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Johnson's Russia List


January 10, 2000    
This Date's Issues: 4023 4024

Johnson's Russia List
10 January 2000

[Note from David Johnson:
1. International Herald Tribune: William Pfaff, Russia's Yeltsin-Putin Coup d'Etat Remains to Be Ratified.
2. The Electronic Telegraph (UK): Marcus Warren, Chechen setbacks put Putin election hopes in jeopardy.
3. The Guardian (UK): Owen Bowcott, Russia's northern cities die as people leave. With no more communist state perks for those living in harsh regions, workers are streaming away in search of jobs and warm weather.
4. Washington Post: David Ignatius, The Strange Case of Russia, Big Oil and the CIA.
5. Stanislav Menshikov: Re Yevgenii Gil'bo in JRL #4018.
6. Jim Hecht: Huge Cost Savings Can Be Made in Factories by Saving Energy.
7. PONARS: Nikolai Sokov, Foreign Policy Under Putin: Pro-Western Pragmatism Might Be a Greater Challenge to the West.
8. Novaya Gazeta: Oleg Lurye, Turover's List. File on Corrupt Russians Revealed.] 


International Herald Tribune
January 10, 2000
[for personal use only]
Russia's Yeltsin-Putin Coup d'Etat Remains to Be Ratified
By William Pfaff, International Herald Tribune./Los Angeles Times Syndicate.

PARIS - Democratic Russia, which came to insecure life in 1991 with Boris 
Yeltsin's election to its presidency, now is at risk. Delegation of the 
presidency to Vladimir Putin amounts to a coup d'état, although one that 
currently enjoys popular approval.

An early presidential election has suddenly been called, at a moment when war 
has produced a patriotic mobilization of the public. Controlled television, 
radio and press are enlisted to support not only the war but also a candidate 
whose sole discernible entitlement to the presidency is that he is waging 
that war.

Russia's other major political figures are withdrawing from the presidential 
contest, or making their accommodations with the man Mr. Yeltsin anointed to 
succeed him. They are also making peace with the political-financial 
''oligarchs'' to whom Mr. Yeltsin and Mr. Putin are obligated, and whose 
control of Russia's wealth and resources is likely now to be enlarged.

A strong suspicion of manipulation lies over the origins of the war against 
Chechen separatists. The motivation, circumstances and timing of the raids 
into Dagestan that provoked Russian retaliation, and of the terrorist 
bombings that followed in Moscow and were attributed, without published 
evidence, to the Chechens, all remain in doubt.

This series of events has been astonishingly convenient to the interests of 
the Yeltsin entourage, and to Mr. Putin.

Six weeks ago, the ''first president'' (as we are now to call Mr. Yeltsin - 
not the ''former president'') seemed certain to see his office fall to 
hostile political forces with an interest in prosecuting him and his family 
and associates. Now the situation has been reversed.

However, war is unpredictable. Information on the real state of affairs in 
Chechnya remains sketchy. Reports other than those provided by the official 
media, and the press and television controlled by Mr. Yeltsin's friends, 
depend on a few journalists, most of them foreigners, who run the extreme 
risks of work inside Chechnya.

Their dispatches, plus what can be read between the lines of official 
disclosures, suggest that Russian casualties are higher than officially 
anticipated, and that progress against the Chechen defenders of Grozny is 
slower than foreseen.

The separatist forces are defending their capital chiefly because of the 
opportunity this provides for killing Russian soldiers. The level of 
casualties will influence Russian public opinion during the weeks from now to 
the March election.

Russian forces have unwisely made Grozny's capture their announced objective. 
Whatever their timetable, this plays into the strength of the irregular 
Chechen force, which can maintain the tactical initiative.

The war against ''terrorists'' is popular but disturbing to the Russian 
public. The war, and the dazzling political succession in Moscow, have 
combined to produce what a journalist in Moscow, Piotr Smolar of France's Le 
Figaro, describes as something like mass hypnosis.

''Something irreparable, implacable is occurring in this rise to power of 
President Putin,'' he writes. ''Traumatized and disoriented'' by the war, and 
by the Yeltsin resignation and Putin appointment, Russians have had their 
national pride flattered by the new leader's promises of ''authority and 

A democratically elected but financially corrupt president, who in December 
was politically bankrupt and threatened by criminal prosecution, has 
(ostensibly) passed his powers to his own nominee, who in return has formally 
exempted the president and his family from prosecution for such crimes of 
malfeasance as may have been committed.

Complicit national media have been mobilized to attempt to assure that Mr. 
Putin's presidency will be confirmed by the March 26 vote. Assured of 
majority support in the Duma, President Putin, as agent of Mr. Yeltsin's 
clan, will then be in a position to assume virtually unlimited governmental 

The obvious shadow over his election is the threat of high casualties in 
Chechnya in the next 11 weeks, with lack of progress toward ending the war. 
That could destroy his popularity.

There is another obstacle to the success of this coup. Whatever their current 
bemusement, Russians have been politically aroused by a decade of democracy. 
This has had less to do with their constitution, which is imperfect, or with 
the political practice of the last few years, which has been scandalous, than 
with their liberation to think and say what they want.

The habit of democracy has been installed. The coup has yet to be ratified. 
Mr. Putin's presidential campaign, which has begun, and the propaganda and 
pressures of media controlled by Mr. Yeltsin's entourage and allied private 
oligarchs, might eventually be ignored.

The public has three months to rebel against manipulation. If it does not, we 
all, the West included, will have taken a step toward the past.


The Electronic Telegraph (UK)
10 January 2000
[for personal use only]
Chechen setbacks put Putin election hopes in jeopardy
By Marcus Warren in Moscow

THE rush of setbacks in the North Caucasus is beginning to erode the 
authority of Vladimir Putin, Russia's acting president, in the very area 
where he commands most respect, his handling of Chechnya, and threatens his 
campaign to be elected president on March 26.

The Russian military was reported last night to be regrouping around the 
Chechen capital in what could be the build-up to a bombardment and ground 
offensive even more devastating than those of the past few weeks.

Moscow also claimed to have surrounded the mountain stronghold of Vedeno. But 
any Russian progress in the snows of the Caucasus was more than offset by 
their growing disarray in and around Grozny.

With his credibility already at stake little more than a week after 
succeeding Boris Yeltsin, Mr Putin sought at the weekend to play down 
increasing signs of chaos in his military command. The transfer of Russia's 
two best known generals, commanders of the western and eastern groups of 
forces in Chechnya, was "a technical matter" and they would not be "thrown 
out", Mr Putin said on Saturday.

He also claimed that the suspension of the attack on Grozny, announced by one 
of the two generals, was a truce to mark the Orthodox Christmas and the end 
of Ramadan. Both explanations were as unconvincing as previous claims that 
the advance on Grozny had been halted because of chemical attacks by rebels 
and the threat to civilian lives.

Russia launched its operation to seize the Chechen capital a fortnight ago 
after weeks of bombing and artillery fire. So far the army has little to show 
for its work. One option for the generals is to intensify the assault on 
Grozny still further, using even heavier weapons and committing more ground 
troops and armour.

So far most of the street fighting has been left to lightly armed Interior 
Ministry troops, with the regular army providing support only with tanks and 
artillery. That division of labour may be about to change.

If the Russian military decide to deploy even more fearsome weapons, they 
have at their disposal fuel air explosives which spray an inflammable gas 
over a large area and then ignite it. Such bombs have already been used in 
the Caucasus mountains.

The army could also deploy chemical weapons against the guerrillas - and the 
thousands of civilians still sheltering in the city's cellars.


The Guardian (UK)
10 January 2000
[for personal use only]
Russia's northern cities die as people leave 
With no more communist state perks for those living in harsh regions, workers 
are streaming away in search of jobs and warm weather
By Owen Bowcott 

A gargantuan Soviet monument to the unknown soldier dominates the terraces of 
high-rise flats above the dockyards in Murmansk at the head of the Kola fiord 
- but his descendants have begun deserting Russia's frozen, far north. 

The largest city within the Arctic circle is emptying. The collapse of the 
communist command economy is dispersing the population south to warmer 
housing estates and better job opportunities. Some residents are slipping 
across the border into Scandinavia. 

Founded in 1915, Murmansk is Russia's only year-round, ice-free port on the 
Barents sea. It survived Hitler's panzer divisions in the second world war 
and by the time Mikhail Gorbachev became the Soviet president in 1988 it was 
home to more than 500,000 people. 

They were drawn in by the higher wages, longer holidays and lower pensionable 
age, granted for working in harsh conditions. 

Since the fall of the Berlin wall in 1989, 100,000 people have gone, 
discouraged by the end of the privileges and the breakdown of municipal 
central heating systems. 

Emigration, plus with spiralling rates of alcoholism, a falling birthrate and 
shorter life expectancy, are driving down Russia's population. In 1990 it 
stood at 148m. By October it was 145.7m. 

With the nouveaux super-rich exporting their wealth to the safety of hard 
currency accounts in the west, there are few signs of investment for economic 
recovery in cities such as Murmansk. The private kiosks may be full of food 
but secondhand Volkswagens and Ford Sierras mingle with elderly Ladas, 
Trabants and Fiat Polskas on the roads. The average wage is only 1,000 
roubles (£23) a month. 

Prostitutes mill around near large hotels. The smell of incinerated oil hangs 
in the cold air. 

"People used to receive all sorts of special benefits for working here," 
explains Otto Mamelund, Norway's consul-general, who deals with the rapid 
rise in visa applications. "In the past, people came to the Arctic for 10 or 
15 years for the extra cash. Many of them are going now. Most consider 
themselves to be from somewhere else in Russia." 

The trend is pronounced across Russia's north-west. The region's second city, 
Archangel, has seen its population bleed away to below 400,000. "After 
perestroika this place began to die," said one discouraged official. "Moscow 
is a separate country." In nearby Severodvinsk, where the Soviet Union built 
most of its nuclear submarines, the number of inhabitants has dropped from 
270,000 in 1990 to an estimated 200,000 this year. 

Archangel was built on the principle of state intervention. Peter the Great 
decreed it should be a naval base. The canals linking the city to St 
Petersburg in the south were built by slave labour in Stalin's days. Memories 
of state oppression linger. A tower block looms over the surrounding 
buildings and a local joke asks: What is the tallest building in Archangel? 
The three-storey courthouse, the answer goes - because from there you get to 
see Siberia. 

While most Russians head south, to Moscow or villages in central Russia warm 
enough for them to augment low wages with freshly grown food, many seek work 
in the west. Ten years ago the border between the Norwegian town of Kirkenes 
and Russia was a cold-war frontier where Nato faced the might of the Soviet 
Union across a sterile military zone. This year 100,000 people are expected 
to cross. 

The prosperity of Norway, the world's second largest exporter of oil after 
Saudi Arabia, gleams like a welcoming beacon for those trapped in a bankrupt 
Russia. Local Norwegian women, traditionally less enamoured than their 
menfolk with the rigours of Arctic life, with its six weeks of total darkness 
every winter, have been leaving for Oslo. Russian women have provided 
replacements, boosting the number of mixed nationality marriages in Finnmark, 
Norway's most northerly province. 

But the opening of the border has prompted Norway to step up customs 
inspections and military patrols to counter illegal immigration, alcohol 
smuggling and prostitution. 

"Prisoners in Norway are paid a small, weekly allowance," explains one 
Norwegian official. "That sum is double the industrial wage paid in Russia. 
People are coming across the border and if they get caught committing a crime 
they know they will be jailed somewhere safe and warm - and get paid for it. 
It's a great deal." 


Washington Post
9 January 2000
[for personal use only]
The Strange Case of Russia, Big Oil and the CIA
By David Ignatius

The Export-Import Bank's decisions normally attract about as much attention 
as meetings of the Federal Maritime Commission. But the peculiar chain of 
events surrounding the Ex-Im Bank's deliberations last month on a $500 
million loan guarantee for a Russian oil company has created a buzz in 

It's a complicated story of lobbying and bureaucratic infighting, but I'm 
devoting a second column to it because it raises an important question: Did 
the Clinton administration and the Central Intelligence Agency overstep their 
bounds by helping a big Western oil company that was locked in a bitter 
commercial dispute with the Russian loan applicant?

Here's a brief summary of what happened: A month ago, the Ex-Im Bank was 
nearing a final decision on its loan guarantee to Tyumen Oil Co. After months 
of study, the bank's directors had concluded that the loan met the bank's 
normal test of creditworthiness. But they were facing an unusual pressure 
campaign to reject the loan, led by BP Amoco, which was battling Tyumen for 
control of a Russian oil field known as Chernogorneft. 

BP believed Tyumen had used improper tactics to acquire Chernogorneft at a 
bankruptcy auction for $180 million, even though it was potentially worth far 
more, and BP had an ownership claim of its own. BP hoped that Ex-Im rejection 
of the loan would give it bargaining leverage against Tyumen. Joining BP in 
its lobbying campaign was global financier George Soros, who had also 
invested in the oil field, and the powerhouse lobbying firm, Patton Boggs. 

Through the fall, pressure had mounted on Ex-Im Bank Chairman James Harmon, 
including a proposal to tighten congressional oversight, a warning that 
congressional committees would investigate his conduct and leaks to 
newspapers of damaging information about him. I wrote about Harmon's 
courageous stand to defend Ex-Im's independence in an earlier column. 

What made the private lobbying campaign unusual was that it was accompanied 
by heavy pressure from the administration to reject or delay the loan. Stung 
by criticism that it hadn't done enough to fight Russian corruption, the 
administration apparently had decided to draw a firm line with Tyumen. It 
wanted to send a message that if a Russian company tried to cheat Western 
investors like BP and Soros, it would pay a severe price.

Helping coordinate the administration's efforts to persuade Ex-Im to reject 
the loan was the National Security Council's top Russia specialist, Carlos 
Pascual. As it happened, he had worked closely in the past with BP's man in 
Moscow, Peter Charow. The two had become acquainted during the mid-1990s, 
when Charow was head of the American Chamber of Commerce in Russia. And 
Charow and Pascual had both been involved in deliberations of the 
Gore-Chernomyrdin Commission, the top-level clearinghouse for 
Russian-American contacts.

Pascual said that he met with Charow four or five times after he joined BP 
about two years ago, and that he attended a meeting Charow had with NSC and 
Gore staffers on Sept. 22 to discuss the Tyumen matter. But Pascual says the 
prior relationship with Charow "didn't affect our judgment about the Tyumen 
matter in any way." 

"This decision was based on the merits and the facts. The NSC's 
recommendation to the secretary of state to stop the loan was mine alone," 
said national security adviser Sandy Berger in an interview Friday. 

As Ex-Im neared a decision, the NSC asked the CIA to analyze information 
about Tyumen and make it available to the bank's directors and other 
concerned agencies. That's standard procedure--Ex-Im, too, was asking for CIA 
help--and the agency provided several analytical reports and some raw 

In mid-December the CIA delivered one piece of raw intelligence that had 
special impact on Ex-Im directors. It was a 29-page investigative report on 
Tyumen, classified "Secret." 

Despite the classification, it actually was a private document. A CIA cover 
letter said it had been "commissioned by an international oil company, and 
produced by a Russian security firm that employs former members of the 
Russian security service," according to CIA spokesman Bill Harlow. Most 
sections of the report dealt with ordinary corporate issues, such as 
"management," "shareholders" and "general structure." But 2 1/2 pages were 
labeled "criminal situation" and included some detailed allegations about 
Tyumen management. 

The document had been commissioned by BP, according to an informed source 
outside the U.S. government. But that information was not conveyed to anyone 
at Ex-Im, despite the bank directors' requests to know the origins of the 
report so they could evaluate its spin.

The CIA won't discuss who might have commissioned the report. But a senior 
intelligence official said: "The agency's source was not an international oil 
company, nor was the agency in any way induced to pass this along by an 
international oil company. We didn't identify the company that commissioned 
the report because we didn't want to compromise the individual who gave it to 

But was it kosher for the CIA to pass along a private report by one party in 
a dispute, stamp it "Secret" and distribute it? The senior intelligence 
official said the CIA's action was "appropriate" and "not all that unusual in 
how we support senior intelligence customers." He added that CIA analysts 
later gave Ex-Im officials a briefing on Dec. 14 in which "we gave them our 
take on the Tyumen report," which was that it tracked other information the 
agency had gathered.

The lobbying campaign against the Tyumen loan worked. Although Ex-Im stood 
its ground, the State Department intervened Dec. 21 and ordered that the loan 
be halted on "national interest" grounds. Tyumen a day later caved to BP's 
pressure and negotiated a settlement that will give the British oil company a 
10 percent share of the Chernogorneft field. 

The outcome was probably good for Russia, and it sent the right signal about 
U.S. opposition to unethical business practices there. But in sending a 
message to Moscow about corruption, we may have corrupted our own policy 


From: "stanislav menshikov" <>
Subject: Fw: Re Yevgenii Gil'bo in JRL #4018 
Date: Sun, 9 Jan 2000 

Could Mr. Gil'bo explain how he comes up with his estimate that the
equilibrium exchange rate is 37-38 roubles per dollar? In view of the 
massive import substitution in Russia one would rather suspect that the
rouble at its current rate of 27.4 per dollar is rather undervalued then


From: (Jim Hecht)
Date: Sun, 9 Jan 2000
Subject: Energy Savings in Russia

Huge Cost Savings Can Be Made in Factories by Saving Energy

Those who wish well for the Russian people can only hope that it will not
be long before government policies are such that the price of oil and gas
in Russia will be the same as world prices. This would provide the
economic incentive to stop wasting energy in industrial plants. The result
would be that Russian energy exports could be increased by at least $5
billion a year, probably considerably more, for investments that would have
payoff times between one month and a year -- including engineering costs.

However, to save large amounts of energy without spending much money
requires a high level of technical expertise. While there are many
engineers in Russia with the potential to learn how to do such work, there
are very few, if any, world-class energy-management specialists at present.
That is because until a few years ago there was no incentive to save
energy because energy prices in the Soviet Union, and then Russia, were
only a fraction of world prices. Since then energy prices have remained
well below world prices, so there still is only a limited incentive to save.

Almost all Russian factories can probably save at least 30 percent of the
energy now being used at a cost that will have a payoff time of less than a
year if energy is valued at world prices; in many industrial plants the
savings will be 50 percent or more. I can be of assistance to those
wishing to take advantage of this opportunity in two ways. 

First, several years ago I was able to get my former employer, the DuPont
Company, to give permission to use a proprietary energy management manual
in the former Soviet Union. Then, with financial support from a private
foundation and assistance from a university program funded by USAID, a
Russian edition of the manual was produced. This 223-page Russian edition
can be obtained by contacting Dmitri Molodtsov at ENCO in Nizhny Novgorod.
Telephone: 7-8312-32-75-21
Fax: 7-8312-32-75-33

This manual is written so that it can be used by anyone with training in
engineering and is priced to recover printing and distribution costs only.

While this manual can be very helpful in saving energy at low cost, the
manual will not be as effective as having a world-class specialist study
the plant. Thus, in the case of factories where energy use is millions of
dollars a year, the use of one or more skilled specialists can mean savings
of a million dollars a year or more. Depending on work loads, Mr.
Molodtsov at ENCO may be able to supply a consultant who has been trained
by a retired DuPont Company specialist. Alternatively, (and this is the
second way I can be helpful) I can probably get a retired DuPont specialist
to do an energy audit for part of the plant, make recommendations, and at
the same time train one or more engineers at the plant in energy management
techniques so that they can continue the work. However, this will require,
at the least, paying expenses for the retired DuPont expert.

>From the above, it should be obvious that there is a good business
opportunity for energy-management consulting firms in Russia and other
parts of the former Soviet Union. The DuPont Company, having developed
technical expertise by improving energy efficiency in its 140 plants
throughout the world, operated such a consultancy from 1975 until it was no
longer needed in the West about 12 years later. About 80 Fortune 500
companies used DuPont's energy consulting services. For DuPont it was a
very profitable business since clients did not balk at paying high fees
since these still amounted to only 1 to 6 percent of the value of the
energy saved in one year.

The relationship between technology and energy savings can be demonstrated
by considering steam traps. A steam trap is a device which separates water
from steam, thereby making the steam much more effective in heating. A
well-designed, properly maintained steam trap will save enough energy that
its installed cost will be paid for in 3-4 months. Yet there are probably
less of these in all of Russia than in some American factories. This
stems, in part, because there has been bad experience in Russia because of
design flaws or lack of maintenance. In order to realize the economic
benefits of using steam traps, a good deal of technological know-how must
be applied.

I shall be glad to answer any questions arising from this communication. I
can be reached by telephone at 303-777-1699. My e-mail address is
James L. Hecht
Denver, Colorado, USA


Program on New Approaches to Russian Security (PONARS)
Harvard University
Memo No. 101
PONARS, 2000
Foreign Policy Under Putin: Pro-Western Pragmatism Might Be a Greater 
Challenge to the West
By Nikolai Sokov
Monterey Institute of International Studies

As Russia prepares for early presidential elections, the foreign policy 
strategy of the most likely winner--acting President Vladimir Putin--is the 
subject of much speculation. Will he be pro- or anti-Western? Will Chechnya 
define his course or is it just a bump on the road? There are precious few 
solid indications of what his policy might be, but this need not impede 
prediction, especially when prediction is needed. 

Considering the upcoming US presidential elections and the general shape of 
domestic politics in the United States--including with respect to Russia--the 
West seems in for a rough ride. Relations will diverge from the old pattern 
in which Russia alternated between seeking acceptance at almost any price and 
strong, emotionally charged hostility. Instead, Putin is likely to maneuver 
Russia into a position where the West will have to choose between admitting 
Russia into the Western community of nations "as is" or isolating it, and 
paying the price. The central challenge rests with the words "as is." Some of 
Putin's policies will be seen by the West as positive, others as negative, 
but he will refuse to change the latter, and the West will have to decide 
which component is more important. 
Policy Under Putin

One should not make the mistake of categorizing Putin as an anti-Western 
politician. In economic matters, he will pursue market reforms very similar 
to those advocated by the West. Russia will closely follow the 
recommendations of the IMF in structural reforms, limited only by the 
domestic costs (i.e., Russia will stop short of measures that might cause 
violent social upheaval). There will be more law and order in Russia; shady 
deals, black market and mafia activity will be severely prosecuted; capital 
flight will be curtailed; oligarchs will be made to behave themselves, and so 
on. Economic growth remains a definite possibility and the investment climate 
is likely to improve. Of course, these will come at the expense of some 
authoritarian measures, which the West will not like. 

Putin will be in favor of integration with the West. The active phase of the 
war in Chechnya will be over soon (or so he hopes), and it will be possible 
to revive the relationship with NATO and the nuclear arms control dialogue 
with Washington. Above all, Putin will try to patch up Russia's relationship 
with the European Union and the OSCE. (This is likely to happen soon after 
Kurt Vollebaek steps down as OSCE Chairman: he acquired a bad reputation in 
Russia during the war in Yugoslavia last spring, which partly explains the 
fiasco of his involvement in Chechnya.) There is a catch, however: the 
defense budget will remain relatively high and Russia will not be too 
forthcoming on arms control and other international issues.

The first challenge will probably be over IMF funding. It is almost certain 
that Russia will continue to pursue policies recommended by the IMF with or 
without debt relief. But, as Russia's finance minister Mikhail Kasyanov 
recently admitted, without debt relief Russia will eventually be unable to 
make its payments and will face default. The trick here is that Putin will do 
everything in his power to make Russia qualify for relief on economic 
grounds. As a result, the West will have to choose between
giving the money even though it does not like Russia's policy (there will 
certainly be something that the West will not like); or 
refusing, thereby explicitly politicizing the IMF. 

Should the US choose the first course, it will mean the end of IMF assistance 
as a political tool (as it has been used during the Clinton administration to 
support the Yeltsin elite). With IMF support, the Russian economy will 
develop faster and under more favorable conditions. Eventually it will be 
integrated into the global economy, but in the meantime any US government 
that makes such a choice will be subject to very severe criticism for 
"rewarding" a "wrong" Russian policy. Paying this domestic price will not be 

If debt relief is not granted--which seems quite probable given the recent 
debate around Chechnya--then default will be very likely. The discussion of 
this option in the United States is striking for its concentration on 
Russia's losses. Russia's losses are, after all, Russians' business. Western 
experts should instead concentrate on Western stakes and interests. 

Western Stakes 

The IMF and Market Reform 

First, the West will have to cope with the tarnished reputation of the IMF 
and other international financial institutions. Every country will know that 
there is more than economic stabilization behind IMF conditions. Almost any 
government seeking IMF credits will be made vulnerable on the domestic front, 
and the most powerful vehicle for promotion of market values might be 

Second, Putin's policy will ensure that default is forced onto Russia despite 
its best effort to comply with all reasonable demands of the IMF. Russia will 
then appear to be unjustly persecuted, which is politically preferable to the 
unilateral default that many in Russia advocate these days.

After that, Russia's "broad menu" of choices can be summarized by a phrase 
from Disney's The Lion King: "When the world turns its back to you, you turn 
your back to the world." Facing isolation and confiscation of its assets 
abroad, Russia will have precious little reason to comply with various rules, 
norms, and regimes. At the extreme, it might even break out of export control 
regimes, though that degree of irresponsibility seems unlikely under Putin, 
who seems cautious enough.

Of course, these choices will be carefully explained to Western 
decision-makers well in advance. As a result, the burden of painful domestic 
tradeoffs will be shifted to the West. In the 1990s, Yeltsin had to confront 
domestic opposition in order to conduct sensible foreign policy; now an 
attempt will be made to turn the tables.

Arms Control 

If the IMF "trap" is successfully avoided or postponed, the next showdown 
might be over the ABM Treaty and American plans to deploy a national missile 
defense (NMD) system. Without doubt, Russia will continue negotiations, but 
will not agree to just any deal, contrary to the expectations of many in this 
country. The burden of choosing between compromise and withdrawal from the 
ABM Treaty will fall to the United States. 

One should clearly understand that Russia does not like NMD as a matter of 
principle--not as a threat to its nuclear deterrence. It will take ten years 
or probably even longer for the US to create an NMD system capable of erasing 
Russia's second-strike capability. At worst, Russia will only need to 
continue reliance on strike-on-warning (still a rather dangerous proposition 
given the deteriorating early warning system), but Russians hope that 
economic conditions improve, enabling it to conduct necessary qualitative 

So arms control agreements might collapse, but this will be a consequence of 
an American decision, and the US will shoulder the responsibility of facing 
non-nuclear states angered by the failure of the nuclear powers to comply 
with Article VI of the Nonproliferation Treaty.

The greatest cost will be China, though. It will be difficult to prove that 
the first phase of the NMD is intended solely against North Korea, especially 
in light of the possible decision to expand that phase from 20 to 100 
interceptors: enough to take care of all Chinese missiles capable of reaching 
the United States. Given the slow but steadily worsening standoff around 
Taiwan, China is likely to become suspicious and embark on modernization and 
buildup of offensive nuclear forces.

Putin will have nothing to do with the expected five-fold expansion of the 
first phase of the NMD. It will be a US decision, just as the possible 
decision to deploy a tactical missile defense system in Taiwan and/or Japan 
will also be a purely American one. It is tempting to say that domestic 
politics in the United States will do all the work for Mr. Putin.

The current US NMD policy can be cost-free only in one case: if Russia agrees 
to alter the ABM Treaty. Putin, however, will simply not be in a position to 
pay the domestic costs if the West has already turned its back on Russia, 
which is why he will not be shy about shifting the cost to American soil. 
There are probably compromises that he can "buy" (although no Russian 
official will admit that publicly), but the United States does not seem 
prepared to entertain them.

Furthermore, Putin will be extra careful to avoid alienating China. At the 
talks with the United States over the NMD system, Russia is negotiating de 
facto on behalf of China as well as itself. As seen from inside Russia, the 
last decade demonstrated that it does not pay to do the bidding of the West, 
which only pockets the concessions and demands more. Can the United States 
offer Russia a compromise on NMD and related issues worth abandoning China? 
Hardly, if only because opposition within the United States to such a deal 
would be enormous. 

Russia will also continue to attempt to ease traditional Chinese-Indian 
hostility. The triangular relationship proposed by Primakov will not be 
forgotten by a Putin government. This will not be an alliance, of course, but 
rather an arrangement for mutual economic, political, and moral relief. The 
main value of this relationship for Russia is some guarantee against complete 
isolation. It is advisable to recall Foreign Minister Ivanov's statement 
after a Russian resolution on Yugoslavia last spring was supported only by 
China and India: he declared that half the world's population supported that 


A pragmatic, cool-headed policy oriented toward Russia's interests (including 
Russia's interest in a robust market economy) will present a far greater 
challenge to the West than Yeltsin's emotional oscillations between 
friendship and confrontation. Putin will most likely seek the former but will 
not shy away from the latter. Most important, he will position Russia in such 
a way that it does not bear the blame for confrontation, or its consequences. 
The burden of choice will be on the West. While, in the end, the West may 
obtain what it wants from Russia, the interim could be painful and costly. To 
paraphrase a Russian saying, love us "as imperfect--when you're perfect, 
everyone loves you anyway." 


Novaya gazeta
27 December 1999
[translation for personal use only]
Turover's List. File on Corrupt Russians Revealed
By Oleg Lurye 

A young businessman, representing a number of Switzerland's largest banking
structures, worked in Moscow in 1994-1998. His name was Felipe Turover and
he worked directly with the highest echelons of Russian power, and more
specifically with the Kremlin, the White House, and Moscow City Hall,
providing them with considerable services as regards both the personal
enrichment of functionaries and diverse commercial projects in the state
and the capital. At that time Felipe Turover was not yet the main witness
in the main case involving Russian corruption and known as the Mabetex
case and did not have any contacts with [Swiss Prosecutor] Carla del
Ponte. Beginning in 1995, he took part in many of the Russian Government's
major deals or was at least closely involved in them. But Felipe also had
a staggering habit at that time. Mr. Turover meticulously copied each
document that he received, each contract or secret government decree, and
tucked it away in a file which he locked up in a safe. He had already
accumulated about 50 such files by mid-1998. They contained very many
unsightly stories which Russian functionaries wished they could bury.
Preferably together with the extremely smart Turover. But Felipe, realizing
that he might have been rather too diligent in collecting documentary
evidence, started delivering warning strikes. Thus, the scandalous case
about corruption in the Kremlin, known as the Mabetex case, and everything
associated with it (the extremely strange refurbishment of the Kremlin and
other facilities, bank accounts in Switzerland, the credit cards of the
president's daughter, and so on) surfaced at the time when Turover
described the contents of one of his files file No. 3, titled
"Administration of Affairs" and showed it to Carla del Ponte and
[suspended Russian General Prosecutor] Yuriy Skuratov. 

This, incidentally, is what former General Prosecutor Yuriy Skuratov said
when I reminded him of Felipe Turover's archive and the Kremlin case file
in particular: "Turover is a great archivist. He gathered some very
serious documents and filed them in the greatest detail. His archive is
something unique...." 

Knowing that Felipe Turover is now in Switzerland and is afraid of
appearing in Russia in case of a "probable assassination attempt right at
the airport" (quoting from an interview with Turover), I determined that
Felipe was able to take out only a small quantity of documents when he
disappeared from Moscow. Quite naturally, I wanted to know: Where is the
bulk of Turover's archive? Who now holds the fullest possible information
about the highest-level wheeling-dealings and intrigues in the last four
years? After all, the Mabetex case documents -- according to the opinion
of experts and of Turover himself - are the most inoffensive from his

And so, a few months ago I started looking for Turover's archive files.
Felipe himself refused outright to tell me where they were, saying: "I
cannot tell you where this material is because it is like an atom bomb,
some very high-ranking people are too deeply implicated. You cannot
possibly imagine the people and the stories to be found in these files." 

But a little while later I did manage to find some traces of the archive
and establish some amazing details. 

So, who holds now Felipe Turover's unique archive? The selfsame archive
that contains a huge volume of documents about corruption at the highest
echelons of power and is allegedly the cherished dream of the Russian
General Prosecutor's Office, which is simply dying to put all
wheeler-dealers in the authorities behind bars. And all of a sudden the
improbable has proved to be true: Apparently all documents from Felipe
Turover's archive have been at...the General Prosecutor's Office since

We have before us the act on the seizure of documents from citizen F.
Turover-Chudinov by the General Prosecutor's Office. We read therein: "As a
result of a review of the documents surrendered (by F. Turover) it was
determined that they are:...", followed by a list of 49 files. The files
contained a total of 4,919 archive documents dating back to 1992-1998. 

Having studied the titles of the documents, handwritten by the General
Prosecutor's Office investigator who seized them, I was convinced that I
was looking at a list of the selfsame "Archive of Russian Corruption" of
which both Skuratov and Turover himself had spoken. And this archive
contains the very documents whose publication is feared by very many
high-ranking functionaries. Both past and present. 

Turover's List [subhead] 

Having received the list of the files and other documents which, as the act
of seizure confirms, are now in the hands of the Russian General
Prosecutor's Office, I telephoned Felipe Turover who now lives in
Switzerland, told him that I have the act and the list of documents, and
asked him for his comments. 

[Turover] How on earth did you get hold of a document which should not have
fallen into your hands under any circumstances? That act was signed in two
copies, one of which is with me and the other with the General
Prosecutor's Office! If you intend to write anything about it, I would ask
you to mention without fail that I did not pass it to you.... 

[Lurye] Of course you did not. My sources are the secret of journalistic
investigation. What is important is the fact that we have confirmed that
your archive is with the Russian Prosecutor's Office. 

[Turover] Yes, you have confirmed this.... But do you realize that, if they
believe that it was I who handed you this list, they will deal with me
even here.... In Switzerland.... 

[Lurye] Who are "they?" 

[Turover] The ones who seized my archive.... [Turover ends] 

Having determined that we really did have some of the documents, Felipe
Turover agreed to comment on the list. And so as not to overwhelm readers
with a vast quantity of factual material, we selected some of the most
interesting items from the 49 listed in the "Act on the Seizure of
Documents" and provide their former owner's comments. 

"File No. 1. Correspondence With Mariy Machine Building Plant, 29 items,"
"File No. 15. Antey, 31 items," and "File No. 27. Mariy El Documents, 243

[Turover] These files contained official documents confirming that Mariy
Machine Building Plant manufactured S-300V missiles and sold them abroad.
This was actually diligently concealed from the public at large. So far I
am unable to name the countries where the S-300V antiaircraft missile
systems were sold, because that would create an international scandal. I
would only say that sales had been planned to India, South Korea, Egypt,
Syria, Ecuador, and Greece. According to the documents, Mariy El
Administration head Kislitsyn was directly involved in the sale. Urinson,
who was vice premier at the time, was aware of everything. Chernomyrdin
also knew about it, as did someone higher than Viktor Stepanovich. 

"File No. 2. Correspondence With Moscow City Hall, 37 item," "File No. 4.
Correspondence With Moscow City Hall (documents relating to Vizit Joint
Venture), 73 items," "File No. 24. Vizit Joint Venture Documents, 138

[Turover] This story involves Luzhkov and his immediate entourage. During
the 1994-1995 privatization period, people from Yuriy Mikhaylovich's
entourage set their eyes on a luxurious complex on Rublevka which was
owned by the former Moscow City CPSU [Communist Party of the Soviet Union]
Committee, as well as an hotel which was also owned by the city party
committee. They were privatized to some mysterious joint venture called
Vizit. Briefly speaking, they were taken away from state ownership. This
is ordinary cheating. The Moscow [city] government conjured up dozens and
hundreds of similar tricks at that time. This example from my archive is
also interesting because, in this case, the City Hall grabbed party
property. It was owned by the CPSU city committee and ended up being owned
by top-level Moscow functionaries. 

"File No. 12. Government Decrees and Directives, 134 items," "File No. 33.
Government Directives and Other Secret Documents, 164 items." 

[Turover] These files of mine contained unique secret government decrees
from the Viktor Chernomyrdin era. About 300 in total. I can name some of
the most impressive ones. For example, there was a particularly secret
decree listing medicines and drugs subject to quotas as regards their
importation and onward transit through Russia. One of the points in this
decree listed "cocaine," and the quota allowed for a large quantity of
this drug. The point is that cocaine in itself is an end product and is
intended only for drug addicts and has no other medical use. All countries
in the world use only one route for cocaine -- into the furnace, to be
destroyed. In our country, however, Chernomyrdin allowed its importation
and onward transit. Another secret decree is also interesting, granting a
quota to Sibneft, or rather to Berezovskiy and Abramovich, to export 3
million tonnes of oil without paying any excise duty. The net profit from
that quota amounted to about $30 million. Sibneft was allegedly due to use
the money it earned to experiment with indexation of deposits lost by
citizens in 1992. Of course, there was no indexation of anything for
anyone by anybody. They simply allowed BAB [Berezovskiy] and Abramovich to
steal $30 million. There were also decrees on Aeroflot. This is probably
what Investigator Volkov is seeking. He will be seeking it for a long
time. Yet it is quietly gathering dust in the general Prosecutor's Office. 

"File No. 3. Correspondence With the Russian President's Administration of
Affairs, 24 items," "File No. 39. Gottardo Club, 151 items," File No. 41.
Financial Documents No. 3, 365 items." 

[Turover] These contained all the documents on the Mabetex case, which were
used by Yuriy Skuratov and Carla del Ponte to institute criminal
proceedings in Russia and Switzerland. The existence of my documents also
confirms that the Russian General Prosecutor's Office has at its disposal
enough evidence to arrest some of the people involved in the case in
Russia. They should not be claiming that they apparently need something
else from the Swiss prosecutors. Russia has a complete set of documents
confirming the culpability of some figures -- contracts, deeds, money
transfers, and so on.... That selfsame archive also contains a full set of
documents about the scandal with the Swiss firm Noga. Do you remember when
hundreds of millions of Russian dollars were frozen abroad? I had far more
documents on Noga than I did on Mabetex, and the sums "channeled" there
were much larger. But the case is at a standstill in the general
Prosecutor's Office. 

[Lurye] Can you name the high-ranking Russians implicated in corruption
whose names feature in your archive which is at the General Prosecutor's

[Turover] Chernomyrdin, Stepashin, Shokhin, Luzhkov, Abramovich, Shantsev,
Fedorov, Orekhov, Golovatyy, Berezovskiy, Ilyushenko, Silayev, Yaroshenko,
Kislitsyn, Bychkov, Urinson, Gerashchenko, and many others. 

[Lurye] Putin? 

[Turover] Volodya Putin is a separate long story. I have run up against
him, but that is not the point. The point is that for the eight months of
his work at the President's Administration of Affairs in 1996-1997 Putin
was responsible for Soviet property abroad. Let me explain. In addition to
debts, Russia also inherited from the former USSR property abroad worth
many billions, including property that belonged to the CPSU. Various
organizations laid claim to it in 1995-1996 -- the Foreign Ministry, the
Ministry of the Maritime Fleet, and many others. But in late 1996 Yeltsin
issued an edict ordering that all USSR and CPSU property abroad be
transferred not to the Ministry for the Management of State Property but
for some reason to the President's Administration of Affairs. And Mr.
Putin immediately got his paws on it. On orders from above, of course. When
he embarked on the so-called classification of former USSR and CPSU
property abroad in 1997, all sorts of front companies, joint-stock
companies, and limited companies were immediately set up. Much of the most
expensive property and other assets abroad was registered in the name of
these structures. Thus property abroad was very thoroughly plucked before
the state got its hands on it. And it was the current premier who did the
plucking. He gained his first experience of theft during his time in
Germany. Back then Putin, together with Shokhin and Poltoranin, contrived
to "steal" the huge building of the Russian cultural center in Germany.
They leased it out for a purely symbolic sum for 50 years to a German firm
with a tiny incorporation capital. Of course, this firm immediately sublet
the building, but for very substantial sums at normal German prices. Where
did the difference end up? I think there is no need to explain. 

[Lurye] Was this information about Putin also in your archive that is now
in the hands of the General Prosecutor's Office? 

[Turover] For the present I am not going to answer that question. I think
both you and I want to live a while longer on this earth. [Turover ends] 

Afterword Concerning the Current Situation [subhead] 

There is little that will now surprise "dear" Russians, who have seen a
thing or two. The credit cards of the president's daughters, top
officials' accounts in Switzerland and the United States, refurbishment of
the Kremlin with a 200% markup, the export of gold and diamonds with
ministers' blessing, stolen IMF loans, the predatory privatization of
major state companies. We have seen all this before and have now forgiven
many of the protagonists and have even elected some of them to the State
Duma. Our people are like that. Kind-hearted. But I find it rather hard to
believe that the kind uncles from the General Prosecutor's Office attached
no importance to a unique archive of Russian corruption almost 5,000 pages
long. Perhaps there was some sort of ulterior motive? Maybe they decided
to blackmail someone? Scarcely. Probably the General Prosecutor's Office
bigwigs simply suffered a case of total memory loss, a bout of deja vu [as
published]. They forgot all about the documents they had confiscated. In
general they are a forgetful bunch. Acting General Prosecutor Ustinov and
Chief Military Prosecutor Demin "suddenly" forgot about their luxury
apartments on Tverskaya Street, each worth $500,000. And the General
Prosecutor's Office investigators handling the Mabetex case forgot to
invite Tatyana Dyachenko in for questioning so she could explain the
origin of the credit cards. This forgetfulness is very convenient,
especially in the present situation, when many figures whose names are
mentioned in Turover's documents have become State Duma deputies. 


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