Center for Defense Information
Research Topics
CDI Library
What's New
CDI Library > Johnson's Russia List

Johnson's Russia List


January 14, 2000    
This Date's Issues: 4034 4035 4036

Johnson's Russia List
14 January 2000

[Note from David Johnson:
1. Reuters: Presidential hopes grow for Russia's Putin.
2. Reuters: Nobel peace laureates accuse Russia of war crimes.
3. APN: Liberal dictatorship may be set up in Russia. (Mikhail Delyagin)
6. Moscow Times: Andrei Zolotov Jr., Primakov Still Keeps Politicians Guessing.
7. Bloomberg: Russia's Mikhail Gorbachev on Yeltsin, Putin, Politics.
8. Transitions Online: Dmitri Babich, Hawks and Doves Circle over Chechnya. The Chechen war splits Russian dissidents.
9. Euromoney magazine: David Roche, Russia: turning point in year 2000.
10. AP: Russians Hope for New Putin Era.
11. Los Angeles Times editorial: The Costs of Brutality.
12. The Economist (UK): What will Putin do? 
13. The Economist (UK): Death and inglory in Chechnya.] 


Presidential hopes grow for Russia's Putin
By Gareth Jones

MOSCOW, Jan 13 (Reuters) - Acting President Vladimir Putin officially joined 
Russia's presidential race on Thursday and his prospects of winning were 
given fresh impetus when Yevgeny Primakov signalled he would not join the 

Putin, 47, Russia's most popular politician and Boris Yeltsin's own preferred 
successor, is already favourite to win the March 26 election and national 
media have begun to shift their focus to those who might be chosen as prime 

Putin made the expected announcement of his bid for the Kremlin at an award 
ceremony in his native St Petersburg. 

"I would like to say that I accept the offer with satisfaction and gratitude 
and I will take part in this election campaign," said Putin, whose name had 
been proposed by a group of leading businessmen and politicians. 

First Deputy Prime Minister Mikhail Kasyanov, who is also finance minister, 
chaired his first cabinet session in Putin's absence. Putin remains prime 
minister for now. 

Kasyanov, a liberal respected by the Western financial community for his 
handling of tricky foreign debt negotiations, shrugged off talk that he might 
head Russia's next government. 

"This is a question for the future," he told reporters. 

One man who will not be facing off with Putin is former Soviet leader Mikhail 
Gorbachev, who in the last presidential election in 1996 polled less than one 
percent of the vote. He said he would focus on organising a new Social 
Democratic party. 


The Sevodnya daily named Kasyanov and Anatoly Chubais, controversial guru of 
Russia's free market right and architect of Russian privatisation, as 
possible future premiers. 

An opinion poll showed Putin moving further ahead of his rivals for the job, 
with 62 percent expressing trust in him and 76 percent saying they supported 
his actions as prime minister. 

The Public Opinion Fund said Putin could win 55 percent of the votes if an 
election were held now and that only four percent would definitely vote 
against him. This would put him on course for victory in the first round of 
the election. 

The poll canvassed the views of 4,000 voters in late December and early 
January. Yeltsin resigned on December 31 and handed all his powers, including 
the nuclear "button," to Putin. 

The former KGB spy, virtually unknown in Russia until his elevation to the 
premiership last August, owes his popularity mainly to Russia's military 
campaign in rebel Chechnya. 

Even military reversals now seem unlikely to make much dent in his lead over 
presidential rivals. They are likely to include Communist Party leader 
Gennady Zyuganov, veteran liberal Grigory Yavlinksy and flamboyant 
nationalist Vladimir Zhirinovsky. 

Any bid to take part in the race by Gorbachev would have been doomed to 
failure. He remains unpopular at home despite being feted in the West for his 
part in ending the Cold War. 

He stopped short of supporting Putin's bid, saying he needed to know more of 
the acting president's policies. 

In further good news for Putin, the popular Primakov was quoted as saying he 
would run for the post of speaker in Russia's State Duma lower house of 
parliament, signalling that he no longer planned to contest the presidency. 

Former Prime Minister Primakov, 70, is widely respected for his role in 
restoring stability in Russia after a 1998 financial crash, but his centrist 
Fatherland-All Russia (OVR) bloc performed worse than expected in a December 
Duma election. 

Derided by pro-Kremlin media as too old for high office, Primakov had hit 
back, saying he would seek the presidency, but now seems to have decided that 
Putin is unstoppable. 


A newly formed bloc called Unity, whose stated aim is to help Putin to become 
president, is the second biggest faction in the new Duma after the main 
opposition Communists. 

Unity's parliamentary leader, Boris Gryzlov, said his faction was set to grow 
from 77 to as many as 82 seats after several centrist politicians elected on 
a non-party, single constituency basis swelled its ranks. 

Gryzlov also said he thought the new Duma would work better with the Kremlin 
than its predecessor, whose left-leaning majority often opposed Yeltsin's 
policies. He added that land reform, blocked by the old Duma, should now be a 
top priority. 

The new Duma is due to meet on January 18. Zhirinovsky and another former 
prime minister, Sergei Stepashin, are also candidates for the post of 
speaker. Putin has indicated he wants a woman lawmaker, Unity's Lyubov 
Sliska, in the key job. 


Nobel peace laureates accuse Russia of war crimes
January 13, 2000

PARIS (Reuters) - Medecins Sans Frontieres (MSF) has accused Russia of war 
crimes against civilians during its military campaign in Chechnya and called 
on the United States to use its influence to force Moscow to end the 

In an open letter to President Clinton, the medical aid agency compared the 
suffering of hundreds of thousands of Chechen refugees to that of ethnic 
Albanians forced to flee Kosovo by Serb soldiers last year. 

``For nearly four months the Russian armed forces have been indiscriminately 
bombing the city of Grozny and much of the entire Chechen republic,'' MSF 
said in the letter dated January 12. 

``Cities, villages, hospitals, marketplaces, and refugee convoys and 
corridors have now become targets. These acts against civilians constitute 
war crimes,'' it wrote. 

MSF, winners of last year's Nobel Peace Prize, said the Clinton 
administration had been swift to highlight the plight of ethnic Albanians in 
Kosovo. By comparison, there was little high-level debate on Chechnya, it 

``As in Kosovo hundreds of thousands of civilians have been forced from their 
homes. Tens of thousands are still trapped in their basements or hidden in 
the forests and mountains. Thousands have already been wounded or killed. 

``Do they suffer any less than the people of Kosovo? From a humanitarian 
perspective, there is no difference,'' it wrote. 

The international aid agency welcomed the fact Clinton had voiced his concern 
over Russia's treatment of refugees, but said words meant little unless they 
produced results. 

``You must prevail upon Russia to abide by its obligations under humanitarian 
law,'' it said. 

The fighting in Chechnya has forced MSF to withdraw its staff from the 
province, but the group said it had ascertained details of what was going on 
there by questioning refugees in neighboring Georgia. 

``(They) speak of deliberate and gruesome attacks on civilians throughout the 
republic,'' MSF said. 

It called for an immediate halt to Russia's ``attacks on Chechen civilians,'' 
safe passage for those who want to leave the area and ``unimpeded 
humanitarian access'' to everyone inside Chechnya and the surrounding 


12 January, 2000
Liberal dictatorship may be set up in Russia

An APN reporter quoted Mikhail Delyagin, director of the Institute of
Globalisation Problems as saying at his news conference that liberal
dictatorship may be set up in Russia with Putin in power as a result of
power`s weakness in face of economic problems. 

In Mikhail Delyagin`s opinion, Putin`s experience in economy is «a blank
paper» which will be filled in by his entourage that are Anatoly Chubais
and Boris Berezovsky. Acting president will not be able to provide real
national reforms as he is in deep dependence on the West and on the
political group which brought him to power. With the lack of serious
reforms in Russia the economic crisis will be redoubled resulting in a
decrease of the living standard in the country. 


January 13, 2000

Political scientist Andrei Piontkovsky does not believe that Vladimir Putin
will fight with the oligarchs. "Many Western observers, as I have said,
impose a symbolic meaning on a purely technical removal of Tatyana
Dyachenko from her position of an image advisor", Piontkovsky said. "How
can Putin wage a war against such oligarchs like Berezovsky, Abramovich and
other "the Family"-affiliated people, if he himself is a creation of
theirs; using their monopoly on media and the war as an propaganda
instrument, they provided all this publicity that in less than a month had
helped make a national hero out of an obscure colonel".

Comment: This interview was published before reports that Borodin and
Aksyonenko, who are directly linked with "the Family", resigned. Berezovsky
is getting ready to the war with Putin, according to "Pravda on-line".
Naturally, it is no sense for Putin to establish in the public mind
associational chains like "Putin - the Yeltsin gang - Berezovsky", and he
will surround himself by the people whom he can trust, not those he will be
dependent on. That "the Family" contributed to Putin's promotion does not
mean that he will agree to live in peace with "gray cardinals" out of mere
gratitude to "the Family". Now Putin is completely independent, and his
independence, after his probable victory in the presidential elections will
be hardly diminished.


Novaya Gazeta
No. 1
[translation from RIA Novosti for personal use only]
By Igor OLEINIK, director, Institute for Development
and National Security Strategies

December 31 is likely to be declared Political Technologies
and Democracy Without Alternative Day in Russia. On the last day
of 1999, President Yeltsin voiced his decision to step down.
Stunned by the double holiday, the voters did not realise
right away that the results of the expression of their will in
early presidential elections had already been predetermined.
Power in Russia will remain in the hands of the "family" and we
are all yet to live for several years in the Yeltsin era without
It goes without saying that democratic formalities will be
observed. Putin will not be left without a communist sparring 
partner provided for by the election "list of staff" (we
congratulate Gennady Zyuganov in advance on winning yet another
honorary second place), while a dozen political clowns will form
the background for them to imitate difficulties on the way to
Possibly, society would be even made to fork out an
impressive amount to hold a second round of elections. However,
the result is already known. The March 26 voting will become a
political-variety show in the genre of uncompromising "Nanai
There would be nothing bad about Vladimir Putin's
overwhelming popularity on the eve of the election of a new
Russian president (the nation needs someone to count on in hard
times after all), were it not for one circumstance. It is highly
probable that even by June, that is, by the constitutional
deadline set for presidential elections, the level of Putin's 
electoral support may fall much lower than that of Zyuganov. The
thing is that there will be no economic successes - the federal
budget will be trimmed because of Russia's increased
international isolation and the financial and trade sanctions to
be imposed by the West, which is extremely wary of Putin, as well
as a fall in world oil prices forecast for 2000. 
The formula of political leaders' sustained popularity has
been known since the times of Ancient Rome: "Bread and circuses."
Since there will hardly be more bread for Russian voters, 
authorities are likely to divert their subjects' attention from
their problems by the struggle against external and internal
enemies. The Chechen war's popularity (in the context of the past
Duma election campaign) is beginning to wane now.
However, as of today, the tragedy of the Chechen war is an
issue that has already been exhausted by political technologists.
It is more probable that the form of "circuses" will be changed.
If in February-March the Chubais team has difficulty in ensuring
electoral support for Putin, the latter may make a populist
attack on Berezovsky and Abramovich even prior to the elections.
Even now a number of Russian oligarchs are feeling the
growing threat on the part of the Kremlin - they know only too
well that Chubais is not inclined to share the fruits of a common
victory. They have seen this for themselves as a result of
sharing the future economic benefits of Unity's political victory
in the Duma elections.
The men appointed by Berezovsky, who is Unity's godfather,
are being ousted by the Chubais team, both from the Strategic
Research Center (within whose framework the future government is
being formed now) and the really meaningful, not formal, posts in
the presidential administration. The sacking of Vladimir Makarov,
who was in charge of federal structures' personnel policy,
betokens great upheavals and reshuffles in the officialdom in
favour of Putin's former colleagues in the FSB and the St.
Petersburg government. 
The bottom line is that in the next few months the rivalry
between Chubais and Berezovsky will keep exciting Russian TV
viewers' interest. Life will get worse, yet more exciting...


Moscow Times
January 14, 2000 
Primakov Still Keeps Politicians Guessing 
By Andrei Zolotov Jr.
Staff Writer

Yevgeny Primakov announced Thursday he will bid for the speaker's post in
the State Duma. But as for the presidential race, the skilled 70-year-old
former diplomat has not said a word. 

The campaign has already started. But Primakov has remained silent since
the Dec. 19 Duma elections, in which his Fatherland-All Russia bloc
performed poorly. Even his decision to run for speaker was announced by

Primakov is a master of political suspense. In September 1998 he only
reluctantly agreed to become prime minister. Last summer, he kept the
political establishment waiting for months before joining the alliance of
Moscow Mayor Yury Luzhkov's Fatherland party and the All Russia group of
regional leaders. 

This time, however, it may mean that Primakov, who just months ago was seen
as the next president and who today is perceived as the only candidate
capable of presenting at least some challenge to acting President Vladimir
Putin, will not run for Russia's top post. 

In fact, Primakov announced he would run for president Dec. 17. At the
time, the move was seen as a desperate attempt to give a late boost to
Fatherland-All Russia. But it didn't work. 

He is in a weaker position today. The early elections have deprived Putin's
challengers of time to mount a counteroffensive, and some of Primakov's key
allies, such as Tatar President Mintimer Shaimiyev and St. Petersburg
Governor Vladimir Yakovlev, have defected to Putin. 

In recent days, more signs of wavering have appeared in Primakov's camp. On
Tuesday, his ally Mikhail Lapshin was reported as saying Primakov would not
run for president, but Thursday, Interfax reported that Lapshin had signed
a letter, on behalf of his Agrarian Party, asking Primakov to confirm his
presidential bid. 

Izvestia quoted Primakov's close associate Sergei Karaganov as saying only
Primakov himself could announce his nomination and that the question was
unlikely to be clarified this week. 

Former Soviet President Mikhail Gorbachev told reporters Thursday that
despite the serious political losses, Primakov would nonetheless run for

"Primakov is today best prepared to work as president," Gorbachev was
quoted by Interfax as saying. Gorbachev said he disagreed with those who
consider Primakov a "played card" and said the reason for Primakov's
silence was likely Shaimiyev's defection and cracks in his relationship
with Luzhkov. 

But a political analyst said Primakov is unlikely to run because the Duma
vote demonstrated his weakness. 

"As a public politician, he has failed completely," Yury Korgunyuk of the
INDEM political research group said Thursday in a telephone interview.
"Everybody expected to see a wise elder, but saw a flabby old man
complaining about the attacks in the media." 

During the Duma campaign, Kremlin-controlled media spared no means to
compromise Primakov and highlight his age. 

Korgunyuk said Primakov no longer has a political force that would work as
the "engine" of his campaign. 

"Most likely, he is probing the ground for trading his refusal to run as
president for something appropriate, such as the position of State Duma
speaker," the analyst said. 


Russia's Mikhail Gorbachev on Yeltsin, Putin, Politics: Comment

Moscow, Jan. 13 (Bloomberg)
-- The following are comments by Mikhail Gorbachev, last president of the 
Soviet Union on acting President Vladimir Putin, Russian politics, the war in 
Chechnya, former President Boris Yeltsin, and the foundation of his new 
party, the Social-Democratic Party of Russia. 

On acting President Vladimir Putin: 

``I know Vladimir Putin: he is a serious, intelligent, restrained man. 

``Putin must say what he has decided to do. . .what does he stand for?. . .I 
understand he can't say everything in the first few days, that's not serious. 
. . He has some time, but not much, to explain what he stands for, what he 
wants to do. 

``I would not say I am for or against Putin. I am waiting, if I see steps by 
Putin towards our program, we will believe in him and may decide to support 
him, but for the moment we don't know what he stands for. 

``He has all the resources of the state (for the elections). 

On leader of Fatherland-All Russia and former Prime Minister Yevgeny 

``He has said nothing. People say Primakov has no chance; I don't agree.'' 

The war in Chechnya: 

``The situation in Chechnya is very risky. 

``At least we understand where Putin stands on Chechnya. 

``We are at a critical moment: do we continue, and how, in this form or that, 
or do we open a political process, or do we face a partisan war?'' 

On Boris Yeltsin: 

``I said long ago that Yeltsin should move away from his circle. But in his 
circle they had and still have the view: do not want to give away power. . 
.Everything in the elections was done from above, vertically. . .(Kremlin 
Chief of Staff Alexander) Voloshin was controlling everything in the 

``How can everything be decided with Putin? What sort of power do we have? 
How can it be decided? And voters? And citizens? They must decide.'' 

On the Social Democratic party of Russia: 

``I will work to build the party. We are nationalists and want to build a 
party that will be a serious party in four years for the next Duma elections. 

``It is of course serious in Moscow and St. Petersburg; but also in the 
Urals, in Siberia and in Tver. 

``We believe in being practical in economic policy, only being practical.'' 

On his political ambitions: 

``I will not be taking part in these or any other elections.'' 


>From the January issue of Transitions Online (

Hawks and Doves Circle over Chechnya
The Chechen war splits Russian dissidents.
By Dmitri Babich
Dmitri Babich is the head of the foreign department of the Moscow News.

MOSCOW--The current war in Chechnya has done what the KGB failed to do in
totalitarian times: it has split the Russian dissident movement. The old
framework of "good dissidents versus evil generals" that worked during the
last war in Chechnya does not work anymore. The hawks among the former
dissidents who support the tough military campaign of acting Russian
President Vladimir Putin now outnumber the doves who oppose the conflict.

Yes, the famous human rights activist Sergei Kovalyov continues to oppose
the "anti-terrorist operation" in Chechnya. But the no-less- famous
dissident writer Alexander Solzhenitsyn supports the war even more
virulently than many members of the government. The middle ground between
hawks and doves is virtually empty. Few people believe a negotiated
solution can be reached with Chechen warlords Shamil Basayev and Salman
Raduyev. Few people also believe that the rebels can be destroyed without
the use of air power. Most dismiss the Western stand of using "balanced
means" in the conflict as hypocritical. The division between hawks and
doves leaves little room for nuances.


For many people in Russia, largely disillusioned with a press they accuse
of being partisan, former dissidents have remained an important moral
authority. Their criticism contributed much toward making the last war in
Chechnya a public relations disaster for then President Boris Yeltsin and
his government. The current divide among the old rebels is not the result
of government pressure and a new kind of censorship -- as many Western
commentators have claimed. Perhaps the Russian press exchanged its
anti-militarist stance during the last Chechen war for today's grudging
acceptance of the government's actions because its publishers (mostly rich
bankers and oil companies) are dependent on the state. But if Russian
dissidents did not submit to the oppressive Soviet state, why would they
now cave in to the demands of the relatively liberal Russian government? No
one can accuse Solzhenitsyn, a person who once challenged the entire Soviet
system and became the symbol of resistance to communist rule, of giving in
or selling out to the current Russian government.

Many observers say that the true cause of the conflict among the former
dissidents is Chechnya's failure to become a more-or-less civilized society
in its three years of independence from Moscow. "Chechnya today is a
country of slavery and gruesome violence, where the old sadist punishment
of dissecting human flesh is practiced every day," writer Vasilii Aksyonov
-- exiled from Russia in 1980 for his "anti-Soviet activity" -- commented
recently in the <i>Moscow News.</i> "But the principle of
self-determination for small nations, which brought us this terrible fruit,
has always been a 'sacred cow' of Russian democratic intellectuals. In
Chechnya we can see to what results those noble impulses can lead."

The self-determination dispute also led Yelena Bonner, the widow of the
dissident academician Andrei Sakharov, to renounce her membership of the
Memorial human rights movement, founded by her husband in the late 1980s.
Memorial's mission is to preserve the memory of the victims of Soviet
repression and protect human rights in Russia. Although it condemned the
war in Chechnya, the group did not dispute the breakaway republic's status
as a part of Russian territory and refused to support the Chechens' right
for independence.

"Russia can lay no claim on Chechen territory; neither does it have the
right to preach morals to Chechnya. Only Russia is responsible for the
cruelty of today's Chechen society. Andrei Dmitriyevich [Sakharov], the
founder of your movement, always supported nations' right to
self-determination," Bonner said in a written statement.


There is no denying, however, that Russia had no authority in Chechnya
after the republic gained de facto independence in 1996. And kidnappings
and armed intrusions into the territory of neighboring North Caucasian
republics only became more common after the truce of 1996. "I asked the
Chechens at the time: 'What did you fight for? For your own freedom or for
the freedom of your gangsters?'" says Kovalyov. He got no answer from
Chechen President Aslan Maskhadov. And neither did Russian and foreign
journalists who came to the region after the war. Instead, some of them
were kidnapped (including the famous NTV reporter Yelena Masyuk who
received several media awards for her anti-war reports from the battlefield
in 1994-1996). Maskhadov's government did not liberate a single foreign or
Russian journalist hostage in the three years of its power. And that
weakens the position of the doves more than anything else today.

The dissident doves explain their lack of support in society in the old
way: they accuse the media of shunning their views. "The human rights
activists are declared enemies again. The old stations that used to jam
Radio Liberty are operating at full swing," Kovalyov said figuratively at a
16 December press conference on Chechnya organized by the <i>Moscow
News</i>. "I bet you won't read what I say now in tomorrow's newspapers."
In reality, no one jams Radio Liberty or other foreign radio stations,
available to every listener in Russia, and two days later the <i>Moscow
News</i> quoted Kovalyov's conference speech. "It is just easier for
Kovalyov to live when he thinks that someone is continuing to jam him.
Without persecution he does not feel comfortable," says Yuri Vasilyev, a
young political journalist who participated in the conference.

The hawks also often use old-style arguments, accusing the doves of selling
out to the West and falling under the influence of Russia's enemies.
<i>Nezavisimaya Gazeta</i> accused the human rights activists of Memorial
and other groups of "living for foreign money and operating against
Russia." In response, Lev Ponomaryov, the leader of the once-powerful
Democratic Russia movement (now consisting almost entirely of former Soviet
dissidents), blamed the state for not supporting the activists and forcing
them to rely on foreign donations.

Some of the critics of the dove position were more constructive. Vasilii
Aksyonov, himself a long time reporter for many Western radio stations
broadcasting to a Russian audience during the Cold War, accused Radio
Liberty's Russian service of falling for Chechen propaganda without
checking their sources. But even in that purely professional failure, he
saw the West's influence: "Western thinkers draw the line of history's
dramatic split between Western and Eastern Christianity. That is not right.
There is another dividing line and the Russian armed forces are fighting on
it," he said. "Unfortunately, it coincided with the line separating the
Christian Orthodox and Muslim civilizations. But this is not a religious
war against Islam. We have one God. But the devils we have are different."

Sometimes the fight between former comrades-in-arms is purely linguistic.
For example, Kovalyov's critics, including prominent perestroika political
journalists Andronik Migranyan and Alexander Tsipko, point to Kovalyov's
repeated use of the label "criminal" to describe the leader of the
pro-Russian Chechen militia Bislan Gantemirov (who was recently pardoned
for economic crime). But Kovalyov never uses that term when speaking about
the warlord Basayev or the Chechen Vice President Vakha Arsanov, allegedly
involved in kidnappings of foreign aid workers in Chechnya.

In response, Kovalyov accuses his critics of being too lenient toward
acting President Putin, who has bet his career on the war in Chechnya. "He
is not an average KGB man. He is smart and infinitely cynical. He knows how
to do his job without the gulag but with the same results. Because of our
bloody and dirty history we are very easily deceived by these 'nice' and
'humane' methods," Kovalyov says.

"I don't think we need to argue now who jams whom," says Lev Timofeyev,
also a former dissident. "What we need is a constructive search for a
solution of this crisis. But that does not seem to interest anyone."


Euromoney magazine
January 2000
[for personal use only]
Russia: turning point in year 2000 
By David Roche
David Roche is president of Independent Strategy, a research firm based in

As I write, Russian troops are preparing to blast and occupy the Chechnyan
capital, Grozny. As a result, G7 governments are putting pressure on the
IMF not to release the next tranche of funds promised under the credit
facility agreed after the collapse of the rouble in summer 1998. At the
same time, Russia's politicians are gearing up for a parliamentary

Ironically, all these uncertainties about Russia's future are happening
after a year in which much of Russia's past economic disasters have been
reversed. Russia is riding high on the wave of the world's cyclical
economic recovery. Inflation is coming under control. Tax revenues have
almost doubled and the budget is close to balance. The share of net exports
has surged from close to zero in early 1998, to nearly 15% of GDP. This
has helped lift the country's GDP by 1-2% this year. The rouble devaluation
has created a cushion of competitiveness for Russian exporters. And, with
oil prices rocketing, export revenues will remain high for the foreseeable

Almost overnight, the country now has the resources to implement a
sustainable economic strategy for reviving growth in the long term. A
strong rouble will restrain inflation and lead to lower interest rates.
And the stronger the rouble grows, the more trusted it will become.
Ultimately, that will help to discourage capital flight (still running at
$15 billion a year, with a cumulative $120 billion since 1993), stimulate
domestic savings and attract inward FDI. 

A London Club debt-restructuring deal is also likely to be finalized some
time early in 2000. This settlement will clear all the outstanding debts
left over from the Soviet era and establish Russia's creditworthiness on a
firm footing. 

Unfortunately, the war in Chechnya has soured sentiment. Will Russia ever
enter the body of civilised nations, where there is rule of law,
transparency in financial affairs and compromise in foreign policy? That's
the question that some are posing? 

I think there's a very good chance. First, the West cannot indefinitely
adopt a tough policy on refusing to help Russia economically. Currently,
Russia owes $16 billion to the IMF. The present regime paid back $3 billion
in 1999 and has honoured all its multilateral agency and Eurobond debt
obligations. A hard line with Russia risks promoting an aggressive
nationalist regime in Moscow that would default on IMF debt. And it would
put huge obstacles in the way of foreign diplomacy. 

Second, this year Russia is set for some wrenching changes. The
parliamentary elections most likely gave a majority to the centrists, led
by former premier Yevgeny Primakov and Moscow's mayor Yuri Luzhkov. And
this summer (or earlier) Russia will probably replace Yeltsin with a new
president of similar ilk. For the first time, those who control the levers
of power will share the same interests as those that are governed. 

If the new politicians remove the Yeltsin "family clique" from power, and
that's what I expect, it will be the first step in re-establishing the rule
of law in Russia. Russia needs its current leadership like a hole in the
head. It operates only for the benefit of a handful of Kremlin acolytes.
They, in turn, act only to preserve their hold on power. 

To complete the circle of vested interests, the state created a bond with
the industrial and banking sector "oligarchs". Together, they screwed the
rest of the nation. While wages, pensions and social benefits were left
unpaid for months, billions of dollars were allowed to flee the country --
sunk into the shady offshore bank accounts of the "chosen". Laws were made
to serve this small group of people. 

The bombardment of Chechnya and repayment of wage arrears, the indexation
of pensions and a high-cost election campaign all represent a last bid to
hold onto power. 

In its campaign for the parliamentary elections, the Kremlin was hoping to
maintain a fractured Duma that is incapable of undermining its own
candidate for president (standing premier, Vladimir Putin). The primary
goal has been to discredit Primakov and Luchkov, using the influential
Kremlin-controlled media. 

At the same time, the ruling clique aims to boost Putin's popularity as a
"caring defender of the weak". And to garner as many votes as possible, any
remaining wage, pension and social benefit arrears will be repaid. The war
in Chechnya will go on for as long as it takes to support Putin's image as
a tough and decisive leader fighting international terrorism. 

But the Kremlin is fighting a losing battle. Russians have finally realized
that, without the rule of law, there is no chance of a better life. And its
resurrection can only happen with a new, credible leadership. It needs to
be trustworthy and capable of reaching a sensible consensus among all
social groups. 

So there's a good chance that the new administration will come into office
in the next six months that will finally implement the structural reforms
that Russia so badly needs. 

For economic success depends on national trust. Russians have been conned
too many times both by government and by the banks. That's why only a
government of national trust, supported by the President and a majority in
parliament, will be able to counter such deeply-embedded cynicism. 

Legal reforms will be critical. These include the full implementation of
new (and unambiguous) legislation on banking reform, deposit guarantee
schemes, bankruptcies, financial reporting procedures, taxation and the
protection of shareholder rights. Of course, for a long time to come, it
will be impossible to consider investment in Russia anything other than
"high risk". But now that risk is increasingly complemented with potential
high return. 


Russians Hope for New Putin Era
January 13, 2000

MOSCOW (AP) - Every evening after she shuts the metal gate over her cosmetics 
kiosk, Irina Bobrova turns her rubles into dollars at an all-night exchange 
booth. Once home, she tucks the dollars into one of three hiding places 
around her apartment. 

``We have a new millennium, and this is our economy,'' she said wryly. 

Bobrova's distrust of the Russian currency and banks highlights one of the 
key challenges facing acting President Vladimir Putin, the front-runner in 
presidential elections in March: reviving the Russian economy. 

While questions remain about how Putin would remedy the country's economic 
ills, Russians on the trading floor and in the barbershop are looking to the 
stiff-spined, straight-talking ex-KGB agent to wrest Russia from a decade of 

Russia's financial markets have leaped since President Boris Yeltsin's 
resignation Dec. 31, and even the ruble's sudden decline this week has failed 
to seriously panic investors or undercut Putin's sky-high popularity. 
Officials say the currency's fall was temporary. 

Although she supports Putin, Bobrova doesn't expect economic miracles. 

``He gives the impression of a strong person with a strong hold on the 
wallet. He also gives the impression that things will be more predictable,'' 
she said. 

Yeltsin was a fitful reformer who left behind a resource-rich, well-educated 
nation where a third of the population lives below the poverty line and the 
average monthly salary is $67. Up to half the economy operates 
``underground,'' unregistered on tax forms or bank accounts, and nearly any 
transaction can involve a bribe. 

Russia's economy grew in 1999, capping a decade marked by painful 
contraction. Yet much of the gain was recovering ground lost in a 1998 
financial collapse, and it was largely due to high prices for oil, Russia's 
biggest export earner. 

``There are still deep economic problems. But Putin has an advantage: Oil 
prices are high, economic indicators look good for now,'' said Marina 
Zaslavskaya, an independent economist in Moscow. ``It's rather superficial, 
but the mood of optimism will last at least through March'' and the 

After that, however, Russia's next president will face a pile of economic 

For example, to make life easier for entrepreneurs like Bobrova, the 
government must simplify the dizzying, punitive tax system - which almost 
every Russian violates - and must streamline licensing procedures that 
usually involve substantial bribes. 

Perhaps the biggest challenge will be tackling graft, which has seeped into 
every facet of Russian life. 

While Putin has avoided scandal himself, he oversaw economic issues in the 
St. Petersburg city government in the 1990s - and that administration was 
tarnished by corruption allegations. 

Even more scandalous accusations of graft have stung the Kremlin entourage 
and many Russians are suspicious of the tycoons rumored to be financing 
Putin's presidential bid. 

``It's not possible for him to be clean because of who surrounds him,'' 
Bobrova said, taking a break from selling glitter-covered barrettes and 
Christian Dior perfume. 

Putin has removed controversial Yeltsin aides and promoted reformists to 
handle the economy, changes analysts said were aimed at reducing the 
influence of the tycoons. But other Yeltsin allies, including some tainted by 
scandal, retain key posts. 

Since he was named acting president, Putin has offered a little something for 
everyone on economic issues. He has increased pensions by 20 percent, 
promised pay raises for teachers and doctors, and acted to boost exporters 
who bring in much-needed hard currency. 

Svetlana Kavun, a friend of Bobrova's who works in a hair salon, said she 
wants a president who will fix the banking system. She has lost her savings 
twice since the 1991 Soviet collapse in banks that went bust, and now keeps 
her money abroad or in cash. 

And she keeps it in dollars. Her lack of confidence in the ruble was 
justified when the Russian currency dropped against the dollar this week, 
although it rallied on Thursday. 

``We're tired of watching our money disappear,'' Kavun said. 


Los Angeles Times
January 13, 2000
The Costs of Brutality 

Frustrated by their humiliating inability to subdue rebellious Chechnya, 
Russia's military leaders are adopting ever harsher measures. From now on, 
they say, all Chechen males between the ages of 10 and 60 will be detained 
and investigated for possible "terrorist" connections. The military has 
observed few restraints in its battle to avenge the defeat it suffered in the 
last Chechen war, in the mid-1990s. Now, by identifying virtually all Chechen 
males as potential enemies, it is moving perilously close to a policy that 
smacks of ethnic cleansing. 
Russian popular support for the conflict is softening as casualties in 
the conscript army mount and as the independent media increasingly question 
the government's truthfulness. Acting President Vladimir V. Putin, a vigorous 
backer of the war, remains the overwhelming favorite in the scheduled March 
26 presidential election. He is unlikely to rein in the military any time 
soon. But if he is going to be Russia's leader for years to come, he must 
also weigh carefully the international consequences to Russia of its brutal 
campaign in Chechnya. 
The Chechen rebels aren't saints. They have murdered innocents, twice 
invaded neighboring Dagestan and bear a heavy share of responsibility for the 
misery that has fallen on their land. They might, as Moscow alleges, be 
behind a series of deadly terrorist bombings in Russia. None of this 
justifies Russia's indiscriminate tactics as it has tried to pacify the 
Russia should look again at its own history. Chechnya has resisted 
control from Moscow since it was first imposed in the 1850s, at a great cost 
in blood to Russians and Chechens alike, and that tradition isn't going to 
disappear. A political solution that would honorably meet the interests of 
both sides might still be achievable. Moscow at least has an obligation to 


The Economist (UK)
January 15-21, 2000
[for personal use only]
What will Putin do? 
M O S C O W 

A weak economy and a war that may be going wrong mean that Russia’s acting 
president, Vladimir Putin, has a tough two months ahead. Yet, for the moment, 
his support is strong 

HIS aims are fuzzy, his methods mysterious. But the outlines of Mr Putin’s 
presidency are becoming a little clearer—and betraying an eerie hankering for 
the stern glories of the Soviet era. “Our country was a great powerful strong 
state and this is not possible if we do not have strong armed forces,” he 
said on January 11th. A decree last week announced that Russia’s security and 
intelligence services should be strengthened. Foreigners (and Russians) 
inclined to think that the Soviet Union was an evil empire and that the KGB’s 
successor agencies remain bloated and unaccountable find this rather 

But the talk has not, so far, been matched by deeds. The Duma, with Mr 
Putin’s approval, looks set at last to ratify the Start-2 treaty with America 
to limit long-range missiles. Mr Putin has concentrated on distancing himself 
from the most unpopular aspects of the previous presidency. Boris Yeltsin’s 
daughter (and chief adviser) is out. So is Pavel Borodin, the man who ran the 
Kremlin’s huge property empire. The influence of Boris Berezovsky, a tycoon 
close to Mr Yeltsin’s family, seems to have been cut; his chief protégé in 
the government, Nikolai Aksyonenko, has been demoted. 

Mr Putin has appointed and promoted a different crew. The tough-minded 
finance minister, Mikhail Kasyanov, is now in effect his deputy. Leading 
reform figures from the past, such as Anatoly Chubais (now an electricity 
magnate), Yegor Gaidar and Sergei Kiriyenko (both former prime ministers), 
are said to be advising Mr Putin on economics. 

An admirable start? It has certainly delighted the stockmarket (see chart). 
But, on their own, these changes are cosmetic. Other Kremlin insiders, 
including those linked to Mr Berezovsky, remain firmly in place. And for all 
Mr Kasyanov’s gritty talent, his role in renegotiating (and reneging on) 
Russia’s foreign debts has left many western investors feeling bruised and 
cheated. For now, Russia is run by much the same old gang. 

Mr Putin may just be biding his time until his election as full president; 
the poll is due on March 26th. Afterwards, if he wins and if he wants, he 
should be able to clean house more vigorously. Until then, he must maintain 
the uneasy coalition of interests that backs him: the security services, the 
armed forces, some oligarchs (as Mr Berezovsky and those like him are termed) 
and the Yeltsin family friends. 

But polling day still seems a long way off. The war in Chechnya (see article) 
may be going adrift, and so is the economy. The biggest sign of trouble is 
the exchange rate. Russia’s money supply increased by about 15% in the last 
two months of 1999, partly to finance a pre-election splurge and partly to 
buy dollars for foreign debt repayments. Predictably, the rouble has dipped, 
by nearly 7% against the dollar, in the past month. Mr Putin’s first response 
was to order exporters to turn all their hard-currency receipts into roubles. 

This brought immediate criticism from the IMF. Such controls have worked 
poorly in Russia in the past. At present, the country has a trade surplus of 
$2.5 billion a month, and exporters are already supposed to repatriate 75% of 
their earnings. But, as the much smaller increase in central-bank reserves 
shows, almost all the money flows out of Russia again. That reflects a 
fundamental lack of confidence among the people who know the country best—the 
Russians themselves—caused by endemic lawlessness. Witness, on January 10th, 
the assassination of Ilya Weissman, the Russian finance director of one of 
the few really successful foreign investments in Russia, the Nordic-owned 
Baltika brewery in St Petersburg. 

The government has now backed away from the hard-currency-into-roubles 
proposal. The episode shows that Mr Putin’s firmness of touch, and the 
economic advice he receives, are not quite so splendid as the ecstatic 
stockbrokers of Moscow believe. And the problem remains: finding $3 billion 
for further foreign debt payments in the coming quarter, and money to finance 
populist pledges such as a 20% increase in pensions, will be horribly hard, 
especially when the war in Chechnya is already costing billions of dollars 

The squeeze on the rouble comes just as the benefits to the Russian economy 
of the huge devaluation in 1998, which made imports plunge and pepped up 
local production, are wearing off. Food imports in December, for example, 
were up 48% compared with December 1998. That suggests that the revival of 
local food producers, a much-touted sign of returning economic health, was a 
blip. If the oil price falls too, Russia could again be facing the financial 

The obvious way out is, as so often before, help from abroad. The European 
Bank for Reconstruction and Development said on January 12th that it was 
planning to lend Russia up to $750m this year. The IMF and World Bank could 
lend billions more—but only if the war in Chechnya ends. And that looks ever 
less likely to happen soon. 


The Economist (UK)
January 15-21, 2000
[for personal use only]
Death and inglory in Chechnya 
M O S C O W 

ALTHOUGH the official propaganda booming out from Moscow still maintains 
that everything is going to plan, all the signs are that Russia’s soldiers in 
Chechnya are in trouble. Russia has a huge numerical advantage, but most of 
its troops are badly led and badly trained. Blowing buildings to pieces at 
long range is one thing; keeping control of territory captured in the face of 
determined guerrilla counter-attacks is proving quite another. 

There are three main fronts. In the capital, Grozny, several parts of the 
city (or what is left of it) still remain under Chechen control. Though the 
Russians have been claiming for a week that the rebels are running out of 
ammunition and food, there is little sign of that yet. Russian soldiers say 
that, when they actually venture into the city, Chechens emerge from bunkers 
and shoot at them. 

In the area between Grozny and the southern mountains, Chechen rebels have 
been able in the past few days to mount raids on towns such as Argun and 
Shali that had previously been captured by the Russians. On January 9th, they 
ambushed a supply column. Some Russian generals deny that any significant 
attacks took place; others say that the Chechens were repelled with heavy 
casualties. But the fighting is an ominous echo of the previous Chechen war, 
in which Russia conquered the country at great cost, only to lose control of 
it again soon afterwards. Meanwhile, Russian troops have encircled but not 
yet taken Vedeno, the largest town in Chechnya still wholly in Chechen hands. 

Accounts of losses differ wildly (see table). Russia’s Interior Ministry says 
its troops have suffered dozens of casualties in recent days, but declines to 
give a total figure for the war. The Defence Ministry’s figure for its own 
losses refers only to recovered and identified bodies, meaning that it is 
bound to be an underestimate. The Soldiers’ Mothers’ Committee in Moscow, an 
anti-conscription group, says official figures are at least four times too 

At any rate, Russian enthusiasm for the war is ebbing. The question now is 
how Mr Putin and his generals will react. There are signs of disunity. On 
January 8th, Mr Putin announced the replacement of two commanders, General 
Vladimir Shamanov and General Gennady Troshev. But the commander-in-chief of 
the operation, General Viktor Kazantsev, said on January 10th that they had 
merely been assigned “additional duties”. He and others have publicly blamed 
their colleagues among the Interior Ministry’s forces who are supposed to 
deal with the conquered areas—where rebels seem most adept at hiding. The 
defence minister, Igor Sergeyev, says bleakly that “the situation in Chechnya 
has seriously changed of late. An enlargement of the safe zone requires a new 
style and method of command.” 

The immediate Russian response has been to treat the civilian population in 
Chechnya even more harshly. On January 11th, General Kazantsev said all males 
between 10 and 60 would be subject to “filtration”, which in the previous 
Chechen war involved lengthy detention, frequent torture and sometimes 
summary execution. 

That sounds an unlikely key to victory, given the Russian army’s disarray. 
Georgian security officials this week said they had seized a large batch of 
arms en route to Chechnya—sold by soldiers from one of Russia’s own military 
bases in Georgia. 


Web page for CDI Russia Weekly:


Return to CDI's Home Page  I  Return to CDI's Library