January 21,
2000
This Date's Issues: 4054 4055
4056
Johnson's Russia List
#4055
21 January 2000
davidjohnson@erols.com
[Note from David Johnson:
1. Izvestia: Konstantin Katanyan, PUTIN'S RATING WILL TOP 100% SOON.
2. Reuters: Putin warns of new bomb attacks in Russia.
3. International Herald Tribune: Max Jakobson, Is the New Strongman in
Moscow a Nationalist or an Imperialist?
4. Financial Times (UK):Putin's old ties build bond with Germany.
Russia's acting president spent 15 years as a KGB agent in Dresden. Andrew Jack reports on how personal affinity is helping national
links.
5. Forbes Global: Vladimir Kvint, Watch out, kleptocrats.
6. Itar-Tass: Putin Supports Trade Unions on New Labour Code.
7. Interfax: DOOR TO RUSSIA-NATO CONTACT NOT CLOSED - MINISTER.
(Ivanov)
8. STRATFOR.COM: Reinventing the CIS: Putin Takes the Helm.
9. Rossiyskaya Gazeta: Iraida Semenova and Aleksey Podymov, When the
Sleeper Wakes Up. (Claims of Economic Growth, Future Prospects Disputed)
10. The Ottawa Citizen (Canada): John Robson, Russia under Putin will
suck, as always.
11. The Ottawa Citizen (Canada): John Robson, An apology to all readers
for my column on Russia.
12. Variety: Noyce to wage Chechnya war. (New Hollywood movie)]
*******
#1
Izvestia
January 21, 2000
[translation from RIA Novosti for personal use only]
PUTIN'S RATING WILL TOP 100% SOON
By Konstantin KATANYAN
Over 80% of Russians are prepared to vote in a presidential
election and, if the election were staged this coming Sunday,
acting president Vladimir Putin would get 62% of the vote. Such
is the showing of a poll conducted by the Agency of Regional
Political Research.
The independent pollsters questioned 1,600 people in 90
towns and villages located in 52 constituent members of the
Russian Federation on January 14 through 16. The agency believes
that the result is accurate, give or take 2.5%.
The pollees named over 40 persons they are prepared to vote
for in a presidential election. Putin's runnerup is the Communist
Party's Gennady Zyuganov with 19%, followed by ex-PM Yevgeny
Primakov (7%), Yabloko's Grigory Yavlinsky (5%), the Liberal
Democratic Party's Vladimir Zhirinovsky (3%) and Moscow Mayor
Yuri Luzhkov (1%).
If Putin's rating continues to grow at the current rate, it
will have topped 100% by the election day, joke skeptics who tend
to mistrust results of opinion polls which oftentimes are far
removed from the reality in this country.
******
#2
Putin warns of new bomb attacks in Russia
MOSCOW, Jan 21 (Reuters) - Acting President Vladimir Putin warned on Friday
of the danger of fresh bomb attacks on Russian territory in retaliation for
Moscow's military offensive in breakaway Chechnya, Interfax news agency said.
``The danger of terrorist acts in Russia is growing,'' Interfax quoted Putin
as telling a meeting of security officials at the Interior Ministry. ``The
danger of such actions...will exist until we have crushed the bandits in
Chechnya.'' Putin said the security organs had information such attacks were
planned.
``Remember what happened in Moscow, Buinaksk, Volgodonsk, when we socked the
bandits in the mug in Dagestan, when they found out they were powerless in a
straight battle with us,'' said Putin, known for using blunt language on
Chechnya.
He was referring to an incursion by Chechen Islamic rebels into the
neighbouring Russian province of Dagestan last August and to a series of bomb
blasts in Moscow and other Russian towns shortly afterwards which helped
spark the campaign in Chechnya.
Moscow blamed the Chechen rebels for the bomb blasts, in which nearly 300
people died, though both the Chechen leadership and the guerrillas denied any
involvement.
In his comments at the Interior Ministry, Putin also repeated earlier pledges
that Russia would remain an open, democratic society. ``Defence of the
individual, of civil rights and freedoms are the basic principles of the
Interior Ministry's activity,'' said Putin, the hot favourite to win a March
26 presidential election.
*******
#3
International Herald Tribune
January 21, 2000
[for personal use only]
Is the New Strongman in Moscow a Nationalist or an Imperialist?
By Max Jakobson
The writer, a former Finnish ambassador to the United Nations, contributed
this comment to the International Herald Tribune.
HELSINKI - President Bill Clinton's national security adviser, Samuel Berger,
recently said he was worried that Vladimir Putin might turn out to be a
nationalist. His use of that term reveals how much things have changed.
During the Cold War, nationalism was a capital crime in the Soviet Union,
while the West applauded every manifestation of a nationalist spirit within
Moscow's orbit. Today the West regards nationalism as a reactionary force, an
enemy of a stable world order, while in Russia it keeps alive faith in a
return to greatness.
I would prefer to see as the leader of Russia a true nationalist dedicated to
making his country sound and strong, rather than an imperialist bent on
conquest. But what is Russia if not an empire?
The question has been much debated; it reveals an unresolved identity crisis.
The British and the French, too, have experienced the pain caused by the loss
of empire, but they have been able to withdraw from overseas possessions to
their well-established nation-states. Russians do not have such a fallback
position.
Before the breakup of the Soviet Union, the present Russian Federation was an
administrative entity, not a nation-state. Furthermore, 25 million Russians
have found themselves separated from the main body of the Russian people by
new state borders.
Except for the three Baltic states, which were independent between the two
world wars, the former Soviet republics gained independence by default, as it
were, with little or no preparation for statehood.
Every Russian I have met in recent times has taken for granted that most of
the lands of the former Soviet Union will eventually be reunited within the
Commonwealth of Independent States. ''Reintegration'' is the favored term. Is
this a legitimate aspiration, comparable to the integration that has taken
place in Western Europe, or is it imperialism in disguise?
During the dying days of the Gorbachev regime, Western governments made every
effort to help keep the USSR intact. But now, nine years later, the
independence of the new states that emerged from the collapse of the Soviet
Union has been institutionalized. All are members of the United Nations and
the Organization for European Security and Cooperation in Europe.
Estonia is in the midst of negotiations for membership in the European Union,
and Latvia and Lithuania are about to begin their talks with Brussels.
Ukraine has a comprehensive system of cooperation with the EU. Several of the
southern states of the former Soviet Union are being actively courted by
Turkey and Iran, as well as by American oil interests. China, too, is getting
involved. The Commonwealth of Independent States has become a mine field of
potential conflicts and crises.
A crucial test for relations between the West and Russia will come with
eastward EU enlargement. So far, the Russian government has made no objection
to EU membership for any of the Baltic states. It is strongly opposed to any
former Soviet republic joining NATO, but the EU has been seen as a toothless
free trade area. Few Russians seem to have grasped the profound consequences
of the EU process of integration. It will have the effect of moving the
Baltic states irrevocably out of Moscow's orbit.
The intentions of the EU are of course benign. Its expansion is meant to be a
friendly embrace, bringing political stability and economic progress to
Eastern Europe, for the benefit of Russia as well.
But those who run Russia today have not yet been converted to the EU concept
of security through integration. Their thinking is still dominated by
traditional geopolitics.
Mr. Putin has publicly castigated those who believe that Russia has no
enemies. Russia's new strategic concept, published last week, calls for more
military spending to counter a possible threat from the West, with nuclear
weapons if need be. The tough language, designed to secure the political
support of the military leadership for a Putin presidency, reveals the
conceptual gap that exists between Russia and the West.
*******
#4
Financial Times (UK)
21 January 2000
[for personal use only]
RUSSIA: Putin's old ties build bond with Germany
Russia's acting president spent 15 years as a KGB agent in Dresden. Andrew
Jack reports on how personal affinity is helping national links
In a country where gentle ripples often hint at powerful undercurrents, the
nationality of one of the first foreign ministers given the chance to meet
Vladimir Putin in his role as acting president is telling. It is Joschka
Fischer of Germany, who sees him today.
Mr Fischer will meet a man who acquired more than just espionage skills
during his time as a KGB agent in the old East Germany. The frontrunner in
Russia's presidential elections in March speaks German fluently, so much so
that although he prefers to speak in Russian he has corrected the grammar of
interpreters translating his comments into German on more than one occasion.
His two daughters were also enrolled in German schools in Moscow, until they
were withdrawn last year for security reasons.
In all, Mr Putin spent 15 years in Germany, largely based in Dresden in the
East but with periodic trips across the Wall into the West. West.
As communism crumbled, Mr Putin returned to his native city, soon to be
renamed St Petersburg - to work as a senior adviser in the mayor's office
dealing with foreign relations. Mr Putin continued to visit Germany
regularly, thanks in part to a town-twinning agreement with Hamburg.
"Putin is the first Russian leader to spend so much time abroad - and to have
such a special relationship with Germany - since Lenin," points out one
Moscow-based observer wryly.
"We think Putin is quite unknown," says one German official. "We believe that
deep inside he might have sympathy for our country."
Germany is one of the largest foreign investors in Russia, with nearly $1bn
in direct and portfolio investment last year. Berlin is the holder of the
largest Soviet-era debt, while the unification of East and West also left it
as Russia's largest aid donor. Russia is also still home to an estimated
800,000 ethnic Germans.
Mr Putin's character certainly fits Saxon stereotypes: efficiency,
reliability and a certain reserve. His career with the KGB and his current
style of operation also reflects a belief in Ordnung, or discipline and order.
In domestic affairs, Peter Schultze, head of the Moscow office of the
Friedrich Ebert Foundation, argues that the new Russian administration is
likely to shift from an American-inspired model adopted over the past decade
to a more western continental European alternative.
"The postwar experience of reconstruction and the role of the state -
especially the regionalised state - as an effective vector of development is
generating increasing interest," he says.
In diplomatic terms, the message is more mixed. Angela Stent, a professor at
Georgetown University in Washington DC and author of arecent book, Russian
and Germany Reborn, agrees that Russia was more focused on the US over the
past few years, while Germany was too consumed with the high cost of
unification to look farther eastwards.
The relationship of the two countries' leaders - of Helmut Kohl with Mikhail
Gorbachev and Boris Yeltsin - also seemed to weaken with the election of
Gerhard Schröder. But since then, Ms Stent says, the German government "has
realised that this is an extremely important strategic relationship".
But the possible warming in bilateral relations made possible by Mr Putin's
ascendancy will not be seized unequivocally by Mr Fischer, who has been a
vocal critic of Mr Putin's policy in Chechnya.
******
#5
Forbes Global
24 January 2000
[for personal use only]
In "Russia should quit the Soviet Union"(FORBES, Feb. 19, 1990), Vladimir
Kvint predicted the breakup of the old U.S.S.R. Eighteen months ago he
foresaw Boris Yelstin's resignation. We asked Kvint to dust off his crystal
ball and see what's in store for Russia after Yeltsin.
Watch out, kleptocrats
By Vladimir Kvint
Dr. Vladimir Kvint is Professor of Management Systems at Fordham University's
Graduate School of Business in New York.
In "The Last Days of Boris Yeltsin," published in the Sept. 7, 1998, edition
of FORBES GLOBAL, I wrote: "[Boris] Yeltsin might strike a deal to step down
(he is not a well man) before the next elections, which are set for June
2000." On New Year's Eve, 1999, Yeltsin announced his resignation. Thank you,
Boris, for making me look good.
This is not the end of Yeltsin, however. Believe it or not, he has
hand-picked almost all of the candidates available to the Russian electorate
in the presidential campaign of 2000. Vladimir Putin, Yevgeny Primakov,
Sergei Kiriyenko--all of them were ushered on to Russia's political stage by
Yeltsin.
It's not a given that all of these men will run. And of course other
candidates will appear, such as the outrageous nationalist and anti-Semite
Vladimir Zhirinovsky and the Communist Party leader Gennadi Zyuganov. But as
a practical matter, the choice for the Russian people has already been made
by Yeltsin. Barring some extraordinary event in Russia over the next three
months, on Mar. 26 Russia will elect a new president, Vladimir Putin. His
only real competition is Zyuganov, who can expect to capture 25% of the
popular vote.
It would be easy to view Putin in a negative light. He is a former
lower-level KGB officer turned bureaucrat in the St. Petersburg city
government. But it would not be a full and truthful picture. The Russian
people certainly don't see him that way.
Why is Putin now the most popular Russian leader? First, because he has taken
a tough and, in the opinion of most Russians, proper step to counter the
Chechen terrorists. He demonstrates persistence in pursuing that aim. And, in
contrast to the previous Chechen campaign of 1994-1996, the offensive he has
pressed has so far resulted in relatively few casualties for the Russian
Army. For this, Putin is no less popular than Zhirinovsky, Primakov or
General Alexander Lebed among the officers and enlisted men of the Russian
Army.
Second, the Russian people are tired of all of their aged leaders. Putin is
only 47. And he is especially popular among Russian women.
What does it all mean for the rest of the world? Mostly, it means new life
for Yeltsin's stalled economic reforms toward a market economy. The world's
leadership will gain a very tough partner, not an enemy, at the negotiating
table. Regarding his likely economic strategy, there is little to go on.
During his five months as prime minister, Putin has not made a single serious
attempt to improve the efficiency of the Russian economy. But that doesn't
mean he will not develop such a program. I expect that in the next 30 days it
will appear.
To reform the economy, Putin needs to muster support on a level similar to
that of the Chechen War. It is therefore not difficult to predict that the
following steps will be taken:
First, he will declare war on corruption. He knows the value of creating
examples. I am certain that his enforcement agents (many of them drawn from
his former employer, the KGB) will arrest and jail some bureaucrats on the
regional and federal levels who are taking bribes.
The next (and related) step will be to revise some of the worst excesses of
privatization, specifically those that clearly resulted from illegal
procedures. This will hurt the kleptocrats who have essentially robbed the
state of valuable assets. Examples: In the aluminum and nonferrous metals
industries, companies worth hundreds of millions of dollars were "sold" for a
small fraction of their true market value. Putin may also reclaim for Russian
taxpayers criminally privatized assets in other natural resource industries
and in the telecommunications and mass media services.
Russia's privatization needs to be put on a more transparent basis. Companies
that are for sale should be evaluated by the "Big Five" international
accounting firms. Tenders should be opened to all investors, not just Russian
ones. Putin's close relationship with Anatoly Chubais, Yeltsin's former first
deputy prime minister and architect of the privatization program, means that
Putin will be less forceful in reversing criminal privatizations than he
should be. But at least he'll start the process moving.
Finally, based on Putin's experience in the city government of St.
Petersburg, it is reasonable to predict that he will be in favor of
encouraging international investment in the Russian economy. Putin is no
xenophobe. He has enough understanding and information to realize that
without foreign investment in key industries and services, it will be
impossible to increase the average Russian's very low standard of living.
Following the Chechen war (which I predict will be wound up by election day
in March), Putin's first order of business will be the declaration of an
all-out offensive against corruption. To govern effectively, Putin will
require popular initiatives. Fighting the Chechen terrorists has been very
popular with Russians; to fight the kleptocrats who, in the opinion of most
of Russian society, stole their national wealth and prosperity, would be just
as popular. If Putin can take on Russia's economic terrorists as effectively
as he has battled the Chechen terrorists, he could be a great president.
*******
#6
Putin Supports Trade Unions on New Labour Code.
MOSCOW, January 20 (Itar-Tass) - Acting President Vladimir Putin has
supported the proposal of Chairman of the Russian Federation of Independent
Trade Unions Mikhail Shmakov on the creation of an influential commission for
finishing and promoting an early adoption by the parliament of a new Labour
Code of Russia.
Shmakov told journalists about it immediately after his meeting with Putin,
which lasted for half an hour.
Shmakov said that the commission would be made up of representatives of the
government, trade unions and the State Duma, as well as scientists, who will
"make into one acceptable version the three versions of the Labour Code,
submitted to the State Duma."
He said as well that he had suggested the creation of observer councils at
the social funds, in order to make their work "transparent and effective."
According to Shmakov, Putin accepted his invitation to attend a meeting of
the General Council of the Russian Federation of Independent Trade Unions,
which is scheduled for mid-February.
Shmakov said that the had discussed with the acting president the raising of
wages and pensions. "This is a standing question," he explained. According to
Shmakov, the problem is now within the competence of the parliament, because
the Federation Council returned to the Duma the draft law, which provided for
the raising of the minimal wage to the level of 200 roubles.
********
#7
DOOR TO RUSSIA-NATO CONTACT NOT CLOSED - MINISTER
MOSCOW. Jan 20 (Interfax) - Russian Foreign Minister Igor Ivanov
has said that the door to resuming contact between Russia and NATO is
not closed. However, Moscow "should clearly know to what extent the
alliance intends to take our interests and concerns into account and
follow the provisions of the Russia-NATO Founding Act," he said in an
article published in a supplement to Nezavisimaya Gazeta published on
Thursday.
In this respect "the developments in and around Yugoslavia have
raised many questions," he said.
"However, NATO is a reality in the European arena and it would be
shortsighted, to say the least, to ignore this fact," Ivanov said.
Russia also favors "the most constructive cooperation" with the
European Union, he said.
"There are no fleeting, temporary aspects to our approach to
relations with the EU and the current processes in it. We expect our
European partners to act accordingly in developing their ties with the
Russian Federation," the article says.
Russia "is open for close, intensive interaction with the U.S.,"
Ivanov said. The two countries are in for "serious work to further
deepen disarmament processes and advance bilateral trade and economic
relations," he said.
Russia is moreover, expanding its involvement in integration
efforts in the Asian and the Pacific region. Russia is consistently
building up ties with leading Asian countries such as China, India,
Japan, Iran and others.
Moscow counts on the dynamic development of cooperation with South
America, Africa and the Middle East, he said.
He singled out that relations with CIS countries would remain a
priority for Russian foreign policy.
Speaking of the situation in the world he recognized that "two
fundamentally different approaches to the formation of a new world order
have been converging lately."
One of them "is aimed at building a uni-lateral model dominated by
a group of the most developed countries relying on the military and
economic might of the U.S. and NATO," Ivanov said. "The rest of the
world is invited to live according to rules suitable for this select
club," he said.
It is especially alarming that "attempts are made to adjust
fundamental principles of international law to this pattern, replace
these principles by doctrines of restricted sovereignty and humanitarian
interference," he said.
"This is a road to nowhere, or to be more exact, back to a world of
confrontation," he said.
Russia, like many other countries is suggesting a different model
based on the strong conviction that the objective development of
civilization brings the world to a multipolar system and "there is no
reasonable alternative to it," the article says.
*******
#8
STRATFOR.COM Global Intelligence Update
21 January 2000
Reinventing the CIS: Putin Takes the Helm
Summary
Commonwealth of Independent States (CIS) Executive Committee Chair
Yuri Yarov stated on Jan. 14 that the Jan. 24-25 CIS Moscow summit
"will be a notable event in the life of the Commonwealth." Acting
Russian President Vladimir Putin will redefine the meaning of CIS
membership, in an attempt to make a more functional supra-national
organization. Such action will likely induce Georgia, Azerbaijan
and Uzbekistan to withdraw.
Analysis
Since the formation of the CIS after the 1991 collapse of the
Soviet Union, member states with differing visions of that
organization's purpose have engaged in a continual tug-of-war. This
fractured view of the region's premier supra-national organization
cannot last. At the Jan. 24-25 CIS summit in Moscow, Putin will
change all that.
Up until now, Russia and Belarus have viewed the CIS as a mechanism
to recreate a version of the Soviet Empire. Kyrgyzstan, Armenia and
Tajikistan have valued the CIS as a method to garner Russian
military assistance. Moldova, Kazakstan, Turkmenistan and Ukraine,
forced to affiliate with Russia for economic reasons, have often
seen the CIS as a necessary evil to be endured. Georgia and
Azerbaijan - which were forced into the organization - have
doggedly tried to dilute the CIS's institutions whenever possible
in order to lessen Russian influence. CIS members all have had
different priorities, oftentimes siding against Russia. The
Georgia-Ukraine-Uzbekistan-Armenia-Moldova (GUUAM) group,
specifically formed to counter Russian hegemony, is the most
flagrant example of this.
According to the CIS's packed summit agenda, Putin will hold no
fewer than five sideline meetings. Ukraine and Kyrgyzstan want to
hammer together a free trade agreement. Azerbaijan and Turkmenistan
are interested in petroleum export routes. Armenia and Tajikistan
are concerned with security issues. With only a day-and-a-half to
cover an aggressive 17-point agenda, Putin's sincerity is suspect.
With so much to cover in so little time, the official agenda will
probably not be adhered to at all.
Instead, Putin will use the summit to transform the CIS from a weak
organization filled with near-warring members into a coherent
organization. He will not tolerate member states actively
undermining the CIS or Russia's hegemonic role. States with
aspirations to join NATO or the European Union (EU) will be firmly
reminded that Western alignment is not a sustainable choice for a
CIS member. Putin sees that such double-dealing would erode any
possibility of the CIS being a cohesive organization. Putin wants
to reinvigorate the CIS and ensure that its members are committed
to working with, not against, Russia.
At the summit Putin will force all 11 of Russia's CIS co-members to
determine their future relationships with Russia. Putin knows that
most CIS member states will stay with Russia. Belarusian President
Alexander Lukashenko, although vocal and short-tempered, will
remain Moscow's pet. Kazakstan has nowhere to go except to Russia.
While tiny Kyrgyzstan doesn't feel particularly threatened by
Moscow, it is dependent upon Russia for access to the wider world.
Tajikistan is not prepared to snub Moscow for fear of losing the
Russian military support it needs to counter Islamic militants.
Armenia, despite its desire to strengthen its independence, is
still wholly dependent upon Russia for military support against
Azerbaijan in their conflict over Nagorno-Karabakh. These five
states will willingly keep themselves hitched to the Russian star.
Three other states will likely join with Russia, but will try to
delay this for as long as possible. After Jan. 20 talks among
Turkmenistan, Iran and Azerbaijan collapsed over a trans-Caspian
pipeline, even neutral Turkmenistan will need to look to Russia for
petroleum export routes. Ukraine and Moldova, having failed in
gaining significant EU attention, are now forced to again look
eastward. Thus, Ukraine, Moldova and Turkmenistan will be the
wafflers, not particularly wanting membership in the CIS, but not
having much of a choice.
This leaves three states that will more than likely decide to
withdraw from the CIS: Uzbekistan, Azerbaijan and Georgia.
Uzbekistan still desires to be part of a weak and fragmented CIS.
Once it becomes clear that Putin will demand a functional CIS,
Uzbek President Islam Karimov will drag his country completely out
of the CIS and become Russia's Central Asian spoiler.
In the Caucasus, Putin faces a far more serious challenge.
Azerbaijan and Georgia have held a half-dozen mini-summits and
bilateral meetings in recent weeks with a resurgent Turkey. Topics
ranged from oil-pipelines to the proposed Caucasus Stability Pact
to their quiet support for the Chechens. In Putin's mind, these are
excellent examples of what CIS members should not be doing. Both
Azerbaijan and Georgia feel that the United States will support
them in the face of an angry Russia, yet the United States probably
has no intention of providing any direct military assistance.
The CIS summit will consolidate the organization's membership, with
Georgia, Azerbaijan and Uzbekistan increasingly going their own
way. Depending upon how tightly Putin seeks to rein in the former
Soviet states, these three states would likely withdraw. Such a
withdrawal would deal a diplomatic blow to Russia, but then Putin
will have confirmed that the three are indeed not allies. The
question will then be whether the three who jumped ship should be
considered Russia's enemies. Continuing to support the Chechens
would clearly establish them as enemies. Russia would then no
longer categorize these states as disrespectful neighbors to be
manipulated, but as insolent foes to be crushed.
*******
#9
Claims of Economic Growth, Future Prospects Disputed
Rossiyskaya Gazeta
14 January 2000
[translation for personal use only]
Article by Iraida Semenova and Aleksey Podymov: "When the Sleeper Wakes Up"
An Attempt at a "Philistine's" Economic Forecast
When only a few months had passed since the infamous default, it began
to be quite convincingly explained to ordinary people on television
screens and in the pages of newspapers that the Russian economy had begun
to grow. But in reality most of us could use only the contents of our
pockets and prices on store shelves to determine how it, the domestic
economy, actually went in the year 1999.
What will fill our pockets in the new year that has arrived, and what
can we buy with it? Let us try to make a kind of
"Philistine's" economic forecast based on the Government's
budget plans, specialists' calculations, and our own everyday
observations.
Neither in Banks Nor in Bucks
Perhaps the most important newly acquired thing that citizens got
after 17 August was at least some stability. At any rate those who live
"on salary alone" no longer have to wait for months to receive
it; they can be confident that their wallets will be filled on the
"fifth and the twentieth" of every month. Many people are even
prepared to close their eyes to the fact that wages have gotten awfully
thin during the year. Even if they were in fact indexed, it was usually
no more than once every 18 months (although prices have at least
tripled).
Just where does such civil accord come from? After all, according to
data from the Ekofakt Macroeconomic Analysis and Prognosis Center,
inflation in Russia during the year came to no less than 36.5 percent.
Most of the population had enough money only for the most essential
things, and many stopped depositing it not only in banks but even in
"bucks." Obviously it is not just a matter of the
psychological effect of regular payments proving to be a bit stronger to
many of our fellow-citizens than disappointment in steadily rising
prices. Russia's citizens managed to get used to price jumps during the
years of the reforms, but then most likely they will never be able to
reconcile themselves to no wages.
But the first signs of stability and the lack of other spheres to put
money in had an altogether appropriate and apparently positive effect on
the consumer market. No, so far people have not begun to buy more,
unfortunately; the structure of consumer demand has simply changed.
Above all the demand for Russian things as well as the demand for cheap
things--which, you must understand, are interrelated--have risen.
And demand, as we know, determines supply. And whereas importers
actually had nothing to use to respond to such changes in the structure
of demand in Russia, domestic producers responded with a rise in
production. At first production of consumer goods: you remember how in
the fall of 1998, Russian food products supplanted imported goods in
stores and then they supplanted the means to produce them too.
In complete accord with the postulates of John Maynard Keynes, the
classic thinker of contemporary economic theories, economic growth was de
facto predetermined by the "effective demand" that appeared.
Obviously, we can count on successes in the economy in 2000 only with the
presence (or if you wish, the formation) of effective demand. But for
now if there actually is demand in Russia, it is only just awakening as
"effective."
Upside Down, or the Other Way Around?
On the eve of the New Year, one of the authors of this
"forecast" attended an extraordinary session of economics
academicians who once again, as in the fall of 1998, are laying claim to
the role of our main economic oracles. Those who just over a year ago
were issuing "fail-safe" formulas for economic revival have now
offered for the public's attention diametrically opposite scenarios for
2000 and subsequent years.
But for a start the academicians headed by Academician-Secretary of
the Russian Academy of Sciences economics branch Dmitriy Lvov found that,
sadly, the purchasing power of most of the population has declined
markedly. And they claimed that this happened above all because our
economy as before "is standing on its head rather than on its
feet." And if the economy does "not turn right side up,"
we can expect a crisis like the August 1998 one, the economists believe.
According to a different, much less gloomy forecast, if there is a
monetary emission synchronized with the rate of growth in prices, we can
count on a short-term revival of the real sector of the economy. It is
true, however, that as soon as enterprises sell what is left of their
"non-liquids," the period of rapid growth may actually end. In
that case Russia may be threatened with yet another cycle of
hyperinflation when most of us will be reminded of both waiting in line
and of the well-known response at the cash register: "We do not have
any money and we won't be getting any." However, why must
enterprises sell everything down to the last item? After all, back in
1999 the loading of production capacities in Russia, according to
estimates of the Institute of Economics of the Transitional Period, rose
from 42 to 51 percent. So why shouldn't it rise even farther, if there
is demand, of course? Even if it isn't always effective demand?
Up to this point, many of us have been attributing our inability to
make ends meet only to our own passion to spend money. When we open our
wallets, almost every single time we recall the well-known axiom:
"Economics must be economical." But immediately we think of
something just as well known: "Economy is the sister of
poverty."
However, while the most prosperous countries without false modesty are
pumping up their own economies, as they say, on debt (just so there is
demand), in our country the attempt was even made to bring the ability to
live within one's means almost to the level of a national ideology. That
rapidly ended in the default, and now after the economic revival of 1999,
we can consider that we still got off easy.
Dmitriy Lvov and his colleagues are convinced that Russia's citizens
deserve to live better (who would argue?). And for that, in the opinion
of the prominent economists, all that is necessary is to level out the
rich (there are 15 percent of them in the country) and the poor (as you
can understand, there are 85 percent of them). Do not be afraid, we are
not talking about "taking everything and dividing it up" or of
expropriation of the rich. They suggest that the country once and for
all define its position regarding its own property and its priorities in
tax collection and formation of the budget, and that it straighten out
cooperation with the regions and, naturally, industrial policy.
Russia, as is common knowledge, is a rich country, perhaps the richest
in the world. And Academician Lvov believes that if rent is collected
directly from the firms exploiting this wealth, it will give the Russian
treasury 60-80 billion dollars instead of the present 20-25.
That is quite a good example, of course, but then whether the
developers of Russia's interior have that kind of money is another
question. And in itself such a "tax" division is essentially
no less dangerous at all than a "property" division, and V.
Putin said in those very program statements last fall that that was
unacceptable. And here is a very big question: will that add anything to
our wallets other than more losses?
It is difficult not to agree with the academicians that Russia's
citizens are truly a unique people who are being exploited in a way
"humankind has never known." Even last year when many
enterprises began to get moving, the very last thing mentioned was once
again raising wages. That is quite a strange approach in conditions
where labor payment is certainly not the chief component of production
outlays. Especially since workers at enterprises have certainly not
become the real co-owners of them in our country and as a rule do not
receive any other dividends from the successes of their plant or factory
than wages.
But you can still understand the enterprises to some extent. For the
first time in the years of the reforms, many of them received the
opportunity to make investments, that is to say, invest money in the
future. Isn't that where our fellow-citizens very faith in stability
comes from? They are certainly not blind, after all.
Something Must Fall
But then in that case where is the regulatory role of the state and
why does it really not want to encourage higher wages? Even the very
necessary decision to raise the purely calculated "minimum amount of
labor payment" was immediately called populist in our country. And
after all, by raising the people's real standard of living, you get only
one thing in response--growth in that same "effective demand."
Let us repeat once again, "effective," not inflationary. And
isn't that where the hopes for continued economic growth in 2000 come
from? As they say, if we produce goods ourselves, we will ensure demand
ourselves too. Incidentally, in academic language that is what is called
"internal demand." Indeed, Russia is even here a truly unique
country; it is perfectly able to exist as a closed economic system in
which almost everything produced can if desired be put to use even
without selling it outside Russia's borders.
But for now, because demand remains low and not always
"effective," a rather paradoxical situation has developed: the
prices of producers in Russia are rising faster than sellers' prices.
Yes, sellers used to have a respectable safety margin. Yes, at the first
gleams of economic revival, competition in the lower price levels rose
sharply. Yes, by holding back the base prices of the natural monopolies,
the Government built up and continues to build up inflationary fat.
But even so something must fall in 2000. Similar to the way it was
for Hodja Nasreddin--either the ruble, or production, or prices. So far
only the first is happening. After all, no flips in our native
"wooden" ruble can surprise us, but only another global crisis
can make production, now that it has started to grow, fall once again.
That is why I would very much like to believe specifically in the latter;
let just prices fall. At least relative to slowly but truly rising
wages. And that is the only scenario that is really good for the
ordinary consumer. But it can occur only if economic growth is an order
greater than growth in our real income. Then a controlled monetary
emission can "equalize" them.
It may seem to many people that today such a "Philistine's"
forecast can arise only in a fevered imagination and only among
journalists of a government newspaper. But for some reason it is
precisely on this scenario that one would like to rely, especially after
the truly unpredictable economic scenario that the past year of 1999
presented us with.
*******
#10
The Ottawa Citizen (Canada)
January 7, 2000
Russia under Putin will suck, as always
"We are one of those nations which do not appear to be an integral
part of the human race, but exist only in order to teach some great
lesson to the world." Pyotr Chaadaev
By John Robson
John Robson is Senior Writer and Deputy Editorial Pages Editor.
The accession of Vladimir Putin has everyone wondering if
he's the miracle man who will finally make Russia a normal state.
Previously they thought it might be Yeltsin, Gorbachev, Andropov,
Brezhnev, Khrushchev, Stalin, Lenin, Aleksandr II, Catherine the
Great, Peter the Great, or ...
I have some bad news, folks. Normal for Russia is filthy, corrupt,
menacing and hollow. Nothing good has ever happened there, nor will
it. Russia is a lump of dung wrapped in a cabbage leaf hidden in an
outhouse. You doubt it? Then join my tragical history tour.
First, Russia was cursed by nature. It has a narrow band of
relatively fertile soil that tapers off from southwest to northeast,
but most rain falls in the northwest and Russia gets drier and
colder as you go east. Its frontier, unlike ours or the Americans',
led nowhere.
Except, of course, to loathsome invaders. First, though, from the
north came the same Norsemen who ravaged Western Europe. But in
Russia they didn't govern, in the sense of providing security in
return for protection money. They just built walled towns and stole
stuff. Then Vladimir of Kiev adopted the Orthodox religion, which
helped wall Russia off from the West and contributed to what one
historian calls the puzzling ``intellectual silence'' of Russian
history. So did the Cyrillic alphabet.
Then came the Mongols in 1237. They, too, provided no services, and
felt no obligation, to their subjects. They just stole stuff and
killed anyone who asked questions. Then the Black Death ravaged
Russia and finished off the Mongols. So Ivan III stopped paying them
tribute in 1480 and promptly set about stripping his subjects of
their few liberties. The nobles were brought to heel, and the
independent cities broken. Around this time, as Richard Pipes notes
in his masterful Russia Under the Old Regime, the blurry distinction
between lands the ruler held personally and those he granted to
nobles in his capacity as monarch was resolved. But in Europe,
especially England, most became the latter, while in Russia the
reverse happened.
Then came Ivan the Terrible, who divided the country into an outer
part he ruled unjustly and an inner part where his psychotic secret
police slaughtered thousands. Ivan killed his eldest son and left
the throne to an imbecile without heirs. Then (then, you say?) came
the Time of Troubles, lasting until the Romanovs seized power in
1613. During this time the peasants were enserfed but, this being
Russia, there is no clear record of when or how.
Then came Peter the Great, a giant (6'8'') who forced
westernization down the throats of his reluctant nobles (along with
anything they abhorred, including corpse flesh), built his capital
in a swamp and forced his courtiers to cut off their beards. So
rather than taking root, western habits were aped for safety but
despised. Peter also held sacrilegious orgies, and had his only
adult heir tortured to death in front of him. Then Catherine the
Great, another westernizer-by-force, murdered her wretched impotent
husband Peter III, brought Voltaire to her court, turned the whole
country into a Potemkin village and drove her son Paul mad. Later he
was assassinated.
Then Aleksandr I, head of the orthodox, theology-free church,
finally read the Bible in his 30s and was converted. God told him to
exterminate liberalism throughout Europe so he formed the Holy
Alliance. Then Aleksandr II lost the Crimean War, emancipated the
serfs and was assassinated. Nikolai II fitfully promoted reform,
lost the First World War and was assassinated.
After that, people say, things went rather badly. But already in
the 19th century to be ``Russian'' about things meant insisting your
own country was best without knowing anything about other countries
and not much about your own. And in 1839 the visiting Marquis de
Custine lamented the absence of a ``citizen class'' and wrote
``there is no people of Russia ... ''
And it has been said that to understand Russian history you need
only know that Russians made the biggest bell and the biggest cannon
in the history of the world, and neither worked. Substitute Marxist
ideology for the religious bell and the Red Army for that cannon,
and you can see that nothing has changed. Nor will it. Russia is
doomed by history and culture.
It stinks, literally and figuratively, and always has. People there
have no manners, and as Pipes argues, no cultural capital,
particularly no tradition of decency toward strangers. In Russia,
when someone is swindled, popular sympathy goes to the swindler.
Communism, of course, made it worse: Communism makes anything worse.
But the bottom line is: Russia has sucked, sucks, and will suck.
*******
#11
The Ottawa Citizen (Canada)
January 19, 2000
An apology to all readers for my column on Russia
By John Robson
The purpose of this column is to offer a sincere and detailed
apology for my Jan. 7 column on Russia. It was offensive and hurtful
and I am extremely sorry for what I wrote. Had I not been away for
the past week, I would have apologized sooner.
The vulgarity of the headline, the final line and the comparison of
Russia to a lump of dung contributed to its offensiveness. They were
cheap shots and I regret them. But what was really wrong was that I
wrote it in such a way as to suggest that I feel contempt for all
members of an ethnic group. If I really held those views, and was
making a dishonest statement of regret to avoid trouble for myself
and my employers, I would expect and deserve the contempt of all
readers. I truly did not mean it the way I wrote it. But I did write
it that way, so I apologize.
I do not wish to reopen wounds, but I want to quote the paragraph I
particularly regret in order to apologize for and retract it,
clearly and completely. I said Russia ``stinks, literally and
figuratively, and always has. People there have no manners, and as
(historian Richard) Pipes argues, no cultural capital, particularly
no tradition of decency toward strangers. In Russia, when someone is
swindled, popular sympathy goes to the swindler. Communism, of
course, made it worse: Communism makes anything worse. But the
bottom line is: Russia has sucked, sucks, and will suck.''
As you can easily see, and as I should have seen, this passage
implies that there is something inherently wrong with Russians as
people. Many Canadians who came here from Russia, or whose ancestors
did, have written to express their pain and anger that I would make
such a statement about an entire group of people. They are right to
do so. I do not think there is something wrong with Russians as
people and I did not intend to imply any such thing. But it is very
clear from the way people have reacted to the column that it had
that effect, and in rereading it, I understand why.
It is not appropriate for columnists to back down simply because
something they write causes public anger. That is part of the
process of debate. Sometimes we expect to cause anger among people
who hold certain views and behave in certain ways, and other times
we provoke anger we consider misguided. But when there is a great
deal of anger from an unexpected direction, I have to ask myself
whether I wrote something other than what I intended to write, and
something I should not have written. In this case the answer is
clear: Yes. I did, in a way that was very hurtful. Instead of
criticizing those who think or act in certain ways, I created the
impression I was criticizing those who are of a certain ancestry.
In saying that I did not intend it, let me repeat that I am not
offering an excuse. I am offering an apology. Had I intended a
blanket condemnation of everyone of Russian ancestry, my apology
would not be sincere and I would not expect anyone to accept it.
Because I did not intend it, but did write it, my apology is
necessary, and I hope that it will be accepted.
I do believe that the course of Russian history has been very
unhappy, and that the people have suffered greatly. I believe that
as a result of its history Russian culture has had and still has too
little of what de Tocqueville called associationalism. Russia has
been appallingly misgoverned throughout its history, and those who
have sought real liberty have found too little popular support. I
fear they still do, and I believe the result is dangerous both to
the inhabitants of Russia and to the world.
But to write these views in such a way as to imply that all
Russians are therefore vile is, itself, vile. And by the sloppy and
overheated way I wrote the column, I not only concealed anything
useful I may have had to say, but undermined my point of view and my
credibility.
In fact I wish those Russians trying to reform their country's
politics, economy and much of its society every success. I admire
their bravery, and respect the difficulty of their task. And to
those Canadians who have come here from Russia, or whose ancestors
did, I must say that I think all things considered you have made a
wiser choice than those who have stayed. The prospects for a good
life are far better here than there.
Had I said all those things in the column, rather than what I did
say, I would have expressed what I really think and would have been
prepared to defend it. But I did not.
So what really matters now is not my opinion of Russia, but my
opinion of my column of Jan. 7. I am ashamed of it. By careless
writing and overgeneralization, I produced a column that was highly
offensive.
I am very sorry.
John Robson is Senior Writer and Deputy Editorial Pages Editor.
*******
#12
Noyce to wage Chechnya war
January 21, 2000
By Paul F. Duke
HOLLYWOOD (Variety) - Director Phillip Noyce (``The Bone Collector'') is
developing a film set against the backdrop of the Russia-Chechnya conflict.
The $40 million project, ``Bloodline,'' is inspired by two trips Noyce made
to Russia's rebel province after befriending members of the Chechen
separatist government at a Cannes Film Festival party several years ago.
``I (met) many Chechens and heard their stories and the stories of their
families going back for centuries. I realized there was a great movie to be
made that reflected this experience,'' said Noyce.
He added he had long wanted to make a film like the David Lean classic ``Dr.
Zhivago,'' which set a love story against the events of the 1917 Russian
Revolution.''
The plot of ``Bloodline'' concerns two brothers, children of Russian
emigrants living in America. One is an adopted son of Chechen descent. The
two return to Russia and become embroiled in the conflict.
Chechnya is currently suffering another military assault by Russia, which is
fighting a bitter campaign to take Grozny, the capital. A Chechen separatist
movement is battling the Russians with the goal of establishing an
independent country.
Funding is coming from TF1 Intl., the film sales arm of France's TF1 TV
group, the country's leading commercial broadcaster. Screenwriter Yuri
Zeltser has been writing a treatment for the past year and a half.
Noyce will continue developing the project while working on the two films he
expects to direct this year, the Tom Clancy thriller ``The Sum of All Fears''
for Paramount, and an adaptation of the Graham Greene novel ``The Quiet
American'' for Mirage Enterprises at Sony.
Reuters/Variety
******
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