. We are concerned that we haven't been 
able to keep the databases as current and as accurate as we would like 
systematically,'' he said. 


``You have personality databases, databases on terrorist organisations -- who 
talks to who, who does business with who? With good databases that are 
updated, you can apply analytical techniques to see where connections are 
being made, where discussions might be held, where people are showing up for 
meetings,'' Wilson added. 


``You can cross-connect a good database like that with maybe a database on 
weapons of mass destruction to see if there are any intersections of 
concern,'' he said. 


The intelligence chief said that better information would also help to avoid 
such mistakes as the U.S. bombing of the Chinese embassy in Belgrade last 
May, which the United States has called an accident caused by outdated CIA 
maps. The incident triggered a major rift in U.S.-China relations. 


``The Chinese embassy bombing certainly showed that if you bomb the wrong 
target, it can stop you potentially in your tracks,'' he said. ``If you miss 
the right one you more than likely will have the opportunity to go back 
another day.'' 


******


#6
Financial Times (UK)
18 November 1999
[for personal use only]
RUSSIA: Pipeline dispute fuels west's fiery relations 
Never mind Chechnya, American-sponsored oil projects in Central Asia may test 
ties with Moscow more in the long term, report Stephen Fidler and Leyla 
Boulton


The focus of Moscow's tense relationship with the west these days is on 
Russia's military offensive in Chechnya. Much less noticed but a potentially 
more durable source of tension are two controversial American-sponsored 
pipeline projects that will take significant steps forward today.


On the fringes of the summit of the Organisation for Security and 
Co-operation in Europe (OSCE), the governments of Turkey, Azerbaijan and 
Georgia are due to sign an agreement that will include terms for seeking 
commercial investment in the development of an oil pipeline from Baku, the 
Azeri capital, to the Turkish Mediterranean port of Ceyhan.


Turkey has agreed to underwrite cost overruns on its part of the $2.4bn 
pipeline.


Those three governments and Turkmenistan are also expected to sign a less 
advanced so-called framework agreement on a $2.5bn-$3bn pipeline to deliver 
gas across the Caspian Sea from Turkmenistan and into Turkey.


The Trans-Caspian line's commercial backers are a joint venture involving GE 
Capital, Bechtel of the US and Shell.


Both of these pipelines are far from coming to fruition. But the proposed gas 
pipeline is in direct competition with Blue Stream, a Russo-Italian scheme to 
pipe more Russian gas exports to Turkey under the Black Sea. According to Rem 
Vyakhirev, chairman of Gazprom, Russia's gas monopoly, in this race the one 
who starts first will win.


The US sponsorship of the two pipelines has an overt geostrategic objective: 
to pull the countries of the Caucasus and the Caspian Sea into the western 
orbit and the world economy.


It also has the benefit, from Washington's perspective, of isolating Iran and 
diversifying the west's energy sources away from the Middle East.


>From the point of view of an increasingly assertive government in Moscow, 
however, both projects are being viewed as the US meddling in Russia's 
"backyard". It is exactly the fear that


Russia may once again seek to assert its assumed rights in the region that 
have encouraged the governments in Azerbaijan and Georgia to sign the accords.


The US plan also has its critics in the west.


Wayne Merry, a former senior US diplomat now with the Atlantic Council in 
Washington, argues that the projects are unnecessarily provocative to the 
other regional powers: Russia and Iran.


Moreover, he argues that the underlying US commitment to the region is too 
weak for Washington to follow its words with concrete action if Russia 
chooses a confrontation over the issue.


But the controversy is not limited to politics. There are also significant 
question marks about the economics of the projects.


BP-Amoco, leader of the Azerbaijan International Oil Consortium and long a 
sceptic about the commercial viability of Baku-Ceyhan, has more recently 
shifted its public position and issued a statement backing it.


However, that was widely read as reflecting heavy pressure from Washington, 
and doubts still persist about its commercial attractiveness.


Oil companies question first whether there will be enough oil available to 
make the project economic.


A figure of close to 1m barrels a day is said to be the commercial threshold 
and that would not be possible without oil from sources other than Azerbaijan 
- for example, Kazakhstan.


Second, once the oil arrives to the sea it is in the wrong place: the 
Mediterranean.


The oil companies would find a pipeline to the big Iranian oil terminal of 
Kharg Island much more attractive, but Washington strongly opposes this.


The US-sponsored projects have, however, an enthusiastic supporter in Turkey, 
which sees its own strategic importance growing if they go ahead.


The Turkish government also argues that the Baku-Ceyhan line would avoid 
increased risk of catastrophic shipping accident in Bosporus from additional 
oil tanker traffic if Azeri oil has to be shipped through the narrow straits.


But some influential figures in Turkey believe Russia should not be isolated. 
One Turkish business leader with extensive interests in Russia and in the 
Turkish energy sector, said Istanbul faced a greater threat from oil tankers 
than from earthquakes.


But he also argued that the Baku-Ceyhan project should be altered to involve 
Russia.


*******


#7
Financial Times
18 November 1999
[for personal use only]
Comment / Columnists
A bully in its own backyard 
Russia is continuing its onslaught on Chechnya with the enthusiastic backing 
of its people and token resistance from the west, writes Quentin Peel


The embattled people of Chechnya, currently being bombarded by the Russian 
armed forces, and the ethnic Albanian population of Kosovo in former 
Yugoslavia have a lot in common.


Both are fiercely independent mountain peoples, with long traditions of 
tribal loyalty and obsessive secrecy. They are both mainly Moslem, in 
countries that are predominantly Orthodox Christian. They both make their 
respective governments thoroughly uncomfortable, and have launched violent 
movements to gain independence.


Not only that. The two peoples are accused of terrorist acts against their 
rulers and widely suspected of organised criminal activities away from home, 
whether in the gangland world of Moscow or in western Europe. In short, these 
are tough and sometimes unpleasant customers. And both have been on the 
receiving end of brutal attempts to pacify them and enforce their future 
obedience.


But there the similarity ends. For whereas the ethnic Albanians in Kosovo 
succeeded in calling down the full might of the Nato alliance in their 
defence against the atrocities of the Serbian armed forces of Slobodan 
Milosevic, the Chechens are on their own.


After seven weeks of aerial and surface-to-surface bombardment, causing 
uncounted civilian casualties, an estimated 200,000 people have fled Chechnya 
for neighbouring Ingushetia, and a further 150,000 are believed to be 
wandering homeless inside the territory. Very little reliable reporting is 
emerging from inside the republic, which is regarded as too dangerous for 
most journalists and aid agencies to operate in.


As for Nato and the western world, they have wrung their hands, expressed 
dismay, and insisted that there is nothing more they can do. They do not like 
Russia's tactics, but they accept, at least publicly, that the action is 
aimed at countering terrorism.


The rhetoric may be stepped up at today's summit in Istanbul of the 
Organisation of Security and Co-operation in Europe. Russia is expecting 
pious condemnation. But there is no hint of the "humanitarian intervention" 
that justified Nato's war in Kosovo. For Chechnya is part of Russia, and 
"nobody denies that Russia has the right to protect its territorial 
integrity", as western diplomats insist.


Igor Ivanov, the Russian foreign minister, was perfectly right when he 
accused the west of hypocrisy and double standards in the FT this week. There 
is one standard for horrid small countries, which can be bullied, and a 
different one for horrid big countries, which usually cannot.


But it is not just a question of double standards. For, in one way at least, 
the Nato campaign in Kosovo has actually encouraged Moscow in its own 
onslaught on Chechnya. Russia is justifying its tactics of long-range 
bombardment, rightly or wrongly, by saying Nato did the same in Yugoslavia. 
Videos have been shown in Moscow of its "precision bombing", just like Nato.


Patriarch Alexei II, the head of the Russian Orthodox church, argued only 
yesterday that the west did not have the moral right to criticise the 
campaign, because it had done the same thing in Kosovo, with less 
justification.


But it is scarcely the same. Most evidence suggests the Russian military is 
using up outdated missiles that are cheap, but incapable of being fired with 
great accuracy. The army is taking revenge for its defeat in the first 
Chechen war of 1994-96, and has little concern for "collateral damage" in the 
process. The rebellious republic is being laid to waste.


It would be wrong to dismiss out of hand the Russian argument that this is a 
campaign against terrorism. There was indeed an invasion by militant 
Islamists led by Shamil Basayev, a Chechen warlord, across the border into 
neighbouring Dagestan.


Whether there was Chechen involvement in several subsequent terrorist bombs 
in Moscow and other Russian cities is more questionable. No clear evidence to 
that effect has yet been produced by the Russian government.


But the tactics of the Russian state in countering the terrorism seem far 
more likely to aggravate the problem in the long run, not to cure it. An 
onslaught with tanks and missiles, causing a mass exodus of refugees, is 
surely going to win the terrorists new recruits.


Sergei Kovalyov, the Russian human rights campaigner, has accused his 
government of using the tactics of Nato to carry out the strategy of 
Milosevic in Kosovo - in other words, ethnic cleansing. The population of 
Chechnya has halved from more than 1m to less than 500,000 since fighting 
first erupted in 1994. But Mr Kovalyov is virtually on his own in Russia in 
speaking out against the campaign.


The fact is that it is hugely popular with ordinary voters. It is the one 
issue that has united people behind Boris Yeltsin, the president, and 
Vladimir Putin, his prime minister and chosen successor. The latter is now 
top of the opinion polls for next year's presidential election, when only two 
months ago he was a rank outsider.


Even a liberal democrat like Grigory Yavlinsky, leader of the opposition 
party Yabloko, has backed the bombing, although he now argues for a political 
solution. And even that cautious statement has worried his supporters and 
infuriated his opponents.


The lack of opposition to such a brutal campaign suggests a tragic decline in 
moral standards within Russia. Few, if any, dare to speak out for 
humanitarian ideals. It mirrors the decline in moral standards in business 
and government. The corruption of communism has given way to a thoroughly 
corrupt form of capitalism.


Boris Yeltsin destroyed the former Soviet Union in the name of Russian 
nationalism. He brilliantly exploited the resentment of ordinary Russians 
against their own empire. Yet since its demise, they have suffered repeated 
humiliation. They have been forced to beg for loans from the International 
Monetary Fund, and to watch the old enemy, Nato, expand to absorb their own 
former satellites in central Europe.


The war in Chechnya is popular precisely because it can be presented as a 
victory for vengeful nationalism, even though the Chechens are supposed to be 
Russian citizens. And because it is so popular, Mr Yeltsin and Mr Putin have 
no desire to see any negotiated peace deal.


That is why the west is powerless to influence the outcome in Chechnya. Its 
criticism is an irritant, but not a restraint. And even its criticism is 
undermined by the perception of double standards.


As for Russia, its capacity to threaten the outside world is not what it used 
to be, in spite of its nuclear missiles. But its capacity to threaten its own 
citizens is still unchallenged.


Contact Quentin Peel by email on Quentin.Peel@ft.com


*******


#8
Russia Shoigu Gives Press Conference on Chechnya, Refugees.


ISTANBUL, November 18 (Itar-Tass) - Russian Minister for Emergency Situations 
Sergei Shoigu gave a press conference here on Wednesday, in which he focused 
on the situation in Chechnya and refugees. 


Following the Chechen war and before the anti-terrorist operation began in 
Chechnya, the federal centre has repeatedly tried to launch a negotiating 
process, a dialogue with Chechen leader Aslan Maskhadov and his government, 
Shoigu said. 


Meanwhile, groups of international terrorists, mercenaries from many 
countries were being formed there, he stressed. According to Shoigu, alone in 
the past year, more than 600 Russian citizens have been kidnapped and taken 
to Chechnya. The minister also reminded the press conference about awful 
terrorist acts, including blasts in Vladikavkaz, apartment house blasts in 
Volgodonsk, Buinaksk and Moscow. 


"This list could be continued if it were not for quick actions of our law 
enforcement bodies," Shoigu stressed. "More than five tons of explosives 
ready to be used were found alone during the week following the terrorist 
acts," he added. 


Shoigu also said that five Chechen regions have been cleared of terrorists as 
of Wednesday, including three regions in the north, one - in the west and one 
in the east. 


Life is gradually getting back to normal there. Shoigu said that 120,000 
people live in northern Chechnya. He said 65 schools have been opened there 
and 1,6000 teachers have started teaching the children, who have not gone to 
school for already three years. 


The minister also stressed that only three medical staffers have remained in 
regional hospitals over the past two years. He said that all in all there 
were 40 medical establishments there, and 28 of them have been re-opened. 


They are manned with personnel. There, where the work of hospitals can not be 
resumed, movable hospitals of the Ministry for Emergency Situations have been 
opened. 


Five temporary points for sheltering people who have had to flee their homes, 
were opened in neighbouring Ingushetia, Shoigu said. Four trains with warm 
passenger cars are used as temporary homes for Chechen refugees. 


A total number of places in tents and trains are 30,000, he added. According 
to Shoigu, 23,000 people live there at present. All the systems of TV and 
radio broadcasting will shortly be restored in the Chechen regions cleared of 
Islamic militants. Five telephone exchanges have been restored, Shoigu added. 


Shoigu also declined to answer the query about whether the termination of 
terrorist acts in Russia means that Chechen gunmen have calmed down. 


Focusing on the work of his ministry, Shoigu said that after the events of 
1995-1996, the ministry has been delivering prefabricated houses in Chechnya. 


"We have been feeding people, giving them medical treatment and restoring 
hospitals," he said. According to him, in spite of everything, the ministry 
has been moving children out of the region over the past three years. 


"Now, we have launched together with journalists the programme Children of 
War," the minister added. 


*******


#9
Moscow Times
November 18, 1999 
Putin Hits Political Jackpot in Oil Boom 
By Yevgenia Borisova
Staff Writer


Editor's note: This is the second in a two-part series on the effects of 
rising world oil prices on Russia. 


Skyrocketing world oil prices provide Prime Minister Vladimir Putin with a 
dramatic political windfall. 


The boost to federal budget revenues - an estimated 100 billion rubles ($3.8 
billion) this year alone - suddenly gives the prime minister a chance to play 
Ded Moroz, or Santa Claus. 


He can easily cover unexpected expenses like the Chechen war, with its sudden 
demand for increased military spending. 


It also allows him to think the previously unthinkable. 


For example, Russia can for the first time in years afford to thumb its nose 
at the International Monetary Fund. The $3.85 billion the IMF has promised to 
pay out through 2000 is less than the amount Russia is likely to get next 
year alone from the oil surge. 


"This oil money is a huge, and absolutely unexpected,......... gift to the 
government and Putin. It enlarges political space for them - it gives them 
space for the talks with the IMF and generally in relations with other 
Western countries - because these revenues allow Russia to pay off its 
international debts and not particularly worry about a sovereign default," 
said Sergei Markov, head of the Institute for Political Studies. 


In fact, Russia has already been paying its dues without much foreign help. 
In the first nine months of 1999, 117.5 billion rubles were paid out from 
federal funds to meet foreign debts, Markov said. By the time the first IMF 
tranche of $640 million turned up in September, a mere $300 million in 
obligations due that month were left to be paid with the money. 


Russia has to make some $1 billion in repayments to the IMF before the end of 
the year. 


According to the Finance Ministry, Russia's coffers have swelled this year by 
85 billion rubles thanks to the rise in oil prices, which were as low as $9 a 
barrel earlier this year but are now above $25 a barrel. 


Government revenues will be boosted by at least 12 billion rubles by the end 
of 1999, economists said Wednesday. 


But while their estimates are based on an average oil price of $20 to $22 a 
barrel, world oil traders were saying that prices were unlikely even to drop 
back that low. 


Revenues for the year, projected at 473.7 billion rubles in the 1999 budget, 
could therefore cover planned budget expenses of 575 billion rubles without 
the need for planned borrowings of 101.3 billion rubles. 


But even more money could appear in the Russian budget soon - just like a 
genie out of a bottle. 


Oil prices hit nine-year highs for the third day running Wednesday, with 
benchmark Brent crude touching $25.07 a barrel in afternoon trade before 
closing at $24.96, 50 cents up on the day. And oil could soar even further 
over the next few months - as high as $30 or even $35 a barrel, industry 
pundits are saying. (See story, Page 11.) 


If the government - as a source in the government told Prime-Tass on 
Wednesday - doubles export duties on oil to 15 euros ($15.50) a ton from 
December, revenues may rise even higher. 


Even more radical, Putin could actually pay off all of the government's wage 
and pension arrears, instead of promising to do so like all his predecessors. 


As of Nov. 1, the government's arrears to workers were 13.3 billion rubles 
(just over $500 million), according to the State Statistics Committee. 


Government leaders could use the bulging budget coffers to build up a 
political advantage by distributing additional funds for people in trouble, 
analysts said. 


Alexander Pikayev, an analyst with the Carnegie Moscow Center, said that a 
couple of prominent government figures were well-placed to try out that kind 
of populism. 


"There are masses of politicians, not only in Russia, but in other countries, 
who would use human trouble to build up their political capital," Pikayev 
said. 


Emergency Situations Minister Sergei Shoigu - who heads the pro-government 
Unity bloc - has been organizing humanitarian aid for Chechen refugees. 
Meanwhile, Putin, who plans to run for the presidency next summer, has been 
indexing the country's miserable pensions and planning a rise in the minimum 
wage. 


But Vladimir Pribylovsky of the Panorama research center was skeptical that 
the federal government would suddenly break with tradition by paying wages or 
pensions on time. 


"I am sure that the priority in spending the money is Chechnya and elections. 
Unpaid wages? They are one of the last priorities for spending," Pribylovsky 
said. "It only becomes top priority when people block the railways." 


Yury Korgunyuk, analyst with the INDEM think tank, agreed with Pribylovsky's 
assessment. 


"It is clear where the extra money goes - one of the biggest black holes 
where they drop it into is, of course, Chechnya," he said. 


In August, just after military operations in Dagestan started, the Defense 
Ministry asked for 26 billion rubles of additional spending to fund them. 


Putin last week called for a rapid increase in military spending to return 
the army to something approaching its former, Soviet splendor. 


Analysts have estimated the cost of the Chechen conflict as being between 40 
billion and 60 billion rubles a year. 


*******


#10
Time is ripe for Chechnya talks - Berezovsky

PARIS, Nov 17 (Reuters) - Boris Berezovsky, a controversial Russian financier 
with close ties to President Boris Yeltsin, said on Wednesday the time was 
ripe for Russia and rebel leaders to negotiate a political settlement in 
Chechnya. 


Beresovsky, a former deputy secretary of Russia's advisory Security Council 
and later executive secretary of the 12-nation Commonwealth of Independent 
States, told the French daily Le Monde that discussions with Russian Prime 
Minister Vladimir Putin and presidential aides had convinced him there would 
be no peace in the breakaway province without a political deal. 


``The Chechen leaders are convinced they cannot attain their objectives -- of 
which the main one is independence -- by using military means...and the 
Russian presidential administration must change its priorities and insist on 
a political solution, which is actually their main priority,'' Beresovsky 
said in an interview. 


``I have worked with Boris Yeltsin for a long time and I can tell you for 
sure that the president does not want to resolve this problem by force,'' he 
said. 


Yeltsin vowed on Wednesday to persuade the West that Russia was respecting 
civilised norms during its offensive in Chechnya. 


But Western leaders converging on Istanbul for a European security summit 
said they would demand a halt to Russia's seven-week-long crackdown. 


Berezovsky has maintained close ties with Yeltsin's administration after his 
sacking from the Security Council last year. He played a key role in 
negotiating an end to the 1994-96 Chechen war. 


Beresovsky said he had drawn up a seven-point plan aimed at solving the 
conflict following a meeting with emissaries of rebel leader Shamil Basayev. 


Under the terms of the plan, he said, the Russian constitution would reflect 
the fact that Chechnya was an integral part of Russia but any political deal 
on Chechnya should be backed by the majority of the population in the region. 


To avoid further civilian casualties, rebel forces should voluntarily lay 
down their arms, rebel commanders who could not accept the terms of the peace 
plan would leave the country and suspected terrorists would face trial under 
international law. 


It was not clear if Berezovsky had formally proposed his plan to the Kremlin. 
He is now running for parliament as an independent candidate. 


Earlier this month, Russia's state prosecution service said it had dropped 
charges including money-laundering against Berezovsky. 


Charges of money-laundering, illegal business practices and continuing 
business activity while holding a government post were filed against 
Berezovsky in April. 


Berezovsky, who built up a huge business empire after the Soviet Union 
collapsed in 1991, had denied the charges. 


*******


#11
DUMA BACKS GOVT ON N CAUCASUS


MOSCOW. Nov 17 (Interfax) - The State Duma on Wednesday supported
the efforts of the Russian government to settle the situation in the
North Caucasus. By 49 votes against one and with one abstention it
passed a resolution on the political situation in the context of the
developments in Chechnya submitted at the initiative of the Liberal
Democratic faction.
The resolution voices support for government efforts. It also
recommends the president and prime minister "to take necessary measures
for the speedy disarmament of gangs and speed up the development of a
well-thought and balanced" policy in the North Caucasus.
Deputies called for intensifying contacts with public and political
movements in the Caucasus, and with ethnic associations of people from
the Caucasus in Moscow and other Russian territories.
The resolution urged power bodies not to permit unlawful actions
against civilians and take urgent steps to resolve the refugee problem.
The president and government should bind the Foreign Ministry to
hold talks with foreign countries on stopping financial and political
support for militants in Chechnya "coming from the territories of those
countries."
Simultaneously, the Duma adopted a statement on the situation in
Chechnya drafted by the International Affairs' Committee saying that
the anti-terrorist operation is an internal affair of Russia and its
nature and scale "are adequate to the threat coming from the gangsters
entrenched in Chechnya who are financed by international terrorist
centers."
The Duma declared that negotiations with terrorist leaders are
senseless and impossible, but they should be conducted with the forces
in Chechnya that are ready to observe the Russian constitution.


*******


#12
St. Petersburg Times
November 16, 1999 
Russia Could Qualify for $12 Billion in Debt Relief 
By Igor Semenenko
STAFF WRITER 


MOSCOW - A little-discussed point in German law inspired by the economic
horrors of the Weimar Republic provides sweeping debt relief for any nation
whose economy crashes badly enough - and under this law Russia may qualify
to shake off as much as $12 billion owed to Germany. 


That is more, for example, than the amount of hard currency Russia's
Central Bank now has in its vaults, and it is about half of what the
government plans to spend in the 2000 federal budget. 


But even though legal experts and a State Duma deputy have encouraged the
Kremlin to seize the day and seek a favorable German court order, the
Russian government has not acted. 


"There is a legal opportunity to dispute repayment of part of Russia's
loans to Germany," said Viktor Gitin, deputy head of the Duma's budget
committee. Gitin said he had obtained a legal opinion from one of the Big
Five accounting firms that Russia had a strong case under German law, and
had pointed this out repeatedly - only to be rebuffed by a Russian
government he thinks is too worried about angering the German government. 


"This [reluctance to act] is related to Russia's desire to become a member
of the G7 [Group of Seven leading industrial nations]," said Gitin, a
Yabloko party member. "You don't ask for debt reduction while sitting at
the same table with the German chancellor." 


Germany in the 1920s was ravaged by inflation and suffering under the
crushing burden of reparation payments to England, France and other World
War I victors. The nation's companies were battling to stay solvent, and
German courts were swamped with cases from borrowers seeking a
court-ordered reduction in their debts. 


A legal rule of thumb grew out of that experience mandating that financial
losses due either to annual inflation of 60 percent or more, or to a
currency devaluation of 60 percent or more, be split between the borrower
and the creditor, according to Ina Schwarz, a Berlin attorney who has
studied Russia's legal case for a Big Five accounting firm. 


Russia has had both the inflation and the devaluation - twice. In 1992 the
ruble fell 160 percent and inflation was 2,318 percent; in 1998 the ruble
fell 240 percent and inflation was 84.4 percent. 


And Russia certainly has an interest in writing off whatever it can from an
overall debt burden of $143.2 billion. 


"I would recommend a Russian borrower invoke renegotiation of external
debt," Schwarz said. 


She said Russia could invoke paragraph 242 of the German Civil Code and
possibly win a German court order that both government and private
creditors forgive up to 50 percent of Russia's loans. 


In theory Russia could get relief not just on half of the $24.3 billion it
owes the German government, but also on unknown billions more it owes to
commercial entities. 


At least some of the $32 billion in Soviet-era debt owed to the London Club
of private creditors is held by German entities. Russia also borrowed $2.5
billion from three German banks in 1996, and may well have contracted other
similar obligations. The Russian Finance Ministry is unwilling to make
public the full details of Russia's debts to German organizations. 


There is a post-Soviet bloc precedent for pursuing such debt relief under
the Weimar-inspired laws: A slew of debtors in the former East Germany,
reeling from the economic and political changes let in after the Berlin
Wall fell, have applied to the courts in recent years. Some of them won
changes to their loan agreements based purely on the sharp change in
business conditions, Schwarz said. 


But apparently, Russia has never seriously considered taking such action -
to the bafflement of many aware of the law and its possibilities. 


"I do not understand why the Russian side never asked for debt reduction,"
said Wolfgang Seiffert, secretary general of the German Law Center at the
Russian Institute of State and Law. "It looks like the Russian government
is afraid to raise the question." 


Seiffert added that Russia's case would be even stronger than it first
appears because the German government has refused to recognize that all
former Soviet assets in Germany still belong to Moscow. 


After the Soviet Union collapsed, Russia announced - to international
acclaim - that it would take on all Soviet obligations, such as
international debts and treaties, and also all Soviet assets, such as
embassies abroad. 


But in Germany, Russia does not even have the property title on its Berlin
embassy. The embassy, along with diplomats' living quarters and other
former Soviet real estate, is claimed at least partially by Ukraine and
other former Soviet republics. 


Other analysts said they doubted it would be worth Russia's while to take
its debts to Germany's courts. Pavel Kandel, a senior analyst with Moscow's
Institute of Europe, said those debts are too tightly tied up with
diplomatic issues for a judge to solve them. 


"[Going to court] could be used as a way to put additional pressure on
Germany in debt talks," Kandel said. "[But] we are going to see a political
decision, no matter what legal possibilities exist." 


Peter Shultz, director of the Fried rich Ebert Foundation in Moscow, said
any legal win for Russia in this area would in fact be a diplomatic
catastrophe. 


"Pushing for such a scheme, Russia would ruin its chances of any helpful
arrangements with Germany in the future," Shultz said, adding the Germans
are a crucial ally given that the United States and other Western lenders
are reluctant to offer new credits. 


Russia did raise the idea of a German debt write-off not so long ago, in
June during a G7 summit in Cologne. Germany scorned the proposal, insisting
that Russia commit to servicing its debts in full, said a former Russian
government official who was close to the talks. 


But exactly what goes on with Russia's debts remains an extremely murky
matter. Yabloko's Gitin said that when Duma deputies earlier this year
asked Finance Minister Mikhail Kasyanov for basic information about
Russia's debts, Kas yanov refused, arguing that the ministry couldn't
afford to make photocopies or send faxes of relevant documents. 


"Finally I had to send them a letter saying I would cover expenses out of
my own pocket," Gitin said. 


Asked about the issue of German debt forgiveness schemes, Finance Ministry
spokesman Pyotr Afanasiyev said, "This problem has a far broader
international scope." Asked to elaborate, he said only, "Interpret it how
you like." 


*******