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1 February 2000
[Note from David Johnson:
1. Reuters: Yeltsin's wife describes husband's resignation.
2. RFE/RL NEWSLINE: MOST RUSSIANS WANT NEXT PRESIDENT TO HALT WAR
3. AP: Albright: Russia Inflicting Misery.
4. Interfax: PM CALLS FOR SPEEDY APPROVAL OF LAND CODE.
5. Interfax: WESTERN INVESTORS INTERESTED PRIMARILY IN PREDICTABILITY -
DEPUTY PRIME MINISTER.
6. Open Society Institute's Central Eurasia Project: Gaidar Supports
Chechnya Campaign, But Is Cautious on Russian Policy Towards CIS States.
7. The Melbourne Age: Bob Ellis, Worse than a lethal fool. (re Yeltsin)
8. The Guardian (UK): Amelia Gentleman, Chechen village lives and dies
with the enemy. In a frontline community, signs on gates plead: 'People live here'
9. Vremya MN: Yelena Boldyreva, NO VIOLATIONS. (Re Russian views
10. Moscow Times: Catherine Belton, Looking for Putinomics.
DJ: It has come to my attention from a usually very reliable
and informed but confidential source that there may have been
massive falsification of the Duma election results in December.
This allegation deserves further investigation and for that
reason I am passing on the information here. I cannot reveal
the source but the issue deserves much more attention
than it has received to date. This allegation is known
to a number of well-known experts on Russia. For a variety of
reasons, unfortunately, there has been no open discussion.
But it is simply too important to keep silent about. I can
say that I have received information from other sources that
both supports and contradicts the allegation.
According to the source here are the official
vs. the actual percentages of the vote of the major parties
in the parliamentary election:
Party Official Actual
Communists 24% 33%
Unity (Medved) 23 14
Fatherland/All-Russia 12 21
Union of Right Forces 9 3.4
Yabloko 6 12
Zhirinovsky bloc 6 4.5
Yeltsin's wife describes husband's resignation
MOSCOW, Feb 1 (Reuters) - Boris Yeltsin's wife, in a rare interview, provided
new insights into her husband's resignation as Russia's president and said
they planned to celebrate his 69th birthday on Tuesday with Acting President
Apart from Putin, who is running for president in a March 26 election, the
Yeltsins have invited Russia's Patriarch to share a meal of fish dumplings,
Naina Yeltsin told the daily Izvestia.
``His holiness the Patriarch is coming, he said so already. I think Vladimir
Vladimirovich Putin will come too,'' she said.
``Those who don't want to congratulate him don't have to come. It's purely
personal...Of course we'll have traditional dumplings -- Urals style
dumplings, definitely with fish. We'll bake up something sweet. We like home
cooking in our house.''
Describing Yeltsin's last hours in office, she said the former president had
surprised his family when he announced he was stepping down on New Year's
``You know, there was a sense he was thinking about something. I could feel
it,'' she said.
``On the morning of the 31st he was in a very good mood. And suddenly, just
before walking out the door, he said to me: 'You know, I've decided to
resign.' And so calm. I just kissed him and said, 'What a great guy you are!'
``It didn't occur to me he meant that day, the 31st. I thought it might
happen in January or February.''
When it finally became clear that the announcement was coming at noon,
Yeltsin's family was torn over the timing. One granddaughter worried that it
might spoil Russians' New Year holiday, but another said everything would be
``Masha said: 'Grandma, how can he do that? Today is a holiday. Everybody's
getting ready for the New Year. You can't create such worries for people.
Call him up right now and tell him not to announce it today!'''
``Then Katya called up and said: 'Grandpa is terrific. He's such a hero.' I
said: 'Katya, don't you think it will spoil people's holiday?' And she said:
'Come on, Grandma, everyone is so busy with the holiday. Sure, there will be
a little worrying, but everything will be all right.'''
``By the time the New Year came we had all calmed down,'' Mrs Yeltsin said.
``Of course, when we watched his address, we cried.''
RFE/RL NEWSLINE Vol. 4, No. 21, Part I, 31 January 2000
MOST RUSSIANS WANT NEXT PRESIDENT TO HALT WAR IN CHECHNYA.
More than half (56 percent) of Russian citizens hope that the
next president of Russia will put a stop to the war in
Chechnya. That is the finding of a poll conducted by the
Russian Public Opinion Center among 1,600 respondents in mid-
January, Interfax reported on 29 January. The same survey
also suggested that 55 percent of citizens want to see
Russia's status as a "great and respected" nation restored,
while only 12 percent believe that the new president's duty
is to keep Russia on the reform track. JC
Albright: Russia Inflicting Misery
January 31, 2000
By BARRY SCHWEID
MOSCOW (AP) - Clashing openly with Russia over Chechnya, Secretary of State
Madeleine Albright said Monday the conflict in the rebellious republic had
inflicted ``an incredible amount of misery'' on civilians by targeting them
indiscriminately and forcing them from their homes.
She appealed to Foreign Minister Igor Ivanov to open a dialogue with Chechen
political figures. ``We believe there is no military solution to the Chechen
problem,'' she said.
But Ivanov responded at a joint news conference that Russia had to move
firmly against terrorism, a view in which he said other governments
concurred, and that no one had come up with an effective recipe to deal with
the extremist threat.
He said Russia understood fully the concern its offensive had stirred abroad,
but insisted ``all our counterparts share the necessity to fight most firmly
The offensive, championed by acting President Vladimir Putin and widely
approved by Russian nationalists, will not extinguish terrorism and is
causing diplomatic isolation for Russia around the world, Albright said.
Their open debate after more than three hours of talks underscored the skid
in U.S.-Russian relations, marked also by disagreement over a potential U.S.
program for space-based weapons that Russia insists would fuel a race in
offensive nuclear arms.
Philosophically, Albright said of discord over arms control measures, ``these
are unlikely subjects for one-day miracles.''
But hinting at a potential for compromise, she said Russia's demand for
deeper cutbacks in arsenals and the U.S. pitch for an antimissile defense
were being considered in ``one package.''
Albright said President Clinton was prepared to make a visit to Moscow to
continue the dialogue with Putin.
In Washington, however, a senior U.S. official said Clinton had no plan to
visit at least until after Russia's national elections in March. Boris
Yeltsin had extended an open invitation to the president before resigning New
Year's Eve and choosing Putin as his successor.
Albright's visit is designed to size up Putin, to push for an easing of
restrictions on antimissile defenses and to persuade the new leader to change
course in Chechnya.
In a gesture of cooperation despite their differences, Albright and Ivanov
took a break while tackling their heavy agenda to sign an agreement designed
to tighten controls on technology used in launching U.S. satellites from
Russian space stations.
Also, they are working together toward a solution to a territorial dispute
between two former Soviet republics, Armenia and Azerbaijan. Albright also
noted that both Russian and American troops were on peacekeeping patrol in
While Albright and Ivanov conferred at Osobnyak, the foreign ministry's guest
house, delegates from the Palestinian Authority, Israel and several Arab
countries began a series of meetings aimed at promoting regional cooperation.
``Russia will keep working consistently to attain durable and fair peace in
the Middle East region, which can be secured through the restoration of the
legitimate national rights of the Palestinian people,'' Putin said in a
letter to Palestinian leader Yasser Arafat. The presidential press service
made the letter public.
Putin said he would accept Arafat's invitation to visit Palestinian-held
territory ``as soon as circumstances permit.''
Clinton also has endorsed Palestinian aspirations and declined to endorse
congressional legislation affirming Jerusalem as Israel's capital.
A Putin mission was welcomed Monday night by a senior U.S. official, who said
``the Russian position is clearly one that is very supportive of moving
The official, speaking on condition of anonymity, added: ``To the extent they
can be helpful we welcome that.''
Albright, Ivanov and about a dozen other foreign ministers held a festive
informal dinner, meanwhile, in a palace built by St. Catherine. They were
serenaded by folk singers and drank some vodka.
Albright and Ivanov boarded a sleigh pulled by horses and rode amid snowbanks
in a torch-lit pathway. Midway, they swapped hats, Albright exchanging her
Stetson for Ivanov's Russian fur hat.
The Moscow talks are being sponsored by Russia and the United States. In
addition to Egypt, Jordan, Saudi Arabia, Tunisia, the Palestinian Authority
and Israel, they are to include representatives of Canada, the European
Union, Japan, China, Switzerland and Norway.
Syria and Lebanon are boycotting the meetings.
On Chechnya, the divergence of American and Russian views was clear.
``We think there has been an incredible amount of misery injected upon the
civilian population of Chechnya, both militarily and also because of the
creation of its many refugees,'' Albright said.
At the same time, though, Albright reaffirmed U.S. support for Russia to
retain control of Chechnya and said Russia was confronted by ``what is
clearly a problem of terrorism.''
She did not elaborate on her proposal that Russia should pursue a political
solution through dialogue. State Department spokesman, James P. Rubin, said
``we don't have a prescription for it.''
PM CALLS FOR SPEEDY APPROVAL OF LAND CODE
MOSCOW. Jan 31 (Interfax) - Acting Russian President Vladimir Putin
has called for the speedy approval of the land, labor, civil and
criminal proceeding codes.
At an expanded Monday meeting of the Justice Ministry board he
said: "We are suffocating from the absence of fundamental legislation
adequate to the changing situation."
"This does not mean that everything should be dumped, but it is
impermissible that the country should be living according to laws
written under a different system of government," Putin said.
He spoke of the need for the dictatorship of law in Russia. "The
dictatorship of law is the only kind of dictatorship which we must
obey," he said.
In the context of the need to speed up law making he said that the
whole job should not be lumped on the Duma alone. The government and
Justice Ministry should assume a more energetic stance on the matter,
"So far Russia does not have a well-thought out, calculated law-
making policy," he said.
He said 20% of recent legislation contradicts Russian laws and in
some cases restricts human rights.
He said the contradiction between laws in several Russian
territories and federal laws "may reach a critical point capable of
blasting the common constitutional space."
Putin said that freedom without law and order "inevitably tumbles
down to chaos and lawlessness." People should have faith in the power of
law. Russia can be made a strong power only on the fundamental
principals of observing law and personal liberties," he said.
WESTERN INVESTORS INTERESTED PRIMARILY IN PREDICTABILITY - DEPUTY PRIME
MOSCOW. Jan 31 (Interfax) - First Deputy Prime Minister and Finance
Minister Mikhail Kasyanov at the world economic forum in Davos said that
Western investors were asking primarily about the investment climate and
general predictability of the Russian authorities.
"The heads of major firms and transnational corporations that have
investments in Russia and intend to increase the volume of their capital
in the Russian economy pointed to the flaws in Russian laws, even though
these flaws do not scare them or constitute the biggest obstacle," he
said. "The fact that these laws change every day is the biggest
obstacle" for investors, Kasyanov said.
In a Sunday interview with the Russian ORT channel he said that the
West "hopes that the new situation arising today, relations between the
government and the Duma and parliament as a whole, will help to correct
many flaws." He quoted the opinion of investors that the situation in
taxation should now be improved.
Kasyanov said that Russia is moving along the road of integration
in the world economy and its participation in the international division
of labor is absolutely necessary. He felt that in order to make this
road shorter and more professional, Russia should coordinate its moves
with international financial institutions, which act as experts and
reflect the opinion of the entire international community in this
He was sure that "the continuation of cooperation with the IMF and
other international organizations is absolutely necessary for Russia not
from the viewpoint of getting money, important though it is, but from
the viewpoint of checking the quality of the steps and measures which
the government will be adopting."
From: Anthony Richter <ARichter@sorosny.org>
Subject: Gaidar Supports Chechnya Campaign, But Is Cautious on Russian
Policy Towards CIS States
Date: Mon, 31 Jan 2000
I thought this piece might be of interest for the list. It is from our website
which carries daily, original news pieces on the Caucasus and Central Asia.
Anthony Richter, Director, Central Eurasia Project, Open Society Institute
Gaidar Supports Chechnya Campaign, But Is Cautious on Russian Policy
Towards CIS States
Yegor Gaidar, Russia's former acting prime minister who initiated the
country's chaotic transition to a market economy, expressed support for the
Kremlin's campaign in Chechnya, suggesting that Moscow is justified in
preserving its federation through the use of force.
But Gaidar cautioned that it would be a mistake for Russia to attempt to
reassert a hegemonic influence on the former Soviet republics in the
Transcaucasus and Central Asia. "It is not in Russia's interests," said
Gaidar, speaking at a January 27 event at Columbia University in New York.
"We (in Russia) are of course interested in maintaining stability in the
Transcaucasus and Central Asia. That does not mean that Russia should
reestablish some sort of imperial controls in the regions," he continued.
"It would be a foolish move in absolutely the wrong direction."
Gaidar, who is a leader of the liberal Union of Right-Wing Forces (SPS)
faction in the Russian parliament, also criticized the union between Russia
The rapid rise of acting President Vladimir Putin is a reflection of
growing conservative and nationalist sentiment in Russian society, Gaidar
said. Thus, it should not come as a surprise that government policies,
especially the conduct of the war in Chechnya, are so popular.
Leaders of the Commonwealth of Independent States held a summit January 25
in Moscow. At that meeting, Putin stressed the need for increased
cooperation among the former Soviet republics, describing closer relations
as "an absolute priority for Russia." He went on to say that the CIS must
be revived to serve as a "mechanism to
preserve the best that we had." CIS leaders, who elected Putin to the CIS
chairmanship, agreed to collaborate on the drafting on an anti-terrorism
It remains unclear to what extent the ascendant nationalist-conservative
thinking in Russia will influence foreign policy, including that towards
states in the Caucasus and Central Asia. Gaidar insisted that Russia
would never want to renew the Cold War, but at the same time, he pointedly
refrained from making any predictions on government policy following the
upcoming presidential election. He added that he could not
envision a scenario in which Putin did not win the election.
Gaidar said the Chechen war was undermining democratic values in Russia,
but he hinted that anarchic conditions in the renegade province hindered
attempts at negotiations, and made military operations
unavoidable. "The government is doing what it has to do," he said. "I don't
see any other choice."
From: "grant taylor" <firstname.lastname@example.org>
Subject: Article for the Johnson List
Date: Mon, 31 Jan 2000
I was wondering if you had already or would consider publishing this piece
by the celebrated Australian eccentric political writer Bob Ellis.
The Melbourne Age
Worse than a lethal fool
By BOB ELLIS
Tuesday 4 January 2000
BORIS YELTSIN will be shown by history to be worse than a stumbling, drunken
blowhard. Worse than a ham-fisted mangler of immortal opportunities. Worse
than a clubfooted public nuisance who stayed too long. Worse than an amiable
buffoon: he was not that amiable. Worse than a lethal fool.
For what he interrupted when he stood up swaying on his famous tank, and a
few days later when he bullied the frayed and traumatised Gorbachev (just
back from being kidnapped) into unjust and thankless oblivion, was the only
process that could have steered the fractious, plaintive Soviet peoples into
the orderly embrace of other nations.
This was its cautious, gradual corralling into the dull and kindly
traditions of European social democracy, of the German, Dutch and Swedish
kind. This was where it was heading under Gorbachev's weary, passionate
guidance. This was where it should have gone.
I lived for short periods in the Soviet Union in 1988, 1989 and 1990, and it
Everybody had a job, everybody had a roof, and an income equivalent to that
of a kindergarten teacher in Murwillumbah.
Everybody had (for the only five years of their history) complete freedom of
speech. Fearless investigative reporters each night grilled cowering
ministers on television.
The parks, the public transport, the circuses, operas, ballets and live
theatres were the best in the world. The streets were safe. There were no
beggars anywhere, though many street hawkers.
The divorce and abortion rates, on the other hand, were abominable. The
accommodation was cramped and mostly insufferable, the cuisine dreary.
Alcoholism was a national plague; education an international triumph. Many,
many wives worked part-time as prostitutes. The black economy was rife.
Half the currency was forged. Bureaucrats were on the take. Corruption was
deep in the system.
It was, in short, like a lot of other countries, if in different
proportions. It had good and bad. People felt frustrated, especially the
men, but they ate, made love, threw parties. They had a life.
Then Yeltsin managed his flat-footed coup (the kidnappers tried to get him,
too, but couldn't discover which early opener he was in) and levels of
calamity not yet admitted ensued.
Free enterprise was declared overnight, and global economics: just like
that. People lost their jobs, their flats, their sense of self-worth.
For the first time since Tsarist times, families slept in the railway
stations, begged in the snow. Inflation soared to 1000per cent. A life's
savings were needed to buy a week's groceries.
Government departments were sold off cheaply to criminals, gangsters,
forgers - the new elites.
Gunfire in the streets between new rival Mafiosi scared off tourism. The
Bolshoi Ballet began to starve. The Moscow Circus was reduced; forced
endlessly to tour.
America was pleased with all this. For Yeltsin, the former Communist
apparatchik, was anti-Communist now - flagrantly capitalist, in fact - so
had to be sustained.
When his legally constituted Parliament defied him, he besieged it with
machineguns and mortars, burnt it down, killed more than 100 of its duly
Though Russia's highest court declared his actions illegal, he was applauded
as a muscular reformist, and the duly elected corpses in the burnt
Parliament were branded "hard-liners".
They weren't; they were Gorbachevites. They wanted slower rates of
transition, and they were right; and they were dead.
Gorbachev stood against Yeltsin in the next presidential elections, but
Boris, in charge of the airwaves, made sure Gorbachev's face was never seen.
Like any Third World dictator, like any Marcos or Suharto, this apostle of
democratic freedom called the tune.
He broke up the Soviet Union because it suited him to be head of Russia,
deranging forever the economies of Latvia, Estonia, Ukraine, Georgia,
Azerbaijan and so on.
When, however, Chechnya chose to leave Russia - much like East Timor leaving
Indonesia - he answered with fire and vengeance, rocket bombings, aerial
strikes, street-by-street fighting, killing tens of thousands.
No one wants to invest in Russia any more. Why would they? Many of its
employees haven't been paid for three years and might prove a fractious
workforce. Not paid for three years? Think about that.
He sacked three cabinets with imperial petulance and also a procession of
his prime ministers, abruptly, overnight.
He survived crippling heart attacks and massive alcoholic binges, made an
international fool of himself and refused to resign - having devised a
constitution that meant he couldn't be voted out.
His present ploy is to get his man up as his successor in the next elections
and so ensure - like Nixon - that he does not go to jail.
What a catastrophe this man has been. Not an unusual kind of Russian, of
course. Provincial officials for centuries have been like this - capricious,
drunk, self-serving, corrupt, impulsive, terminally ill and mad. The tragedy
is he ran a continent, and ran it into ruin.
His legacy is absolutely predictable. His successor, appalled at the debts
he has run up, will repudiate them, and pull out of the world economy, and
smaller nations will follow - in Africa, in South America.
There will be depressions, revolutions, and poverty everywhere. And plagues,
and civil wars, and runs on currency, and pogroms. He has not done as much
wilful harm as Stalin, but the harm is great.
Worst of all, he has turned a brave, romantic, patriotic and brilliant
people into a den of squabbling thieves. He has badly bruised if not
mortally wounded one of the great artistic and literary cultures with
spontaneous vulgarities and cruelties worthy of Idi Amin.
He has wrecked that great unwreckable - Russian pride. May his latter days
go hard with him.
Bob Ellis is a writer and commentator. E-mail: email@example.com
The Guardian (UK)
1 February 2000
[for personal use only]
Chechen village lives and dies with the enemy
In a frontline community, signs on gates plead: 'People live here'
Amelia Gentleman in Alkhan-Kala, Chechnya
There were two funerals in Alkhan-Kala yesterday, forcing gravediggers to
find room for two more plots in this rapidly expanding village graveyard.
Around 80 men braved a thick snowstorm to bury their friend Magomet-Amin, an
elderly farmer, killed last week by Russian soldiers for no apparent reason.
Throughout the ceremony, mourners could hear Russian artillery shelling the
Chechen capital, Grozny, just over a mile away.
On the other side of the graveyard, a second man killed in the same incident
was also being buried; relatives said that half of his head had been blown
off. He was put into the ground alongside at least 40 more fresh graves, all
of villagers killed during bitter fighting here at the beginning of the
Alkhan-Kala's residents are weary of this constant stream of funerals. But
several men were in tears yesterday at the sheer pointlessness of these new
The villagers are trying to get used to to life in the midst of the Russian
attack. But with daily abuses by soldiers, this new way of life is hard.
Magomet-Amin and his young neighbour were killed as they attempted to
retrieve a friend's car from the no man's land between their village and
Grozny - a task for which they had permission from the soldiers on duty.
Local people became suspicious when the men failed to return. The car they
had gone to fetch was spotted in the nearby military base.
For a week, Russian troops pretended to know nothing of the attack. It was
only yesterday, under pressure from the village elders, that a local officer
admitted that there had been an "unfortunate accident" and the bodies were
handed to relatives for burial.
"They tried to hide the crime. The Russians call this liberated territory -
this is how they are helping us to live," said a friend of the dead men, Said
As mourners left the cemetery they met Khamzan Guasayev, a senior figure
within the village hierarchy, enraged by a new example of the Russian
soldiers' hell-raising. Unwrapping a shawl, he laid five Kalashnikov
ammunition clips, each containing 30 bullets, on the ground. Soldiers had
sold them that morning to village children in exchange for one large bottle
"They'll sell anything for vodka - or better still, drugs if they can get
them. But they know where the children live. Later they will send an officer
around to their house, there will be a search and then serious trouble when
they find the ammunition. It's happened many times before," he said.
Satsita Magomedova, 36, has suffered many abuses since Russian troops based
themselves outside the village.
For five days at the beginning of the month when fighting in the Alkhan-Kala
became bitterly intense, Russian soldiers took over her house. She fled with
her husband and her three children to relatives in a quieter region of
When they returned they found that the uninvited guests had departed, taking
with them the double bed she once shared with her husband, all the family's
food supplies and her husband's best pair of shoes.
"Our neighbours saw them drag the bed away," she said. "I'm sad, because it
was an excellent bed. But I don't begrudge them the food - some of the young
soldiers look very hungry."
>From a rear window, troops manning a nearby post are just visible. Very early
yesterday morning they fired two shots into her house, breaking two windows.
Her daughter found one of the bullets on the kitchen floor.
Half a mile along the road, soldiers were openly looting ruined houses on the
outskirts of the neighbouring village, Alkhan-Yurt, which was destroyed
during a Russian assault in early December. Plank by plank, troops were
dismantling the skeleton of a destroyed building, piling up the wood in the
military truck to take back to the base for fuel.
The words "people live here" have been chalked on many of the front doors in
the ravaged village to try to stop soldiers from taking people's belongings
or bits of their homes.
Zaindi Mezhidov, 69, has written these words on his front gate - which is
scarred with bullet holes - but he admitted there wasn't much left to steal.
He pointed to the charred remains of the rooms where his eldest son once
lived. The roof to this family home had caved in beneath the shelling and the
snow was beginning to settle on the floor.
He still has the car in which another son was shot and killed last month.
"This is the hell we are living in," he said.
Despite their uncomfortable proximity to Grozny, residents of these villages
have little idea about how the battle for control of Chechnya's capital is
progressing. News from the city is scarce, though the information which has
seeped through has made villagers sceptical of Russia's televised claims of
The flow of military traffic to and from the battlefield provides an insight
into how Russia's campaign is going.
Dozens of vehicles bringing new ammunition and petrol rolled into Grozny
A convoy of trucks travelled in the other direction. It was carrying the
burned-out remains of armoured personnel carriers and useless, broken, heavy
January 28, 2000
[translation from RIA Novosti for personal use only]
By Yelena BOLDYREVA
More than half of Russians think that human rights are
not at all violated during the present Chechen campaign.
Perhaps, for this very reason the war enjoys such massive
support among people. Besides, the overwhelming majority of
people (according to all public opinion polls) still believe
that the war should be continued until the final victory.
Though, perhaps, they prefer not to see what is going on and
not to think about the methods which are used to conduct the
Moreover, there is a category of people which would like
to have Chechnya wiped off the face of the earth. And there
are quite a few such people. One of the questions asked by
VTsIOM (All-Russia Public Opinion Research Centre) specialists
was: "Would you agree with Alexander Rutskoi's statement that
`Chechnya should be turned into a Gobi Deseart'"? Thirty-four
percent of Russians (more than a third!) said that they would.
Those who are against such "radical" measures accounted for 57
percent of the respondents, and those who did not know the
answer - for 9 percent.
The results of the VTsIOM's poll may also be explained by
the fact that for many Russian citizens "human rights" are
still an abstract notion, which is not yet decoded and has no
connection whatsoever with realities. But it is precisely in
Chechnya that, according to human rights activists, all
humanitarian norms are being violated now.
Question: Do not agree or not with the accusations of
some European public figures that human rights are being
violated during the military operation in Chechnya?
Answers: (1) Definitely "yes", and more
"yes" than "no" - 35 %
(2) More "no" than "yes" and
definitely "no" - 52 %
(3) I don't know - 13 %
VTsIOM. The poll was conducted in 83 populated centres
(cities and villages) in 31 regions of Russia on January
21-24. It covered 1,600 people.
February 1, 2000
Looking for Putinomics
By Catherine Belton
Russia's inscrutable "president-in-waiting" has put the economy to one side
until after the March elections. As Catherine Belton reports, his own
instincts will make the job that much harder when he does turn to such
We have come to a line beyond which we cannot go. Poverty has reached a
mind-boggling scale in Russia."
That was the blunt, even apocalyptic, assessment given by Prime Minister
Vladimir Putin just three days before he became acting president, delivered
as part of his debut policy manifesto, posted on the government web site
A quick glance at the economic state of the nation shows that the dire
rhetoric is all too appropriate. Even though the stimulatory effects of ruble
devaluation and soaring oil prices have delivered fragile economic growth and
rising tax returns, the economy is a mess.
Russia is still hemorrhaging about $2 billion to $3 billion per month through
capital flight; the banking system remains an intractable swamp; without
transparency and the rule of law, property rights are often unenforceable and
foreign debts of $150 billion plus continue to paralyze the country's
Then there is Chechnya.
The war there is eating away at the state's still meager budget and the
outrage expressed by the United States, the European Union and others at
Russia's tactics makes it almost impossible for Moscow to receive suspended
credits from multilateral lending agencies, in particular the International
In the manifesto and elsewhere, the acting president has stressed the need he
perceives for the paternalistic hand of the state and categorically rules out
any radical measures that would take a further swipe at the miserly living
standards of the population.
He has also called for the creation of a long-term strategy to help Russia
overcome "the present protracted crisis and create conditions for our
country's fast and stable economic and social headway."
Such a program would presumably aim to meet the acting president's own
prescriptions: a decade or so of 10 percent a year economic growth and rapid
action to alleviate the economic misery suffered by a large section of the
"The paramount word is fast, as we have no time for a slow start," Putin's
But despite the urgency of the rhetoric, acting President Putin has
implicitly signaled that tackling the economy - especially in any strategic
way - is a task that will have to wait until after he has secured election in
the presidential poll slated for March 26.
In the meantime, over the course of his five months in office, Prime Minister
Putin's economic policy statements and deeds have been a mixed bag of ad hoc
measures mostly aimed at raising more cash for the government.
"This is a reflection both on Putin and on his inner circle. They have not
yet formed their opinions and so it is still very difficult to say what path
they might take," said Yevgeny Gavrilenkov, deputy director of the World
Bank-funded Bureau for Economic Analysis in Moscow.
ANY PLAN WILL DO?
Putin has sought to fill that gap by creating an economic think tank, the
Center for Strategic Research, with the aim of accumulating ideas from the
country's leading economists to come up with a 10-year strategy for Russia's
Founders and contributors to the fund range from old guard "liberal
reformers" such as former Prime Minister Yegor Gaidar, to conservative
stalwarts like Yevgeny Yasin and respected alternative thinkers such as
Andrei Illarionov, a long-time vocal critic of government policy who is now
on board at the center.
Interestingly enough, Gleb Pavlovsky - the obscure image maker who has been
credited by some as grooming Putin for the presidency - also keeps offices at
the think tank.
The think tank is headed by First Deputy Property Minister German Gref, a
36-year-old lawyer and a close Putin ally from his days in the St. Petersburg
administration. Gref, who moved to Moscow in late 1998 to take up his post at
the property ministry, played a major role in drafting the economic parts of
the Putin policy statement mentioned above.
Back in his St. Petersburg days, Gref also worked closely with Unified Energy
Systems chief executive Anatoly Chubais, at a time when Chubais was drafting
the privatization program for Russia's northern capital - a program that
became the template for the federal government's privatization programs.
Emphasizing Putin's wait-till-I'm-elected approach to economics, the center
has been given an April deadline for a detailed conceptual plan to guide
Russia's way forward and act as an economic map for the new Cabinet to
At a recent meeting with Western journalists, Gref said the center is funded
by leading lights from Russia's industry.
He said funds had been received from Russian natural monopolies such as
Unified Energy Systems, the electricity giant headed by Chubais; telecoms
giant Svyazinvest; monopoly oil pipeline operator Transneft; and Gazprom.
Interestingly enough, the state holds large stakes in all of these entities -
indeed, Gazprom is the only one in which the Russian government holds less
than 50 percent.
Gref said financial contributors would also be forwarding their own proposals
for Russia's economic path. But he denied they would play a major role in
policy forming from the start.
"Gazprom has said 'We will give money, but we will also forward our project
for a new fuel and energy balance in the country,'" he said.
Two months away from the deadline for a coherent plan, Gref talks big on
radical reform of the power system itself, but he is still very short on
"Without doubt we will follow a liberal model of development," Gref said.
"But that liberal model will preserve a wide sphere of state regulations.
There will be a strengthening of the paternalistic role of the state. Perhaps
something along the lines of a German or Swedish model.
"We will have to create a wider social safety net for the population and make
up for the shock that was felt by many when suddenly overnight decades of
care from the state were swept away."
Gref said the center had set the aim of coming up with a blueprint for reform
in four wide areas: the system of power, creating a social contract with the
population, modernization of the economy and finding a new place for Russia
in the world order.
"It is pointless to talk yet of solutions to economic problems, like cutting
down the number of inefficient enterprises or lowering the tax burden. These
are all interdisciplinary problems. Without reforming the system of power we
will be unable to move anywhere," he said.
But as to how the system of power might be reformed, Gref was vague at best.
"But if I knew how to reform the power system and tackle Russia's economic
problems all at once, then this center would not have been created and I
would have written the plan myself," Gref said.
"The center is here to accumulate the knowledge that already exists and
attract as many specialists as possible to plot a new path for Russia," he
It also seems to feed nicely into Putin's election strategy, which focuses on
the war in Chechnya and little else. The acting president has yet to make any
indication as to whom he might appoint as prime minister after he becomes
Nevertheless, some economists have welcomed the creation of the center as a
way of putting an end to the piecemeal and often contradictory economic
policies of previous Russian governments and as a way of coming up with a
long- term development plan.
"The economic strategy of the government is one of the key moments in
restoring trust in the state. Beyond the political stability of a long-term
leader, the government should declare its aims and plan in the long term, in
detail and then stick to it," said Alexei Zabotkin, an economist at
investment bank United Financial Group.
"It is not enough to jump from one IMF loan to the other," he added.
THE PUBLIC RECORD
But whether the center's ambitious plans will ever make it off the drawing
board is a different matter entirely. It remains possible that the think tank
will turn out to be little more than window dressing.
And while Putin's economics are widely regarded as being even more enigmatic
than the man himself, there is evidence available regarding his likely
economic plans. For a start, there is his record over the more than five
months he has spent as prime minister.
In continuation of the government's record ever since the August 1998 crash,
the government under Putin has acted as if it were a fire service and little
else. This time the emergency has been the squeeze on the Russian budget
thanks to mounting costs - mostly due to Chechnya and the parliamentary and
presidential election campaigns - coupled with the disappearance of almost $6
billion in forecast foreign credits for 1999.
Emphasizing Putin's revenue-raising focus when he reshuffled his Cabinet soon
after becoming acting president, he turned to Finance Minister Mikhail
Kasyanov to take over the day-to-day running of the government. Kasyanov, an
effective administrator well known to many in the West through his role as
debt negotiator, was tapped as the sole first deputy prime minister.
Apart from successfully stalling Russia's creditors, Kasyanov's main role
after becoming finance minister last summer has been to fill the
ever-widening gaps in the Russian budget.
When the International Monetary Fund's loan program stalled in September, the
Finance Ministry urgently needed funds to top up the budget deficit and to
meet obligations on foreign loans.
With ruble devaluation stimulating exports, the Putin government has made
hiking export duties its first priority. Crude oil duties were raised twice,
scrap metal tariffs were hiked once and export duties on gas were introduced.
The Putin government also made moves to put an end to tolling - a scheme that
aluminum producers have used for years to avoid paying billions of rubles in
The Putin government also implemented a law from earlier this year that ruled
oil companies had to start paying taxes 100 percent in cash from November
onward. But while the oil sector was the main source of juice for Russian
coffers, it was also the easiest target as world oil prices soared beyond
producers' wildest dreams.
Import duties were also raised on a wide range of goods.
Finally, the State Duma was wheedled into raising excise taxes on those
traditional sources for Russian government funding - alcohol and tobacco,
where excises were increased by between 25 percent to 40 percent.
As a result of all these busy maneuvers, government coffers ended 1999
looking healthier than they have done in years.
However, the Putin tax squeeze has probably done little to further stimulate
economic growth. Funds raised from excises on alcohol production have hit the
sector just as it was beginning to bloom under its own strategy. Money that
could have been reinvested to build on that success has gone instead to feed
Putin's emergency cash box.
And the tax hikes can in no way be called an economic strategy. They were not
planned for in the long term. Putin's economic dealings so far are instead
rooted in the ad hoc, slap-on-a-Band-Aid plumbing that Russia's leaky economy
has been seeing for much of the past decade.
But the focus on revenues via whatever means are ready at hand does dovetail
neatly with one of Putin's main policy obsessions: the need for a radically
stronger Russian state.
"We need to take energetic action on carrying out reform. But reforms must be
implemented under the strict control of the state and with the active
participation of the state," he said at a recent Cabinet meeting. "Above all
we need to strengthen state institutions."
But how do you reconcile liberalism - which calls for a smaller, but more
effective state - and an openly statist liberal ideology such as the one
Putin has put forward?
Indeed, some of the Russian liberals from the Union of Right Forces, or SPS,
party, which rode Putin's coattails into the State Duma, are openly worried
about where the acting president's instincts could lead him.
Leading SPS figure Irina Khakamada said in a recent interview that Putin's
basic ideas are statist. She said the most likely path he would follow would
be one of state liberalism, but she warned that if the state interferes too
much in the economy then the inherent danger is for a further outbreak of
corruption that would stifle economic growth.
"Economic growth is just knocking at the doors. All Putin has to do is open
them," she said.
"But to do this he might have to change his way of thinking," she said.
"He has to finally understand that the state should be strong but not higher
and above the economy. The state should work as a strong arbiter for a free
economy," she said.
She said previous attempts at reforming the way Russia worked over the past
decade had been hampered from the start by the prevailing mentality of state
interests over a free economy.
"When economic competition can exist independently of state interference,
when the state instead guarantees a level playing field for all, then
business can really grow in Russia. Further state interference, such as
proposals to provide state guarantees for exports for instance, is a road to
nowhere," she said.
But perhaps the biggest barrier to meaningful reform under a President Putin
will not be his own statist ideology, but rather the vested interests of
those who helped put him in power.
The nomenklatura, or Russia's ruling elite, has thrived off that strange
Russian hybrid of state interference combined with patchwork free-for-all
elements of market economics that became Russia's model during the Yeltsin
years. Leading members of that elite have been falling all over each other in
recent months to ride the Putin bandwagon. The Unity, or Medved, party -
which openly avows that it is the party of Putin - is packed with members of
that elite. Several of them, such as Primorye region Governor Yegeny
Nazdratenko and Kaliningrad Governor Leonid Gorbenko, have overseen massive
corruption in their fiefdoms.
Old guard Kremlin power broker Boris Berezovsky was a key player in the
founding of Unity. And even as Putin was moving out tainted figures such as
Boris Yeltsin's daughter Tatyana Dyachenko and former presidential property
chief Pavel Borodin, he retained long-time Berezovsky associate Alexander
Voloshin as chief of staff.
Observers warn that the Russian ruling class is not going to be ready to give
up their power. Even if Putin is playing a waiting game that involves winning
power first and then attacking corruption, vested interests like these will
be tough to set aside.
"It will be impossible for Putin to fight against the interests of the entire
ruling class. People have gained a lot of property almost as if by accident
and for free. Now they are managing it badly and are mainly busy stealing.
They are not ready to give up their position and play a role in changing the
situation to institute real reform," said Leonid Radzikhovsky, an economics
commentator with liberal daily Segodnya. "They're not interested in allowing
free and open competition that might undermine their power base."
Many observers are waiting for Putin to legitimately become head of state
when he is expected to show his true colors.
If Putin is going to seriously level the playing field for fair economic
competition, he might have to launch a sweeping campaign against corruption
to just begin to wipe out the existing system of favors and bribes.
But what appears to be one of Putin's other main traits, loyalty, might
hinder an extensive campaign.
"Putin is himself a member of the Kremlin clan - this is the structure from
which he emerged. He knows a lot about the Kremlin's participation in dark
deals and took part in them himself," said Yevgeny Volk, a political analyst
with the Heritage Foundation.
After working as deputy to St. Petersburg Mayor Anatoly Sobchak, Putin was
brought into the Kremlin by St. Petersburg ally Chubais, where he was
appointed as deputy to Borodin in the administration's department for
managing presidential property. He was giventhe task of managing perhaps one
of the most controversial sections, presidential property abroad.
An international arrest warrant was filed just last Thursday for Borodin who
is alleged to have taken millions of dollars in kickbacks from Swiss
construction company Mabetex. After being in charge of the Kremlin's control
department which, attempted to keep tabs on Russia's wily regional governors,
Putin was appointed head of the Federal Security Service, or FSB, the KGB
successor agency. During his leadership of the agency few corruption
campaigns were launched.
The acting president has yet to take any action regarding the allegations
against Borodin which came just days after Putin ratified his appointment as
executive secretary of the Russia-Belarus union.
"Putin is tied closely to the Kremlin and if he was to go for even just one
member of the clan he would bring the entire structure crashing around him,"
And Putin consolidated Russia's oligarchs around him in the name of securing
the presidency for the next four years, leaving a question that begs to be
asked: for him or for the oligarchs?
"You must always pay for any form of support. A lot of those supporting Putin
now are counting on being paid back," Volk said. "But almost everybody is
supporting him at the moment. That might mean that everybody's reward will
not be so great, giving Putin more room for maneuver."
Even with an iron will and the tremendous constitutional powers provided by
Russia's presidency, the mess Russia's economy is in is likely to bog down
even the most ambitious reformer.
"Putin remains something of an unknown entity. But I would be surprised if we
see any dramatic changes under his presidency. We will probably see a
continuation of what we have already seen: slow steady economic development
even if he turns out to be an inconsistent reformer," said Charles Blitzer,
the former head of the World Bank delegation in Moscow and now head of
emerging market research at Donaldson, Lufkin and Jenrette.
"We're not looking at Russia either sinking or swimming but somewhere in
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