December 11, 1999    
This Date's Issues: 3675 • 3676  • 

Johnson's Russia List
#3676
11 December 1999
davidjohnson@erols.com


[Note from David Johnson:
1. Moscow Times editorial: Chubais Is Wrong for Right Forces.
2. AP: Rich Candidates Dot Duma Elections.
3. Bloomberg: Russian Communist Party Leads Poll Before Elections.
4. Moscow Tribune: Fred Weir on election controversies.
5. Novye Izvestiya: Union Of Right Forces Collects 4 Million Signatures 
In Support Of Referendum.
6. Yevgenia Albats: Re: 3674-Graham/US Role in Chechnya.
7. Masha Gessen: Regarding Will Englund's piece in 3673.
8. Cyrille Arnould: Education in Russia.
9. St. Petersburg Times: A. Shcherbakova, Generation Next: Gift Of the 
New Russians?
10. Alexander Domrin: Iona Andronov's Book.
11. The Economist (UK) editorial: Russia’s brutal war. 
Letting Russia get away with murder diminishes the West too.
12. Foreign Policy Research Institute: Stephen Moody,
RUBLES, OLD SOCKS, AND IMF LOANS
13. Alexander Pikayev: Will Russia Ever Agree to US Deployment of New
National Missile Defense? If not, So What?
14. Job Openings at the National Endowment for Democracy.]


*******


#1
Moscow Times
December 11, 1999 
EDITORIAL: Chubais Is Wrong for Right Forces 


Even though at least 60 percent of the population is expected to vote in next 
weekend's State Duma elections, Russia is a long way from being a 
full-fledged democracy. 


The kind of parties that are making the running in the polls illustrate that 
point admirably. 


Even though the Communists, Fatherland-All Russia and Unity all acknowledge 
the legitimacy of the electoral process, none of them are natural democrats. 
Indeed, these three movements have shown themselves to be solid believers in 
paternalistic autocracy. 


Meanwhile, the high-profile battles being waged between the pro-Kremlin party 
of power, Unity, and the anti-Kremlin party of power, Fatherland-All Russia, 
have helped to keep the spotlight away from Russia's two main liberal, 
"democratic" parties and their fight for votes. 


When it is not accusing him of being a traitor, the Union of Right Forces has 
spent plenty of time and effort during the election campaign urging Yabloko 
leader Grigory Yavlinsky to cooperate with them. 


On the surface of it, this olive branch makes sense. The two parties have 
many aims in common and several members of the Union of Right Forces f for 
example, Boris Nemtsov and Sergei Kiriyenko f have at times been Yabloko 
sympathizers. 


However, such proposals also display an astonishing level of arrogance on the 
part of a party that has been rapidly created through the patronage of the 
godfather of democratic Russian politics, Anatoly Chubais. 


And for all that the Union of Right Forces has in common with Yabloko, that 
is the one thing that clearly separates it from Yavlinsky. 


Chubais and his creation are tainted both by the flawed policies they pursued 
in government and by the corrupt practices f such as the series of rigged 
privatizations f that were used to pursue them. 


Yabloko has relentlessly and cogently condemned those practices and the 
policies that allowed them. Eschewing the grand schemes and slush funds of 
Chubais and co., Yavlinsky has instead built up Russia's only genuinely 
democratic party. 


So if Kiriyenko, Nemtsov and their allies are serious about wanting to unite 
with Yavlinsky for the general good, they should dump Chubais and simply join 
Yabloko. 


Putting the worthwhile remnants of the Union of Right Forces into Yabloko 
would inject needed fresh blood and energy into Yavlinsky's movement. It 
would also create a party that would command something like 12 percent of the 
vote f allowing it to step out of the shadows and challenge both 
Fatherland-All Russia and Unity as the second largest party behind the 
Communists. 


*******


#2
Rich Candidates Dot Duma Elections
December 11, 1999
By JUDITH INGRAM


MOSCOW (AP) - Wanted: Parliamentary representative, well-connected,
wealthy, preferably with access to natural resources or powerful industry.
Successful candidate will be rewarded with a salary and perks he doesn't
need, and immunity from prosecution - which might well come in handy one day.


The Dec. 19 election for a new State Duma, the lawmaking house of
Parliament, has attracted a new class of candidate: the oligarchs. They are
the handful of millionaires who gobbled up large parts of the Russian
economy after the Soviet collapse - often by dubious means, critics say.


As the Yeltsin era nears its end, the oligarch-candidates - and their
lower-level imitators who may fear prosecution - want to play a public role
in government and also possibly ensure their own safety.


``They already have more than enough money and influence,'' said Vladimir
Rimsky, a political analyst with the Information for Democracy Foundation.
``But the Russian political process is developing, and we've gotten to the
point where the people who enjoy the greatest status are elected officials.


Parliamentary immunity from prosecution is seen as the real attraction of a
Duma seat - and it's not just the oligarchs who are looking for immunity.


St. Petersburg candidate Yuri Shutov is awaiting trial for allegedly
ordering seven contract murders. Sergei Mikhailov, who has been accused but
never convicted of leading Moscow's murderous Solntsevo criminal gang, is
running from the southern town of Taganrog.


Numerous other candidates stand accused of economic and other crimes, and
four are wanted by police, mostly on extortion charges, said Konstantin
Nikishkin, an Interior Ministry official.


Jaded by traditional politicians, voters have elected people with criminal
records before, counting on them to be effective at winning benefits for
their regions.


``Those who are entering the Duma are used to the fact that nothing in
Russia can be done according to the law,'' Rimsky said. ``And that's why
they're going into the Duma, because they know that the Duma can adopt any
law, give any perks and lobby for advantages to this or that financial
group.''


Boris Berezovsky, one of the most notorious oligarchs, made his fortune in
oil and automobiles and has carved a political career out of his ties with
President Boris Yeltsin's inner circle. Now he's running for parliament in
Karachayevo-Cherkessiya, a small, poor republic in Russia's North Caucasus
region where at least one-quarter of the working population is unemployed
and local incomes are a fraction of the low Russian average.


Roman Abramovich, an oligarch who controls the Sibneft oil giant, is
running in an even more remote and poverty-stricken region - Chukotka, in
the frozen north of Russia's Far East. Chukotka suffers from continual
shortages of food and fuel in the winter, due to both a lack of local
resources and iced-in transport routes.


Both men, with their industrial connections and political clout, are
campaigning on the economic benefits they say they can bring to the
regions. The Obshchaya Gazeta weekly reported that Chukotka switched oil
suppliers in the autumn, and that Sibneft has already supplied $5 million
worth of fuel to the region.


``Imagine: You're living in one of these places, you've never seen this man
in your life, and all of a sudden he shows up and can solve any problem for
you,'' Rimsky said. ``You need gas? You'll have it in three months. You
want humanitarian aid? You've got it.''


And the voters can solve the oligarchs' biggest problem: making the
transition to a new political era when proximity to Yeltsin will be no
advantage. Yeltsin's exit after next June's presidential vote could leave
Berezovsky and Abramovich vulnerable to political attacks by their foes.


Both men have been accused of corruption and of bankrolling Yeltsin's
family. And Berezovsky has been facing an on-again, off-again investigation
of allegations that profits from the national airline Aeroflot were
funneled to Swiss firms. The lead Russian investigator told Literaturnaya
Gazeta weekly he was preparing to reopen the case against Berezovsky on
charges of fraud and misappropriating about $9 million.


For now, Berezovsky's influence over the Kremlin appears to be shielding
him from prosecution. If he does win a seat in the Duma, he'll enjoy the
parliamentary immunity guaranteed to every deputy unless his colleagues
vote to strip it.


*******


#3
Russian Communist Party Leads Poll Before Elections


Moscow, Dec. 10 (Bloomberg) -- Russia's Communist Party is
still leading opinion polls ahead of Dec. 19 parliamentary
elections.


Public Opinion Fund is an independent Russian poll agency
established in 1991. The total number of respondents participating
in the poll was 1,500. The poll has a margin of error of 4 percent.
The poll, carried out between Nov. 27-28, surveyed 1,500 people. It
has a margin error of 4 percent. The figures in parentheses are the
findings of the previous poll (Nov. 13-14).


For what party would you vote if elections took place on Sunday?


Communist Party 21% (22%)
Unity Movement 14% (9%)
Fatherland-All Russia 10% (14%)
Yabloko Party 8% (8%)
Union of Right Forces 4% (4%)
Zhirinovsky Bloc 4% (4%)
Women of Russia 3% (3%)
Against all 2% (3%)
Don't Know 20% (22%)
Others 14% (11%)


(Public Opinion Fund www.fom.ru)


*******


#4
From: "Fred Weir" <fweir@glas.apc.org>
Subject: fred weir's column for Moscow Tribune
Date: Sat, 11 Dec 1999 


MOSCOW -- Perhaps he thought he was performing a public service, or
maybe he was just planning out loud, but Boris Berezovsky sounded
dangerously plausible last week when he warned the next Duma could be
dissolved by the courts thanks to the dubious manner of its election.
No Russian polls have ever been clean. People tend to take for
granted that there will be blizzards of kompromat, contradictory rules
capriciously enforced by the Central Electoral Commission, gross abuses of
authority and other kinds of skulduggery that lack proper names.
But it's been getting worse in recent years, and that's ominous.
The current Duma election is a dress rehearsal for the presidential
contest soon to come, when real power is at stake. Judging by the
bacchanalia around us today, the chances the Kremlin will change hands in a
legally valid and historically worthy way next year look pretty dim.
There is not a single organ of state authority, no media
organization,
and few political forces that have remained relatively clean amid
the deepening muck of these elections.
Taking it from the top, the pro-Kremlin bloc, Yedinstvo, is
capitalizing
on an endorsement from Prime Minister Vladimir Putin, whose approval ratings
are soaring thanks to the war in Chechnya, that should never have been made.
Putin was careful to express his backing "as a citizen" rather than as a
government official, but that's not even a clever deceit. Russian electoral
law forbids all "persons holding state or municipal posts" from "carrying
out campaign agitation". Yedinstvo's popularity doubled in the week
following Putin's
announcement, to its present 18 per cent. If the polls can be trusted of
course, but that's another story.
Yedinstvo's reluctant leader, Emergency Minister Sergei Shoigu, gets
lavish exposure on the state-owned RTR and ORT networks, though they grant
almost nothing to any other party beyond the bare legal requirements. Shoigu
might cope heroically with natural disasters, but he is an incoherent mess
as a candidate. No problem, the networks edit him. There is an eerie
strobe-like effect produced by the number of breaks in an average Shoigu
interview
With all that covert help you'd think Yedinstvo would at least find
it useful to defend the process. But no. The group's press spokesman,
Yevgeny Zuyenko, was vociferous about all the violations going on. He
charged that Moscow Mayor Yury Luzhkov's people launched an ugly "whispering
campaign" about Shoigu's alleged use of state airplanes and other resources
for electioneering purposes. "Pro-Luzhkov media go beyond all decent limits
to spoil our reputation," he said. "Newspapers like Moskovsky Komsomolets
publish such garbage. You can't even sue them because there are no facts at
all".
The Luzhkov camp have their own tale to tell. Last week
Otechestvo-Vsya Rossiya filed charges with the public prosecutor that
Kremlin forces offered several of the party's candidates bribes of up to
$700,000 to withdraw from the race. Under the electoral law if 25 per cent
of a party's list quits, it is removed from the ballot. Vladimir Lebedev,
head of OVR's international department, alleges the Kremlin is engaged in a
savage bureaucratic offensive to gut Luzhkov's electoral machine. "Every
group associated with OVR is being subjected to tax inspections, financial
audits and other kinds of checks on a daily basis," he says. "Needless to
say, this is all very counterproductive for
Russian democracy".
The folks at Yabloko own no media, and don't hold power anywhere.
Maybe that's why everyone feels free to trash them. The party's leader,
Grigory Yavlinsky, was treated like a leper when he tried to campaign
recently in Bashkortistan. A local TV station set up an interview
with him, then cancelled after its manager received a phone call from the
republic's State Secretary, Ildus Adigamov. Not a single auditorium or
public hall in Ufa would rent its premises to Yabloko and no local media
breathed a word of Yavlinsky's visit. By the way, Bashkortistan's President
Murtaza Rakhimov is a big wheel in OVR. A similar thing happened in Kalmykia
to Yabloko's Sergei Stepashin. Kalmyk President Kirsan Ilyumzhinov is near
the
top of Yedinstvo's list. "The opportunities for local leaders to influence
the results of the elections, as well as the vote counting, cannot be
underestimated," says Yavlinsky.
But Yabloko spokesperson Yevgeniya Dellindorf says the unkindest cut
of all came from the party's closest neighbour on the political spectrum.
"The Union of Right Forces is distributing leaflets that give a completely
false picture of Yabloko's voting record in the Duma," she says. "We never
expected this kind of attack".
The bizarre saga with Vladimir Zhirinovsky's bloc almost looks like
a deliberate plot to wreck the elections. First his Liberal Democratic Party
was legally disqualified by the CEC and removed from the ballot. Zhirinovsky
formed a new bloc, which was duly registered. Last week, by Supreme Court
decision, the LDPR was written back in. A couple days later the court's
presidium reversed that decision. Zhirinovsky, charging he has been deprived
of his elementary constitutional rights, demanded the elections be
postponed. He might just turn up in court with that complaint in January,
and who's to say he doesn't have an excellent case?
The only people who don't seem to be complaining much this time
around are the Communists. Gennady Zyuganov has made his ritual -- and
thoroughly justified -- complaints about being denied normal coverage on
state TV. But otherwise they sound pretty smug. "We don't suffer much from
the kompromat wars," says Communist deputy and candidate Yury Ivanov. "It's
mostly the Kremlin and Luzhkov tearing each other's throats out".
If you hadn't noticed, the Communists are consistently out in front
in almost every opinion survey. And any fool can see that all this crap is
just working in their favour.


*******


#5
Russia Today press summaries
Novye Izvestiya 
December 10, 1999
Union Of Right Forces Collects 4 Million Signatures In Support Of Referendum
Summary
Today the Union of Right Forces (SPS) will submit four million signatures to 
the regional election committees in support of a referendum on four key 
questions that worry Russians. According to the law only 2 million signatures 
were needed, but people showed a great interest in the referendum. Collecting 
signatures was very difficult and didn’t have the approval of local 
authorities.


One of the referendum’s clauses calls for a “ban on sending draftees to ‘hot 
spots’”. Enlisted soldiers do not apply. Really, what mother would permit the 
government to send her dear 18 year-old son straight to Chechnya without any 
special training? There seems to be a president’s decree prohibiting that, 
but at the same time there is a law that permits sending volunteers. And we 
know that our army is good at “convincing” people, so no mother can be sure 
that her son will not write a report saying that he really wants to go to 
war. The referendum might put a legal end to this problem.


Russian citizens have also approved the second clause ­ on abolition of 
deputy privileges and immunity. Everybody understands that the State Duma 
will not deprive itself of privileges, and more and more deputies have either 
already been in prison or have been accused of a crime, but are very safe 
under the “deputy roof”.


The last two clauses of the SPS referendum are “The law on political 
guarantees of protection of private property” and the “Constitutional 
amendment of a president’s power to dismiss the government”. Who won’t agree 
with stopping administrative despotism on questions of property?


In the next 15 days, election committees will have to check all the 
signatures and give them to the Central Election Committee (CIK). CIK will 
also have to check them within 15 days and then pass them on to the 
president. The Constitutional Court will then have to make sure that the 
procedure of signature collecting was lawful, and after that the president 
will have to set a date for the referendum. SPS has already planned 
everything so that the expenses will be minimal. The most important thing now 
is to overcome the resistance of the authorities.


*******


#6
Date: Sat, 11 Dec 1999 
From: "Yevgenia Albats" <albats@glasnet.ru>
Subject: Re: 3674-Graham/US Role in Chechnya


To 3674-Graham/ US Role in Chechnya, NYT
By Yevgenia Albats
Moscow Times, Dec.9,1999


This weeks events don't allow for intellectual discussion. We have to
lay them aside.


The Russian military has issued an ultimatum: Whoever is still in Grozny
after Dec. 11 "will be considered bandits and terrorists and they will
be destroyed." According to Nikolai Koshman , a vice prime minister and
the Russian government's representative in Chechnya , there are 40,000
residents left in Grozny. How many of them are bandits and how many are
children and the elderly no one know for sure. Journalists and human
rights observers cant get into the city. Refugees say "Grozny is hell.":


The Russian military is in a hurry: On Dec 11, 1994, the last Chechen
war began ? and was lost in shame by the Russian army. The generals are
eager to take revenge and it looks like nothing can stop them now.


This is nothing new. They are dropping the same leaflets on Grozny that
they dropped during the first war. I saved one of these old leaflets in
my archive. I picked it up it in the village of Bamut: "If anyone in
your town opens fire on Russian soldiers," it reads, "we will answer
this with powerful rocket and bomb strikes without hesitation. Your
life, and the lives of your children, are in your hands."


During the last war ? as today ? tens of thousands of elderly people and
children packed basements in Grozny. They were without electricity, heat
and food. Food was brought by us, the journalists and human rights
workers. Russians bombed the city with vacuum bombs capable of blowing
penetrating the basements. They bombed with full knowledge that
civilians were there. My most terrible memory of this war is of a blind
people's home on Grozny's Ulitsa Bratyev Khutsievikh. These helpless
blind people were living under their cots. Their building had no
basement. The road to Ingush capital of Nazran out of Grozny was
littered with cars loaded with baggage and corpses. The only place that
was worse than Grozny was this road: It was under constant fire from all
side. Because of this, people preferred to stay put in the basements.
That's why they are staying put in the city now.


After my return, I was asked to testify before the U.S. Congress's
Commission of Security and Cooperation in Europe which held hearings on
Chechnya on May 1 , 1995. I recounted what I had seen there. I tried to
convince them that by giving loans to Russia United States were financing
murder. But
the credits kept coming. I also told them the following, which is a
direct quote from my testimony:


?he roots of the Chechen crisis go all he way back to September and
October of 1993 when Yeltsin dismissed Russian parliament, violated the
law and Constitution and ended up with a mini civil war in Moscow. It
was the turning point at which Russian authorities first chose to
resolve a political crisis with tanks and bloodshed ... and ruined any
hopes that Russia could be run by the rule of law. Yeltsin crossed the
line. But instead of being condemned by western democracies, he got
President Clinton overwhelming support. Russian authorities got the
message: They will be excused for violence as long as they keep economic
reforms going. But that view is both ill-conceived and shortsighted.
History teaches us that the free market economy is by no means a
guarantee for democracy, it may just as easily lead to the establishment
of the harshest regimes.


On Thursday, Bill Clinton came out and said that Russia "will pay a
heavy price" for its actions in the Caucasus. He was late by exactly
six years.


Yevgenia Albats is an independent political analyst and journalist.


******


#7
From: "Masha Gessen" <gessen@iwm.at>
Date: Sat, 11 Dec 1999 
Subject: re: will englund/3673


Regarding Will Englund's piece in 3673:


I think we all know that claiming someone was "the only" 
anything is a risk. And it is especially unfortunate when this 
kind of irresponsible statement reinforces Soviet era myths, 
which is to say, blatant falsifications of history, as when 
Will Englund states that David Dragunsky "happened to be the 
only Jewish general in the wartime Soviet Army."


Starting with his famous speech on May 24, 1945, Stalin began 
creating the myth that the Great Patriotic War was fought by 
ethnic Russians virtually alone. This appalling lie, as it 
regarded Jews, was perpetuated by Soviet authorities even 
after Stalin's death. The fact is that approximately 200,000 
Jews died in the Soviet Army and Jewish soldiers had the 
highest percentage, of any ethnic group, of Heroes of the Soviet Union
among them.


As for generals, here are some names I was able to get just in 
a couple of minutes from the sources on hand: General Yakov Kreiser
played a leading role in the defense of Moscow, during which another
Jewish General, Dovator, was killed; borth Kreiser and Lt. General
Israel Baskin took part in the Battle of Stalingrad; Major General
Girsh Plaskov and Lt. General Shimon Krivoshein were among the leaders
of the storm of Berlin; other names include Major General Mikhail
Vovsi (brother of slain actor Solomon Mikhoels), Rear Admiral Pavel
Trainin.


Many of these people fell victim to the so-called anti-cosmopolitan
campaign - most notably Vovsi, who was one of the defendants in the
"doctors' plot." Dragunsky, of course, was different. Dragunsky was
scum who led the Soviet government's anti-Semitic and anti-Israel
efforts in the 1970s and 80s. For that he was unofficially named "the
only Jewish general in the wartime Soviet Army."


Check your facts, for the love of god!


Masha Gessen
chief correspondent
Itogi


******


#8
Date: Fri, 10 Dec 1999 
From: Carnould@ifc.org (Cyrille Arnould) 
Subject: Education in Russia


David, recently Andreï Liakhov (DJRL 3671) and John Squier (DJRL 3674) made
some
very valid comments on the education system Russia inherited from its soviet
past. May I add in support of their comments that the very high level of
literacy and overall education is not solely visible in Moscow and St.
Petersburg, but also in much smaller cities which often have cultural and
academic infrastructures that most Western European cities can only dream of.


I would be interested to read further comments on the following: how is the
lack
of money and decline in social prestige affecting the renewal of academic
cadres
(not to mention the massive brain drain of the late eighties early nineties)?
To maintain these formidable assets (education and culture) a constant flow of
young docents must be secured. A friend of mine accepted a year ago to head
the
French Language Dept. of the Smolensk Pedagogical Institute. His all in pay is
RUR700 per month and he replaced a professor at least 35 years his senior.


Also, any views on how corruption (not exactly something unknown in Soviet
times) may be affecting the sustainability of the quality of the Russian
education systems?


To close, two of my favorite Russian epithets: "kulturnii" and "bezgramatnii"
and the souvenir of the classroom walls of the dietki sad where my children
went
when I lived in Moscow: where from Lenine and Marx's portraits previously
hung, Pouchkine and Krilov were looking at the children.


******


#9
St. Petersburg Times
December 10, 1999
Generation Next: Gift Of the New Russians?
By A. Shcherbakova


WHO are these wealthy upstarts called New Russians? They usually are 
identified as people who own businesses, drive Mercedes and Lexuses, live in 
luxurious apartments, spend millions traveling to the Riviera and purchase 
American citizenship.


These members of the new elite, who were first named New Russians, or NRs, 
seven years ago by Russia's first business daily Kommersant, instantly became 
popular figures in the collective imagination through the telling of hundreds 
of jokes that poked fun at their excesses. The NR heroes in these jokes 
always professed an affinity for loud Versace clothing and imposing Mercedes 
600-series sedans, for example.


Looking back in recent history, we find that there is no old money or wealth 
that has remained in one family, passed down through the generations in 
Russia. Ever since the revolution of 1917, people have had to scramble to 
make ends meet without owning any private property or having any other 
financial recourse.


The ugly surrogates of the upper classes in Soviet times were the Communist 
Party bosses and some criminals, who were expected to hide their fortunes 
away from society. These categories have contributed some members to the new 
caste of wealthy Russians, but not many.


As my experience shows, people with absolutely different backgrounds are 
united under the banner of New Russians - former KGB officers and engineers, 
sales assistants and musicians, housewives and sailors and doctors and 
professors. The common trait that unites them all together under this mighty 
name is the necessity to fight for their property and wealth - both through 
legal and illegal means.


Another problem which occurs by defining the new but still mighty class of 
New Russians is their sheer invisibility. They are almost indiscernible to 
the general public. They do not include those who appear on the glossy 
magazine pages or on television programs - those are actually just NR 
employees, mostly clerks and executives, not real New ones.


But this policy of invisibility fails in rare cases when conflicts erupt 
between them; although clever ones know better how to avoid such problems. 
Except for a couple of so-called oligarchs who are worn out after the 1998 
financial crisis, and the new generation of oligarchs specializing in raw 
materials, particularly in the metals industry, they are absolutely unknown 
to us.


We help make them richer every minute of the day, through buying something in 
their boutiques or eating in their restaurants or purchasing products from 
their factories.


I hope that the portrait of the New Russian which I've sketched does not turn 
out to be a very dark one. The people who form this new social class are 
obviously not white collar; some of them are rude and poorly educated, but 
the good news is that their children and grandchildren should prove to be 
completely different - after receiving a fancy education in the West's best 
universities.


******


#10
Date: Sat, 11 Dec 1999 
From: Alexander Domrin <domrin@pc-club.ru>
Subject: Iona Andronov's Book


The first copies of the long-awaited book of memoirs of Iona Andronov,
the last Chairman of the Foreign Affairs Committee of the Russian
Supreme Soviet, are to be released next week.


The author would be interested in reaction of his Western readers.
Those wishing to contact Andronov please send private messages
to my Email address.


Thanks!
Alexander


******


#11
The Economist (UK)
December 11-17, 1999
[for personal use only]
LEADER/Editorial 
Russia’s brutal war 
Letting Russia get away with murder diminishes the West too 

IT IS as if Boris Yeltsin and his generals believed that their standing at 
home and Russia’s influence abroad could be rebuilt on the rubble of 
Chechnya. Instead, Russia’s self-isolation has never been more complete. Even 
during the chill of the cold war, the old Soviet Union always had its claque. 
But the ultimatum delivered this week (see article) to the residents of 
Grozny to surrender the Chechen capital or be “destroyed” is 
indefensible—worthy of a marauding medieval bully, or a latter-day war 
criminal such as Slobodan Milosevic, but not the government of a modern 
European nation. 


If Russia’s government does what it said it would do—subsequent threats have 
been slightly less bloody—the artillery and air attacks aimed at flattening 
Grozny, building by building, will pick up this weekend just as the European 
Union’s leaders gather in Helsinki for a summit that, among other things, 
will declare the EU open to a lengthening line of hopefuls from Eastern 
Europe, including several of Russia’s former friends. The contrast could not 
be more stark between the democratic and free-market aspirations of most of 
post-communist Europe and Russia’s singular brutality. 


For now, the war is popular among ordinary Russians. Five years ago, during 
earlier fighting in Chechnya, which ended in humiliation for Russia’s 
generals, Russian newspapers and television had criticised the war and the 
generals, who were as careless with the lives of their own troops as they 
were with those of Chechen civilians. This time Russia’s media mostly parrot 
government propaganda that deems every Chechen a “terrorist”. And the 
generals have used long-range artillery and air strikes to keep Russian 
casualties low—though that may change as the battle for Grozny intensifies. 


Russia also found last time that the West did little to make it answer for 
its actions. In 1994, Mr Yeltsin was seen still as a bulwark against wider 
chaos and given the benefit of every doubt. No longer. Russia is days away 
from a parliamentary election, and only months away from a presidential 
contest, and Mr Yeltsin’s prime minister, Vladimir Putin, himself a 
presidential hopeful, has made this Chechen war his own. At last month’s 
summit of the Organisation for Security and Co-operation in Europe (OSCE), Mr 
Yeltsin swatted aside polite criticism from President Bill Clinton and 
European leaders. Western governments now need to correct the impression that 
they will overlook behaviour from Russia that they would not have tolerated 
from the Soviet Union. 


Western military intervention is not a realistic option, despite echoes of 
Serbia’s campaign in Kosovo. First, Russia is a nuclear power with a large 
army, so attempts to deter it militarily could provoke a much wider war. 
Second, Chechnya is not quite Kosovo. Though Russia could have averted some 
of the difficulties it faces there by negotiating with the republic’s less 
fiery leaders, the Chechens have not been blameless. They have done little 
for the place, even by wretched Chechen standards, and outsiders willing to 
help have often been kidnapped and even murdered. Some Chechen fighters have 
undoubtedly caused trouble elsewhere. Earlier this year they invaded 
neighbouring Dagestan, also legally a part of Russia. 


Exacting a price 

It is not so much Russia’s cause in Chechnya, therefore, as the way it is 
being pursued, that so offends. This can be made clear, while still raising 
the cost to Russia of its indiscriminate and disproportionate assault on 
Chechen civilians. 


Getting American and European leaders to deliver a common message has proved 
easier as the refugee streams have swollen (over 200,000 civilians had been 
displaced before the threat to Grozny). As Russia’s tactics have toughened, 
so have western warnings. Mr Clinton this week told Russia it would “pay a 
heavy price” for its actions. It has already harmed relations with its own 
Islamic peoples and some of its neighbours, who fear that the military boot 
crushing Chechnya could soon be aimed at them. But this is a price Russia 
seems ready to pay. So how can outsiders increase Russia’s pain? 


Hitting it in the pocket would hurt most. Fighting is costly: the government 
has already set aside $1 billion for the war. Meanwhile, the IMF is refusing 
to hand over the second slice of a $4.5 billion loan to pay off old debts. 
Whatever the rules, IMF lending to Russia has always been politically 
motivated, since the country has been lent money even though it never carried 
out its promised economic reforms. It should not get another cent until it 
halts the shelling and opens serious talks with the Chechens. Russia’s 
finances have eased lately because higher world oil prices make its oil 
exports worth more. If Arab governments wanted to help fellow Muslims in 
Chechnya, an opening of the oil taps could drive down prices and thus help 
empty Russia’s war chest too. 


Meanwhile, Russia has more than earned immediate suspension from the OSCE, 
whose codes of conduct it has repeatedly mocked, and from the Council of 
Europe, whose legal conventions on human rights it has comprehensively 
flouted. Would it care? Maybe not. But letting it continue its assault in 
Chechnya unpunished diminishes the rest of Europe too. 


******


#12
Date: Sat, 11 Dec 1999 
From: Foreign Policy Research Institute <fpri@fpri.org>
Subject: Rubles, Old Socks, And IMF Loans by Stephen S. Moody 


Foreign Policy Research Institute
A Catalyst for Ideas
E-Notes
Distributed Exclusively via Fax & Email


RUBLES, OLD SOCKS, AND IMF LOANS
by Stephen S. Moody
December 10, 1999
Stephen S. Moody is a trustee of the Foreign Policy Research
Institute, with extensive business experience in Russia.
His last E-Note on the subject was "The Virtual Monetary
Fund and Russia's Current Industrial Expansion," August 20,
1999.


RUBLES, OLD SOCKS, AND IMF LOANS
by Stephen S. Moody


"Money is the blood and soul of men, and he who has none
wanders dead among the living." -- Scipion de Gramont, 1620


War in Chechnya notwithstanding, the IMF decision to
withhold the current tranche of its $4.5 billion loan to
Russia may signal belated realization that, in Russia
anyway, IMF policies line private pockets. The oligarchs
and kleptocrats running Russia these days aren't necessarily
Marxist ideologues, nor necessarily do they seek to govern.
As former communists, however, they all learned Lenin's
lessons well. The Lenin they learned best was: Grab'
nagrablennoe! Steal what's been stolen.


Economic reform in Russia failed because public means were
subverted to private ends. Former communist nomenklatura
used IMF macroeconomic tools to build private capitalist
fortunes. Corruption, expropriation, monopoly -- they're
all taxes of a sort, though economists prefer to call them
"rents." Whatever you call them, they're still money. And
where law can't rule, money will.


Devaluation and tight monetary policy are the tools of
economic reform. Since 1947, the IMF has used them to
stabilize national economies worldwide. Admittedly, few
currencies devalue forty thousand-fold in ten years as has
the ruble, and few money supplies get as tight as 14 percent
of GDP. Russia, in fact, has the tightest money supply on
earth. The ruble is stable because no one uses it.
Persistent devaluation and shortages of cash so undermined
confidence in the ruble that private citizens and
corporations alike abandoned it.


Citizens abandoned the ruble because devaluations wipe out
ruble savings. Wary of devaluations and rickety banks,
Russians stuff dollars into old socks for savings -- as much
as $45 billion by the time of August 1998's infamous crash.
But, even stuffed with dollars, socks don't get counted in
Russian money supply. For that matter, neither do corporate
accounts receivable.


Devaluations also wipe out the cash component of working
capital. Corporations don't wear socks, of course, so
Russian companies stash their would-be cash surpluses either
in inventories of raw materials and finished goods, which
they barter among themselves in lieu of cash, or in the form
of neplatezhi (non-payments, or accounts receivable) or
veksel' (bills of exchange). Veksel' are corporate IOUs-
fungible credit instruments Russian industry uses to
discount its receivables. In most capitalist economies,
commercial banks discount corporate receivables. In Russia,
however, banks don't make loans, so accounts receivable
rarely show up as demand deposits in commercial banks. Or,
obviously, in the money supply.


No wonder Russian money supply is so tight. And no wonder
Russian government can't collect taxes. It doesn't take an
IMF economist to see that, at velocities (the speeds at
which money circulates) less than two, a money supply of 14
percent of GDP can't pay tax bills of 28 percent in full.


Who needs a stable currency if no one uses it? If banks
don't make loans, and industry barters, and citizens stuff
dollars into socks for savings, what good can monetary
policy -- tight or otherwise -- do? Indeed, what are the
benefits of policy so tight that corporations can't pay
taxes?


In the main, there are three.


First, if money supply is so tight that banks can't make
loans, then government enjoys a de facto monopoly on credit.
Rubles are a medium of exchange for some, but a store of
value for no one: they can't retire debt at interest rates
anyone but government can afford. In fact, absent credit,
rubles the Russian Central Bank prints aren't real money at
all.


Second, accumulated tax arrears, and the interest and
penalties accrued thereon, presently account for more than
half of all non-payments in Russia -- an amount equivalent
to Russia's entire GDP at the end of 1998. If all debtor
enterprises were pressed into bankruptcy under current
Russian law, government would end up owning more than fifty
percent of the shares of most. The companies can't be
liquidated, of course, because there isn't enough cash to
pay their back taxes, and government has a monopoly on
credit.


Last, tight monetary policy won the Russian government IMF
loans, which met Russia's international obligations and
opened the doors to foreign investment. Foreign investment
generated tax and government bond revenues from sources
outside the ruble tax base. As important, foreign direct
investment lifted the value of all privatized Russian
enterprises -- even the insolvent ones in which government
has claim to a fifty-one percent stake.


Of course, in light of FIMACO and recent money laundering
scandals, some contend that, in September 1996 and again in
July 1998, other doors opened, and emergency IMF funds went
directly from the Russian government to certain private
banks.


Devaluation, tight monetary policy and IMF loans
notwithstanding, after eight years of economic reform,
Russia finds itself with a government that enjoys a monopoly
on ruble credit and claims to majority control of as much as
half the country's means of production -- powers eerily
reminiscent of former regimes. Actually, Russian government
today would have Soviet-like economic powers, except that
Russia really has no government at all -- federal, regional
or local. Governments that don't collect taxes surrender
governance to individuals who do.


The oligarchs and kleptocrats who now run Russia conned the
IMF into lending them its tools. "Kinuli ikh," someone has
said. "We conned them." For its part, the IMF forgot that
tools are indifferent to the ends they serve. Wealth --
public or private -- is still wealth. Devaluation can't
weep for the millions it impoverishes; policies don't drive
Mercedes.


And the kleptocrats conned the Russian people. The $45
billion that trickled down into old socks -- about $40 per
person per year for eight years -- insured the oligarchs
against two risks they couldn't afford to run: revolution in
Russia and suspicion in the West. The insurance paid off in
part: there hasn't been a revolution. There hasn't been
much reform, either. Socks walk; capital flies.


For its part, money doesn't know it's the blood and soul of
men or that, deprived of it at birth, democracies die.
Russia's great experiment with democracy and capitalism has
given her neither. Yeltsin's era ends sadly; reform's
legacy is nil.


******


#13
Date: Fri, 10 Dec 1999 
From: Dan Smith <dsmith@cdi.org> 
Subject: Pikayev notes/By Dan Smith, Center for Defense Information


A few notes that I made, with an addendum by Nick Berry, on the 
presentation by Alexander Pikayev at the Carnegie Non-Proliferation Seminar 
today. Subject was “Will Russia Ever Agree to US Deployment of New National 
Missile Defense? If not, So What?”


1. Last month, Yeltsin invited Clinton to come to Moscow in Spring 2000 to 
talk about arms control issues. Pikayev is of the opinion this is a ploy to 
boost the Yeltsin Administration’s profile as being able to deal with the 
US and thereby boost the chances for a Yeltsin adherent (not named) in the 
June presidential election. Pikayev speculated that Yeltsin might be 
willing to make some concessions on ABM just to have Air Force One land at 
Moscow’s airport.


However, will Yeltsin’s “good friend Bill” be willing to take the risk of 
going to Moscow and getting nothing?


2. Yeltsin himself is hemmed in on what concessions he could make. First, 
there is general Russian public opinion which increasingly is turning 
against cooperation with the US because of US policy positions ­ NATO 
expansion, Kosovo, opposition to the popular war in Chechnya. Many Russians 
see the objective of US policy as relegating Russia to Third World status. 
(Still, Russians like Americans as individuals and like the American way of 
life.)


3. The Russian army is probably closer than at any time since the 1917 
revolution to injecting itself into the policymaking realm. Two examples 
were cited:
-Talks about the withdrawal of Russian forces from Moldova reached 
agreement that the troops would be out by 2002. The major-general 
commanding the Russian 14th Army in Moldova, when interviewed about the 
timetable, said that whatever the politicians agreed, the Army knows the 
reality that it will be 5.5 years before all the soldiers are out.
-On START II, should ratification occur the Army has ways of 
impeding and slowing implementation.


4. On the Russian elections for president: a new administration would have 
higher public support than Yeltsin does. While it might also be less 
inclined to make concessions to the West, when it chose to do so it would 
be less dependent on ­ and therefore better able to circumvent obstacles 
from ­ either the bureaucracy or the Russian military.


5. Russian military seems to be of two minds on ABM. The more “moderate” 
wing (centered in the Strategic Rocket Forces) doesn’t see the need for 
further modifications as the 1997 demarcation agreements already allow the 
US to develop the technology needed [I presume Pikayev is referring to TMD 
development]. The larger, more hawkish group sees a chance to use the US 
ABM modification effort as a means to kill off all arms control agreements 
­ strategic nuclear as well as conventional.


6. The Duma elections later this month will likely leave many current 
members unemployed. Pikayev sees this as an opportunity, between then and 
now, for Yeltsin to do some horse-trading to get some things he wants in 
return for which members will be given assurances of future state 
employment ­ and therefore the continuation of at least some of their perks.
-If he were inclined, Yeltsin could push for START II 
ratification. The Duma extended its session to consider the Russia-Belarus 
Treaty, and the fact that there is a move to consider putting START II 
ratification on the agenda came as a surprise.
-Even for those likely to be reelected (and retaining present 
perks), there is an out in voting for ratification. Article 9 of the 
Russian Treaty Implementation legislation says that the START II agreement 
will not come into force (that is, instruments of ratification will not be 
exchanged) until the US Senate ratifies the September 1997 demarcation 
agreements.


[7. As an aside, I note that the Russian presidential election is scheduled 
for June 2000 and the Presidential deployment decision ­ or maybe the 
Presidential feasibility decision ­ is also due in June 2000. It will be 
interesting to see if the US waits until the Russian election is over 
before announcing the decision. To do so beforehand ­ especially if the 
decision is to go ahead with deployment ­ might influence the dynamics of 
the Russian election.]


Nick made the following notes after I left the session:


1. Asked about Nunn-Lugar, Pikayev said that some (unnamed) in the military 
wouldn’t miss the program if it lapsed. They don’t like the transparency, 
don’t need the money, and want to be free to “do what they want.”


2. Asked if Russia will re-MIRV, Pikayev said that if START II comes into 
force and the START process continues, then Russia will not MIRV. (He 
estimated that Russia would drop to about 1,000 weapons under a START III 
regime.) If START does not continue, Russia will probably try to maintain a 
force at about 1,500 missiles. And in the absence of a treaty-guaranteed 
U.S. reduction Russia would likely move to MIRV these 1,500.


3. There is a feeling in Russia that Western funds have been given more as 
a welfare payment rather than for work. That is, Western money came because 
Russia left East Europe and removed strategic weapons rather than to foster 
real economic development in Russia.


******


#14
Date: Fri, 10 Dec 1999 
From: John Squier <JohnS@NED.ORG> 
Subject: Job Openings at the National Endowment for Democracy


David--The National Endowment for Democracy is seeking a Program Officer for
Central Asia and the Caucasus, and a Program Assistant for Central and
Eastern Europe and the NIS. Details follow.


PROGRAM OFFICER FOR CENTRAL ASIA AND THE CAUCASUS


The National Endowment for Democracy is searching for a Program Officer for
Central Asia and the Caucasus, to be based in Washington, DC. Duties will
include: 


Working with the Senior Program Officer to develop and oversee a grants
program in Central Asia and the Caucasus; 
Identifying program priorities and key issues as political and social
conditions change in the region; 
Maintaining regional expertise in political and social issues through
research, meetings, and by cultivating a network of contacts and experts; 
Reviewing and assessing grant proposals; 
Preparing and recommending proposals to the NED Board of Directors; 
Monitoring grant programs; 
Maintaining contact with organizations and individuals in the region,
including regular travel to the region. 


Qualified candidates should have a Masters degree in a relevant field and
two years of experience. 


Candidates should also have travel experience and in-depth knowledge of
political and social issues in the former Soviet Union. Fluent Russian
language and strong writing skills are required.


Applicants should send a cover letter, resume or CV, writing sample, and
names of three references to:
John E. Squier
Program Officer for Russia and Ukraine
National Endowment for Democracy 
Suite 700, 
1101 15th Street N.W., 
Washington D.C 20005.
Or e-mail to johns@ned.org
NO PHONE CALLS, PLEASE



PROGRAM ASSISTANT FOR CENTRAL AND EASTERN EUROPE AND THE NEW INDEPENDENT
STATES


The National Endowment for Democracy is searching for a Program Assistant
for Central and Eastern Europe and the New Independent States, to be based
in Washington D.C. Duties will include;
Assisting the program staff in assessing assess grant proposals, monitoring
existing grants, maintaining contacts with the region and clerical and
information management duties.


Qualified candidates should have a B.A in a relevant field of study; basic
knowledge of the political and social issues in the geographic region;
administrative support experience; good computer skills and some language
skills, preferably Russian. 


The National Endowment for Democracy (NED) is a Congressionally funded,
private, nonprofit grant-making organization created in 1983 to strengthen
democratic institutions around the world through non-governmental efforts.
The Endowment conducts a worldwide grants program that assists organizations
abroad-including political parties, business, labor, civic education, youth,
women, media, human rights, and other groups-that are working for democratic
goals. 


Applicants should send a cover letter, resume or CV, writing sample, and
names of three references to:
John E. Squier
Program Officer for Russia and Ukraine
National Endowment for Democracy 
Suite 700, 
1101 15th Street N.W.
Washington D.C 20005.
Or e-mail to johns@ned.org
NO PHONE CALLS, PLEASE; only applications under active consideration will
receive a response.


******