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Johnson's Russia List
18 January 2000
[Note from David Johnson:
1. Moscow Times editorial: Dizzy With Success.
2. AP: Anna Dolgov, Most War-Torn Chechens Denied Care.
3. Reuters: Latvian police detain Starovoitova murder suspect.
4. Christian Caryl: Re: Vladimir Pozner show.
5. Robert Donaldson: "Putin Doctrine"
6. Ray Thomas: RE: 4042- Stratfor/The Putin Doctrine, World Socialist
Web Site/Political and Historical Issue.
7. Eltsin Forum at Georgetown.
8. The Russia Journal editorial: Politics of compromise.
9. Moscow Tribune: Stanislav Menshikov, BE PREPARED FOR A SMALL BOOM.
New Administration Heeds Advice to Promote Demand.
10. Reuters: How the Duma helps run Russia.
11. Trud: Vyacheslav Nikonov, DUMA PUZZLE.
12. The Independent (UK): Patrick Cockburn, Moscow denies casualties
despite photo evidence.
13. AFP: Russian Business Elite Cautiously Backs Putin.]
January 18, 2000
EDITORIAL: Dizzy With Success
"The plan has not changed. Nothing in particular has happened to make us
start thinking that something unusual has happened." - acting President
Vladimir Putin on Saturday, discussing the war in Chechnya.
It is time to stop the war - and to start asking some hard questions about
how it came about in the first place.
Whatever acting President Putin may say, the fighting is not achieving any of
its stated aims. In fact, it is subverting every one of them. The war is
fostering more disorder, more terrorism, more banditry and more suffering for
In a recent tour of Chechen territory under the control of federal forces,
our reporter Yevgenia Borisova found no electricity, no gas, no heat, no
functioning schools, no pensions or social payments, no humanitarian aid, no
gainful employment. What she did find was the Russian military tightly
controlling media access to and from Chechnya - to the point of having
soldiers confiscate scraps of paper with anything written on them from those
passing through checkpoints. And in village after village, she heard tales of
innocents killed by airstrikes; she heard detailed accounts of an early
December massacre of 41 people by wilding Russian troops in Alkhan-Yurt; she
was told of entire communities passing the hat to pay "tribute" bribes to
Russian officers; and she saw trains of cowed yet protesting refugees
rolling, in a forced repatriation to the war zone, back into Chechnya.
Ms. Borisova, by the way, is a Russian citizen. The Russian government likes
to insist that unflattering reports about events in Chechnya are filed or
influenced by prejudiced foreigners. The reality is that the best, most
damning case against the war has been assembled by Russia's own people -
among them Andrei Babitsky of Radio Liberty, Vyacheslav Izmailov of Novaya
Gazeta, Alexander Petrov of Human Rights Watch, and of course the heroic
Maria Eismont, who files dispatches from Grozny and elsewhere for Reuters and
Alas, as in the Soviet era, the government seems to look upon truth itself as
a disloyal saboteur.
The Sunday after Russian Orthodox Christmas, explosive devices set in three
huge apartment buildings in the southern town of Armavir failed to go off.
Terrorists had breached gas mains in the basements of the buildings and
rigged flares to timers. By the time police discovered them, the flares had
already gone off as planned, but the gas had apparently leaked away through
other holes in the basement walls.
Consider this incident for a moment. Each of these buildings was nine stories
or more. Had the explosions destroyed them, hundreds would have been killed;
indeed, the death toll could have well dwarfed that of all previous bombings
Putin's military operations - not a whim of fate - are supposed to be
stopping such terrorism. But how? In Putin's words, we will simply "waste"
the terrorists "in the toilet." In other words, we will kill every last one
of them. The reality, of course, is that Russian forces have not even been
able to prevent leading, high-profile guerrilla leaders like Shamil Basayev
and Movladi Udugov from doing as they please - even visiting other nations.
How are they going to find, much less deal with, thousands of anonymous
This primitive approach of killing all the terrorists could only work if it
was actually about killing all of the Chechens. Period. Otherwise, every
"terrorist" killed will have a son or a brother or a nephew - or even a
mother or a sister or niece - who will then become a "terrorist" in turn. The
aerial bombing campaigns, which have destroyed entire communities, have no
clear military purpose. Instead, they are the equivalent of a terrorist
factory - for what is more likely to produce a man willing to take up arms
against the state then a state that kills his parents, his wife, his
A Not-Great Game
The Taliban this weekend formally recognized Chechnya's independence. The
U.S. State Department, for the first time ever, met with Chechnya's foreign
minister. It was apparently a low-level affair, a mere nod-and-handshake in a
Washington hotel lobby. Turkey, meanwhile, is drawing a nervous Georgia into
talk of a "Caucasus Security Pact." Turkey grandly agrees Russia can probably
In the capitals of the West, Russia's political allies can't figure out how
to justify sending more financial aid; in the Moslem world, they are watching
Moscow replace Washington in public opinion as "the Great Satan."
None of this - none - is remotely in Russia's national interest. (It may, of
course, suit Washington and Ankara just fine.) And it is unfolding inexorably
- even as Putin turns aside whistling that "nothing in particular has
happened to make us start thinking that something unusual has happened."
Who Is Winning?
As near as we can see, the only beneficiary of the war so far is Putin
himself. He looks decisive, ruthless. He is former KGB - a strong hand - yet
vocally supported by leading "liberals" like Anatoly Chubais and Sergei
Kiriyenko. To many Russians - who, like us, see corruption in government as a
major threat to national security - he probably looks the man to restore
order. And already he is making changes - putting a former KGB man in to
replace Pavel Borodin at the murky presidential household affairs
directorate; demoting ministers with unsavory reputations; promoting those
respected by Western observers.
So far, however, we see government officials shuffled - but not sacked. We
see a Central Bank under the same management as the people who brought us
FIMACO, the offshore shell company where the bank has parked the national
reserves, earning unspecified profits that have gone in unspecified
directions. (Readers of these pages may know we have called repeatedly for a
thorough purge of existing Central Bank management, for an investigation and
for increased parliamentary oversight of the bank.) We see ORT, the national
state-run Channel 1 television station, firmly in the hands of its de facto
editor-in-chief, Boris Berezovsky. (Berezovsky even admits the authenticity
of transcripts of his phone conversations with ORT anchor Sergei Dorenko - as
published in Novaya Gazeta, they have those two discussing how best to pin a
murder allegation on Moscow Mayor Yury Luzhkov, among other things.) We see
Yury Skuratov, the suspended prosecutor general, still on the outs -
apparently for the crime of finally starting to do his job - and, by the way,
deriding Putin as a corrupt lackey for corrupt family interests.
A Change of Subject
In August, the most heated topic of Moscow discussion revolved around reports
that billions of dollars from Russia had been laundered through the Bank of
New York. (It is our opinion, by the way, that the Bank of New York
hullabaloo was as loud and shrill as it was because Russia-watchers abroad
felt sheepish about having been slow to grasp the significance of FIMACO; for
these people, the New York Times-approved Bank of New York scandal was a
welcome opportunity for a make-up call.)
And then, a dramatic change of subject. Suddenly, Russian television was full
of the horrors and disorders of Chechnya. The invasion of Dagestani mountain
backwaters by Basayev's bands, the apartment bombings - these would come
later. But even today, even after those larger events, what sticks with many
people is the television footage of a Chechen fanatic beheading his victims
with a sword; of the emaciated kindergartner held in Chechnya for months for
It was not entirely a new theme. In March and April, Interior Ministry
General Gennady Shpigun was kidnapped off of his plane on a Grozny runway
(his whereabouts remain unknown); a bomb ripped through a Vladikavkaz
marketplace, killing more than 50 people; and a car bomb packed with nails,
screws and empty gun shells and parked in residential St. Petersburg failed
to detonate, but would have been deadly. August and September saw Basayev's
attacks - and then the apartment blasts, in Moscow, Buinaksk, Volgodonsk,
which left nearly 300 dead. There are strong reasons to believe Chechen
partisans are behind every single one of these terrorist events.
However, authoritative voices have argued that the Kremlin itself - or
elements in the Kremlin "family" - may have abetted, encouraged or even
framed the Chechens.
This theory has been put forward by Chechen President Aslan Maskhadov, who
has over the years repeatedly accused oligarch Berezovsky of ties with
Chechnya's worst terrorists and kidnappers (Berezovsky has brokered the
release of many kidnap victims).
It has been floated in testimony to the U.S. Congress by Yabloko party Duma
Deputy Yury Shekhochikhin and on the floor of the State Duma by Liberal
Democratic Party of Russia leader Vladimir Zhirinovsky.
It has been put forward in print by no less famous a journalist than NTV's
"Itogi" anchorman, Yevgeny Kiselyov. And in Chechnya proper, it is taken as
axiomatic by villagers that the war is about putting the "family's" successor
into the Kremlin - and nothing else.
The newspaper Moskovsky Komsomolets has published what it says are
transcripts of phone conversations between Berezovsky and Chechen terrorists,
in which Berezovsky is described playing a role in organizing Basayev's
invasion of Dagestan. In a startling response, the Berezovsky-controlled
Nezavisimaya Gazeta in October suggested, in an article by editor Vitaly
Tretyakov, that Berezovsky might indeed have done that.
Tretyakov wrote then that it was "obvious that the Chechens in Dagestan were
lured there" by "Russian special services." (Is it obvious? If so, isn't this
worth investigating?) Tretyakov added his "personal hypothesis" that
Berezovsky might have unwittingly assisted those special services, "or even
more likely - he could have acted in concert with them." (To what end?)
In Moskovskaya Pravda, meanwhile - days before the first bombs rocked Moscow
- well-known journalist and retired army Colonel Alexander Zhilin wrote that
Kremlin insiders, including Berezovsky, were circulating a written draft of
steps to sow disorder as a way of reaping power.
"The plan is to carry out some high-profile terrorist attacks," Zhilin wrote.
Days later, the first terrorist bomb hit Moscow, ripping through the Manezh
shopping center and killing one person. Apartment blasts followed.
Let Parliament Investigate
No one has ever taken responsibility for any of the terrorist attacks in
recent months. That is not exactly Chechen style - Basayev and other warlords
have often worn their worst crimes as badges of honor.
Instead, we have seen these fascinating Moskovsky Komsomolets and Moskovskaya
Pravda reports of a Kremlin intriguing with terrorists. We have seen
Segodnya, another national newspaper, report of a meeting in Paris between
Kremlin chief of staff Alexander Voloshin and Basayev.
We have seen The Independent of London report on a videotaped "confession" of
a Russian GRU, or military intelligence, man, who tells his Chechen captors
that he and others engineered the Moscow apartment blasts.
And for that matter, we have Sergei Stepashin's sacking as prime minister -
and Stepashin's opaque claim that he was sacked because "he could not be
It is time for a major national investigation of the apartment bombings - one
run by a parliamentary commission, or perhaps by a special prosecutor
selected by parliament and granted a free hand to work.
We would humbly suggest Stepashin be the first to testify. He should be asked
under oath: Who made his staying as prime minister (and, presumably, as
Yeltsin's successor) conditional on his "being bought"? Bought to do what?
Next up for consideration ought to be these purported M-K Berezovsky tapes.
Is it not possible to determine the authenticity of the voices on an audio
tape - to determine whether the tape is real?
And if the M-K tape is indeed authentic, then is Tretyakov's "personal
hypothesis" of its meaning sufficient, or does parliament have a
responsibility to dig deeper?
Some will hotly reject calls that the apartment bombings be investigated by
parliament. They will say it is a police matter; they will accuse those
willing to entertain even fleetingly a Kremlin role in terrorist attacks on
innocent Russians as "Russophobes," or cranks.
We'd respond that it is not The Moscow Times that has first suggested this.
It has been discussed in the Russian Duma and the U.S. Congress, and in the
newspapers of Paris and London and Los Angeles; and it is time the air was
We'd also respond that the Central Intelligence Agency has mined Nicaraguan
harbors, and been behind Middle East car bombs that have killed innocents;
that the conventional wisdom is that broad official conspiracies led to the
carnage in Kosovo and East Timor; that American presidents have looked to the
polls in prolonging the carnage in Vietnam and in invading, say, Grenada.
Such behavior is not unheard of - even in nations where democracy and rule of
law are considered strong.
Nor is any of this Russophobia, or naoborot. What to us constitutes
Russiaphobia is to assume that Russia is not capable of conducting a real,
democratic, parliament-led investigation of terrorist attacks that have
killed hundreds; that it shouldn't even try.
It is also Russophobia, in our view, to clench one's teeth into a grin and
insist Putin is "the best bet" for Russia - simply because he looks
For that matter, what could be more xenophobic toward Russia's citizens than
lazily accepting the warped official logic - that "Chechens" are behind the
Moscow apartment blasts, so "Chechens" must die, and Grozny apartment blocks
must be destroyed by federal aviation? Don't the hundreds of thousands of
innocents deserve at least some court to hear their pleas?
Parliament should demand a halt to the war, and it should open an
investigation into the terrorist attacks.
We would also suggest that ordinary Russians reconsider their enthusiastic
support for acting President Putin's policies.
So far, Putin has appealed to the worst natures of the Russian people - and
the people have applauded.
It would be dangerous and foolhardy - not to mention utterly immoral - to
look upon this with complacence as a temporary problem, one to be addressed
March 26 and no sooner.
Most War-Torn Chechens Denied Care
17 January 2000
By ANNA DOLGOV
NAZRAN, Russia (AP) - The chief of the trauma department of the Nazran
hospital is overwhelmed with fatigue and frustration. Dozens of injured
civilians from war-ravaged Chechnya arrive every week, but in most cases
doctors must turn them away.
The southern Russian republic of Ingushetia has taken in most of the
approximately 250,000 refugees who have fled Chechnya, and the hospital in
the Ingush capital, Nazran, is the first stop for many of Chechnya's wounded.
Yet the hospital has only 40 beds for the injured - even after the trauma
unit took over wards from two other departments. And as the fighting in
Chechnya rages, more wounded civilians than the hospital can accommodate are
crossing the border into Ingushetia seeking treatment.
``If we had beds, we would admit 50 people every week,'' said Dr. Ibragim
Murzabekov, the trauma department chief, shaking his head. ``People who need
hospitalization walk around with serious injuries, with infected wounds, but
we have to treat them as outpatients.''
The Russian authorities insist that their strikes in Chechnya are targeting
rebel fighters, and deny heavy casualties among the civilian population. But
human rights groups, Chechen officials, and Ingush doctors all say that
thousands of Chechen civilians have been killed or wounded during the
fighting - though no one has a more precise estimate of the entire toll.
In the hospital's fourth-floor trauma unit, patients lie on bunks in the
corridor. Nurses hurry by, carrying syringes and steel trays heaped with
iodine- and blood-soaked cotton swabs. The air is heavy and stale, tinged
with the smell of disinfectants.
Thirty-year-old Zarema Sadulayeva lay on a makeshift bed, her injured arm
heavily bandaged, her face bruised and her lips caked with dried blood.
``I had to plead with doctors to take us in,'' said Sadulayeva's husband,
Alibek Kiriyev. ``All the hospitals kept refusing to admit her.''
The bones in Sadulayeva's left arm were smashed in several places by a
Russian shell fragment during last week's fighting in the Chechen town of
Shali, said Kiriyev, who arrived with his wife from Chechnya on Saturday
Two other clinics in the area - in the Ingush towns of Sleptsovskaya and
Malgabek - also admit wounded civilians from Chechnya. But these rundown
facilities are even worse off than the hospital in Nazran, with little space,
even less cash, no modern equipment, and overworked doctors and nurses.
Asked whether the government is doing anything to ease the medical centers'
dire financial and material straits, Murzabekov snarled, ``Absolutely
``Only a handful of people are transferred to central Russia'' for treatment,
he said. ``And even then, there are hurdles at every step.''
Latvian police detain Starovoitova murder suspect
17 January 2000
RIGA, Latvia (Reuters) - Latvian police said Monday they had detained a
former Russian policeman as a suspect in the assassination of Russian liberal
politician Galina Starovoitova.
State police chief Juris Riksna told journalists that Konstantin Nikulin, a
former Russian paramilitary policeman, had been apprehended as a suspect in
an unrelated murder committed in Latvia and evidence showed he might have
been involved in Starovoitova's death.
``We have operative information on Nikulin's possible connection with St.
Petersburg groups carrying out ordered murders,'' Riksna said.
``We sent bullets and cartridge cases (from Nikulin's gun) to St. Petersburg,
but so far we have not received any reply about his possible connection with
``The confiscated gun is of a very rare brand and it is very expensive.
Starovoitova's aide was wounded by the same type of gun,'' he said.
Starovoitova was gunned down outside her home in St. Petersburg in November
A 52-year-old grandmother, Starovoitova was an outspoken supporter of reforms
in Russia and a close supporter of former President Boris Yeltsin in the
early days of Soviet reforms.
The assassination occurred during the run-up to a local election in St.
Petersburg in December 1998.
Date: Mon, 17 Jan 2000
From: Christian Caryl <CCaryl@compuserve.com>
Subject: Re: Vladimir Pozner show
In keeping with my personal policy of openness toward our colleagues in the
Russian media, I just made an appearance (along with three colleagues) on a
show hosted by Vladimir Pozner on ORT. I didn't see the version of the show
as it was actually broadcast, but my wife caught the end and told me that
at least one of my remarks had been edited to make it sound like I was
agreeing with government policy (which, needless to say, I wasn't). I would
be very grateful to hear from anyone who saw the show and, even better,
recorded it. To those who are interested in such matters, this might make
an interesting case study in the new Kremlin's retrograde approach to news
Date: Mon, 17 Jan 2000
From: Robert Donaldson <email@example.com>
Subject: "Putin Doctrine"
The analysis by Stratfor.com of Russia's revised national security concept
(JRL 4042), which Stratfor dubs "the Putin Doctrine," seems to me to make
far too much out of an extremely subtle distinction. In Stratfor's view,
the new formulation marks the abandonment of Gorbachev's "no first use"
pledge. In sweeping terms, Putin's doctrine is called "an attempt to
re-order Russia's relations with the United States, the rest of the West,
the former republics of the Soviet Union and ultimately, to reconcile
Russia's own self-image."
All of this fits in with the notion that Putin's accession represents a
much harder-line Russian approach to the West. But the premise is flawed.
In fact, Gorbachev's pledge was trashed as a "propaganda thesis" and
reversed as early as the November 1993 adoption by Yeltsin's Security
Council of a new military doctrine, when Russia's "nuclear umbrella" was
first extended to defense of the territory of all signatories of the CIS
Collective Security Treaty. Later, when the National Security Concept was
finally adopted in December 1997, it stated that Russia was prepared to use
nuclear weapons to deal with any armed aggression that might threaten its
existence as an independent sovereign state. (For details on these
documents, see Chapter 4 of my book with Joe Nogee, The Foreign Policy of
Russia.) As best as I can judge from summaries I have seen so far, the
revised doctrine speaks of using nuclear weapons to repel armed aggression
against Russia if all other means of defense have been exhausted or proven
This subtle change is no doubt "not accidental," but it is decidedly not
the first time Gorbachev's pledge has been abandoned, and it hardly seems
to warrant the overblown rhetoric, replete with images of nuclear bombs
raining down on the US in response to US hegemony, with which Stratfor and
some press commentaries are greeting it.
From: R.Thomas@open.ac.uk (Ray Thomas)
Subject: RE: 4042- Stratfor/The Putin Doctrine, World Socialist Web Site/
Political and Historical Issue
Date: Mon, 17 Jan 2000
Your juxtaposition of the commentaries by Stratfor on strategic issues, and
the World Socialist Web Site on political issues is brilliant. The
surprising thing is that these two commentaries are consistent with each
other! Together they give a masterly analysis of the situation of Russia
and the situation in Chechnya.
The major component missing, and also missing from other commentaries you
publish, is a good assessment of the prospects for Putin's economic
policies. This gap encourages me to express the view that these prospects
are grim. The centralization of power that Putin advocates will condemn
Russia to economic stagnation. Centralization is the reverse of what is
The economic problem is not the enemies outside that Putin unjustly maligns,
but enemies and lack of trust inside Russia. The problem is few
organisations in Russia have justification for trusting each other, and none
has justification for trusting the state. The Russian may vote for Putin,
but that does not mean that they will trust the Kremlin any more than they
do now. Putin's popularity is based on the belief that he will change
things for the better.
Unfortunately for Putin's policies, economic growth in a capitalist world
depends upon trust. Putin's centralization will prevent the development of
a banking system in which Russian people and Russian organisation have any
trust. For the foreseeable future, the kleptocrats of Russia will
continue to keep their money abroad, and the processes involved in keeping
this money abroad will continue to feed corruption and encourage tax
evasion. For the foreseeable future, dollars in mattresses will continue
to be the way in which the majority of Russians will try to preserve their
assets on a week to week and month to month basis.
The barrier to market transactions created by this situation and the
thinking in short time horizons that this situation requires will stunt
economic growth. Unfortunately the poor prospects for economic growth
reinforce the importance of the analyses of the strategic situation made by
Stratfor and the political situation made by World Socialist Web Site.
Ray Thomas, Social Sciences, Open University
Tel: 01908 679081 Fax 01908 550401
35 Passmore, Milton Keynes MK6 3DY
Date: Sun, 16 Jan 2000
From: "Harley Balzer" <Balzerh@gunet.georgetown.edu>
Subject: Eltsin Forum at Georgetown
Could I ask you to post the attached announcement?
THE CENTER FOR EURASIAN, RUSSIAN AND EAST EUROPEAN STUDIES (CERES),
GEORGETOWN UNIVERSITY, PRESENTS A FORUM AND DISCUSSION:
"The Historical Yeltsin and Russia's Future"
Leon Aron, Resident Scholar and Director of Russian Studies, American
Enterprise Institute, author of the new biography Yeltsin: A Revolutionary
With comments by Paul Goble, publisher, Radio Free Europe/Radio Liberty and
Harley Balzer, Director, Center for Eurasian, Russian and East European
Thursday, January 20, 2000. 4-6 p.m. ICC Auditorium.
For questions contact Astrik Tenney, CERES Program Officer
The Russia Journal
January 17-23, 2000
Politics of compromise
President Boris Yeltsin's resignation on Dec. 31 was not just the last
political surprise of the 20th century, it also sets the tone for a series
of political compromises and surprises in the coming years. Russian
politics, at least in the foreseeable future, is going to remain a zero-sum
game, throwing up regular surprises, brought together through back room
deals, amounting to little substantial change.
Even though acting President Vladimir Putin's campaign will focus on "a new
generation," "new ideas" and "tough governance" themes, there is nothing
new in Russian politics. Politicians are afraid of their own convictions.
Communists are talking of market economy, while reformers nod at
Former hawks are talking of restraint in Chechnya, while liberal democrats
are taking a hawkish line. There is almost no ideological polarization in
the nation's politics.
Everyone is edging toward an undefined centrism. "Russian revival" is the
latest rallying cry (as if anyone would disagree), while no one seems to
have a clue about how to go about achieving it. For those looking for signs
of a revival of reform, it would be a rude shock to realize that centrism
in Russia is a continuation of corrupt control of the state and all its
subjects by a coterie of former party apparatchiks.
Communism and its whole ideology amounted to no more than a slogan in their
arsenal for many years. Russia's political elite had less faith in the
communist ideals than even their Western counterparts. Now, they have even
abandoned all talk of social equality and promise prosperity through tough
measures and the battle against corruption.
New faces such as Putin's simply give more credence to new messages. But
the harsh realities of the country's internal situation from the Chechen
war to the economy mean that the political system will have to come up
with new faces, new slogans and newer alliances with greater urgency.
The rush to presidential elections is understandable. The myth of a great
leader that is being woven around Putin could crumble any time. His ratings
could suddenly fall for acting or for failing to act.
That is where one sees the masterful art of Russian compromise and backroom
dealing in operation. Primakov is willing to give up his ambition, grand
vision and grand plans for Russia (if he ever had any), only to hold to on
a post, any post, and its privileges. That leaves the field even clearer
for Putin. Things can only go wrong if he shoots himself in the foot.
But, even with this farce of outward political stability and rallying
around a single consensus candidate, flaws are clearly evident in the
political system. Democracy has won and lost at the same time. Eight years
under an imposing political figure like Yeltsin did not bring a single
truly popular, non-communist, reformist and democratic politician to the
Almost every political figure in the country is now part of the same old
system of a politics of compromise that gives few choices for a democratic
Putin, a president elected with the active support of the political elite
and population, may not be the worst man for the job. What remains to be
seen is whether he can leave the political baggage of these months behind
and get on with the task of radical reform of Russia's institutions with
the same zeal he has shown in Chechnya.
What also remains to be seen is whether he will prove to be as committed to
democracy, free market and reform as the old man who gave him his chair.
Yeltsin was an exception to decades, if not centuries, of political
tradition in Russia. If Russia is to thrive and prosper, it will demand the
same qualities, and more, in the new president than simply the ability to
hold together a group of influence peddlers and oligarchs.
From: "stanislav menshikov"<firstname.lastname@example.org>
Subject: BE PREPARED FOR A SMALL BOOM
Date: Mon, 17 Jan 2000
BE PREPARED FOR A SMALL BOOM
New Administration Heeds Advice to Promote Demand
January 18, 2000
By Stanislav Menshikov
Mr. Putin's promise to raise pensions and wages of government employees by
20 per cent has been discounted by some as a populist measure that will
either have no positive effect on the economy or will be taken back after
the elections are over for "lack of money in the exchequer" or lead to an
inflationary boost in money supply, more price increases and new runs
against the rouble. The proposed measure was met with scepticism in the
None of these criticisms should be taken seriously. In fact, it is exactly
the right policy which the economy needs at this time. GDP and industrial
production showed remarkable growth in 1999 as a whole but monthly figures
are relatively stagnant since last fall. The main reason is that real wages
and personal incomes in general have failed to recover in line with
production. A new gap in aggregate demand is putting a brake on further
growth. To mend the situation, incomes have to be propped up. The
government cannot order privatised businesses to raise wages, but it can
increase pensions and salaries of government employees. That is what Mr.
Putin is doing.
If the suggested raises indeed go through, their effect on the economy will
not be insignificant. The wage bill of government employees (excluding
armed forces) together with that of persons employed in education and
medical services is about one fifth of the total civilian wage bill.
Pensions are as big as a quarter of the total wage bill. All told, an
increase of 20 per cent in such incomes for the remaining part of 2000 is
equivalent to roughly 80 billion roubles. According to calculations, this
would lead to a net addition of 0.9 per cent to real annual GDP and a full
one per cent to industrial production (multiplier and accelerator effects
are included in these estimates). At first glance, this does not look
spectacular but it may help double the current growth forecast for the year
and could make all the difference between stagnation and continued growth.
There are other signs pointing in the same direction. Government defence
expenditures are scheduled to rise by 57 per cent this year compared with
1999. If orders from the military are paid in full this time around, as
promised, this additional demand could, according to our calculations, add
another 1.2 per cent to real growth of GDP. Considering the immediate
effect on many branches of industry with large excess capacity this could
trigger a small boom in the economy.
Large increases in government expenditure are now possible because revenues
in 1999 have been collected well ahead of what was planned - more than
twice as much as in 1998. Extra taxes collected (compared to officially
approved budget figures) are 103.5 billion roubles - about as much as is
needed to finance the new rises in federal expenditure. More taxes are due
from growing output and incomes this year.
Also, sharply increased oil and other export earnings have made it possible
to service foreign debt even without access to loans from the IMF. Wisely,
there has been no hurry in implementing the suggested excessive tightening
of exchange controls. This is a contingency measure that is kept in
reserve. The declared joint policy of the Finance Ministry and Central Bank
is to conduct a managed slow devaluation of the rouble while avoiding
shocks in the currency markets. It looks like the new administration is
heeding advice expressed in this column. At least, we are in agreement so
far with what is being done.
The central problem now is how to channel excess money capital into
domestic investment. There are clear signs of renewed activity in the stock
market where the Moscow equivalent of Dow Jones Industrials has recovered
to pre-1998-crisis levels. Share prices are still substantially lower than
the September 1997 peak but the rise since last year is so steep as to
constitute the beginnings of a boomlet. Also evident is renewed interest in
government bonds - OFZ's. But lagging behind is investment into fixed
One barrier to capital investment, stagnant output, is being effectively
removed. But another big obstacle remains - high interest rates. The
refinance rate of the Central Bank has been kept above 50 per cent for far
too long. And one can still earn a 50-plus per cent yield on well chosen
government paper. But it is next to impossible to match such profits by
investing in the real sector. Unless interest rates fall to much lower
levels prospects for an upsurge in capital investment are scant.
The government and the Bank should start rethinking their monetary
policies. The principal barrier to easy money is largely psychological. The
fear is that lower interest rates will spark new inflation. Not
necessarily. If less expensive funds are borrowed for replenishing working
capital and paying for new equipment, not for speculating against the
rouble, then the vicious circle of loose money and inflation will be
broken. With professionals, rather than careerist amateurs now in charge of
economic and financial policy, the solution should not be too difficult to
FACTBOX-How the Duma helps run Russia
MOSCOW, Jan 17 (Reuters) - Members of Russia's State Duma lower house of
parliament, who were elected on December 19, hold their first parliamentary
session on Tuesday.
The chamber prepares the country's laws but the president holds most of the
power. Following are key facts on the Duma and how it interacts with Russia's
other governing institutions.
Parliament is divided into two chambers, the 450-seat Duma and the 178-seat
Federation Council (upper house), under a constitution approved by a
referendum in December 1993.
The Duma is elected for four years and sits separately from the Federation
Council. The government is not drawn directly from its ranks but is appointed
by the president.
LAW-MAKING - The Duma adopts laws by a simple majority of all its members, or
226 votes. Draft laws then go to the Federation Council for approval by a
simple majority and must be signed by the president in order to come into
If the upper house rejects a law, the Duma can override it with a two-thirds
majority. The backing of two-thirds of deputies in both chambers is needed to
reverse a presidential veto. Laws needing the Duma's approval include the
CONSTITUTIONAL CHANGES - Changes to the constitution can be made only with
the support of two-thirds of all Duma parliamentarians and three-quarters of
all Federation Council members, as well as two-thirds of Russia's 89 regions.
APPOINTMENTS - Duma approval is needed for the president's candidates for
prime minister, Central Bank chairman and human rights commissioner.
DISMISSING THE GOVERNMENT - The Duma needs a simple majority vote of all
members to express no confidence in the government. The president can then
sack the government or ignore the Duma.
DISSOLVING THE DUMA - The president can dissolve the Duma if it rejects his
candidate for prime minister three times or if it votes no-confidence in the
government twice in three months and he opts not to dismiss the cabinet.
The Duma cannot be dissolved on the latter grounds in its first year of
It also cannot be dissolved if it has filed a criminal charge against the
president, if a state of emergency is in force, or if the president has less
than six months left in office.
REMOVING THE PRESIDENT - The president can be removed if two-thirds of all
deputies in each chamber of parliament support a charge of treason or ``some
other grave crime'' against him.
A special parliamentary commission must previously make a ruling on the
charge, the Supreme Court must confirm the president has committed the crime
and the Constitutional Court must rule that the procedure for filing the
charge has been followed correctly.
The PRESIDENT, elected for four years, guarantees Russia's constitution,
sovereignty and borders, is the commander-in-chief of the armed forces and is
in charge of foreign policy.
He nominates the prime minister, the Central Bank chairman, Constitutional
Court judges and the prosecutor-general. He can submit draft laws to the
Duma, and signs and promulgates federal laws. His decrees and directives are
mandatory throughout Russia.
The FEDERATION COUNCIL's powers include confirming border changes within the
Russian Federation, approving presidential decrees on declaring martial law
or a state of emergency, and approving top judges and the prosecutor-general.
It also can initiate draft laws which are sent to the Duma.
The GOVERNMENT drafts the budget and ensures it is carried out. It implements
fiscal, credit and monetary policy, and policy in areas such as education and
It can initiate laws, must guarantee civil rights and ensures law and order.
January 15, 2000
[translation from RIA Novosti for personal use only]
By Vyacheslav NIKONOV, president of Politika Foundation
The 3rd State Duma, three-quarters of whose
members are newcomers, will meet in session on January
18. The alignment of political forces in it is
different: the majority in the previous house belonged
to the Communists and their allies.
As I see it, the newly elected Duma, the lower chamber, will
be more reform-oriented and pro-Cabinet and will have more
factions. Until this past December, the house consisted of four
factions and three groups of deputies; in the new chamber, there
may be six factions and four groups.
Nobody would venture to predict their numerical strength the
next day--the 'independents' elected in single-mandate
constituencies will take their time forming allegiances--but the
overall layout is clear.
The largest factions will be those of the Communist party
(up to 100 members), Unity (close to 70 members) and Yevgeny
Primakov's part of Fatherland-All Russia, or OVR (up to fifty
The following groups of deputies will have no less than 35
members each (in line with the Duma's regulations): Narodny
deputat, or People's Deputy, which Gennady Raikov is building
with the Kremlin's okay; Russia's Regions whom Oleg Morozov has
stolen from OVR; the Agrarians rallying behind Gennady Kulik and
Mikhail Lapshin, who have been elected on the OVR party list and
are ready to forget, for the sake of uniting the ranks of the
agricultural producer's protectors, their recent disagreements
with Nikolai Kharitonov, who in turn is close to the Communists;
and Yuri Maslyukov's Industrial Group.
The Union of Right Forces, or SPS headed by Sergei
Kiriyenko, will have more than 30, Yabloko 25 and Vladimir
Zhirinovsky's bloc 19 members.
The Duma's lineup will thus closely resemble that of Ivan
Rybkin's house of 1994-95 where nobody had the majority and the
decision making boiled down to bargaining done between factions
and between the house and the Kremlin and the government. The
lobbying by the various interested agencies and business
structures was instrumental. The behavioural pattern of either
Duma is therefore hard to predict.
This circumstance is easily discernible today: three days
before its maiden session, the Duma has not elected a speaker.
The session will be opened by the oldest member, the largely
forgotten member of the former Pilitburo of the Soviet Communist
Party's Central Committee, Yegor Ligachev. But who the chamber's
speaker for the next four years will be is an intrigue for the
first few days of Duma deliberations.
The Communist Party has habitually been the first to claim
the speakership for itself by force of having the largest
faction. But it looks that its candidate, Gennady Seleznev, is
not to everyone's liking. He would have stood a sure-fire chance
to make it again in the new house if the Kremlin wanted to repeat
the 'Moscow Oblast scenario'.
To remind: while running for the Moscow Oblast governorship,
Seleznev has been supported by the Communist Party, Unity and
even Putin. But will the acting president and his tame Unity,
a.k.a. Medved, or Bear, want to be associated with the Communists
again is a big question.
And anyway, why allow the Communist Party to control the
Duma staff, which can easily be turned into an election staff now
that the Communist contender has challenged Putin in his bid for
The acting premier has proposed the candidature of Unity's
Lyubov Sliska: there are too few females in the top echelon, he
hinted. But Putin is likely in for a flop. Sliska may be
supported by Medved and the People's Deputy, but this is not
The other factions and groups would hardly want to see the
post filled by a person who is fully controlled from the Kremlin
and has fought no parliamentary battles.
Yabloko suggests Sergei Stepashin, who is not opposed by the
Union of Right Forces, which simultaneously suggests ex-minister
of justice Pavel Krasheninnikov, whose chances of making the
speaker are seen as ethereal.
Stepashin irritates no-one; he is acceptable for both the
Liberals and the Centrists. Given the Kremlin's support, he could
well count on getting the needed 226 votes. But one should
remember that while Stepashin was the premier, his
interrelationship with the then entourage of Boris Yeltsin was
not problem-free. Now if that entourage is still in power,
Stepashin can hardly expect to triumph.
Vladimir Zhirinovsky's nomination is everyone's laughing
stock. The country's chief Liberal Democrat will certainly be
OVR had been keeping mum until this past Thursday, probably
because Primakov would want to play the speaker poker, but only
when he was sure to win. The backing of OVR, the friendly Russian
Regions and the Agrarians would not suffice. Primakov would need
a few more votes--of either the Communists or pro-government
forces. He could get them only when the discussion of all other
candidates is deadlocked.
There are three realistic contenders for the Duma
speakership: Seleznev, Stepashin and Primakov. The votes of
Putin's Unity will likely be decisive--unless the Kremlin has
another ace up its sleeve.
The model of the new Duma's operation is clear: it will have
to seek compromise solutions on each issue.
The Independent (UK)
18 January 2000
[for personal use only]
Moscow denies casualties despite photo evidence
By Patrick Cockburn in Moscow
The bodies of four federal soldiers lie in shrouds in a frozen field in
Chechnya – although officially no soldiers were killed on the day they
Now two pictures, taken secretly by a Russian photographer and published in a
newspaper yesterday, have provided evidence of their deaths and have renewed
doubts about the true number of casualties.
>From the start of this latest conflict in Chechnya, the Russian armed forces
have gone out of their way to sanitise the war, reporting limited casualties
and ensuring photographs of its dead and wounded never appeared on television
or in the press. Generally, they have succeeded. Only by chance was a
photographer – who does not want to be named – able to take a picture
bodies of four Interior Ministry troops from the city of Orenburg, which was
published yesterday in the Russian weekly Novaya Gazeta.
The soldiers were killed fighting Chechen guerrillas on 27 December, a day
when officials say that no troops were killed. The bodies, which were
abandoned, were handed over 11 days later in exchange for some dead rebels.
The Defence Ministry in Moscow said yesterday that 426 soldiers were killed
and 1,195 wounded between 10 October and 5 January. This excludes casualties
from the heavy fighting during a Chechen counterattack 10 days ago on towns
east of Grozny, the Chechen capital.
But since Moscow launched the second Chechen war, many soldiers, their
relatives and human rights groups have come to believe that the real losses
are much higher than those announced. Valentina Melnikova, of the Soldiers'
Mothers Committee, said that going by reports from the Russian regions, the
real figure is at least 3,000 dead and 6,000 wounded.
The government has gone out of its way to make it difficult for the public to
discover the number of Russian victims. The army, Interior Ministry, security
services and different branches of the government report their losses
Both the Interior Ministry and the FSB security service told The Independent
yesterday that they had no data that they could reveal. Even senior medical
staff in the Defence Ministry cannot obtain true figures, says the
militarynews agency AVN, which suspects that losses are three or four times
the number reported.
The true figure for federal losses is a political football because Moscow has
always presented this waras very different from the one in 1994-96, when
Chechen guerrillas repeatedly decimated untrained infantry and unsupported
Dmitri Shkapov of Memorial, a human-rights group, saidthat going on past
experience, the casualties were between 20 and 30 per cent higher than
This may be because the number of missing is not included. At the end of the
last war, the army said that 4,000 of its soldiers had died in the fighting,
but did not include some 1,900 missing, almost all of whom were dead.
Military casualties probably were low up untilearly December, when troops
foughthard in villages south of Grozny to close a "ring of steel" around the
capital. Then there were reports of heavy losses from Russian officers,
although these were swiftly denied by Moscow.
Whatever the true figures, Russian casualties are likely to increase. The
acting president, Vladimir Putin, said at the weekend that the army wouldnow
move to take Grozny and then drive into the mountains of southern Chechnya.
The Chechen rebels, for their part, say that they will shift from positional
to guerrilla warfare, at which they are famously skilful.
Russian Business Elite Cautiously Backs Putin
MOSCOW, Jan 17, 2000 -- (Agence France Presse) Russia's business elite
cautiously backs Acting President Vladimir Putin's bid to win a presidential
election on March 26, an opinion poll in a leading business daily showed on
The poll, published in Vedomosti, also showed that business leaders did not
expect Russia's economy to worsen if Putin, seen as the strongest candidate
for president, won the election.
The poll, conducted by the independent ROMIR opinion research center among
260 top executives in companies operating in 12 of Russia's biggest cities,
reported that 16 percent of respondents believed Putin suited the job of
president. Another 62 percent said he suited the top Kremlin post "to some
extent". Seven percent of respondents said they expected Russia's economy to
decline if Putin, whose economic program remains largely unknown, won the
poll. Forty-five percent said it would probably improve.
Thirty-six percent of respondents said they expected the economy to remain
unchanged and 12 percent said they could not answer the question until Putin
shaped his economic course.
Vedomosti did not state when the opinion poll, arranged by ROMIR at its
request, was conducted.
Communist Party leader Gennady Zyuganov and liberal Grigory Yavlinsky have
officially joined the race for president in March, which Putin enters as hot
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