January 31, 2000    
This Date's Issues: 4080 4081

Johnson's Russia List
#4081
31 January 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Bloomberg: McDonald's Expands in Russia After 10 Years Serving Big Macs.
2. New York Times: William Safire, Putinism Looms.
3. Bloomberg: Chubais Says Chechnya War Needs `Clear-Cut' Result.
4. Reuters: Suspended Russian prosecutor charged--Tass. (Skuratov)
5. AP: Report: Radio Liberty Reporter Held.
6. Reuters: Putin vows tough laws to restore Russia confidence.
7. Jamestown Foundation Monitor: BORODIN, BEREZOVSKY SAY GUSINSKY IS BEHIND CORRUPTION CHARGES. (DJ: And Putin linked to Borodin)
8. Larry Black: Re: 4079-Straus/Russia and NATO.
9. Ostankino Radio Mayak: RUSSIAN LIBERAL POLITICIAN SLAMS CHECHEN WAR. (Yavlinsky)
10. RIA Novosti: IMF-BACKED REFORM WILL NOT PRODUCE POSITIVE RESULTS - YAVLINSKIY.
11. Wall Street Journal Europe editorial: Putin's Priority.
12. Izvestia: Larisa KALLIOMA, WE AIN'T LOCAL. Moscow Adopts Migration Regulating Programme.
13. Trud: IN WHAT COUNTRY DO WE WANT TO LIVE? (Interview with Yevgeny GONTMAKHER, "head of the social development department of the government staff.")
14. Russia TV: PUTIN'S RATING SAID DECLINING - BUT NOT OVER CHECHNYA]

*******

#1
McDonald's Expands in Russia After 10 Years Serving Big Macs

Moscow, Jan. 31 (Bloomberg) -- McDonald's Corp., the world's largest
restaurant company, will open nine new restaurants in Russia this year as
it marks a decade of serving Big Macs at its busiest outlet worldwide on
Moscow's Pushkin Square. 

McDonald's was among the earliest foreign investors in Russia, eager to tap
a new market of 150 million people. When the first restaurant opened in
1990 on Pushkin, thousands of Muscovites and tourists from across Russia
waited for hours in lines snaking down central Moscow's Gorky Street, now
known as Tverskaya. The restaurant still serves an average of 20,000
customers daily, making it the world's busiest McDonald's. 

McDonald's has kept them coming through wars and coups d'etat, bank
failures and ruble devaluations, with a combination of price cutting and
local sourcing. A Big Mac in Moscow now costs 39.5 rubles ($1.38), down
from $2.10 in 1990. In London, a Big Mac is $3.23, while in Prague it's
$1.54. In the latest crisis, the ruble has fallen 78 percent against the
dollar in the past 16 months. 

``We saw a drop in sales of about 25 percent, but now we are reaching
pre-crisis levels again,'' said Glen Steeves, managing director of
McDonald's Russia. ``We're going slowly, but with such a huge market the
possibilities are unlimited.'' 

The company, which has invested $140 million in Russia so far, keeps prices
low by buying 75 percent of its food locally. It buys supplies from Russian
companies such as Belaya Dacha, which grows lettuce and produces pickles,
and Russian slaughter houses, as well as U.S. companies Coca-Cola Corp. and
Cargill Inc. 

Local Production 

McDonald's $45 million food processing plant near Moscow supplies meat and
pies to its Russian restaurants as well as 17 other countries including
Germany, Austria, Poland and Ukraine. 

When the ruble initially plunged, the restaurants also offered cheaper,
locally made traditional Russian items such as soup and cabbage salad. 

Luba Zorieva, a 39-year-old social worker, can afford to take her son
Vanya, 9, to the flagship McDonald's store for a Happy Meal, which includes
a toy and costs 62.50 rubles ($2.20), once a month. 

``Everything is tasty and my son loves the toys,'' Zorieva said, while
Vanya was entertained by clowns in Russian costumes. ``This is a way to do
something nice for the kids.'' 

George Cohon, senior chairman of McDonald's in Russia, was named
``Capitalist Hero of Labor'' by Moscow's Pravda newspaper in 1990 after he
was finally allowed to open the first McDonald's after knocking on
bureaucrats' doors since 1975. Once he opened it, his biggest task was in
teaching sour-faced Soviet staff to smile. 

Karl Marx, Adam Smith 

``It was the height of the Cold War and it was a direct conflict between
Karl Marx and Adam Smith,'' Cohen said. ``Since then, the entire thought
process has changed and it's much easier to do business.'' 

To accelerate expansion, the company wants parliament to introduce laws
simplifying taxation and regulating franchising, which it hopes to
introduce in Russia in about three years. 

The company, which employs 5,000 in Russia, encouraged the burgeoning
middle class by promoting managers from behind cash registers. Among them
was Khamzat Khasbulatov, who started as manager of the Pushkin restaurant
and is now president of McDonald's in Russia. 

Students employed part-time at McDonald's in Moscow earn a starting salary
of about 20 rubles (70 cents) per hour. 

*******

#2
New York Times
January 31, 2000
[for personal use only]
ESSAY / By WILLIAM SAFIRE
Putinism Looms

DAVOS, Switzerland -- A Russian doctor told the ambulance driver to take his 
patient directly to the morgue. "Why?" cried the patient. "I'm not dead yet." 
"Shut up," said the doctor. "We're not there yet." 

That lugubrious joke is being told about Vladimir Putin, chosen by the 
Kremlin clique to succeed Boris Yeltsin. In eight weeks, riding a wave of war 
hysteria, this K.G.B. apparatchik is likely to be elected president -- to 
take his patient, Russia, to the cooler of repression and autocratic rule. 

President Clinton refuses to see this. In his whirlwind junket to the annual 
Davos gathering of politicians, executives and scientists, his lame-duck army 
of aides passed the word that Putin could well be a closet democratic 
reformer. 

Americans here were already embarrassed by their president's royal arrival. 
The day before, Britain's Tony Blair came with a modest party of 15 to 
deliver his speech. 

But when hundreds of junketeering Clintonites descended on Davos, meeting 
participants were ordered out of the hall to make room for the huge 
entourage. When the offended audience resisted, the Clinton traveling claque 
had to relent. 

More dismaying was the Clinton refusal to see that its Russia policy -- by 
failing to tie economic aid to democratic reform and property rights -- has 
been a flop. The result has been the takeover of the government by a 
combination of corrupt oligarchs, the internal police and the army. 

Yeltsin's extended "family" put a K.G.B. man in place, took advantage of 
lawlessness in Chechnya to launch a popular war and called a snap election to 
capitalize on the war fever. By so doing, they avert prosecution for 
corruption and silence the beginnings of a free press. 

It's working for them. An instant cult of personality has been created for 
Putin -- tough-minded and lean-bodied, in contrast to the staggering Yeltsin 
-- and he rides high astride his Chechen warhorse. The army is with him: he 
pays the troops, and has raised spending on armaments by 50 percent. 

He is a man whose basic principle is to have no inconvenient principles. His 
first major political act was to double-cross the fake reformers close to the 
Kremlin by making a deal with the Communist Party. Now Putin controls the 
Kremlin while his new Communist allies -- along with the wildman Vladimir 
Zhirinovsky -- dominate the parliament. 

He is now counting on his generals to crush the Chechens before March 26, 
election day, or at least to provide the illusion of low-casualty victory 
until then. His surprise enemy at home is the Committee of Soldiers' Mothers, 
a hard-to-harass group that provides casualty figures 10 times greater than 
Kremlin disinformation. 

He has been suppressing the truth by arresting journalists who dare to report 
from the front lines and silencing independent TV commentators. Media 
controlled by Boris Berezovsky, the Putin sponsor reportedly denied entry to 
Davos by Swiss authorities, tout the new Napoleon to the skies and besmear 
opponents. 

That opposition is on the run. Names like Primakov and Luzhkov -- seemingly 
sure things for power six months ago -- have faded fast. The Communist boss 
Zyuganov exists only as a foil with no future. 

The only real reformer left standing is Grigory Yavlinsky, who suffered 
losses for daring to denounce the switch in goals from anti-terrorism to 
all-out war. He is gutsily running again, but his time won't come until 
Russians tire of stagnation, weary of war and are no longer bamboozled by the 
Kremlin-controlled media. 

Until then, Putin is the oligarch-K.G.B.-army choice. But his quick 
popularity in polls rests on war fever; when that dissipates, so may he. If 
he does not win a majority in the first round, the fickle Russian public 
could drop him overnight. 

The irony is that a "Putin era" would mean an uncompetitive, economically 
weakened Russia -- no threat to the West. A "Yavlinsky era" would marry a 
literate work force to a free-market system under law -- and Russia would 
soon compete as a world power. 

Those fearful of resurgence of Russian power prefer the surly stagnation of 
what would come to be called Putinism. The more hopeful of us wish the 
Russians a better life, but should be careful what we wish for.

******

#3
Chubais Says Chechnya War Needs `Clear-Cut' Result: Comment

Davos, Switzerland, Jan. 31 (Bloomberg) -- 
Following are comments by Anatoly Chubais, chief executive 
of Russian utility RAO Unified Energy Systems. Chubais is former head of the 
elections headquarters of the Union of Right Forces, a group of parties that 
includes those of Boris Nemtsov and Sergei Kiriyenko. Currently Chubais is 
not affiliated with any party. He was speaking at a press conference at the 
World Economic Forum in Davos: 

``I cannot represent the government, the acting government here. Even so, I 
personally say that in Chechnya armed forces attacked Russian territory. At 
that point, the Russian authorities had not choice but to react. Any 
government would have reacted. And act as stringently as possible. 

``There can be a political settlement of that problem. I would even say there 
can only be a political settlement of the problem. That can only be achieved 
though after we have a clear- cut military result.'' 

*******

#4
Suspended Russian prosecutor charged--Tass

MOSCOW, Jan 31 (Reuters) - Russian Prosecutor General Yuri Skuratov, 
suspended last year amid a sex scandal after accusing the Kremlin of 
corruption, has been charged with abusing his office, Itar-Tass news agency 
reported on Monday. 

Tass quoted Skuratov's attorney Leonid Proshkin as saying the suspended 
prosecutor was cooperating with investigators and was free though ordered not 
to leave Moscow. 

The agency quoted Skuratov as saying the charges concerned 14 men's suits he 
had received as a gift and that there was ``no instance of any crime.'' 

Skuratov, who has announced plans to run for president in Russia's March 26 
vote, became the centre of a political scandal last year when state 
television aired video footage of a man resembling him in bed with two 
prostitutes. 

Skuratov never denied he was the man in the video and said the tapes were 
released to discredit him and block high profile investigations into 
allegations of Kremlin corruption. 

President Boris Yeltsin ordered Skuratov's suspension, but the upper house of 
parliament repeatedly refused to sack him. Skuratov has since been locked in 
a court battle with the Kremlin to win back his prosecutor's job. 

Prosecutors could not be immediately reached for comment on Monday. 

******

#5
Report: Radio Liberty Reporter Held
January 31, 2000

MOSCOW (AP) - A Russian journalist who was detained in the breakaway region 
of Chechnya will remain in custody for another week, the Interfax news agency 
reported Monday.

Last week, U.S.-financed Radio Liberty announced that correspondent Andrei 
Babitsky had gone missing on Jan. 15, when he last called his family and 
colleagues from the Chechen capital Grozny. The Russian Interior Ministry 
said Friday that Babitsky had been detained because he did not have proper 
accreditation to report from the war zone.

Interfax quoted Russia's acting prosecutor-general, Vladimir Ustinov, as 
saying Monday that Babitsky was being detained for 10 days beginning last 
Thursday. He said it had taken several days to identify the reporter, 
Interfax said.

The prosecutor's press office could not confirm the Interfax report.

Babitsky has angered Russian officials with his consistent criticism of the 
Chechnya war. The Russian government has accused Babitsky in the past of 
backing the rebels, and secret service agents raided his Moscow apartment 
Jan. 8 and seized photographs he had taken of dead Russian soldiers, his wife 
Lyuda Babitskaya said.

Journalists are occasionally detained by the strict military command in and 
near Chechnya, but are usually released quickly.

Most Russian media have generally supported the war, though some have grown 
more critical as the fighting has dragged on.

******

#6
Putin vows tough laws to restore Russia confidence
By Ron Popeski

MOSCOW, Jan 31 (Reuters) - Acting President Vladimir Putin said on Monday 
that post-Soviet Russia had degenerated into a lax society where laws were 
flouted and promised to restore order to let people live and conduct business 
without fear. 

``The system of state authority is neglected, slack and ill-disciplined,'' 
Putin, who leads opinion polls ahead of a March presidential election, told a 
meeting of Justice Ministry officials shown on television. 

``How can anyone be surprised that we have such difficulties with reforms? It 
is indeed surprising that they are working at all. We must always remember 
that the only sort of dictatorship to which we must be subject is the 
dictatorship of law.'' 

Since taking over as acting president on New Year's Eve, Putin has been at 
pains to stress his commitment to democratic freedoms and to allay suspicions 
in the West over his background as an official in the Soviet-era KGB secret 
service. 

Putin remains heavily favoured in the March 26 election, although the latest 
polls show a slight decline in his rating. One weekend survey gave him 48 
percent -- below the 50 percent needed to win the election outright in the 
first round. 

The list of political leaders backing his candidature is long, with even 
prominent members of other political parties falling in behind him. 

Putin has portrayed himself as capable and decisive, in contrast to Yeltsin's 
declining years, able to restore Russia's greatness and uncompromising in 
pursuing the military campaign against Chechen separatists. 

But he spoke of personal freedoms within hours of taking office and vowed 
dictatorship would never return to Russia. 

He has peppered his speeches with calls to increase the wages of low-paid 
workers and was also seen this month in the role of a mediator above 
politics, holding talks with political leaders to end a row which hobbled the 
work of parliament. 

In his address to Justice Ministry officials, most dressed in military-style 
tunics, Putin said it would be wrong to abandon all existing legal 
provisions. Change had to be ``based on the longstanding Russian traditions 
of justice and legality.'' 

Russia's very future, he said, depended on the primacy of laws created under 
current state structures and ensuring qualified people worked in the legal 
system. 

FEAR OF ORGANISED CRIME 

Businessmen and ordinary families had the right to operate without fear of 
reprisals from organised crime. 

``People must not feel anxiety about their own security or those of their 
loved ones because of the excesses crime. They must not live in fear that 
their business will be taken over by groups of organised criminals,'' he 
said. 

``There is only one way to do this -- by turning Russia into a strong state. 
And Russia will be truly strong when human rights and individual freedoms are 
respected, when all are equal before the law and when laws are carried out by 
all.'' 

But establishing freedoms without legal order, he said, ``inevitably leads to 
a slide into chaos and lawlessness.'' 

He said Russia ran the risk of legal confusion with the passage of 
legislation by some of Russia's 89 regions which contradicted federal law, 
particularly regarding tax collection and prosecution procedures. 

Upholding personal freedoms has been a recurrent theme in Russian society in 
recent weeks, with human rights ombudsman Oleg Mironov deploring human 
suffering and saying that citizens enjoyed little beyond political and 
religious rights. 

Mironov expressed particular concern about long legal delays which keep many 
Russians in custody in poor conditions and deter potential plaintiffs from 
going to court. 

*******

#7
Jamestown Foundation Monitor
31 January 2000

BORODIN, BEREZOVSKY SAY GUSINSKY IS BEHIND CORRUPTION
CHARGES. Two Kremlin insiders under investigation for corruption have
accused a rival oligarch of being behind the charges against
them. Pavel Borodin, the former Kremlin property manager who was
recently named state secretary of the Russia-Belarus union,
suggested on January 28 that accusations that he had accepted
bribes from the Swiss construction firm Mabetex in return for
lucrative Russian government refurbishment contracts were part of
a smear campaign organized by Vladimir Gusinsky, founder and
owner of the Media-Most group. Last week, Swiss law enforcement
officials confirmed that they had issued a warrant for Borodin in
connection with the Mabetex case (see the Monitor, January 28).
According to a report today, the Swiss authorities wanted to keep
the warrant secret, so that they could detain Borodin and
extradite him while he was travelling abroad using Interpol, the
international law enforcement agency (Segodnya, January 31).
Borodin has denied all the allegations and said that he is
willing to go to Switzerland voluntarily to answer questions.

Borodin's charges against Gusinsky and Media-Most were echoed
by Boris Berezovsky. Last week, the French newspaper Le Monde
featured an interview with Nikolai Volkov, who is heading the
probe by the Russian Prosecutor General's Office into alleged
money laundering from the state airline Aeroflot through Swiss
companies belonging to Berezovsky. Volkov said that Berezovsky
might soon be charged with embezzling state funds and money
laundering. Berezovsky charged during a January 28 press
conference that "all the proceedings in Switzerland against
political figures in Russia are politically motivated." He noted
that Gusinsky and Carla del Ponte, formerly Switzerland's chief
prosecutor, were both planning to participate in a panel
discussion on Russian corruption as part of the World Economic
Forum in Davos, Switzerland. Del Ponte, who is now chief
prosecutor with the International Criminal Tribunal for the
Former Yugoslavia at The Hague, Netherlands, worked closely last
year with Yuri Skuratov, Russia's suspended prosecutor general,
in developing both the Mabetex case and the one involving
Aeroflot. Berezovsky accused del Ponte and Gusinsky of being "the
driving force" behind "cases against various people in Russia"
(ORT, January 28).

Media-Most's NTV television emphasized over the weekend the past
links between Borodin and Acting President Vladimir Putin. Last
night's broadcast of "Itogi," NTV's weekly news analysis program,
included a segment which noted that Putin left St. Petersburg in
1995 to become Borodin's assistant in Moscow. The segment
included an August 1995 clip in which Putin insisted that he
moved to Moscow at Borodin's initiative (NTV, January 30). While
Putin removed Borodin from his Kremlin post in early January,
just after Boris Yeltsin resigned as president, Borodin's recent
appointment as state secretary of the Russia-Belarus union would
not have been possible without Putin's support. Yabloko leader
Grigory Yavlinsky said yesterday that he was perplexed that Putin
had not yet responded to the fact that the Swiss authorities had
issued a warrant for Borodin. Yavlinsky, who is attending the
World Economic Forum in Davos, Switzerland, said that Putin must
clearly indicate his position toward "high-placed officials
suspected of corruption" (Russian agencies, January 31).

Meanwhile, Yuri Skuratov, Russia's suspended prosecutor general,
was charged last week with abusing his office for allegedly
accepting free suits worth nearly US$40,000. Last year, Mabetex
head Bahgjet Pacolli claimed he had given Skuratov 14 suits worth
US$60,000. Skuratov threatened to sue Pacolli for the allegation.
If convicted, Skuratov could be sentenced to seven years in
prison (Russian agencies, January 28).

******

#8
Date: Sun, 30 Jan 2000 
From: lblack@ccs.carleton.ca (Larry Black)
Subject: Re: 4079-Straus/Russia and NATO

re: Ira Straus (JRL 4078, #8) on Nesirky's "Russia Warms to NATO" (JRL
4074), takes an approach greatly expanded upon in my book, "Russia faces
NATO Expansion. Bearing Gifts or Bearing Arms?" (Rowman & Littlefield,
1999). All current trends and dilemmas in the RF-NATO relationship
mentioned by Ira Straus are patterns delineated (to May 99) in the book.
Any comment would be appreciated, for I plan to continue to chronicle the
relationship
J.L. Black

*******

#9
BBC MONITORING 
RUSSIAN LIBERAL POLITICIAN SLAMS CHECHEN WAR
Source: Ostankino Radio Mayak, Moscow, in Russian 1230 gmt 30 Jan 00 

Russia's all-out assault on Chechnya is doomed to failure, Yabloko leader 
Grigoriy Yavlinskiy said in a party political broadcast on the Mayak radio 
station. The only way out is to negotiate a solution, probably with President 
Maskhadov. He dismissed sanctions by the West over Chechnya as purely 
symbolic, and also voiced his disapproval of the way Russia is entering into 
union with Belarus. The following are excerpts from the broadcast on 30th 
January: 

[Presenter] The time in Moscow is 1534 and our guest on Mayak is Grigoriy 
Yavlinskiy. This programme is a party political broadcast. 

The leader of the Yabloko party, Grigoriy Yavlinskiy, gives his views on the 
situation in the country and in the Duma. The first question is about how 
events are developing in Chechnya. 

[Yavlinskiy] Our position remains the same. Its essence is that the methods 
now being used in Chechnya cannot produce results or achieve the goals that 
were set out at the very beginning. These methods are a large-scale military 
operations, heavy bombing and an all-out attack on Groznyy, the use of all 
types of weaponry, the deployment of 100,000 or more troops in the North 
Caucasus, and it is impossible that they will lead to [the rebels'] 
destruction or isolation or neutralization. The war has been in progress for 
a year. A huge number of Russian soldiers are dying there. Russian generals 
and military chiefs are dying there. While Khattab and Basayev are at large 
in Chechnya as before. Not one of the best-known terrorists has been caught 
or brought to trial or killed. 

We, Yabloko, are of course on the side of the Russian forces. And all our 
criticisms apply first of all to the country's political leadership. We 
warned that the offensive has to be stopped and that a humanitarian corridor 
must be set up, and special forces sent in. We weren't listened to, and as in 
1994-1996 they just charged in. The result today is bloodshed, heavy fighting 
and the lack of any prospects. 

We say this not only from the viewpoint of some kind of abstract values. I 
say this because of course I feel sorry for the young men, soldiers, killed 
there. Of course I feel sorry for all the innocent who are dying in this war. 
I say this because it pains me to hear of the privations and illnesses and 
tragedies that the local people are going through. But I also say this 
because it is leading to the collapse of the Russian army and the Russian 
state. From any viewpoint, this war has absolutely no future. 

So our troops take Groznyy. And what do they do next? They'll hoist our flag, 
and at night try to survive guerrilla attacks. What's the point? What 
prospect is there in this? We must stop the war now, set up a humanitarian 
corridor and act with firmness but also a purpose - to disarm the terrorist 
gangs. 

Throughout all this, we have to offer a gradual transition to a political 
solution. 

[Presenter] But who to negotiate with? 

[Yavlinskiy] Who to negotiate with? The situation there is becoming ever more 
complicated and unclear. But we will still have to find someone to negotiate 
with. And draw up a political solution with them. The things to do now are 
stop the war, set up a humanitarian corridor, and use the special forces to 
disarm the terrorists. That is our policy for the North Caucasus. In theory, 
we should negotiate with Maskhadov. But we don't know what kind of condition 
he's in now, or whether it will be possible to hold talks with him after such 
a war... 

[Presenter] And what about sanctions by the West against Russia because of 
this war? Your view on this? 

[Yavlinskiy] I think that they will be purely symbolic. They won't be felt by 
a country as large as Russia. 

[Presenter] Grigoriy Alekseyevich, Russia and Belarus are moving towards 
union and [Belarus President Alyaksandr] Lukashenka is the head of that 
union. Is this a worthwhile move or a priority issue, or what? 

[Yavlinskiy] I view this as a symbolic move that has nothing to do with 
reality. But the danger here is that Belarus will gradually be sucked into 
the Russian political structures and authorities. I've said this many times. 
If we allow any increase in the disorder in our state authorities, and if we 
allow even more legal muddles and the rest of it, then this will have a 
grievous impact on our economy and our legislation. Nothing good will come of 
this. I'm not very concerned at these negotiations and I don't see any 
practical benefit from them. I continue to insist on an economic treaty 
between Russia and Belarus, an all-embracing agreement - not political games 
- between the two leaders and not political games about who of them is more 
important... 

*******

#10
RUSSIA: IMF-BACKED REFORM WILL NOT PRODUCE POSITIVE RESULTS - YAVLINSKIY
RIA Novosti

Davos, 30th January: "The approach to the reforms in Russia and their order, 
as proposed by the International Monetary Fund, will not give positive 
results. Today that is clear. And we have every reason to say so," the leader 
of the Yabloko movement, Grigoriy Yavlinskiy, said in a RIA Novosti interview 
in Davos. He added that he had become convinced of this after taking part in 
the discussions on the reforms in Russia. 

The Yabloko leader believes that the entire programme of reforms in Russia 
should rest on four aspects: human rights, the right to protect property, 
reduction of the scale of the shadow economy and a stubborn fight against 
corruption. According to him, it is these factors that will form the basis of 
his future presidential election programme. 

Speaking about the possibilities which attending the Davos forum gives, 
Yavlinskiy said that the contacts established there "are very useful and very 
important". He called Davos a unique opportunity to discuss the problems of 
Russia with the leadership of all leading world financial organizations and 
with the political leaders of approximately forty countries. 

********

#11
Wall Street Journal Europe
January 31, 2000
Editorial
Putin's Priority

If the true test of resolution lies in whether good intentions survive hard
times, Russia is in danger of falling off the wagon again. The start of the
year saw Boris Yeltsin's chosen successor promising market reforms, the
strengthening of democracy and the rule of law.

In less than a month, acting President Vladimir Putin has stepped up an
increasingly desperate and brutal campaign in Chechnya, brushed off
international opposition to the war and presided over the issuance of a
new, hardened military doctrine. Last week Mr. Putin announced a 50%
increase in the country's defense procurement budget. It's not exactly a
welcome mat for investors -- or an effort at reassurance for Russia's
neighbors.

Not that either foreign investors or neighborly relations are Mr. Putin's
priority right now. With less than two months before the presidential
election, Mr. Putin is trying to secure the goodwill of the defense
industrial complex, and convince the Russian public that this would-be
President-elect will restore the armed forces to their former glory. Yet
the military's bloated size has fed an insatiable demand for more
resources, tying up as much as 19% of Russian budget expenditure (second
only to debt servicing costs). If Mr. Putin continues to feed that demand,
he will soon find himself hostage to it.

Few would deny that Russia's armed forces need some attention. As William
Odom writes nearby, something's clearly gone wrong when soldiers hock their
weapons to a force they are fighting. Western journalists poking around the
Russian military since the end of the Cold War have found plenty of
evidence of decay, ranging from rusting hardware to privation in the ranks.
You'd be better looked after as an inmate in a Swedish prison than as a
foot-soldier in the Red Army.

Even the downsizing of recent years has done little to alleviate the
overall picture of squalor and disarray in the Russian military. Nor has it
relieved the burden on state coffers.

The prevalence of barter and nonpayment in the military sector makes it
difficult to get a real picture of Russian defense outlays: For example, at
market exchange rates, Russia's defense spending looks similar to that of
Singapore. NATO estimates Russian defense expenditure for 1998 at 4.4% of
GDP, while the International Institute for Strategic Studies puts it
higher, at 5.2% of GDP. (We'll toss out the low-ball estimate: the IMF
reckons improbably that Russia spent only 2.5% of GDP on defense.) The IISS
says that "up to 75% of all defense-related financial transactions
effectively fall outside the defense budget." And the real figures now may
be even higher since details of the 1999 defense budget were classified for
the first time since the end of the Cold War.

Boris Yeltsin had the right idea when he called in a 1996 presidential
decree for the creation of a fully professional military. But the
government hasn't been able to let go of conscription. A December 1998
presidential decree stated that the armed forces were no longer obliged to
use only professional NCOs and soldiers in armed conflict situations but
could also conscript to fill positions. In a passing reference to his
previous order, the 1998 decree stipulated that the creation of
professional armed forces could be pursued "once the necessary conditions
(mainly economic) emerge." How convenient for operations such as flattening
Grozny.

It would be one thing if Mr. Putin allocated budget resources for purposes
of retiring unneeded Russian forces (for example, giving foot soldiers a
stipend on which they could begin to search for employment in the civilian
world) and paying for professional ones, securing Russian weaponry from
freelance asset-stripping or sending thinsulate boots to those soldiers
biding their time on the tundra. Instead, he has staked his claim to the
Kremlin on a combination of populist militarism and Soviet-style paternalism.

He pledges to restore the dignity and power of the state, and then use it
to benefit the great Russian people. In this, Mr. Yeltsin's successor
appears to be following in his predecessor's footsteps. It is especially
disturbing that neither the reality of resource constraints nor battlefield
losses are allowed to interfere with the plans for military rejuvenation.
Even journalists whose reports are considered unflattering are deemed a
menace, as the bizarre detainment by the Russian military of a Radio
Liberty journalist indicates.

If, like Mr. Yeltsin, Vladimir Putin finds himself unable to fund his
"other" priorities, military adventure could conceivably become a more
frequent diversion from the woes of an underperforming economy. Russia's
new leader tempts a vicious circle.

*******

#12
Izvestia
January 31, 2000
[translation from RIA Novosti for personal use only]
WE AIN'T LOCAL
Moscow Adopts Migration Regulating Programme
By Larisa KALLIOMA

The migration situation on the expanses of the CIS is
worsening: the number of people pining to move to Russia, in
general, and to Moscow, in particular, is snowballing. 
Having decided it was high time to start regulating
migration flows, the Moscow government is ready to adopt a
special programme on February 1. The announced objective is to
"ensure the legitimate rights of migrants to, and residents of,
Moscow, create beneficial conditions for the city's
socio-economic development and reinforce public safety."
A third of guest workers in Russia flow into the capital.
Last year, Moscow's immigration services registered over 70,000
of them. But the number of illegal aliens is said to approximate
130,000.

From Izvestia's File:

Yulia ANFILOVA

Various outfits willingly employ migrants to work at
construction sites, in road building and transport. 
As many as 40,000 foreigners do the construction work in
Moscow; 5,000 Ukrainians drive Moscow municipal transports. 
Services and public catering willingly use guest workers:
10,000 Chinese, Vietnamese and Indians. Several thousand
Americans, French, Dutch and citizens of other, rather affluent
countries, also work in Russia. 
To issue the license to work, Moscow employers are required
to pay a duty worth a minimum monthly wage for a manual worker
and 15 minimum monthly wages for a qualified worker to the state
coffers. 
Moreover, Russian and joint-venture employers are expected
to pay a minimum monthly wage for every employee to the city
budget.
The composition of legal guest workers in Moscow is
currently as follows:

----------------------------
From the post-Soviet states:
Ukraine - 12,838
Moldova - 3,722
Georgia - 3,200
Armenia - 1,551
Estonia - 282
Latvia - 198
Uzbekistan - 197
Tajikistan - 163
Kazakhstan - 140
Azerbaijan - 124
Lithuania - 34
Kyrgyzstan - 27
Turkmenistan - 7
From the rest of the world:
Turkey - 11,622
China - 7,387
Former Yugoslavia - 3,896
Vietnam - 3,500
Bulgaria - 1,470
Afghanistan - 1,300
India - 1,131
USA - 1,100
----------------------------

The only migrants exempt from the migration regulations are
citizens of Belarus who have, in line with an intergovernmental
agreement, the right to work as residents, i.e. do not need to be
certified.

*******

#13
Trud 
January 19, 2000
[translation from RIA Novosti for personal use only]
IN WHAT COUNTRY DO WE WANT TO LIVE?

In this departing 20th century Russia is completing the
first, transition stage of economic and political reforms, which
were launched nearly ten years before. At least Vladimir Putin
said as much in his policy article published at the government
Web site before the New Year.
What will be the second stage? What can we expect in the
year 2000 and in the subsequent few years? Society has been
wracked by a deep, in particular spiritual, crisis. The country
is facing acute economic and social problems. We have reached yet
another crossroads. 
The elaboration of a long-term federal development strategy
began on government orders in late December last year. The Centre
of Strategic Studies, specially created for the purpose, rallied
impressive intellectual forces. Why do we need a new strategy
now? Why do not the existing concepts suit us? But the acting
president thinks we did not, and still do not, have serious
strategic programmes. Since the beginning of the reforms, "we
have been groping our way, without a clear view of the national
goals and boundaries," Putin said. 
This is a very harsh evaluation of what his pro-reform
predecessors did. Does this mean that we will at long last
determine the direction and the priorities of our movement? If
so, where will we turn? What will be the new vector of the
country's movement? And can we be sure that we will not make more
gross mistakes while making this strategic choice? These and
other questions are answered by Dr. Yevgeny GONTMAKHER
(Economics), head of the social development department of the
government staff, who was interviewed by Vitaly GOLOVACHEV, a
Trud political analyst.

Question: What will be the fundamental difference of the new
strategy from the reform policy (if we had one), which had been
pursued since 1992?
Answer: It would be premature to speak of this, as we are
only beginning to work on such a programme. But one thing is
clear now: There must not be another revolution, another major
change, for the country will not survive one more shock.

Question: The article published on the government's Web site
offers a rather harsh description of the Soviet period and the
past eight years of reforms. "We had been moving into a dead-end
for nearly seven decades by the road that was laid far away from
the highway of civilisation," it says. "The experience of the
1990s graphically shows that a truly successful (...) renewal of
our homeland cannot be ensured by a simple application of
abstract models and schemes, found in foreign textbooks, in
Russia." This clearly amounts to criticism of the "shock
treatment" used by Gaidar, Chubais and other radical reformers.
Does this mean that the liberal ideas will be buried?
Answer: Nobody questions the values of liberal economy and
the free world, or democratic institutions. Judging by your
question, it looks as if Russia was pursuing the course of
economic liberalisation but now can turn away from this road. 
I would like to ask you: What are liberal reforms? Have we
created an effective economy? Do we provide powerful assistance
to small businesses? Can any citizen begin his own business
without getting the approval of dozens of state officials first
and without fearing the interference of criminal structures? And
what about stifling taxes, loans made impossible by high interest
rates, and other hindrances? Small business, which is one of the
cornerstones of a market, liberal economy, has been neglected in
Russia. 
Or take another problem. Do we invest money into the real
economy sector? Is our economy really rising?

Question: There seems to be certain industrial growth?
Answer: Mostly thanks to the high world oil prices and the
devaluation of the rouble in 1998. In fact, as that Web article
points out, "we see the destruction of the very material
foundations of the Russian economy." Investments into the real
economy sector plummeted to one-fifth in the 1990s. Corruption
has reached an alarming scale. The shadow economy accounts for
40% of the overall economy. Ineffective management at all levels
is hindering the development of society. Labour productivity in
the industries (with the exception of the raw materials and
power-engineering sectors) is four to five times lower than, say,
in the USA. The production of commodities that are competitive on
the world markets has plummeted dramatically. Are these the
results of liberal reforms?

Question: The liberal reforms that began in 1992 simply
drowned in Russia.
Answer: Why? We should have started thinking long ago why
not a single socio-economic development programme was implemented
in Russia in the past eight years, why not a single forecast in
this sphere came true. Did we have bad forecasters? No, the
documents were compiled by qualified specialists. But the trouble
is that these programmes were not accepted by the people. Because
we do not know Russian society. We don't know, for example, the
amount of the disposable incomes of different social groups, have
no precise information about health and education levels. But the
main thing is that we have no clear view of the values of our
people. 
This is why we cannot forecast the reaction of the people,
individual social groups, to decisions of the authorities and to
major innovations. This is why we cannot, in part, explain the
sensational surprises at the parliamentary and municipal
elections. What can explain the success of Vladimir Zhirinovsky
at the elections to the 1st State Duma or the phenomenal rise of
the Unity bloc, created only a few months prior to the December
1999 elections? 
We still know nothing about the mechanisms of the
development of public moods and the people's likes and dislikes.
Why does a region, which opinion polls say is in favour of
continuing the reforms, elect a radical "left" governor, who is
firmly against the market reforms? 
There are many more such examples. The conclusion is that
one cannot draft an effective long-term development strategy that
would be understood and supported by the people without adequate,
deep knowledge of the people's moods and spiritual world, their
expectations and orientation. 

Question: Do not the sociological polls and statistical data
give a real and detailed picture of the situation in society? 
Answer: Detailed? No, although these materials are of
considerable interest. But you must agree that there is no
exhaustive answer to the questions that were raised here, as well
as many other questions.
Since the beginning of the reforms, I took part in the
drafting of many important policy documents. Remembering their
inglorious demise, I would like to give some advice to the
authors of the new strategy. I think they should begin with
creating a multidimensional, socio-cultural picture of society,
so as not to fall victim to old and widely-used stereotypes. This
will help them to avoid the main danger of in-built
ineffectiveness of solutions to the over-ripe economic and social
problems. 
A long-term development strategy will remain on paper unless
the authors begin with determining the fundamental, basic
principles, namely, the political system (the constitutional
regime, the type of democracy, and the model of contacts between
the citizen and the state), as well as a system of values that
would be recommended (but not enforced) by the authorities. 

Question: What values do you mean? Can you give an example?
Answer: I would begin with personal (above all economic)
freedom and responsibility of the people to themselves. This
provides for admitting the fundamental role of private property
and self-government. A key notion embracing all elements of the
above would be individuality. In the Soviet Union, the state and
the collective, rather than the individual, stood above all else.
Individualism was an unquestionably negative trait and buried
quite a few carriers. But it is the bright individuals who make
the greatest contribution in their spheres and become the pride
of the country. Individuality is one of the basic values, and the
state must say this out loud. 

Question: I could question this statement. The team spirit
has always stood above individualism in Russia, including before
the 1917 revolution. Last year's poll by VTsIOM showed that over
a half of the population (58%) think "it would be better if
everything in Russia remained as it was before 1985." A half of
the population regard the multiparty elections as a negative
trend, and one-third have a negative attitude to the freedom of
speech and the press. What individuality, what liberal values can
one speak of in this situation?
Answer: And here are other figures, provided by the
self-same VTsIOM. Last year, 40% of the respondents wanted Russia
to be "like the Western countries, namely democratic, market and
law-abiding." What does this mean? It means that society has
changed dramatically since the Soviet period, not to mention the
pre-revolutionary age. But the gross mistakes, shortcomings and
drawbacks permitted during the reform period discredited the
notions of the market economy, democracy and liberal values. The
people are tired, confused, at a loss.
However, when asked if they regard themselves as free, 36%
said "Yes, rather yes," which is 7% more than in 1995. The
process of "liberation" is going on, and will accelerate with
improvements in the people's material situation (which is one of
the key tasks). And freedom and individuality are the Siamese
twins.
So, the notion of individualism is not alien to our people,
or at least many of them. And it is possible that the most
important thing now is for the state to look into the future,
rather than into the past. Otherwise it will not succeed. 

Question: It is very difficult to draft such programme in a
society rent by a deep ideological and political split. Can you
formulate goals that would be approved by the bulk of the
population?
Answer: Certainly. According to last year's polls, 71% of
the people in Russia think that power is held by the mafia and
organised crime, and 58% say the main barriers to effective
economic reforms are corrupt officials and the squandering of
state money and property. Will not the people support the
programme, if it formulates practical methods to combat
corruption? The overwhelming part of the people want stability,
law and order and higher living standards in the country. 
These are routine tasks. As for basic values, individualism
should be complemented with tolerance and solidarity. A normal
society cannot live without these values.

Question: What do you mean?
Answer: Take tolerance. It means ethnic, confessional,
personal and group tolerance (the latter case provides for the
implementation of the key principle of a civic society -- social
partnership). 
Regrettably, tolerance is very low in Russian society.
According to VTsIOM polls, nearly a third of Russians think that
"rockers, members of religious sects and AIDS patients must be
isolated from society." Twenty percent of the respondents are
convinced that bums and alcoholics should be treated in the same
way, too. As you see, the public mood is highly "specific" in
some cases.
Or take solidarity. This is the most important condition for
the existence of any effective state. The point at issue is
full-scale collection of taxes, trust and support for the power
structures, etc. 
Social accord on these fundamental elements could create a
platform for the elaboration of a long-term strategy on practical
aspects of the domestic policy.

Question: Many people vote for etatism and for turning
Russia into a great power. Does this clash with the ideas of
liberal values?
Answer: I don't think so. Let's see how the people
understand the notion of great power. Most understand it as a
high economic potential (64%) and high living standards (63%),
respect on the part of other countries (35%), and rich culture
(31%). Only 30% (the fifth most popular answer) understand it as
military and nuclear might. 
As for etatism, sociological polls show that over a half of
the respondents would like to see Russia "as a state with the
broadest possible rights of local authorities, where the central
authorities would only coordinate their interests." This fully 
corresponds to the democratic principles of statehood. 

*******

#14
BBC MONITORING
PUTIN'S RATING SAID DECLINING - BUT NOT OVER CHECHNYA
Source: Russia TV, Moscow, in Russian 1700 gmt 30 Jan 00 

The Russia-wide Public Opinion Centre has carried out another nationwide 
public opinion poll from 21st-24th January; 1,600 people took part in the 
survey. The margin for error is under 3.8 per cent. The following question 
was asked specially for the programme "Zerkalo": Who do you think you will be 
voting for in the presidential election at the end of March? [Chairman of the 
Conservative Party Lev] Ubozhko, [Russia's former Prosecutor-General] Yuriy 
Skuratov, [leader of the Spiritual Legacy movement] Aleksey Podberezkin, 
[businessman Umar] Dzhabrailov, [leader of the ultra-right Russian National 
Unity] Aleksandr Barkashov have received zero per cent. [Samara governor 
Yuriy] Titov and [Kemerovo governor Aman] Tuleyev received 1 per cent each. 
[Leader of the Liberal Democratic Party of Russia Vladimir] Zhirinovskiy 
received 3 per cent. Last week he had 2 per cent. [Yabloko leader Grigoriy] 
Yavlinskiy has received 4 per cent (last week 2 per cent); [Fatherland-All 
Russia leader Yevgeniy] Primakov - 6 per cent (last week 5 per cent); 
[Communist leader] Gennadiy Zyuganov - 13 per cent (last week 12 per cent); 
[Acting President] Vladimir Putin - 48 per cent (last week 53 per cent). 

The second question specially for the programme "Zerkalo" was this: "Which 
politician do you trust the most?" [Duma speaker Gennadiy] Seleznev, 
Zhirinovskiy and Yavlinskiy have received 3 per cent each. [Leader of the 
Union of Right Forces Sergey] Kiriyenko - 4 per cent. Primakov - 7 per cent 
(last week 6 per cent); Zyuganov - 10 per cent (last week 11 per cent) and 
Putin - 41 per cent (last week he had 46 per cent). 

You will recall that the survey was carried from 21st-24th January, that is, 
prior to Tuesday 25th January when Putin met Kiriyenko and [Boris] Gryzlov, 
leaders of the Union of Right Forces. That is important. Because we can see 
the ratings relating to trust confirm the ratings relating to presidential 
elections, Vladimir Putin has lost 5 per cent. This is not a crucial loss, 
given that his main potential rivals have not gained any extra points. Putin 
is still in the lead, being far ahead of the others. So, we cannot really 
speak of any radical change in public opinion. Nevertheless, the loss of 5 
per cent should ring alarm bells. Question should be asked. 

And the next question asked by the opinion poll centre was about Chechnya: 
"Do you think federal troops should continue their offensive in Chechnya? Or 
should they start peace talks with the Chechen leadership? 

Sixty-nine per cent said the offensive should be continued; 24 per cent were 
in favour of peace talks. The others could not answer. These figures have not 
changed since last week... 

*******

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