January 11, 2000    
This Date's Issues: 4025 4026 4027

Johnson's Russia List
#4027
11 January 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Bloomberg: Russian Ruble Falls to Low, May Weaken Ahead of Vote.
2. The Guardian (UK): Ian Traynor, Moscow media turning against Putin's war. Battle for Chechnya: The truth now emerging about military setbacks threatens the Kremlin's new leader.
3. RFE/RL: Andrew Tully, Putin Confounds Western Experts.
4. The Moscow Tribune: Stanislav Menshikov, PUTIN'S ECONOMIC STRATEGY CONSIDERED. The Acting President Should Listen to Different Schools.
5. Philadelphia Inquirer: Lori Montgomery, Some see a scary side to Putin. The acting president is popular among Russians. But advocates for human rights are concerned. 
6. Itar-Tass: Israel's Sharansky Supports Russian Stance in Chechnya.
7. The Independent (UK): Luz Echeverri, Decline and fall of the Soviet empire. The past decade saw upheaval on a grand scale behind the former Iron Curtain. Anthony Suau was there to document it.
8. Moscow Times: Yulia Solovyova, 13 Turn Down Seats in Duma.
9. New book: Martin Nicholson, Towards a Russia of the Regions.
10. Nezavisimaya Gazeta: MIKHAIL DELYAGIN BEMOANS RUSSIA'S SORRY FINANCIAL PLIGHT.
11. Izvestia: Georgy Bovt, TIME TO KEEP THE PUNCH. Vladimir Putin's Move to the Kremlin Would Not Be Easy.]

*******

#1
Russian Ruble Falls to Low, May Weaken Ahead of Vote

Moscow, Jan. 11 (Bloomberg)
-- The Russian ruble fell to a record against the U.S. dollar and 
analysts expect it may weaken further as the government tries to pay foreign 
debts and back pensions and wages without new international loans. 

The ruble for delivery today fell 2.5 percent against the U.S. dollar to 
28.44 on the Moscow Interbank Currency Exchange after falling as low as 29 
rubles per dollar in early trading. Yesterday, it fell 2 percent to 27.98 
rubles per dollar. The ruble has declined 3.8 percent in the past month. 

Acting President Vladimir Putin, standing in after Boris Yeltsin quit Dec. 
31, has vowed to pay delayed wages and pensions before the March presidential 
election. Putin, whose popularity has soared on his handling of the war in 
Chechnya, has no economic track record and a pledge to cut interest rates 
also raises concern the central bank may print money to give cheap loans to 
industry. 

``He's got good intentions, but the way he's going about it may not be the 
right way,'' said Roland Nash, director of credit analysis at Renaissance 
Capital in Moscow. ``Some moves he's made are quite worrying.'' 

Russian central bank Chairman Viktor Gerashchenko said the ruble's decline is 
a ``temporary phenomenon,'' Russia's Interfax news agency reported. 

Russia owes about $3 billion in foreign debt payments in the first quarter, 
and the International Monetary Fund has delayed the release of additional 
loans for more than four months. The fund still is considering a $640 million 
loan installment, which first was expected last September. 

The central bank expanded the money supply by more than 34 billion rubles 
($1.2 billion) in December alone. That's about 11 percent of the total money 
supply as of Dec. 27. 

Ruble Controls 

The central bank probably will require exporters to sell 100 percent of their 
foreign currency earnings on Russian exchanges, up from 75 percent. Increased 
administrative controls over the ruble combined with printing more money 
caused banks and companies to begin selling rubles, Nash said. 

``The ruble will continue to depreciate until the presidential elections'' in 
March, Nash said. 

Increased administrative controls on currency trading are unlikely to win the 
support of the IMF and probably will further delay loans, analysts said. 

``If they say exporters have to repatriate 100 percent it will be 
disastrous,'' said Peter Westin, an economist at Moscow-based Russian 
European Centre for Economic Policy. Companies ``know how to evade those 
regulations and less export revenue will be repatriated. This is adding to 
problems with the IMF.'' 

The central bank raised reserve requirements for banks to try to stem the 
ruble's slide. Efforts to defend the ruble may eat away at the bank's gold 
and foreign currency reserves, analysts said. 

``There is concern that reserves are inadequate and we are in the situation 
where international financial organizations are delaying loans,'' said 
Westin. 

Central Bank Reserves 

The central bank's gold and foreign currency reserves fell $200 million to 
$12.5 billion in the week ending Dec. 31. 

Putin's moves threaten the progress Russia made last year in curbing 
inflation which was initially forecast to spiral out of control after the 
government's Treasury debt default in 1998 and decision to abandon its 
defense of the ruble. 

The annual inflation rate in 1999 was 36.5 percent compared with 84.4 percent 
in 1998, defying forecasts of 70 percent or more. 

The ruble has fallen 77.8 percent since the default. 

Russia boosted budget revenue last year through increased tax collection and 
by imposing an export duty on crude oil. 

The government raised the export duty on crude oil last month to 15 euros 
($15.43) per metric ton from 7.5 euros as it tries to boost revenue further. 

*******

#2
The Guardian (UK)
11 January 2000
[for personal use only]
Moscow media turning against Putin's war 
Battle for Chechnya: The truth now emerging about military setbacks threatens 
the Kremlin's new leader
Ian Traynor in Moscow 

After almost four months of uncritical support for Russia's war in the north 
Caucasus, part of the mainstream media in Moscow has begun to attack the 
Kremlin's handling of the Chechen conflict. 

Previously loyal newspapers are fracturing the consensus by starting to 
reveal bad news from the front line and lambasting the perceived ineptitude 
of political and military leaders. 

The launching of the Chechen war - and tight government news management of 
the campaign - have been central to the swift rise to power of Vladimir 
Putin, the prime minister and acting president, who hopes to be elected Boris 
Yeltsin's successor in March. 

But the sudden breakdown of the media consensus combined with the turn for 
the worse in what is clearly identified as Mr Putin's war could spell trouble 
for a leader who has staked his political prospects on this conflict. 

The state-controlled television station ORT continued yesterday to put the 
best possible gloss on Russian setbacks in Chechnya. But its main rival, NTV, 
Russia's biggest commercial channel, led its news bulletins with a steady 
diet of grim tidings from the war. 

"The situation in Chechnya has taken a sudden and unpleasant turn for the 
[Russian] federal forces," were the opening words on the NTV news last night. 
Unusually, the channel complained about army minders trying to control and 
mislead reporters. 

While state television reported Russian successes at Vedeno, in southern 
Chechnya, quoting the defence minister, Igor Sergeyev, as saying that all 
Chechen counterattacks had been rebuffed, NTV told a different story. 

"There is no doubt that the situation is very serious," its correspondent on 
the eastern front said, reporting well organised rebel attacks in half a 
dozen places. 

The Russian military said 300 Chechens attacked the Russians at Argun, east 
of the Chechen capital, Grozny. NTV put the number at 2,000. The military 
said 100 Chechens attacked Shali; NTV put the figure at 1,500, adding that 
the rebels were holed up in a school and had taken hostages. 

Izvestiya, a daily newspaper usually broadly supportive of Mr Putin and the 
war, yesterday devoted most of its front page to a devastating critique of 
military incompetence and failed government propaganda. 

"The extremely difficult position of the federal forces is causing the war's 
attractiveness to voters to recede gradually," the newspaper said. It 
dismissed Moscow's declared reasons for calling off its assault on Grozny at 
the weekend, attacked attempts to cover up casualty rates and forecast a 
long, costly campaign. 

"The course of the military operations in recent weeks has turned out so 
badly for the federal forces that there can no longer be any talk of the 
successful special operations in Chechnya," it said. 

An analyst on the inside pages questioned the government's strategy in 
Chechnya. "Theoretically it might be possible to have most of the Chechen 
territory under the tight control of the troops," the commentator said. "But 
who is going to control the population? It is already clear that a regime of 
occupation will not be effective." 

Newspapers firmly in the Putin camp remain grovellingly on-message, however, 
with the Nezavisimaya Gazeta, which is owned by one of the Kremlin's main 
associates, Boris Berezovsky, declaring the war marked an end to years of 
Russian "geo-political retreat" and saying now was the time to fight for 
further advances. 

Hostile coverage of the disastrous 1994-96 Chechnya war was highly damaging 
to the Kremlin. 

This week's TV pictures from Chechnya have proved more potent than any 
commentary. NTV this week screened disturbing film of Russians and Chechens 
swapping their dead in Grozny and an opposition Moscow TV station showed grim 
footage of Russian casualties in a Volgograd hospital. 

Last night's NTV news reported several rebel attacks on the Russians and then 
glumly concluded: "The federal forces couldn't succeed in suppressing them." 

*******

#3
Russia: Putin Confounds Western Experts
By Andrew F. Tully

When Boris Yeltsin handed over the Russian presidency to Vladimir Putin, he
handed the West the riddle: What next in the Kremlin? RFE/RL's Andrew F.
Tully listened to Washington's experts and found that for all their
speculating, they were at a loss. 

Washington, 10 January 2000 (RFE/RL) -- With his final act as president of
Russia on New Year's Eve, Boris Yeltsin not only stunned the world, but
also -- probably to his delight -- confounded Western experts.

Last week, two prestigious Washington think tanks held briefings on what to
expect from acting President Vladimir Putin, but none of the panelists
could do more than guess.

They all speculated at length, however, and if they agreed on anything, it
was that Putin is a pragmatist. This, they concluded, is good news for both
Russia and the West.

There was plenty of bad news, of course, particularly from the panel that
addressed the briefing last Wednesday (Jan. 5) at the Nixon Center, which
specializes in foreign affairs.

Paul Saunders, president of the Nixon Center, says that perhaps the most
troubling aspect of Putin's approach to governance is that he prefers a
strong presidency at the expense of a weaker parliament. Add to that 15
years in the KGB, Saunders says, and you have a man who is potentially very
dangerous at the head of a fledgling democracy.

But only one chapter in Putin's biography is enough for Saunders to condemn
him: the war in Chechnya.

"I think he appears to be quite ruthless. I think Chechnya demonstrates
that. I don't think that much more needs to be said about that."

On Thursday (Jan. 6), the Carnegie Endowment for International Peace held a
similar briefing. Thomas Graham, a senior associate at the think tank,
pointed to the essay that Putin posted on the Internet during the last week
of December. In it, the acting president advocated a "strong state" for
Russia.

Graham interprets this to mean that Putin wants to centralize power in
Moscow. In the past, he says, similar centralizations have followed periods
of drift and anarchy, and led to authoritarianism, increased government
control of the economy, and xenophobia.

Graham says Putin's view of centralization is frighteningly similar to
Russia's most recent past.

"Putin is advocating a paternalistic Russian state. He talks about a
Russian state that guides and directs society. And if you remember, that's
exactly what the Communist Party of the Soviet Union was supposed to do
during the Soviet period. And how you're going to square that with a state
that doesn't interfere with the economy is not clear to me."

Then there are the so-called "oligarchs" -- the men viewed as having a
stranglehold on the Russian economy and, by extension, the Russian
government. Some analysts say it is one thing for Putin to distance himself
from Yeltsin. But firing Yeltsin's daughter from her influential Kremlin
post, they say, is not enough.

Peter Rodman is director of the Nixon Center's National Security Programs.
He says Putin could be compromised by the political debts that he may owe
to Russian power brokers. They include Boris Berezovsky, the financier and
industrialist, and Anatoly Chubais, the utility magnate who brought Putin
to Moscow -- and to Yeltsin's attention -- in 1996.

"To the extent that Mr. Putin is really a pragmatist, I would agree that
there will be forces that will push him toward economic reform and trying
to encourage foreign investment. The question is: What will be his ability
to do this, given the relationships that he has with people like Boris
Berezovsky, with Anatoly Chubais, and others. These people are interested
in foreign investment that they control."

Michael McFaul of the Carnegie Endowment doubts that Putin would shrink
when confronted by such men as long as he continues to enjoy broad public
support on election day, March 26, because of his handling of the war in
Chechnya.

"I've always thought the balance of power was much more complicated than
that, and especially if you were elected with a giant mandate in the first
round of an election, where 75 percent of the population supports you.
Suddenly the balance of power between the so-called 'oligarchs' and Mr.
Putin changes radically. Now what he chooses to do with that, I have no idea."

George Handy is an expert on international business planning with the
Center for Strategic and International Studies. He has coordinated foreign
investment in several countries, including Russia. Handy tells RFE/RL that
he did business with Putin when the acting Russian president was first vice
mayor of St. Petersburg.

Handy, like McFaul, is optimistic about Russia's future under Putin, but
says a strong showing in the election will not be enough for him to declare
his independence from the oligarchs.

First, Handy says, Putin must deepen his popular support by addressing
Russia's fledgling financial infrastructure and thereby directly benefiting
all Russians with an improved economy. He says it may be misguided to
suggest that Putin can confront the oligarchs before then.

"I think that's looking at Russia through the prism of an established
democracy in the United States. And I think that that's a possibility, but
I don't think it's a certainty. I think he still has to prove -- he has to
show actual economic progress and return that touches more of the people in
a more measurable way."

And Handy believes that Putin has the right credentials for improving the
economy. While other experts focus on the acting president's tenure with
the KGB, Handy recalls the meetings -- eight to 10 of them -- that he had
with Putin when he was the first vice mayor of St. Petersburg.

Handy says that the port of St. Petersburg confronted him with the problems
of inefficiency and corruption, as well as the opportunity to provide jobs
and social services for thousands of Russian workers.

"This gave him more than an awareness of the economic issues facing Russia
today because of the nature of St. Petersburg -- its size, its influence on
Russia through its port operations."

Saunders, of the Nixon Center, is less enthusiastic about Putin's tenure in
St. Petersburg, noting that it has traditionally been one of the most
corrupt cities in Russia. But minutes after he denounced what he called
Putin's "ruthlessness," he, too, conceded the benefits of the acting
president's pragmatism.

"Mr. Putin is quite pragmatic. I think this squares with his rapid rise in
Russian politics, in which he demonstrated that he was really willing to do
what it takes to achieve his goals. This, I think, really, rather than Mr.
Putin's alleged reformist credentials, though, can be a source of some
optimism about Mr. Putin, because I think if he is a true pragmatist, we
may hope that he will recognize the importance of continued economic and
political reform."

Even while portraying Putin as a man focused on his own best interest,
Saunders could not help declaring -- or perhaps hoping -- that the man who
may be Russia's next president may be the best for the job. 

*******

#4
The Moscow Tribune
11 January 2000
PUTIN'S ECONOMIC STRATEGY CONSIDERED
The Acting President Should Listen to Different Schools
Stanislav Menshikov (menschivok@globalxs.nl)

Thanks to Vladimir Putin's big article published on the government web
site, the general thrust of his economic strategy is now an open secret.
While we intend to come back to this subject on many occasions (including
his short-term measures treated in a separate column in this paper), some
preliminary comments are in order.

First, about the long-term perspective. Mr. Putin seems to believe that the
Russian economy could be able, under some unspecified but extremely
favourable circumstances, to maintain an average annual growth rate of
8-10 per cent of its GDP in the next 15 years. This assumption is too
optimistic for a number of reasons. 

On the supply side, the existing stock of non-utilised physical capital can
support economic growth for a only a few years. Further expansion will need
massive new investment and Mr. Putin rightly puts it at the centre of his
programme. But investment is now at a standstill and reviving it will not
be easy. One way is to return to centralised accumulation of necessary
finance and channelling it into new factories, modern infrastructure, etc.
Mr. Putin wants more government intervention in the economy but is he
prepared to accept, as a minimum, indicative planning of the type that
Japan, China and other Asian "tigers" have used in the past to engineer
fast growth? If he chooses to do so, he would be applauded by the
left-centre segment of the political spectrum but opposed by the right
wing. However, without introducing indicative planning, growth at rates of
8-10 per cent per annum is hardly possible. 

Another, politically more feasible way is to accept a more modest target
growth of, say, 4-5 per cent, closer to rates typical of the industrially
developed market world. Even achieving that limited goal would be dependent
on creating a favourable climate for a predominantly private (including
foreign) investment, with some government support. And booming private
investment depends on expectations of growing markets. The key element is
rapidly expanding consumer and government demand. This element is missing
in Mr. Putin's text. The supply argument is there, but the demand argument
is absent.

The importance of consumer demand was illustrated in 1999 when industrial
output rose largely due to a major shift in demand from imported to
domestic goods. But import substitution cannot last forever. In 2000 and
beyond, consumer demand will have to grow, not simply shift, if the economy
to make progress. For this to happen, real incomes (primarily wages and
pensions) have to rise as fast as the economy in general. Mr. Putin's
article mentions raising real incomes as part of an incomes policy, but not
as the most important element of economic growth.

In a largely privatised economy real wages grow only when rising output and
productivity make it possible for profits to increase together with wages.
The government cannot force business to raise wages, it can only set an
example by increasing salaries of its own employees, pensions and legally
enforced minimum wages. But it is not absolutely helpless. By increasing
its own purchases of domestic goods it can help lead the economy out of 
the stagnation trap. 

Mr. Putin's article does not mention government purchases as a key factor
in stimulating the economy. Perhaps, this is done intentionally - to
downplay the excepted rise in military expenditure this year by 50 per
cent. But the government need not be shy of this development. When armament
factories are working at 10 per cent of normal capacity defence
expenditures, far from becoming a burden on the economy, could serve as the
shortest way to jump-start overall growth. Through the well known
multiplier effect this would create many more jobs nation-wide, increase
real wages and thus assist in the expansion of consumer demand. 

The trick is then to trigger rising government purchases. Once markets
start growing, prospects for massive private investment will improve, as
well. When real profits are growing together with aggregate demand, they
will be increasingly reinvested at home rather than fleeing abroad, as
today. This is the well-known accelerator effect which, when combined with
the multiplier, produces the spontaneous growth momentum characteristic of
normal market economies.

Accelerated growth may create new inflationary pressures, particularly from
bottlenecks in the energy sector. Sustained growth will need more oil, gas
and electric energy for domestic consumption. Unless special attention is
given to increasing the production potential of these industries,
inadequate energy resources would be deflected to exports and become a
serious drag on the whole economy. 

The suggested adjustments in economic policy may meet with opposition from
competing economic advice. This is only normal. What is not normal is for
the government to listen to one school of thought. So far, economic policy
in Russia was based on a one-sided, largely neoliberal and monetarist
viewpoint. The new authorities should expand their horizon by listening to
different schools and carefully weighing the pros and cons of each. This
should be a pragmatic safeguard against policy errors for which Russia has
paid an excessive price in the past.

*******

#5
Philadelphia Inquirer
10 January 2000
[for personal use only]
Some see a scary side to Putin 
The acting president is popular among Russians. But advocates for human
rights are concerned. 
By Lori Montgomery 
KNIGHT RIDDER NEWS SERVICE

ST. PETERSBURG, Russia - Before Boris N. Yeltsin's sudden resignation on
New Year's Eve propelled him to the presidency, Vladimir V. Putin visited
the branch of the Federal Security Service in his hometown.

The office, known as the KGB when Putin worked there, was facing a stunning
humiliation: A St. Petersburg judge was about to acquit Alexander Nikitin,
a retired navy captain charged with leaking state secrets about nuclear
pollution.

The Dec. 29 verdict - hailed as a victory for the rule of law in Russia -
was an unprecedented slap at the security service, now called the FSB.

At the time of Putin's visit, the verdict was still three days away, but
details of the roughshod investigation and harassment of Nikitin were
widely known. So when Putin declared himself "highly satisfied" with the
FSB, human-rights advocates were outraged.

"It was perfectly clear that the FSB had spent taxpayer money to
investigate an innocent man," said Boris Pustintsev, president of Citizens'
Watch, a local FSB watchdog. "The prestige of Russia had been violated. And
he called it satisfactory work." 

The Nikitin case - a sensation in St. Petersburg, the crucible of Russian
liberalism - opens a window on the enigmatic Putin, a 47-year-old St.
Petersburg native, onetime city official, KGB spy and former FSB chief.
Respected in Russia as a pragmatist and a fervent anticommunist, the new
president also is condemned as an enemy of free speech, free information
and individual liberty who is unlikely to rein in a resurgent FSB. 

Putin holds "liberal, market-oriented priorities . . . but there is another
side, and that's his attitude toward human rights and the power of the
state," said St. Petersburg sociologist Leonid Kesselman. "This is the side
that draws concern from liberal Russians - and I think it makes the West
concerned, too." 

As FSB director, Putin purged the most hidebound KGB hard-liners, but he
allowed the agency to harass and prosecute environmentalists, whom Putin
last summer called fronts for Western spy agencies who "will always be the
focus of our attentions." 

As prime minister, Putin backed Yeltsin's messy brand of democracy, but
also pressed a brutal offensive against Islamic rebels in the breakaway
republic of Chechnya, and supported legislation that last month gave the
FSB new powers to seal off territory, confine Russian citizens and restrict
travel. 

After Yeltsin's resignation, Putin published a mission statement calling
for "the creation of a civil society that will be a counterweight" to
executive authority. But he also declared Russia unaccustomed to the
"liberal traditions of England and the U.S.," and called for a "strong
state . . . to guarantee order." 

Last week, in preparation for a March 26 special election to succeed
Yeltsin, Putin worked to replace his icy spy face with a kindly, family man
persona, gushing in an interview on Russian television about his late
father and the difficulty Yeltsin must have faced in deciding to leave office.

But in St. Petersburg - where Nikitin and others say Putin publicly
advocated Nikitin's conviction - few were impressed.

"I don't have any joy that Putin is going to be our president," said
Nikitin, 47, who was jailed for 11 months and harassed for three years
after he wrote a report on Russian nuclear submarine accidents for a
Norwegian environmental group.

"It's unclear what he has inside and how things are going to develop,"
Nikitin said. "But Putin was brought up by the secret service. And it is
the most reactionary structure remaining in Russia." 

"Putin is a dangerous man - a very dangerous man," said Pustintsev. "You
can never distance yourself from a KGB past. His ascendancy to power means
there won't be any radical change in the state security system." 

Human-rights activists say Putin's handling of the Nikitin case and the
prosecutions on his FSB watch of other environmentalists suggest a
disturbing lack of democratic principles. 

Pustintsev and other observers say the FSB has grown bolder in recent
years. The KGB was dismantled after the collapse of the Soviet Union in
1991. But after the FSB was created in 1995, the domestic spy agency
reassembled much of its old authority, including control over
intelligence-gathering operations. One of its first targets was Nikitin.

Imprisoned in February 1996, Nikitin was called Russia's first "post-Soviet
prisoner of conscience." Based on secret Defense Ministry decrees - some of
them adopted after his arrest - the FSB accused him of espionage and high
treason. The reason: 10 pages Nikitin wrote in a 1995 report by the Bellona
Foundation in Norway, a neighbor long concerned about Russia's handling of
nuclear waste. Nikitin has always said the information came from public
sources, but the FSB said he stole state secrets.

Nikitin spent 11 years as an engineer on nuclear submarines and as nuclear
inspector for the Defense Ministry. He retired in 1993, disillusioned by
shoddy maintenance, haphazard dumping and storage of nuclear materials, and
shocking accidents. He wrote about the accidents for Bellona.

In a nation where environmental catastrophe is often linked to the
military, more ecological spies soon emerged. 

Grigory Pasko, a military journalist in Vladivostok, was charged in 1997
with treason after he gave Japanese television a videotape showing Russian
naval vessels dumping radioactive waste into the Pacific Ocean. Convicted
this year on a lesser charge, Pasko has appealed. 

Last summer, the FSB raided the Vladivostok apartment and laboratory of
Vladimir Soifer, a scientist who studies radioactivity in the Pacific. 

And Justine Hamilton, an American student-exchange coordinator, left Russia
after the FSB accused her of collecting "secret environmental maps" for the
CIA. 

The persecution of environmentalists is blatantly illegal, said Yuri
Schmidt, Nikitin's defense attorney. Russia's constitution, adopted in
1993, guarantees "the right to a decent environment [and] reliable
information about the environment." It also makes "the concealment by
officials of facts and circumstances creating a threat to people's lives
and health" punishable under federal law.

Federal laws on state secrets specifically exclude information about the
environment from the body of data that can be classified as secret. 

When a St. Petersburg Times reporter called attention to the relevant legal
provisions last summer, FSB spokesman Alexander Timashov responded: "I
don't care." Putin, too, seemed unimpressed. 

"Sadly, foreign secret services . . . very actively use all sorts of
ecological . . . organizations" as fronts for spying, Putin told the
newspaper Komsomolskaya Pravda.

After an extensive investigation, Judge Sergei Golets exonerated Nikitin,
accusing the FSB of committing "a direct violation of the constitution" by
bringing charges based on secret Defense Ministry decrees. In open court,
he encouraged Nikitin to sue the FSB for illegal imprisonment. 

"This verdict will have a significant impact on the KGB," Golets said in an
interview, using the communist-era acronym for the spy agency. "The court
drew attention to the fact that the KGB must now abide by the law and pay
attention not only to their own interests, but to the evidence. Because the
court is guided by reasons of law, not reasons of KGB 'necessity.' " 

The day after the verdict was read, prosecutors filed an appeal with the
Russian Supreme Court. Golets, Nikitin and his lawyer all believe the
verdict will stand. 

And Golets expects a Supreme Court affirmation of his ruling to stand, too,
"although we have a new president and although Putin was head of the FSB. 

". . . The verdict is open. And lawyers throughout the world will be able
to see whether Russia is a state based on law, or whether law is just a
smoke screen to hide any arbitrariness." 

*******

#6
Israel's Sharansky Supports Russian Stance in Chechnya 

JERUSALEM, January 6 (Itar-Tass) - Israeli 
Interior Minister Natan Sharansky said Russia has a right to defend its 
national interests in Chechnya. During a conversation with Russian 
journalists in Jerusalem he expressed the hope that the antiterrorist 
operation in Chechnya would not inflict suffering on peaceful people. The 
minister noted the similarity of Russia's and Israel's interests in the 
struggle against Islamic fundamentalism. 

Sharansky said he regards Boris Yeltsin's decision to step down as president 
as "a strong and wise move of a courageous man". 

Boris Yeltsin was the first Russian leader in a millennium to voluntarily 
have stepped down, and this decision is a wise step as it opens the road 
to presidency to the man who will continue democratic traditions started 
by the first Russian president," the Israeli interior minister said. He 
said "Boris Yeltsin's personality deserves most profound respect. He will 
always be remembered in world history as a leader who climbed on a tank 
to uphold Russian democracy".

*******

#7
The Independent (UK)
11 January 2000
[for personal use only]
Decline and fall of the Soviet empire 
The past decade saw upheaval on a grand scale behind the former Iron Curtain. 
Anthony Suau was there to document it 
By Luz Echeverri 

A man lies dead in the middle of a desolate street in Moscow. People glance, 
but walk on by; murders have become common and they have grown indifferent. 
In the midst of the turmoil caused by the collapse of the Soviet bloc, the 
population is adapting to an ever-changing existence. 

Scenes from daily life, showing moments of anguish, despair and frustration 
are captured by the camera of Pulitzer Prize-winning photojournalist Anthony 
Suau, and compiled in his book, Beyond the Fall . The result is striking 
imagery that will be exhibited in the Royal Festival Hall from 21 January. 

The artistic beauty on one hand, and the social content on the other, combine 
to tell the story of immense change in Eastern Europe. Black-and-white 
photographs taken over the past decade show the extremes caused by the 
collapse of the totalitarian system and the emergence of capitalism in the 
former Soviet Union. 

In one image, a poster for West cigarettes reads "Original International 
Quality". On it, a sharply dressed man smokes contentedly while dreaming of a 
sunny day on the beach. Juxtaposed with this stereotype of consumerism, an 
old man shuffles down the street, and another one sleeps (or has already 
succumbed to the cold) on the concrete pavement. 

Ten years after the fall of the Berlin Wall, the enthusiasm and spirit of the 
early days has been overshadow by disenchantment, hunger, fear, and war. 

In 1989, there were high hopes for an uncertain future. In 1999, many 
Russians think that they were better off in the old days of communism, where 
at least a few things worked. 

The transformation has been so abrupt that people are undergoing identity 
crises. In Moscow, casinos, nightclubs and shops have become the playground 
for the new rich, the bureaucrats and the Mafia. In the countryside, 
impoverished workers and farmers work in primitive ways and struggle to 
survive. Children play in the ruins of industrial buildings and the 
population suffers from pollution and toxic waste related diseases. 

Russia has witnessed in a short time the disintegration of an empire. This is 
reflected in Suau's photographs, which show the ruins and debris of cities 
and towns; and illustrate the tragedies of the people caught in the crossfire 
of civil war. 

Despite the harshness of life, people manage to get by. Some smile, others 
still have hope. As Suau points out, "For Russians, communism and capitalism 
had emerged into the same frustrating experience – a nightmare of
deprivation 
presided over by an élite few." 

Suau's astonishing documentary photos reveal the ambivalence of the 
transition. These powerful images show the contrasts of a society that is at 
once coming to terms with its revolutionary past and trying to determine its 
future. 

Beyond the Fall: Royal Festival Hall, South Bank, London SE1 (0171-960 4242) 
from 21 Jan to 13 Mar, free 

******

#8
Moscow Times
January 11, 2000 
13 Turn Down Seats in Duma 
By Yulia Solovyova
Staff Writer

Thirteen people elected to the State Duma on their party's federal list have 
refused to take their seats - including leaders of the Unity and 
Fatherland-All Russia blocs - and their mandates will go to other members of 
their parties, the Central Election Commission said Monday. 

Those who have preferred to keep their old jobs are Unity leader Sergei 
Shoigu, the emergency situations minister; seven members of Fatherland-All 
Russia, including two of its three leaders, Moscow Mayor Yury Luzhkov and St. 
Petersburg Governor Vladimir Yakovlev; the Zhirinovsky Bloc's Stanislav 
Zhebrovsky; and four members of the Communist Party - including the governors 
of the Tula and Kemerovo regions, Vasily Starodubtsev and Aman Tuleyev. 

The regional leaders, who also hold seats in the Federation Council, 
parliament's upper house, wield far more power than they would as members of 
the lower house. 

Former Prime Minister Yevgeny Primakov, the other Fatherland-All Russia 
leader, has decided to take his Duma seat, as has former Duma speaker Gennady 
Seleznov, a communist who lost a narrow race for governor of the Moscow 
region. 

Under elections law, if a member of a bloc's top troika refuses the Duma 
seat, the whole list is immediately scratched. However, an exception is made 
if the person has a "good reason," such as serious illness or a top state 
job, according to Artyom Golev, a Central Elections Commission spokesman. 

If a candidate farther down on the list refuses the Duma seat and his or her 
reason is not considered good enough, the party loses the seat, Golev said. 

"While theoretically possible, such a thing has never happened in reality," 
he said. 

The precedent for turning down parliament seats was set during the 1995 Duma 
elections, when all three leaders of Our Home Is Russia - then Prime Minister 
Viktor Chernomyrdin; movie director Nikita Mikhalkov and General Lev Rokhlin 
- refused their seats. 

If the 13 people who moved up on the party lists confirm by Tuesday that they 
wish to work in the Duma , they will receive their mandates, together with 
212 others elected as part of the federal lists, at a ceremony at the Central 
Election Commission's office. 

But there is no deadline, and those people whose confirmations are late will 
receive their mandates separately, Golev said. 

Elections for single-mandate seats failed to produce results in eight regions 
and were not held in Chechnya, so only 216 deputies representing individual 
districts will receive their mandates from local election commissions. This 
gives the Duma a total of 441 deputies. 

*******

#9
Date: Mon, 10 Jan 2000 
From: "Petra Green" <petra67@waitrose.com>
Subject: Towards a Russia of the Regions by Martin Nicholson.

I am writing to you on behalf of Oxford University Press, the UK
publisher. I came across CDI and the CDI Russia Weekly through on the
internet, and thought that a recently published OUP title would be of
great interest to your readers. This is a monograph in the highly regarded
Adelphi Paper series called Towards a Russia of the Regions, written by
Martin Richardson, a former British diplomat. It looks at the federal
system in Russia and argues that relations with the centre must become
stronger before Russia can fully develop. The book is published by OUP for
the International Institute for Strategic Studies, based in London.  
Towards a Russia of the Regions by Martin Nicholson. Eight years after the
Soviet Union collapsed, Russia's constitutional framework is weak, and the
balance of political and economic power between the centre and
the regions is in flux. This new Adelphi Paper argues that establishing an
effective, regulated federal system is crucial if Russia is to develop a
multiparty system in place of single-party rule, and a market economy in
place of state ownership and central planning. For a more detailed
description of the book, along with ordering information, see 
http://www.adelphi.oupjournals.org/special/email.html
 
******

#10
Nezavisimaya Gazeta
January 6, 2000
[translation from RIA Novosti for personal use only]
MIKHAIL DELYAGIN BEMOANS RUSSIA'S SORRY FINANCIAL PLIGHT

Following below is an interview with Mikhail DELYAGIN,
who heads the institute of globalization problems. Delyagin
believes that Russia can't expect to obtain any financial aid
from international organizations prior to presidential
elections.

Question: Mr. Delyagin, what can you say about positive
and negative aspects of Vladimir Putin's performance?
Answer: I don't see any results, as far as economic
aspects are concerned. Putin, who was appointed as a military
premier, has retained his status today. 
Speaking of political implications, Putin, who doesn't
deal with the economy, is doing the right thing. As soon as he
starts tackling economic issues, he will confront at least one
of Russia's two powerful clans, e.g. the Berezovsky clan and
the Chubais clan. Putin himself will suffer grievously as a
result of that stand-off.
Putin should first become a full-fledged president,
before confronting those clans and dealing with economic
matters. As I see it, Putin is deliberately turning a blind
eye on regional property redivision, as he tries to enlist the
support of local barons. Putin has, sort of, forgiven their
sins in exchange for political support. Meanwhile Putin
remains aloof from the economy and the snowballing economic
crisis. This position is quite correct, as far as he is
concerned.

Question: Do you think that the economic crisis is
already approaching?
Answer: The budgetary crisis has been assuming impressive
proportions ever since September 1999. I haven't yet received
any December 1999 statistics; however, the authorities had
failed to fulfil September 1999 budgetary-spending targets by
20 percent, also falling short of October 1999 targets by 13
percent. The Ministry of Finance has failed to provide any
statistics for the November 1999 period; however, indirect
signs apparently prove that budgetary-spending targets have
not been fulfilled by more than 25 percent. We now face a
full-fledged budgetary crisis.
Moreover, wage arrears have started increasing in some
Russian regions.

Question: Does this mean that federal-budget debts are on
the rise once again?
Answer: This is true of federal and regional budgets
alike. In real life, though, these are two inter-related
factors just because Russia's regions get their monies out of
the federal budget.
An energy crisis is also brewing. Apart from that, we'll
evidently be faced with a grain crisis already this summer.
Quite a few regions had suffered from irregular grain
deliveries in the summer of 1999. Current negative trends will
only grow worse because all surplus grain stocks, which had
enabled us to weather the 1998 crisis, have already become
depleted.
To cut a long story short, the Russian economy used to
fly on two wings, e.g. the rouble's devaluation and sky-high
global oil prices, after the August 1998
economic-and-financial melt-down.
The devaluation effect has already sipped into the sand.
Meanwhile global oil prices will begin to diminish somewhere
after March 2000. In a nutshell, we are now flying on just one
wing; however, starting with the March 2000 period, Russia
will lose its only wing completely.
Consequently, Putin, who distances himself from all
economic problems, is doing the right thing. By all looks,
Putin is going to act in line with Yeltsin's methods, provided
that he becomes a full-fledged president. Putin would be
expected to appoint prime ministers, who, in turn, would be
responsible for the economy, also replacing them on a regular
basis. Meanwhile Putin himself would shy away from any
clashes, while declaring some quite reasonable and sober,
albeit currently impracticable, principles.

Question: Will the West change its stand at a time when
Putin has virtually every chance of being elected as Russia's
next president? First of all, will it modify its position with
regard to loaning money to Russia?
Answer: The West's position with regard to Russia is
motivated by its own interests. I'd like to remind our readers
that the latest conflict has been caused by the Chechen war. I
think that, if Putin wins the elections, in that case he would
end the war in Chechnya because such a war would no longer be
needed by him. Technically speaking, the West will be able to
loan money to Russia (without losing face) after local
presidential elections, provided that it wants to do that.
Meanwhile anti-Russian moods will become more and more
pronounced prior to presidential elections.
Russia will have to pay $3 billion worth of hard cash, or
25 percent of its gold and hard-currency reserves, to
international creditors during the first quarter of 2000. For
its own part, the West might well whip up that anti-Russian
hysteria to a great extent, subsequently complicating any
negotiations with Russia. In that case, the IMF and the World
Bank would voice some completely unacceptable terms within the
framework of their own loan-disbursement plans.
In the meantime one should note that Russia will have to
start repaying the Sergei Kiriyenko government's debts over
the 2003 period. As a result, this country would face a really
serious 1998-vintage debt crisis. 

******

#11
Izvestia
January 11, 2000
[translation from RIA Novosti for personal use only]
TIME TO KEEP THE PUNCH
Vladimir Putin's Move to the Kremlin Would Not Be Easy
By Georgy BOVT

Now that the Christmas holidays are drawing to an end, it
has become clear that acting president Vladimir Putin's 100 days
entail no easy stroll from the Russian government's White House
to the Kremlin and losing the unpleasant adjective "acting" on
the way. 
Putin will have to sweat to win. Judging by all, he will
have to sweat much more than one may have thought while the
executive authority was drunk on the impressive victory of the
Unity bloc in the December 19 elections to the Duma, the lower
house. One then had the impression that all Putin had to do was
to say the word and the man in the street, entranced by his own
hopes to finally see a really efficient authority, would vote as
needed. 
But it turned out that one word is not enough: Putin's
charisma, which sociologists have failed to discover in full, has
not yet become the Kremlin's "magic wand." 
The magic of political techniques misfired at the Moscow
Region gubernatorial elections: Gennady Seleznev, who had had the
highest blessing and had been confidently in the lead in the
first round, came in second with 2% less than General Boris
Gromov who had been backed by Fatherland-All Russia. 
For Seleznev, the worst thing about the defeat is that the
campaign had been designed to snub Yuri Luzhkov once again yet
turned out to be a revanche for the Moscow Mayor for the
humiliation he had had to swallow in the course of the Duma
election campaign. 
Putin has to deal with even bigger problems in Chechnya.
While the federal troops faced a radically deteriorating
situation, Boris Yeltsin resigned. The premier no longer has the
best political "cover" in the post-Soviet history. 
Nobody is going to stand up to pan-European criticism the
way Yeltsin did at the OSCE summit meeting in Istanbul. There is
nobody to provide a sickly background for the young and energetic
successor. The source, and target, of the constant popular
irritation by the authorities in general and their inability to
normalise life in particular, is no more. 
Putin is now eye-to-eye with the authorities and the
electorate. His main trump card of the past fall--a more or less
successful operation in Chechnya which was conducted with a
minimum loss of life--plays no more: the military have suffered a
series of defeats and the loss of life has grown appreciably. 
The rebels' counter-attacks at Gudermes, Shali, Argun and
Achkhoi-Martan outweigh the federal forces' military successes of
the past few weeks. The operation to seize Grozny has been
suspended. The Russian military are suffering increasing losses.
Sooner or later, society may start thinking that the price to be
paid for a small victorious war is too steep.
The price has two--human and economic--dimensions: even a
small war is a costly affair. In the conditions of what is
effectively a financial blockade of Russia by the West, the war
can be financed from the domestic sources alone. The hints that
were made in 1995-96--that the first Chechen war was paid for
with the IMF money--ring hollow these days. 
Putin seems to be tempted to resort to questionable market
methods. The fact that the reaction of Russian businesses to the
recent concerted decision of the government and the Central
Bank's Viktor Gerashchenko to make it binding on exporters to
sell all currency revenues has been slack should mislead nobody:
simply, the corporate lobbies were still on vacation. 
But the vacation will soon be over and big businesses will
return to their routine operations. Also, Putin admits that the
introduction of 100% sales takes serious preparations and time,
which means that this campaign is going to be spread in time. 
In for a penny, in for a pound. The government may be
tempted to toughen its currency regulating function to include a
ban on hard currency cash circulation. Or even worse, to apply
the not quite market methods of regulating the exchange rate,
which is fraught with all sorts of unpleasant things the type of
a flourishing black market and massive capital drains. 
That the economic policy calls for mobilising forces was
proven by yesterday's personnel changes in the government: Sergei
Shoigu was made a deputy, and Mikhail Kasyanov, the first deputy,
to the premier. Nikolai Aksyonenko is no longer the first
vice-premier. This latter decision is not purely economic (for no
decision involving the person who used to control, by force of
the Kremlin's whim, many of the election financial flows, is a
purely economic one); it is also an admission that the ruling
elite will hardly reach an election consensus. 
When the government's fiscal agencies will reach for reports
of the natural monopolies and other big-time players in the game
of economics and politics, and insistently request a "share," the
above conclusion will be even more evident. 
Nor should one overestimate the degree to which the regional
elites are loyal to the heir apparent. The current generation of
regional administrators are good at political blackmail of
loyalty. This aptitude involves, in particular, the knack of
promptly changing one's likes and convincing one's respective
electorate to do likewise. 
Putin is not backed by a "family" whose capacity to deal
with acute situations with simplistic yet highly efficient means
is well known; he only has a team he has inherited from the
"family." 
Of course, Putin can find a more loyal person (and a keen
administrator into the bargain) than Pavel Borodin whom Putin
fired yesterday from being the chief of the Kremlin's
administrative department. But one should not underestimate the
inherent potentialities of the Kremlin's rank-and-file
bureaucrats. Now if they can be heard saying that "Putin is not
our president," there is a problem to address here. 
In other words, Putin has to demonstrate, until March 26,
that he can move and keep the punch no worse than ex-president
Yeltsin. When the going gets tough, the tough get going: such is
the test of a politician's stamina. 
The very first days of being the acting president amply
demonstrated to Putin that he will have to wage a difficult
election campaign filled with specific and not necessarily
popular deeds. He must get used to the idea that there will be no
victory in Chechnya timed to the election, the way it was planned
this past fall. 
His high popularity rating--nearly 60%--may be transient.
For this is the case of marking time in expectation of a victory
being tantamount to losing. Other qualities apart, the Russian
electorate can get fast tired of their idols' high ratings. And
three months is not the time in which it can overcome this nice
habit. 

*******


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