January 25, 2000    
This Date's Issues: 4065 4066 4067

Johnson's Russia List
#4066
25 January 2000
davidjohnson@erols.com

[Note from David Johnson:
1. RFE/RL: Paul Goble, Building Walls On The Internet.
2. Moscow Tribune: Stanislav Menshikov, PARROT-SPEAK ABOUT REFORM IS POINTLESS. Reforms Helping Growth Should Have Priority.
3. Moscow Times EDITORIAL: NTV's Fate Will Show Putin's Style.
4. International Subscription - The Russia Journal.
5. Christian Caryl: Re Umland (#4059).
6. Kate Moore: Panel on Chechnya in Washington.
7. Interfax - Vremya: Vladimir Konstantinov, WHENCE THE SPECTRE OF THE COLD WAR?
8. Moscow Tribune: John Helmer, PUTIN & THE CLAIM JUMPERS.
9. Interfax: PUTIN SETS CONDITIONS FOR ENDING OPERATION IN CHECHNYA.
10. Toby Trister Gati: U.S-Russia: Exit Yeltsin] 

*******

#1
Russia: Analysis From Washington -- Building Walls On The Internet
By Paul Goble

Prague, 24 January 2000 (RFE/RL) -- Government monitoring of e-mail messages 
sent and received by individual citizens and groups could have a far more 
chilling effect on communications within and among countries than any 
previous official effort to keep track of the views and behavior of those 
living under their control.

On the one hand, the existence of such a capacity could easily make 
governments ever more willing to use it, a possibility few of their citizens 
are likely to feel free to ignore. And on the other, those who now use the 
Internet may either seek to use enhanced encryption devices to thwart 
official surveillance or turn to other media altogether.

All these possibilities were highlighted earlier this month when Russia's 
acting president, Vladimir Putin, signed into law amendments to that 
country's 1995 Law on Operational Investigations. Under the terms of the 
amendment, Moscow's security and law enforcement agencies will gain access to 
all Internet service providers in the Russian Federation. 

Such an arrangement, already well-established in Kazakhstan and several other 
post-Soviet states, gives the Russian authorities at least in principle the 
ability to monitor in real-time all e-mail and other electronic traffic 
passing through these providers. 

The new Russian legislation maintains the requirement that these agencies -- 
including the Federal Security Service -- must still obtain a court order 
before opening e-mails or accessing other electronic communications and 
files. But given the past practices of these institutions, that does not 
appear to be a very strong barrier to official misconduct.

Yelena Bonner, the widow of Soviet dissident Andrei Sakharov and a leading 
human rights activist in her own right, told The Moscow Times last week that 
this action "means Russia has officially become a police state," adding that 
"this war-time police state came about unnoticed when Putin rose to power on 
December 31." 

Other observers were equally exercised. Boris Putintsev, the head of Russia's 
Citizens' Watch, said that the new rules signed into law by Putin means "the 
end of e-mail privacy." "It was bad enough that the Federal Security Service 
had unlimited control over confidential correspondence," he said. Now, he 
concluded, that power "is multiplied eight times." 

The experience of Kazakhstan and elsewhere suggests that such conclusions may 
be overstated. Governments generally lack the resources to monitor the 
increasingly large volume of electronic traffic their citizens send and 
receive. But there are three reasons why the concerns of Bonner and Putintsev 
about probably Russian government actions merit serious attention.

First, even before this new law was adopted, Moscow had in place a system for 
operational-investigative activities -- its acronym is SORM in Russian -- 
which allowed the Federal Security Service direct access into the accounts of 
Russia's Internet providers, many of whom suspect that the FSB has used SORM 
without a court order and without telling anyone. 

Second, given Russia's troubled legal culture, many people both there and in 
the West may actually welcome the use of such a tool by the tax police, the 
customs authorities, and the Interior Ministry. Many more may be reluctant to 
criticize arrangements that will allow the foreign intelligence service and 
border guards such access, especially since a variety of countries have 
similar arrangements. 

And third, given Putin's background in the security services, many people are 
likely to fear that he will use the capacity to monitor e-mail traffic to 
solidify his power. Indeed, even Western officials long known to be 
sympathetic to Russia have recently noted that Putin's accession makes it 
difficult if not impossible to know where Russia is going. 
More than in most countries, the Internet has played a key role in helping to 
jumpstart civil society in the Russian Federation. The possibility that this 
important mechanism will now be sidetracked thus seems certain to be an ever 
more serious issue for an ever larger group of people, even if the Putin 
government does not make full use of its new capabilities. 

*******

#2
From: "stanislav menshikov" <menschivok@globalxs.nl>
Subject: PARROT-SPEAK ABOUT REFORM IS POINTLESS
Date: Tue, 25 Jan 2000 

Moscow Tribune
PARROT-SPEAK ABOUT REFORM IS POINTLESS
Reforms Helping Growth Should Have Priority
January 25, 2000
By Stanislav Menshikov

The use of the word "reform" has become so vague as to be at best
pointless. For instance, when one hears something like "Mr. Putin is a firm
believer in reform" or "the G7 will ask Russia for guarantees of reform"
one wonders whether people understand what they are talking about. At times
it sounds like an oath of loyalty to the "free market" cause, but mostly it
is plain parrot-speak. Ask the parrot WHAT reforms he is calling for, and
he will repeat "rrreform!".

A few years ago anybody who criticised Russian government policy was
hounded as "enemies of reforms" in much the same way as a critic of
Stalin's reforms in the 30s would be called "enemies of the people". The
fashion of the day was to be "all for reform". More recently, particularly
after Mr. Kiriyenko's brilliant default reform of 1998, that fashion has
changed but not the irrational approach.

The list of reforms currently cited in and around the Duma is a good
example. It includes land reform, labour legislation, fiscal and tax
reform, rights of investors, and some others. But there is no
non-ideological explanation why they are chosen. We are told that prior to
the March elections populism will prevail but that later on "unpopular
moves to boost the economy" are to be expected. But this is an ideological,
irrational approach.

Priority should indeed be given to policy measures and reforms that help
support economic growth. But the notion that only unpopular moves can
achieve growth is misleading and erroneous. Improvement in living standards
is not only an element but a necessary condition and principal tool of
economic growth. Unlike others, Mr. Putin stated that principle quite
clearly at last week's cabinet meeting. Cut waste but not social
expenditure. Raise pensions and wages. That is not populism. It is the only
way to support inadequate demand threatening to stifle output expansion. 

To make this the guiding principle, not a short-term measure, the
government needs to develop, together with the trade unions and business
management, a well prepared and balanced incomes policy that would
guarantee growth of wages, pensions and other social benefits in line with
productivity, output and profits. West European experience has demonstrated
that concerted action of government, labour and capital is a basic
requirement for sustained economic and social dev elopment.

Another priority measure badly needed today is a banking reform. It is no
secret that Russian financial institutions are not commercial banks as they
exist in developed market economies. People and firms in this country are
forced to use these "banks" only because there is no alternative. After
1998, the loss of confidence in banks is close to total. Their ability to
serve the real economy is minimal. In 1999 their total assets have
decreased in real terms by 5 per cent while their loans to the private
sector in real terms fell by 23.5 per cent. Meaning that growth in
industrial production is not supported by bank credits, and that inadequate
bank performance is endangering further growth. The government and Central
Bank cannot afford to take a philosophical attitude to Bank reform. It is
top priority, not something to be postponed under various pretexts.

On the other hand, land reform is a measure that can wait. There is no
strong evidence that the absence of a free market in land prevents economic
growth. On the contrary, in the Russian business environment of today the
freedom to buy and sell land would certainly lead to exploding prices of
real estate, rising costs of production. Housing and communal services are
equally unprepared for another price spiral. Rising prices and rents would
cut into real incomes and undercut growth in consumer industries. Also
banks, in their present condition, are not prepared for mortgage financing.
There is no reason in risking large-scale land reform at this particular
juncture. Why not wait until a few years of sustained economic growth
prepares the foundations for a market in real estate? In the meantime, the
existing legal infrastructure of long-term leasing of land could be
perfected in the interests of the business community.

Priority should also be given to reforms that increase the role of 
government institutions in upholding law and order with a particular accent
on enforcing contracts and property rights. This is would be decisive in
bringing normalcy into economic life. Mr. Putin is a person who not only
understands the need for such reforms but also has the political will to
put them into effect. In this he will undoubtedly enjoy the support of the
entire economic community.

To sum up, rational approach to further economic reforms should be based
not on ideology but on two pragmatic criteria: (1) Reforms that promote
growth should have priority; (2) All reforms should be well prepared and
reflect realities. If these criteria are not followed and ideology
prevails, the effects of reforms will be as harmful as they were throughout
most of the 90s.

******

#3
Moscow Times
January 25, 2000 
EDITORIAL: NTV's Fate Will Show Putin's Style 

Alexander Voloshin, the Kremlin chief of staff, is worried that foreigners 
may somehow muck up Vladimir Putin's impending coronation. According to 
Itar-Tass, he addressed "an enlarged session of the board of the Federal 
Security Service," or FSB, the main KGB successor agency. 

Itar-Tass quotes Voloshin as telling the nation's top security agents 
Thursday that he expected them to "make sure that foreign citizens and 
organizations do not play any part in the election campaign." 

That same Itar-Tass report also carries comments by FSB chief Nikolai 
Patrushev, who was installed by the previous top Chekist, Putin. Patrushev 
announces that his agents have "concrete information" about - to quote 
Itar-Tass paraphrasing Patrushev - "attempts by foreign organizations and 
missions based in Russia to interfere with the presidential election 
campaign. However, this information needed further checking." 

And the Itar-Tass report quotes Kremlin Security Council chief Sergei Ivanov, 
another ex-KGB Putin protĪgĪ, as saying that certain foreign organizations 
"have both influence and an interest" in the March 26 vote. 

This is known as a trial balloon. Voloshin, Patrushev and Ivanov are floating 
the idea of choking silent some of those few independent voices left - on the 
pretext that they are evil foreign wreckers. No doubt the No. 1 target is 
Voloshin's bŠte noir, NTV television. 

NTV owes money to state-run Vneshekonombank, and those debts have been called 
in by a Kremlin uncomfortable with independent news. In response, NTV 
announced last month that it would sell a minority stake to a U.S. mutual 
fund, as a way of getting out from under. 

To say that this means NTV is influenced by foreigners would be absurd. NTV 
is 100 percent homegrown; and with all of its warts it remains a national 
treasure. If at all possible, NTV should continue to go it alone - steering 
clear of "help" from Kremlin-friendly structures like UES and Gazprom. 

Voloshin and Patrushev should leave NTV alone. Surely these men have more 
important tasks? Or do they intend to return as well to the days of jamming 
BBC and CNN, and confining dissident voices to the psychiatric wards - as 
apparently nearly happened with M-K's Alexander Khinshtein? 

Madeleine Albright says acting President Putin is "a leading reformer." Maybe 
he will prove her right. But not if he allows NTV to be closed or gutted. A 
muzzled NTV would be the clearest sign imaginable that Putin's Kremlin is 
aiming for corrupt, authoritarian rule. Friends of Russian democracy ought to 
stick a pin into this cowardly Itar-Tass trial balloon, before it becomes 
something more. 

- Matt Bivens 

******

#4
Date: Mon, 24 Jan 2000 
From: Alexander Shishilov <webmaster@russiajournal.com> 
Subject: International Subscription - The Russia Journal

Dear Readers,
International readers can now get a hard copy of The Russia Journal by
OVERSEAS SUBSCRIPTION. 
The international subscription rates for The Russia Journal are:
12 months (50 issues): US$ 135
9 months (38 issues): US$ 103 
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3 months (12 issues): US$ 33 
For details and online subscription...
http://www.russiajournal.com/start/support/subscribe_main.cgi

******

#5
Date: Mon, 24 Jan 2000 
From: Christian Caryl <CCaryl@compuserve.com> 
Subject: Re Umland (#4059)

I read with great interest Andreas Umland's remarks (#4059) about the
political laboratory of Yekaterinburg and particularly about the innovation
represented by the May movement. I made my first acquaintance with this
group in June/July of last year, when I went to Yekaterinburg to write an
article about the gubernatorial race as a model of regional politics. (I
wrote the article, but it was bumped because of the usual government
scandal in Moscow - Stepashin's firing, I think it was.)

With all due respect, however, I think that Mr. Umland sells our readers a
bit short. It is not enough to describe May as a stalking horse for various
Moscow political struggles, even if its origins lie in some Rossel-directed
intrigue. When I visited Yekaterinburg, May had just scored an amazing
success by collecting 200,000 signatures for a petition calling upon
Yevgeni Primakov to run for governor of the province - not exactly the kind
of thing to warm the Kremlin's heart, at that particular moment. (These
days Yevgeni Maksimovich might well be regretting his rejection of that
overture.) But anyway, May's real innovation was a tactical one - its
implementation of a forceful version of social democracy Russian-style that
included something called "prinuditelny dialog" ("compulsory dialogue"). In
a highly effective protest against wage arrears, May activists organized
"occupations" of the offices of local government officials (but only during
office hours, all strictly legal, mind you) and forced them to sign
agreements promising to pay off owed salaries. It proved a surprisingly
effective approach. All over Yekaterinburg I heard rave reviews from
ordinary folk as well as political professionals. Some people protesting
unpaid salaries in a tent camp in front of the regional administration said
that May would get all their votes. Even though it hadn't helped them yet,
they said, they had seen that May was getting something done. I was not,
therefore, caught completely off guard by May's surprise success in the
gubernatorial elections, when they knocked Chernetsky out of the run-off
and sent a minor shockwave through the Russian political establishment.

Mr. Umland is right to assume that May was not an authentic political
movement "from below." One is rightly inclined to doubt the existence of
such movements in Russia, where the initiative still, so often, comes from
above. May's left-populist rhetoric stood, even then, in stark contrast
with the sleek Italian furniture and slick advertising brochures that
adorned its campaign headquarters - odd enough for a "grassroots" political
group that had come into existence a mere three months before. (Shades of
Unity!) But the story doesn't end there.

*******

#6
Date: Mon, 24 Jan 2000 
From: "Kate C. Moore" <katecm@hotmail.com> 
Subject: Panel on Chechnya in Washington

The Russian Club of American University (Washington, DC) is planning a panel 
discussion of the war in Chechnya tentatively scheduled for the third week 
in February. We are still in need of a Russian journalist or diplomat to 
give the RF's perspective. Each of the three panel members will be given 15 
minutes to speak, and a question and answer period will follow.

If you would be interested in sitting on the panel, please contact Kate 
Moore at katecm@hotmail.com

******

#7
Interfax - Vremya No. 4. 
January 2000
[translation from RIA Novosti for personal use only]
WHENCE THE SPECTRE OF THE COLD WAR?
By Vladimir KONSTANTINOV

The spectre of the Cold War is being revived in the East 
and the whole world is to feel the consequences of this 
shortly. This is approximately how some Western press comments 
on Russia's new National Security Concept and acting 
President's decree endorsing it can be summed up. It follows from the 
Concept that Russia has overcome its previous euphoria concerning the 
end of the Cold War, the dissolution of the Warsaw Pact Organisation, 
the lifting of the Iron Curtain and an end to confrontation 
with NATO. A series of steps towards the trimming of armed 
forces and armaments, a sharp reduction of the defense industry 
potential and readiness to continue following this course was 
the apotheosis of that euphoria.
According to its present National Security Concept, Russia 
can resort to nuclear weapons "to repel an armed aggression, if 
all the other measures to settle a crisis situation have been 
exhausted or have proved ineffective." The previous concept 
restricted the use of nuclear weapons to the case of "a threat 
to the very existence of the Russian Federation as a sovereign 
state." The lifting of a ban on the use of regular troops (in 
addition to Interior Ministry troops) inside the country to 
protect national security a threat to which is created during a 
domestic conflict is a major principle of the protection of the 
country's national security.
What has prompted the need for all these changes? Are they 
really explained by Russia's general aggressiveness and 
Vladimir Putin's election interests, as the Western press 
claims? Suffice it to recall the events of the past two years 
to get the answer to this question.
In December 1997 (when the previous Concept was adopted) 
Moscow proceeded from the assumption that favourable 
international factors will continue working endlessly and that 
such notions as "hostility" and "a threat to territorial 
integrity" or, on a broader sense, a threat to Russia's 
national interests have passed into oblivion never to return.
Half a year before that Russia and NATO concluded a 
comprehensive agreement on partnership and mutual consultations.
Signed during a summit meeting in Paris, that document was to 
put an end (as our leaders believed and of which Western 
leaders assured them at that time) not only to confrontation 
but even to misunderstandings between them. Having taken the 
assurances of the NATO leaders for granted, Moscow adjusted its 
National Security Concept accordingly.
The Concept included all the good words about Russia's 
Western partners. In accordance with it, Russia had no enemies.
Its announced possibility to use nuclear weapons in the case of 
"a threat to its very existence" was rather a tribute to 
tradition. However, the general tonality of that document 
actually precluded the appearance of such a possibility.
Realities have sobered up those who by law are to ensure 
the country's national security. If the spectre of the Cold War 
has really re-appeared, humanity owes this not to Russia but to 
its Western partners whose activities in 1998-1999 eventually 
made it think of its own security. It is important to emphasise 
that Russia had not given any ground for such a turn of events 
with the exception of the fact that it might have behaved too 
quietly, allowing the West to take one step after another which 
infringed on its interests.
Has Russia in any way provoked NATO enlargement at the 
expense of its former Warsaw Pact allies and in violation of 
all gentlemen's agreements? Have the NATO leaders heeded 
Moscow's warnings about the harmful consequences, for the 
European security and stability, of their unprovoked military 
actions against Yugoslavia (we do not talk of US President Bill 
Clinton's quibbles)? What is even more important, hasn't it 
been the Clinton Administration to adopt a unilateral decision 
to begin developing, in violation of the 1972 ABM Treaty, which 
is of unlimited duration, a national anti-missile defense 
system, thereby reducing to sheer polite formality periodic 
consultations with Russia on this issue?
The above mentioned would be enough to understand what 
kind of partnership the West had in mind with regard to Russia 
and what role it assigned to Moscow in international affairs. 
But there were also scandals, which were not confirmed by 
facts, over alleged money laundering and corruption in the 
Kremlin, which were aimed to undermine the already rather low 
credibility of Russia, the refusal to grant it loans through 
international financial organisations, which were not prompted 
by any developments, and unprecedentedly intensive attacks on 
Moscow in connection with the military actions in Chechnya.
It was suddenly (for whom?) realised that in our complex 
world Russia can rely only on itself. And it has few resources 
for its own protection. The first resource that came to Boris 
Yeltsin's mind was the country's powerful nuclear potential, 
which had not been finally wasted or allowed to become 
hopelessly obsolete yet. In Istanbul, Yeltsin told his 
high-ranking Western friends that they have no right to lecture 
on Russia and bring pressure to bear on it. In Beijing - and 
the choice of place was quite significant - he gave vent to 
his anger and did not mince words in warning the West against 
trying to make attacks on Russia with its tremendous nuclear 
potential.
Even if Yeltsin had not resigned on new Year's eve, the 
decree endorsing Russia's new National Security Concept would 
have been signed, because it had become a necessary measure. 
The West should not blame Russia for its renunciation of the 
USSR's pledge not to be the first to use nuclear weapons.
As for its nuclear potential, according to comments by our 
high-ranking military spokesmen, it was and remains a means to 
deter an aggression. In this sense, the essence of these 
horrible armaments has not changed. There is the ground to 
presume that if the US and the West as a whole find the 
strength to repress their temptation to corner Russia and 
discontinue their military, political and economic pressure on 
it, the world will never see the Cold War spectre.

*******

#8
Date: Mon, 24 Jan 2000
From: helmer@glasnet.ru (John Helmer) 
Subject: PUTIN & THE CLAIM JUMPERS

The Moscow Tribune, January 25, 2000
PUTIN & THE CLAIM JUMPERS
John Helmer

Last September, when Prime Minister Vladimir Putin met his Canadian
counterpart, Jean Chretien, for the first time, their conversation turned to 
a Canadian company's project to redevelop Russia's Dukat silver mine, one of 
the largest silver deposits in the world.

The Canadian company, Pan American Silver Corporation, has raised $45 million
in equity finance, and $60 million in loans, with the plan to produce about 
$2 billion worth of silver and gold over the next 15 years. The International
Finance Corporation of the World Bank is one of the investors; the Canadian
government's Export Development Corporation is one of the lenders.

Putin not only told Chretien he supported the mine investment plan. He 
also gave instructions to issue a government authorization for export of 
silver concentrate, when the mine starts production. He also backed the 
issuance by the Central Bank of permits to open the special accounts required 
for the foreign cashflow of the project.

Less than two months later, a group from St.Petersburg and Moscow launched 
an attack aimed at forcing Pan American to default on the terms of 
its mining licence, and at that point, to jump the Canadians' claim to the 
silver mine. The best known member of this group is Alexei Bolshakov from St.
Petersburg, a former deputy prime minister. 

According to press statements, the Polymetall Association of St. Petersburg 
and the Kaskol group of companies of Moscow claim the right to
the Dukat mining licence, because they say they are able to mine faster and
cheaper than the foreigners; because they want to process the silver 
concentrate into metal at a local refinery at a fraction of earlier cost 
estimates; and because they are Russian. 

The last one is the only claim the group has been able to prove. In time,
they are figuring, this is all they need to win over Putin.

Located in the Omsykhan district of Magadan, the Dukat mine began losing 
money after the collapse of the Soviet Union. Unable to process its ore 
into concentrate and then into high-grade silver at local facilities, the 
concentrate was exported instead for processing abroad. Still, the revenues 
were not enough to halt the company's slide into bankruptcy.

The Magadan and federal governments then decided to liquidate the mill, 
and its licence to mine the silver deposit was put up for tender. Eventually 
Pan American emerged the winner, with backing from the Magadan regional 
government and the federal Ministry of Natural Resources. Awarded the mining 
licence, Pan American has already spent about $35 million since 1997 in 
feasibility studies, mine construction, and payments to the old Dukat company 
and its workers.

Last November, Kaskol outbid Pan American in a tender for the old mill and
its equipment, paying $12 million. Pan American has a contract to lease
the mill, whoever owns it; and, practically speaking, it does not need the 
mill to operate the mine. 

However, Kaskol and Polymetall have declared that "due to the fact that
[Pan American's Russian subsidiary] Serebro Dukata lost the
tender, [it] de facto lost the right to use the facilities of [the mill] and 
thus can't develop the deposit." They claim Polymetall's variant for the
development of the deposit better suits the interests of Russia. "While
Serebro Dukata was oriented towards production of silver concentrate and
further exports of it for reprocessing, Polymetall plans to extract
silver and refine it in Magadan region," the group says. "The cost of this 
is estimated to be four times lower than that proposed by Serebro Dukata." 

Ross Beaty, Pan American's chief executive, replies "it is completely 
uneconomic to process silver now in Russia." He estimates that the Russian 
cost of a new leaching facility for ore treatment would require between $20 
million and $30 million, and additional investment in refining would cost 
even more.

The arithmetic is beside the point. Whatever it costs to produce silver at
Dukat, the Bolshakov group intends to move on from the old mill to capture
the mine itself. That requires the quiet backing of the government.

Before he took over the presidency, Putin issued a manifesto that welcomed 
foreign investment in Russia. At the same time he said he supported an 
expanding role for the central government to conserve Russia's assets.

After the succession, Putin ordered the release of the new national security 
doctrine, drafted when Putin headed the Security Council. The document makes 
almost no mention of foreign investment. Instead, it declares the Russian 
state "must play a stronger role in regulating foreign banking, insurance,
and 
investment companies; and impose definitions and justified limitations on 
the transfer for use by foreign companies of Russian natural resources, 
telecommunications, transport, and production infrastructure."

This was the cue the silver raiders were waiting for. "Definitions and 
justified limitations" are just what they have in mind to squeeze the 
Canadians out of Dukat -- a roadblock of words, but no highway robbery 
that could be challenged in court.

As for the rest of the Russian government, the Bolshakov group has calculated 
that, so long as they trigger the right amount of uncertainty over the Dukat
project, the government needs to do nothing but wait. According to the
terms of Pan American's mining licence, it must start silver production by
September 30, 2001. But that will require Pan American's shareholders,
along with the bankers and investors, to agree to start spending millions 
of dollars at once. Naturally, the Russian move makes this far too risky. At 
the same time, if the money isn't spent, forfeiture of the licence will be
inevitable. 

At a price of $12 million -- one-third of what the project has already cost
Pan American -- the Bolshakov group and their supporters in government
are building a "justified limitation" to oblige Pan American to expropriate 
itself. 

******

#9
PUTIN SETS CONDITIONS FOR ENDING OPERATION IN CHECHNYA

MOSCOW. Jan 24 (Interfax) - Acting Russian President, Prime
Minister Vladimir Putin says the terms of ending an anti- terrorist
operation in Chechnya depend on the military factor.
"The terms are determined by military expediency alone," Putin
said, adding that military actions won't be tuned up for the election
campaign or any other circumstances.
Asked what can be the signal of the end of the operation in
Chechnya, Putin said in an interview with RTR on the Zerkalo or Mirror
program Sunday that it would be "the final destruction of the major
terrorist bands," their break up and annihilation, "the withdrawal of
our armed forces which took part in these actions in the Chechen
Republic and the simultaneous accommodation there of Russian troops on a
permanent basis." "These plans exist and are being put into effect
already," Putin said.
The end of the operation, according to him, is also tied in with
"the acceleration of efforts" toward creating a law- enforcement system
in Chechnya - "Russian Interior and Federal Security Service branches, a
judicial system, the start of democratic and political processes and
procedures, including elections to the State Duma, elections of other
administrative bodies of the republic. All this can be regarded as the
completion of the military stage of the anti-terrorist operation," the
acting president said.
He added that so far, there has been no "serious complaints" on the
part of the country's political leadership for the Russian military
actions and "are not expected, if the operation proceeds this way in the
future."
Touching upon the international aspect of events in Chechnya, Putin
admitted that "we clearly do not do enough in this sphere." He made this
clear by saying that a significant part of the international public is
under the impact of "the external picture," and "terrorists propaganda."
"But this indicates that we do not show the depth of what is going on
there, the essence of events," Putin said.
At the same time, he expressed hope that on the Chechen issue, the
West "has begun to turn" toward Russia.
Besides, according to the acting president, there are "positive
dynamics" in Russia's relations with NATO suggested.

*******

#10
U.S-Russia: Exit Yeltsin 
Toby Trister Gati (tgati@akingump.com)
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
January 19, 2000

The Yeltsin era is over. True to his mercurial ways, Boris Nikolayevich
Yeltsin unexpectedly resigned as President of the Russian Federation on New
Year's Eve, 1999. "Russia must enter the new millennium with new
politicians, with new faces, with new, smart, strong, energetic people,"
Yeltsin said as he dramatically handed over all power to the Prime Minister
and now Acting President, Vladimir Putin. Yeltsin's decision to step down
voluntarily is an important step in Russia's democratic development. Never
before has a national leader stepped aside and transferred power within a
constitutional framework. Amid rampant speculation in Russia and the West
that Yeltsin and his close ring of advisers and relatives, commonly called
"the family," were preparing various scenarios for Yeltsin to retain power,
to dissolve the Duma, to cancel elections, or even to leave the country,
Yeltsin pulled a final trick out of his hat - defusing panicmongers and
skeptics while at the same time ensuring his legacy as the man who first
brought democracy, however imperfect, to Russia. 

Yeltsin's decision to leave, however, may be less related to a desire to
advance Russian democracy than to a serendipitous series of events that
finally assured the leader that he and his family would be safe if he were
to step down. He was obviously physically incapable of governing.
Yeltsin, after all, is a sick man, one whose capacity to lead was
questioned not only by the Russian people, but also by his family and
perhaps himself, especially in recent days. Yeltsin was always more of a
destroyer than a builder, and, following the collapse of the economy and
the evident failure of "reform" in 1998, Yeltsin had lost his direction,
and perhaps his zeal. He was in search of an exit strategy. The perpetual
firing and hiring of Prime Ministers was always attributed to Yeltsin's
infamous capriciousness, but perhaps, in hindsight, it can be seen as a
logical and rational search for a successor who would be strong enough to
defeat the Communists in a presidential election, who would carry the
mantle of democratic reform, and, most importantly, who would ensure a safe
transition and immunity for the Yeltsin family in civilian retirement. In
Vladimir Putin, Yeltsin finally found his man. 

It is perhaps ironic that what finally made Yeltsin's peaceful exit
possible was a violent war. The massive support that the Russian people
threw behind Putin for his strong stance on Chechnya ushered in the
surprising victory of the pro-Kremlin forces in the Parliamentary elections
in December, including the pro-war supporters among Russia's "reformers."
Putin's ascendancy in presidential polls, his deep connections in the
security services, and the support of the military cemented his position as
a strong hand. Yeltsin finally felt confident enough to step down, and,
indulging his penchant for drama, he used the occasion of the new
millennium as a backdrop for his exit. In a revealing move, Putin's first
act as temporary President was to sign a decree granting Boris Yeltsin and
perhaps his family immunity from criminal investigation and protecting
their property from seizure. Now, the next step in Russian democracy is
the election of a new President which, according to the Constitution, must
be held within three months. Vladimir Putin will likely win in a
landslide, for he is unlikely to feel any real challenge, unless there is a
drastic failure in Chechnya.

The U.S. must now find a way to deal with a Russia without Yeltsin. This
will likely mean the final end of bilateral relations based on personal
rapport, as defined by the "Boris - Bill" relationship. It will mean
handling a country that is tired of being told what to do and whose
population cares little for U.S. warnings about Chechnya and other
international issues. And it will mean dealing with a leader whose
popularity depends on asserting his authority and the power of the Kremlin
in the international arena as well as at home. 

The most important short-term U.S. objective in Russia should be to ensure
that elections do take place according to the Constitution and that all
candidates have access to the media and are given a level playing field.
Putin's overwhelming head start and his control of the resources and power
of the Kremlin may make it difficult for any candidate to oppose him, thus
undermining the prospects for a fair election. Rhetoric will intensify on
both sides as elections in Russia and the U.S. approach, but policymakers
in both capitals should have an interest in developing a less contentious
relationship, taking into account both the lessons and disappointments of
the past.

Putin as Acting President

Vladimir Putin has made a name for himself as a strong man through the use
of a war that seems justified to most Russians but has been conducted with
little regard for world opinion or humanitarian concerns. He has been able
to translate Russian military advances into political momentum, and has
used that momentum to secure a Duma that will be more cooperative with the
Kremlin than in the past. Barring unforeseen consequences, he also stands
an excellent chance of securing the presidency of the Russian Federation.
However, he is still largely an unknown quantity. Mr. Putin is not a
politician by vocation. A former KGB agent and a symbol of "law and order"
and national unity, it is difficult to judge his political record. He was
involved in St. Petersburg politics, where he was known as the "Grey
Cardinal" for the way he exercised influence in Mayor Sobchak's government.
His views on the need for a strong state are clear; his positions on
specific political and economic issues are less well formed. According to
National Security Adviser Sandy Berger, "the jury is still out" on what
kind of leader he will be.

With regards to Russia's present difficulties and economic future, Mr.
Putin has spoken out in favor of increasing the role of the state in the
national economy and pursuing a more dynamic industrial policy, while at
the same time pushing for renewed foreign investment in the country. While
the specifics of any economic program remain hazy, Mr. Putin seems to be
trying to forge a plan that would reanimate the state as a strong provider
for social needs, reestablish the center's preeminence as the allocator of
resources, and reinvent the state as a friend to foreign investment rather
than the meddlesome foe of the past nine years. Mr. Putin's words may
appeal to foreign investors and ordinary Russians alike, since both groups
see the desperate need for a stabilizing hand in the economy. The
question, however, is whether Mr. Putin can deliver on his vision and at
what point, given Russian and Soviet history, a strong state role in the
economy will stifle, rather than foster, development.

Politically, Mr. Putin has also begun to show his colors. He fired Boris
Yeltsin's daughter, Tatyana Dyachenko, from her post as Kremlin adviser,
and initiated a shakeup in the Presidential Administration and the cabinet.
He has indicated a desire to root out corruption and crime -- should he
actually do something about either, it will likely cause tension between
the Kremlin, the political elite in Moscow and the regions, and Russia's
powerful oligarchs. At the moment, Mr. Putin's all-encompassing objective
is a victory in Chechnya, however he and the Russian public define it. It
is a goal widely shared by the Russian voters, who do not seem particularly
disturbed about the means used to attain that end.

With regards to foreign policy, there are some positive signs. Following
the Duma elections, Mr. Putin called on the Parliament to ratify the START
II treaty, which has been bogged down for years. In his first conversation
with President Clinton in his new capacity, Mr. Putin apparently reaffirmed
his commitment "to the core values of democracy," causing President Clinton
to declare that he and Mr. Putin were "off to a good start." Still, Mr.
Putin's willingness to use a war to pursue political objectives and, as he
declared on December 31, "to enjoy respect from other nations," coupled
with the toughening of Russia's national security doctrine, likely portends
a more assertive Russian foreign policy. 

If he is elected President, he will be dealing with a lame duck U.S.
President, an American Vice President who is on the defensive over the
handling of foreign policy, and a host of thorny bilateral problems that do
not have an easy solution. One of the most contentious issues is Russia's
objection to modification of the ABM treaty. Judging by Mr. Putin's past
statements, it would seem that a President Putin would not easily
compromise on the issue of national missile defense and would perhaps allow
the military to take countervailing steps, such as increased missile
production or development of new technologies. Other issues, such as U.S.
sanctions on Russian enterprises due to Russian nuclear cooperation with
Iran, Caspian energy and pipeline issues, Russian interests in Iraq, and
the general Russian desire to counter U.S. dominance in a "unipolar" world,
will continue to dog the relationship. 

In its efforts to ensure what it terms a "multipolar" world, Russia has
been pursuing a more friendly relationship with China. Under President
Putin, this trend would likely continue. China has publicly supported
Russia's actions in Chechnya, while Putin has not shown any signs of
deviating from the "strategic partnership" pursued by Yeltsin.

Parliamentary Elections

The third parliamentary elections in Russia's post-Soviet history were held
on December 19. Although the Communist Party was able to gain the largest
share with 24.29 percent of the vote, against most expectations, the
pro-Kremlin party, Edinstvo, came in second place, with 23.32 percent.
Fatherland All-Russia won 13.33 percent, the Union of Rightist Forces won
8.52 percent, the Zhirinovskii Bloc 5.98 percent, and Yabloko 5.98 percent. 

Centrist parties did quite well, and the Communists will likely not be able
to muster a majority in the new Duma. At first glance, this would seem a
positive sign for Russia's democratic prospects. However, a closer look
reveals a muddier picture. Edinstvo is not so much the party of democratic
reform as a creation of the Kremlin; three months ago it was a political
non-entity. Only through the public support of Putin was Edinstvo able to
create an identity and garner support. Edinstvo does not have a clear
platform or agenda, and the party's composition itself is in flux. It is a
phantom party populated by regional leaders eager to maintain support from
the center, but with no sense of loyalty to it.

The elections themselves were conducted by and large with few procedural
irregularities. But the manipulation of the press and of patriotic
sentiments and the influence of money and raw power were so great that to
call them a victory for democracy would be stretching the point. What
these elections represent is the extraordinary ability of incumbent powers,
especially the executive, to manipulate the Russian political system.
Furthermore, they showcase the Russian population's willingness and desire
to elect a strong leader who can provide security at home and give the
people a sense of pride. The war in Chechnya has been able to give the
Russians, for the time being, a reason to feel good, even if it turns out
to be an artificial optimism based on early military successes in the North
Caucasus. 

In the days leading up to the Parliamentary elections, Chechnya became the
major "cleavage issue" among the parties, while the fundamental political
and economic choices facing the Russian people were glossed over. Those
parties, like Edinstvo and the Union of Rightist Forces, which were seen as
closely aligned with Putin, enjoyed tremendous success, while anyone who
was seen in opposition to the Kremlin, such as Fatherland All-Russia and
Yabloko, suffered.

Chechnya

The cause of Vladimir Putin's popularity and a resurgence of optimism among
the Russian population is the war in Chechnya. What Vladimir Putin termed
an action to create a "security zone" and to destroy "terrorists and their
bases" began when the Russian military rolled into the northern part of
Chechnya on October 1. It soon became obvious that, unlike the disastrous
1994-1996 war, the Russian population was staunchly behind Putin's actions,
especially following the September bombings in Moscow and two southern
cities, which killed hundreds of people and were largely blamed (without
conclusive proof) on Chechen terrorists. Riding this wave of support, the
military pressed on, quickly conquering the northern, flat part of Chechnya. 

After a Russian rocket attack on an open-air marketplace in the center of
Grozny on October 22 that left tens of civilians dead and highlighted the
possibility of discord between Moscow's civilian and military leaders, the
U.S. increased its criticism of Russia's actions. Deputy Secretary of
State Strobe Talbott, following a meeting with Russian Foreign Minister
Igor Ivanov on October 29, said that while the U.S. understands that Russia
has the "right and duty to protect the state from terrorism, it nonetheless
hopes that Moscow will turn to political levers as soon as possible."
Foreign Minister Ivanov rebuffed any criticism, saying Chechnya was
Russia's "internal affair."

In the days leading up to the Istanbul Organization for Security and
Cooperation in Europe (OSCE) summit on November 17, the Yeltsin
administration broadened the objectives of the war from "stamping out
terrorism" to the subjugation of Chechnya and the restoration of Russian
control over the entire territory. Moreover, it became clear that the
Kremlin, and Vladimir Putin especially, were enjoying a massive boost in
popularity due to successes on the battlefield. This began to raise
questions as to the Yeltsin Administration's motives in the war, and,
although the West did not publicly acknowledge it, many policymakers and
analysts began to believe that the Kremlin might be using the war for
political purposes. While the U.S. supported Russia's right to maintain
its territorial integrity, the lack of a political strategy to negotiate an
end to the conflict coupled with overall suspicion regarding the Kremlin's
motives greatly heightened U.S. concern.

On November 8, the U.S. State Department accused the Russian government of
violating the Geneva Convention. Russia continued to adamantly defend its
right to military actions in the breakaway republic and reject U.S. and
Western criticism. In fact, some in Russia speculated openly that it was
in the U.S. interest to keep the conflicts in the North Caucasus
"constantly smoldering." On November 18 President Clinton admonished Boris
Yeltsin at the OSCE summit in Istanbul after President Yeltsin vowed Russia
would not accept any criticism regarding Chechnya. Yeltsin left the summit
early and returned to Moscow. 

In early December the International Monetary Fund decided not to issue the
next scheduled tranche of $640 million. Although IMF officials cited a
lack of "required structural measures," there was little doubt in Russians'
minds that the decision to withhold the funds was directly related to
Western concerns over Chechnya. Russia largely blamed the European powers
for the decision, and the U.S. denied any other motivation for the decision
other than that specific economic criteria had not been met.

On December 6, Russian forces dropped leaflets on Grozny warning that
intensive bombing of the city would begin on December 11, and that anyone
in the area should "leave or die." The ultimatum caused an uproar in the
international community. President Clinton warned that Russia would pay a
"heavy price" if it went through with its threats, and many European
leaders stepped up their condemnation. In the face of the world's
criticism, the Russian military backed down and did not carry out its
bombing threats. However, Russian forces did finally initiate an advance
on Grozny on December 25. They encountered ferocious resistance and
suffered relatively heavy losses. 

Russian casualties are beginning to mount as the battle for Grozny
continues, and the U.S. and the West are struggling to find an appropriate
response that could have some impact on Russian decisionmaking and bring
about negotiations to end the war. The West has continued to call for a
political settlement, even if such a resolution seems impossible given the
political realities in Russia and the military realities on the ground in
Chechnya.

Conclusion

The most difficult tasks in Russia's domestic political life lie ahead.
The necessary legislative and structural reforms that Russia so desperately
needs are still to be undertaken; the fight against corruption and
organized crime is yet to be fought; and the difficult compromises
necessary for an appreciable improvement in U.S. - Russia relations have
yet to be negotiated. The parliamentary elections highlighted the
inadequacies of Russian democracy and there is growing concern that the
March 26 presidential election will be more like a coronation of Mr. Putin
than a choice between real alternatives. It is clear that, for Russia,
creating a democratic culture and a civil society between elections will
prove to be a more important - and much more elusive - goal than adopting
the trappings of electoral democracy. For the short term at least, Mr.
Putin has been given a broad mandate by the Russian people and by important
groups in the Duma. The whole world will be watching what he does with his
window of opportunity.

*******

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