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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

February 15, 2000    
This Date's Issues: 4107 4108 4109

 

Johnson's Russia List
#4109
15 February 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Putin pledges to restore Russians' morals.
2. Bloomberg: Russia's Putin on Missing Radio Free Europe Reporter.
3. Itar-Tass: Putin to Announce Economic Programme after February 25.
4. Reuters: Russia's Kasyanov outlines ideas, no big tax cuts.
5. Itar-Tass: FAPSI Anniversary.
6. Nezavisimaya Gazeta: CEC STOPS ACCEPTING APPLICATIONS FOR CANDIDATE REGISTRATION.
7. Peter Chatterton: Exiles on Main Street/4107/Richmond.
8. John Dabbar: RE: 4103- Lelyveld/Caspian Oil.
9. Moscow Times EDITORIAL: Debt Deal a Victory But Details Dim.
10. Nancy Herring: RUSSIAN AGRICULTURE - Response to Sawyer 4107.
11. Segodnya: Yevgeny Yuryev, ALEXANDER SHOKHIN DOES NOT RULE OUT A COUP...If Not Enough Voters Come to the Polling Stations in the First Round of the Presidential Elections.
12. New York Times: Raymond Bonner and Timothy O'Brien, Guilty Pleas Seen in the Laundering of Russian Money. 
13. Obshchaya Gazeta: Yelena Dikun, The Oligarchs Are in Suspense Waiting for March. (Putin Plans for Chubays, Berezovskiy Examined)
14. Bloomberg: Russia to Ask Creditor Governments to Forgive 50% of Debts.
15. Reuters: Russia welcomes Clinton praise for Putin. 

DJ: If you have been puzzled about the pro-Putin posture of the US
government it may help to know that the traditional US agents of
influence in Russia, Chubais and Gaidar, have been lobbying vigorously
for Putin with their American collaborators, giving assurances
that Putin is in their camp and that temporary distractions such as the 
war in Chechnya will soon be over. Debt forgiveness is a major element
of the pro-Putin campaign, to help cement his election victory and to
make it clear to the Russian people, as with Yeltsin before him, that
the powerful and wealthy West has a favorite. There may be less than
meets the eye to Putin's nationalistic posturing. Yeltsinism in a
Primakov cloak?] 

*******

#1
Putin pledges to restore Russians' morals
By Anatoly Vereshchagin

MOSCOW, Feb 15 (Reuters) - Acting President Vladimir Putin vowed to revive 
the moral fibre of the Russian people as he received the green light to run 
in next month's presidential election. 

Putin, criticised by rivals for keeping Russia in the dark about his plans 
for the country, enters the March 26 poll as hot favourite, riding a wave of 
support from his military campaign against the breakaway region of Chechnya. 

But the former spymaster said he was not complacent about victory and 
criticised those who said the election was a foregone conclusion because 
there was no serious competition. 

``Any programme should start from the revival of people's morals,'' Putin 
told reporters after Russia's Central Election Commission voted unanimously 
to accept his application. 

``I am not just taking part, it will be my programme with my own ideas,'' 
Putin said, adding that he would publish his much awaited political programme 
after February 25 in line with election law. 

FEARS FOR TURNOUT 

Campaigning is only allowed from February 23 in the print media and from 
March 6 in the broadcast media. 

Putin, who took over as head of state after Boris Yeltsin's New Year's Eve 
resignation, shrugged off fears that his campaign could run into difficulty 
if Russians became complacent over the outcome and failed to turn out. 

If fewer than 50 percent vote, the poll is invalidated and a new election is 
called within four months. 

Putin said all attempts to convince the electorate that the elections would 
be uncontested were aimed at persuading voters to stay home: ``I am sure that 
Russian citizens are mature and...the turnout will be ensured.'' 

The election commission, which has so far registered two presidential 
candidates, said 14 could run in all after one dropped out of the running. 
All candidates must gather the signatures of half a million supporters and 
provide evidence of income, property and funding. 

The 13 others have little chance. Some politicians who might once have 
harboured presidential ambitions have pledged to support Putin. 

OPINION POLL LEAD 

A weekend opinion poll gave Putin 48 percent, just short of the 50 percent 
needed for outright victory on the first ballot, with Communist leader 
Gennady Zyuganov second on 14 percent. 

The commission also approved the candidature of Aman Tuleyev, communist 
governor of Siberia's Kemerovo region. 

Putin has kept everyone guessing on his policies, managing to be all things 
to all men. That position has offered advantages ahead of the election but 
raises questions about what Putin's Russia would be like. 

His only clear policy has been on Chechnya, where he has backed a military 
offensive to wipe out Islamic separatists whom Russia calls ``terrorists'' 
and restore Moscow's control. 

U.S. President Bill Clinton offered an endorsement of sorts late on Monday, 
saying he thought Washington could ``do business'' with Putin and expressing 
hope for more progress on nuclear arms reduction after the election. 

On Monday, election commission chairman Alexander Veshnyakov said an 
investigation had been launched into complaints that Putin and Zyuganov had 
broken election rules through media appearances. But he said he blamed the 
media more than them. 

Putin gave a television interview last week and answered questions on a 
phone-in organised by a Moscow daily. Zyuganov announced his political 
programme at a news conference. 

******

#2
Russia's Putin on Missing Radio Free Europe Reporter: Comment

Moscow, Feb. 15 (Bloomberg)
- Russian Acting President Vladimir Putin spoke about missing Radio Free 
Europe/Radio Liberty journalist Andrei Babitsky. 

Earlier, Russian military officials said they detained the journalist in 
Chechnya and after holding him for several weeks turned him over to Chechen 
militants in exchange for Russian prisoners of war. Below is a translation of 
comments Putin made after the central electoral commission registered his 
candidacy for presidential election set for March 26. 

``I didn't say I participated in this matter personally. I've talked about 
control. The control and participation (in the matter) consists of the 
constant contact with the general prosecutor's office that is dealing with 
this matter. 

``The relevant orders have been issued to the law enforcement bodies. Those 
orders are aimed at ensuring his life, security and doing everything that 
depends on our security services to save his life, health, freedom.'' 

(NTV television 2/15) 

*******

#3
Putin to Announce Economic Programme after February 25. .

MOSCOW, February 15 (Itar-Tass) - Russia's acting President Vladimir Putin 
was presented a presidential candidate certificate in the Central Electoral 
Commission here on Tuesday. He told journalists after the ceremony that he 
would announce his economic programme after February 25. 

Putin pointed out that a large group of staff members at the Centre for 
Strategic Studies work on the programme. "This is not just a programme (in 
general), this is my programme," he said, emphasizing that "it is essential 
to begin with the restoration of moral values, not with taxes". 

*******

#4
Russia's Kasyanov outlines ideas, no big tax cuts

MOSCOW, Feb 15 (Reuters) - Russian First Deputy Prime Minister Mikhail Kasyanov, widely tipped as the next head of government, outlined his reform ideas in an interview published on Tuesday and ruled out a sharp reduction in taxes. 

Kasyanov, mostly known as a debt negotiator, told Expert weekly magazine the state should not interfere in the economy except in areas regarded as being of strategic significance. 

``The basic principle should be non-interference of the state in the activities of concrete sectors and enterprises, although exceptions will naturally remain,'' he said, adding these included defence, basic scientific research and agriculture. 

Acting President Vladimir Putin has stressed the need for free market principles combined with strong state regulation, but his plans for the economy remain vague. 

Kasyanov, praised by Putin this week for his handling of debt restructuring negotiations with the London Club of private creditors, also said market mechanisms had failed to stimulate agriculture and suggested a system of state-guaranteed prices. 

``If you find a higher price (for agricultural produce), sell on the market. If you don't, the state buys,'' he said. 

Kasyanov dismissed proposals favoured by many members of parliament for a sharp reduction in taxes. ``At the moment we are not considering a radical tax reduction,'' he said. 

The government wanted to eliminate contradictions in tax legislation before a March 26 presidential election, he added. 

Economists say investment and economic growth are being deterred by high and complex taxes, which also contribute to widespread tax evasion and capital flight. 

Kasyanov said the main way to stem illegal capital flight, estimated at $1 billion a month, was to improve the investment climate at home. 

But he said there should also be tighter controls. ``Banks should even undergo weekly control of payments on export and import contracts,'' he said. 

But he said it was not necessary to force exporters to sell 100 percent of their hard currency revenues for roubles as proposed by the central bank, instead of the current 75 percent. 

``Especially as we recently completed work on a draft decree by the acting president on abolishing loopholes regarding compulsory sales (of foreign exchange) for a whole series of companies,'' he said without elaborating. 

He added that existing exemptions for oil companies which need hard currency to repay foreign debts would remain. 

********

#5
FAPSI Anniversary
By Grigory Dubovitsky

MOSCOW, February 15 (Itar-Tass) - FAPSI (Russian acronym for
Federal Agency of Government Communications and information)
troops mark their 57th jubilee on Tuesday.
A FAPSI official has told Itar-Tass that a reform of
government communications troops in the near future will make it
possible gradually to give up drafting and fully switch over to
a contract system of manning.
The current technical re-equipment in conjunction with
organisational arrangements streamline the composition and
deployment of units, reducing their numerical strength. "The
equipment of FAPSI units with new specimens of digital radio
relay and troposcatter communications stations will make it
possible to optimise the strength of personnel," the FAPSI
official pointed out.
The changed situation in the world makes new demands on
state administration systems, under which factors of time,
reliability, mobility and shielding of information grow shraply.
In this connection,the role of such subdivisions as FAPSI is
difficult to overestimate, the official emphasised.
Government communications troops were established on
February 15, 1943, and stood their first test in combat during
the Battle of Kursk. During the Second World War, more than
20,000 officers and men of government communications troops
were nominated for government awards. After the war, special
communications matters were handled by the State Security
Committee. A Federal government communications agency to the
President of Russia was founded in 1991.

*******

#6
Nezavisimaya Gazeta
February 15, 2000
[translation from RIA Novosti for personal use only]
CEC STOPS ACCEPTING APPLICATIONS FOR CANDIDATE REGISTRATION
The Number of Presidential Hopefuls Is Half of What It 
Was in the Beginning
By Olga TROPKINA

Aware of the Russian tradition to leave everything to the 
last moment, the Central Election Commission, or CEC, prepared 
for February 13, the deadline by which the nomination papers of 
all presidential hopefuls were to be submitted for registration 
under the law.
This time, however, tradition was of minor importance.
Elections have laws of their own, and nominees who are unlikely 
to be regarded as serious rivals in the race, as a rule, submit 
applications for registration at the very last moment. They 
usually have no time to check the "cleanliness" of the 
signatures collected in their support. The experience of the 
1996 presidential elections showed that the percentage of 
invalid signatures grows significantly and sometimes even 
exceeds the critical mark, making registration of such 
candidates impossible.
Last Sunday, which CEC Chairman Alexander Veshnyakov 
called "abundant," his commission received subscription papers 
in support of five nominees: dismissed Prosecutor-General Yuri 
Skuratov, businessmen Umar Dzhabrailov and Ismail Tagi-Zade 
(the latter was refused to be registered on Monday because he 
had submitted 480,000 instead of the required 500,000 
signatures), chairman of the so-called all-Russia people's 
political party Anzori Kikalishvili and board chairman of the 
Moscow presidential programs fund Yevgeny Savostyanov. Thus, 
fourteen hopefuls have come through the first stage of 
registration, or almost half of the number of action groups (33 
action groups have been registered). There is ground to 
presume that after the CEC examines all the subscription lists 
the registered candidates will constitute no more than 
two-thirds of the nominees and will be less than in 1996, when 
twelve candidates vied for the top post.
At present, the list of presidential hopefuls is as 
follows:

Aksentyev-Kikalishvili, Anzori Iosifovich, leader of the 
all-Russia people's political party;
Govorukhin, Stanislav Sergeyevich, State Duma deputy;
Dzhabrailov, Umar Aliyevich, advisor to the director- 
general of the Intourist-RadAMER Gostinitsa i Delovoi Mir joint 
venture and co-owner of the Hotel Radisson- Slavyanskaya;
Zhirinovsky, Vladimir Volfovich, LDPR leader;
Zyuganov, Gennady Andreyevich, KPRF leader;
Pamfilova, Ella Alexandrovna, leader of the public- 
political movement For Civil Dignity;
Podberyozkin, Alexei Ivanovich, Spiritual Heritage leader;
Putin, Vladimir Vladimirovich, Prime Minister and acting 
President of the Russian Federation;
Savostyanov, Yevgeny Vadimovich, board chairman of the 
Moscow presidential programs fund;
Skuratov, Yuri Ilyich, ousted Prosecutor-General of the 
Russian Federation;
Titov, Konstantin Alexeyevich, governor of the Samara 
region;
Tuleyev, Aman-geldy Moldagazyevich, head of the Kemerovo 
region government;
Khrustalev, German Alexandrovich, assistant to a Moscow 
Duma deputy; and
Yavlinsky, Grigory Alexeyevich, Yabloko leader.

The income and property declarations and signatures 
collected by the majority of these candidates in a hurry are 
unlikely to be impeccable. Veshnyakov even made a vague hint 
that his commission has some serious questions to some 
nominees, including "two high-profile names," concerning their 
income and property.
Veshnyakov also said yesterday that the CEC was looking 
into allegations of premature campaigning on behalf of Putin 
and Zyuganov. The degree of responsibility for such campaigning 
on the part of these two men or the mass media in question is 
to be established by Thursday.
Alexander Barkashov, leader of the nationalist RNE (the 
acronym for the Russian National Unity) who is notorious for 
his scandalous parliamentary election campaign, is out of the 
race because he has been unable to collect the required number 
of signatures. As a matter of fact, this was the reason why 
other initial presidential hopefuls have become outsiders: 
right from the outset they had neither the possibilities nor 
the means to collect so many signatures and submit their 
subscription lists.
They could only console themselves by making a stir in the 
press.
It is clear why so many businessmen wished to take part in the 
race. Thus, campaign funds, which are allocated out of the 
federal budget, can be used, for instance, as interest-free 
credits.
Under the law, the CEC has no more than eight days to 
verify subscription lists. So, we will know next Monday the 
names of the candidates who will appear on the ballot sheet. 
Today the CEC will examine the registration papers of Putin and 
Tuleyev. It is more likely than not that both will receive a 
certificate of registration. Zhirinovsky's fate will be decided 
on February 18, Govorukhin's on February 19 and Yavlinsky's, 
Pamfilova's and Khrustalev's on February 20.

*******

#7
From: "Peter J Chatterton" <chatters@online.ru>
Subject: "Exiles on Main Street"/4107
Date: Tue, 15 Feb 2000 

In his article in JRL #4107 Yale Richmond suggested that dissidents are not
in power in Russia today because they lacked the experience or skills to
manage.

This may or may not be the case but, surely, the role of dissidents in any
society is to alert the population at large to systemic abuses or
injustices - as they see it. Is there any significant evidence to suggest
that these Soviet dissidents were seriously intending to foment revolution
either before or after their exile to the West?

Idealists have a tendency towards martyrdom, this is what makes them such
good copy. Serious political operators, on the other hand, know that the
only objective is to win - heroism is a luxury best left to others.
The most effective means of stifling real or apparent opposition is to
separate it from its natural constituency and deprive it of publicity - the
lifeblood of any opposition movement. By establishing the network of gulags
and implementing internal exile, the Soviet system effectively removed its
unwanted "idealists" from society. Until, that is, they came to the
attention of "The West". The resultant "causes celèbres" guaranteed
isolation from the mainstream of domestic politics as each, individually,
became an instrument of "capitalist aggression and propaganda". Their very
status as dissidents ensured the evaporation of any meaningful domestic
support as deeply engrained xenophobia was mobilised to the full.

Their use to the West was never more than the expression of the "my enemy's
enemy is my friend" syndrome. To eliminate any future damage they may cause
the Soviet system simply issued exit visas - at a price - thereby removing
the irritant and its source of sustenance. The new transit camp for these
unfortunates was often a university campus or a foundation where their views
were politely received - and ignored by serious politicians since their
knowledge of their own country was diminished by years of isolation and
deprivation. Sadly, their primary purpose fulfilled, they were now outside
of The Soviet Union, neutered.

I am unaware of any serious intent to prepare these people for future
leadership roles and it is highly unlikely that any exile would have been
acceptable as a leader to the Russian people or key institutions such as the
military.

It may be safe to say that, as a body and as individuals, they were never
going to be more than pawns in the Cold War game. They could not change The
Soviet system from within and they were certainly never going to do it from
without. The last exile to make any impact on the system was Lenin and
nobody was going to encourage the release of another such genie, and
certainly not in the nuclear age.

As is so often the case, idealism fell victim to realpolitik - and was
smothered by a comfortable resting place.

******

#8
From: "John Dabbar" <Dabbar@CPC.Ru>
Subject: RE: 4103- Lelyveld/Caspian Oil
Date: Tue, 15 Feb 2000 

A few technical observations regarding the Chechnya bypass pipeline
(I will leave the political considerations aside as they have been
sufficiently addressed by other JRL postings):

The pipeline bypassing Chechnya (through Dagestan and Stavropol) is
not a surprise. The drawing showing its proposed route has been hanging on
my office wall since 1998. 

The basis for building the pipeline is quite simple: most of the oil
industry complexes and pipelines through Chechnya have been damaged by
vandalism and subsequently by war. With respect to the pipelines, finding
and fixing illegally drilled holes (used to siphon oil out for fuel) is a
major task, and more importantly is very time consuming. It could easily
take more time to find and fix damage in the existing pipeline than to build
the bypass. And the damage investigation and repair couldn't really start
until military activities in the area cease - flammable gases are
occasionally released into the air during pipeline repair and a stray bullet
could cause an explosion. 

The Russian pipeline construction industry has been active for
decades and has built over 55,000 kilometers of oil pipelines. They have
many experienced workers, they have established work processes and can
quickly build standard designs in familiar territory like the North
Caucasus. They also had plenty of time during the last two years to complete
all the detailed engineering work, so that when the order to start
construction was given, they could quickly mobilize the workers and
equipment. Consequently, no one should be surprised at the pace of
construction. 

******

#9
Moscow Times
February 15, 2000 
EDITORIAL: Debt Deal a Victory But Details Dim 

Ten billion dollars. The details of how Russia wrung this staggering sum of 
cash out of the Western bankers of the London Club may make a yawn-inducing 
tale to some, but no one can dispute that the figure itself - $10.6 billion, 
written off, gone - is reason for all friends of Russia to applaud. 

Of course, as with any financial arrangement, the devil is in the details - 
and there are details aplenty here to ponder. Communist Party leader Gennady 
Zyuganov was quick on Monday to attack the London Club deal of First Deputy 
Prime Minister Mikhail Kasyanov - and while some of his complaints looked 
like frank politicking, Zyuganov did make some salient points. 

Perhaps Zyuganov's most intriguing complaint is one that goes beyond Russia, 
however, to get at the heart of what is wrong with much of international 
financial practice. Zyuganov complained Monday that these sorts of deals - 
like similar arrangements brokered with the IMF and the World Bank, for that 
matter - affect the future of a nation for generations, yet don't involve 
even the slightest consultation with parliament or the public. 

This is not a situation Russia created, but one that Western financiers have. 
It favors their interests as "masters of the universe," at the expense of the 
public's. Western financial institutions - private investment houses, and 
also the IMF, the World Bank and the U.S. Treasury - are quick to lecture 
Russia about the need for transparency. But they are almost always eloquently 
slow to practice what they preach. 

In the case of Russia, unwarranted secrecy makes it impossible to judge 
whether Kasyanov could have gotten an even better deal - could have written 
off, say, two-thirds of the $31.8 billion it owes these banks in Soviet 
debts, and not just a third. 

We are therefore ambivalent. We can't help but be left excited at the thought 
of a $10 billion victory - that's almost half the size of the entire Russian 
national budget this year! And we are impressed that any victory at all could 
be brought home from Western institutions, at a time when relations with the 
West are cool indeed. 

Yet we also can't help but be sobered at such a stark demonstration of the 
economic significance of transparency - in other words, of truly open 
democratic government. Perhaps this $10.6 billion represents the best 
possible deal; but as long as the world is such that these matters are 
considered properly cloak-and-dagger, we are left to wonder if it couldn't 
have been just a few billion better. 

- Matt Bivens 

*******

#10
From: Nancy Herring <nherring@regent.ru>
Subject: RUSSIAN AGRICULTURE - Response to Sawyer 4107
Date: Tue, 15 Feb 2000 

I disagree with virtually all Sawyer's proposals for land reform. What on
earth could possess someone to recommend just privatizing and see where the
chips fall; maybe everything will be OK in 10 year or so. He guesses that
this might end up with a "quicker eventual recovery", whatever that is. It
is sad to realize that after the failures of market bolshevism,
prescriptions like Sawyer's can still be suggested at this late date.

First, Russian people do not want land reform. Why can't foreigners who
profess respect for democracy simply respect the wishes of the Russian
people. All polls consistently show that Russians do not favor land
privatization. We really shouldn't be in the business of "cram down". There
appears to be no agitation within Russia for change or reform of
agriculture. The party of the collectives, the Agrarian Party, did not
exactly win a lot of seats in the Duma. How can anyone "just hope that the
country could survive the orgy of speculation, fraud and general chaos" will
end up OK. There are real lives at stake. Cameron, go experiment on someone
else, like your own grandmother and leave Russians alone.

I have read Johnson's list for a couple of years now and I have rarely seen
an approach to the problems of Russian agriculture that evidenced much
knowledge or insight. There is a persistent view that markets will take care
of everything. Do privatizers really think that Russian collective managers
and workers will wake the day after privatization reborn into some kind of
Jeffersonian farmer yeomanry? Pull your head out of the dark places and read
the history books. 

As early as the Land Grant Acts in the ante-bellum period in the US, I think
the 1830s - possibly earlier - the US has had an explicit policy of
extensive state support for agriculture. It took recognizably American
paths. The US has over 150 years crafted and to some extent experimented
with abundant Federal level programs, everything from Land Grant Colleges
and the Interestate Commerce Commission to county demonstration projects.
You can split hairs about whether these programs were optimized but it is
unequivocally the case that US agriculture is the most productive on earth
and one that consistently earns farmer's incomes above the US average. For
contrast, look at the despicable state of US agriculture in the US South
following the Civil War. It collapsed into shareholding and tenancy; freed
slaves and poor whites rarely became landowners, they just migrated North.
Among its many pernicious outcomes were peonage and chain gangs. Peonage is
an extremely ugly way of life, in terms of degradation it's down around
chattel slavery and serfdom. There was also malnutrition, it took
Rockefeller charities to eliminate pellagra in the South. Around the world,
it appears that sharecropping and tenancy are the default modes for
organizing agricultural production in the absence of a strong and wise
government hand guided by deeply rooted democratic principles. In other
words, effective agricultural policy is very, very hard to do.

The problems Russian agriculture needs to solve are similar to the problems
the US solved for the American South in the New Deal era. How do you get
credit into farmers' hands? How is output bought at the end of the harvest
season? In short what infrastructure is needed to create effective
agriculture. I would argue that the infrastructure needs are extensive and
far, far beyond the means of Russia today, either economically or
institutionally. There is no functioning banking system, there is no credit,
there is no cooperative system for post-harvest purchases. There is no
commodities market giving farmers critical pricing information. There is no
effective rail tariff regulation. I could go on. 

It turns out that we don't know a lot about Russian agriculture today. My
guess is that there is a hybrid or exotic form of share cropping going on.
As I peruse the data on the sector it shows signs of bottoming out although
for about 9 months following devaluation in 1998, production fell. According
to Russian Economic Trends, it appears that the catastrophic decline in the
early post-Soviet era were due to collectives in extremely unproductive
locations like Murmansk and Yakutia, abandoning their operations. To the
extent that the sector is stabilizing maybe we should leave it alone. 

Russia has a multitude of problems to solve. In an period when world prices
for agricultural commodities continue to plummet, why should Russia spend
precious resources on agriculture. It may make more sense for Russia to buy
these extremely abundant commodities than growing its own.

******

#11
Segodnya
February 15, 2000
[translation from RIA Novosti for personal use only]
ALEXANDER SHOKHIN DOES NOT RULE OUT A COUP
...If Not Enough Voters Come to the Polling Stations in 
the First Round of the Presidential Elections 
By Yevgeny YURYEV

Judging by Vladimir Putin's present rating, he will win 
the decisive victory in the very first round of the 
presidential elections. Of course, this will happen only if the 
voters' attitude to the acting president does not change, and 
the election results are recognised as effective. But here 
various unexpected things might occur. Alexander Shokhin, whose 
forecasts surprise with their astonishing accuracy (in an 
interview to Segodnya he predicted even the date of Boris 
Yeltsin's resignation several months before the event), does 
not rule out that the first round of the presidential elections 
might be declared non-effective because of the voters' failure 
to come to the polling stations.
Shokhin thinks that many Putin's supporters might decide 
not to go to vote because the results of the elections are 
predetermined anyway. If the election results are declared 
non-effective because of the voters' failure to appear at the 
polling stations, the next round can be held only in four 
months. But the present Constitution does not allow the acting 
president to stay in office longer than three months. How to 
resolve this legal problem, and whether Putin will be able to 
preserve his status of successor till the new elections, is for 
the Constitutional Court to decide, which, as is known, 
examines all issues "as they are submitted." Shokhin thinks 
that if the first round is recognised as non-effective, any 
consequences are possible, up to a state coup. The polls 
conducted by VTsIOM (VTsIOM is the Russian acronym for the 
All-Russian Public Opinion Research Centre) do not inspire 
great optimism. Fifty-eight percent of the voters confirm their 
readiness to go to the polling stations (according to the poll 
conducted on February 4-7). During the election campaign, 
which, by the way, has not yet started officially for Putin, 
this indicator might rise a bit. However, even with sufficient 
attendance, the main candidate for the presidency might face 
some problems: he may fail to win the necessary number of 
votes. And then, Putin is in for another round of the 
elections. According to Shokhin, "very few people think of such 
a possibility." At the same time, Shokhin does not rule out 
that some of Putin's present supporters may vote for another 
candidate. He associates changes in the preelection situation, 
which is favourable for Putin now, with the intensification of 
the partisan war in Chechnya which, as he says, might be 
expected in spring, and also with the possible emergence of 
some other negative factors.

*******

#12
New York Times
February 15, 2000
[for personal use only]
Guilty Pleas Seen in the Laundering of Russian Money
By RAYMOND BONNER and TIMOTHY L. O'BRIEN 

Two major suspects in the federal investigation into the illegal transfer of 
billions of dollars from Russia through the Bank of New York have agreed to 
plead guilty to money laundering charges, people involved in the inquiry said 
yesterday. 

The suspects -- Lucy Edwards, who was a senior officer at the Bank of New 
York, and her husband, Peter Berlin, whose company, Benex International, 
controlled the accounts through which the money was moved -- were expected to 
arrive in New York from London today to surrender to the federal authorities, 
a law enforcement official said. 

The charges are the most serious to arise from the investigation that began 
in the fall of 1998 when officials in the United States and Britain 
discovered that billions of dollars were passing through a handful of 
accounts at the Bank of New York. The investigation was made public last 
August, but no major arrests have yet been made. 

Efforts to reach Ms. Edwards and Mr. Berlin were unsuccessful; their home in 
London was dark last night. In New York, their lawyer, T. Barry Kingham, said 
through an assistant that he would have no comment. 

A spokesman for the office of the Federal Bureau of Investigation in New 
York, which is conducting the inquiry, also declined to comment. 

The Bank of New York declined to comment yesterday on any aspect of the 
charges against Ms. Edwards and Mr. Berlin. 

A person close to the investigation said Ms. Edwards and Mr. Berlin had 
agreed to plead guilty to several criminal charges, including conspiracy to 
commit money laundering, visa fraud, wire fraud and bribery of a bank 
official. Details of the charges were not immediately known, including the 
identity of the official or the bank involved in the bribe. 

The person providing the information said Ms. Edwards and Mr. Berlin had also 
agreed to forfeit $8 million that had been seized in their personal accounts 
by the federal authorities last fall, when they were indicted in New York on 
relatively minor charges, including transferring money without a license. 

Ms. Edwards and Mr. Berlin held intensive negotiations with the federal 
authorities for several months, a person close to the negotiations said. The 
sticking point was the money laundering charge, he said. 

Another law enforcement official said the American authorities needed the 
plea agreement to include a criminal charge that was sufficiently serious to 
make the couple subject to extradition under British law. Mr. Berlin and Ms. 
Edwards have lived in London since 1996. 

Money laundering is generally defined as the practice of taking ill-gotten 
gains and passing them through a series of bank accounts or businesses so 
that they appear legitimate. Under federal law, money laundering is a crime 
only if the money comes from the proceeds of serious crimes like kidnapping, 
extortion, murder or bank fraud. 

It was not known last night exactly what the nature of the money laundering 
charge was against the couple. Justice Department lawyers have argued during 
the negotiations that Ms. Edwards and Mr. Berlinviolated federal money 
laundering laws when they moved the millions of dollars they earned as 
commissions at Benex from their accounts at the Bank of New York to personal 
accounts overseas, a lawyer close to the negotiations said. 

Ms. Edwards, who rose quickly from an office assistant to vice president in 
the Bank of New York's Eastern Europe division, largely because of her 
ability to bring in Russian business, was dismissed by the bank in August 
after the investigation became public. 

The fact that Ms. Edwards and Mr. Berlin have decided to plead guilty to 
money laundering charges seriously complicates legal matters for the Bank of 
New York. Lawyers with expertise in banking law said that whenever a senior 
bank officer admits to such charges, questions arise about the bank's own 
culpability. 

Ms. Edwards may now also testify to federal prosecutors about senior members 
of the bank to whom she reported, raising possible problems for her former 
superiors. 

A spokesman for Natasha Gurfinkel Kagalovsky, a former Bank of New York 
executive who oversaw the division in which Ms. Edwards worked and who has 
also been a focal point for the investigation, said she had never been 
approached to discuss a plea agreement of any sort. 

Ms. Kagalovsky, who resigned from the bank last fall after she was suspended, 
has not been charged with any wrongdoing in connection with the 
investigation. Ms. Kagalovsky's attorney, Stanley Arkin, said yesterday that 
his client had not "been involved in anything which is conceivably a 
violation of any law." 

Ms. Kagalovsky is married to Konstantin Kagalovsky, a senior executive with a 
large Russian oil company called Yukos who previously worked as a senior 
executive with a now defunct Russian bank, Menatep. Mr. Kagalovsky has not 
been charged with any wrongdoing. 

A business partner of Mr. Berlin and Ms. Edwards who was indicted along with 
them last fall on charges of illegal money transfer, Aleksei Volkov, has not 
entered into any plea agreements with federal prosecutors, according to his 
lawyer in New York. Mr. Volkov now resides in Moscow. 

Last month, the federal authorities indicted a former Bank of New York 
employee, Svetlana Kudryavtsev, on charges of making false statements to 
investigators in connection with the money laundering inquiry. According to 
the indictment, Ms. Kudryavtsev received about $30,000 from Ms. Edwards and 
her husband between 1995 and 1999. The complaint said Ms. Kudryavtsev lied to 
investigators in August about having received money from the couple and also 
lied about having any knowledge of their business activities. 

Ms. Kudryavtsev's lawyer, Charles Adler, said the indictment of his client 
was "surprising and disappointing." He said she is not involved in any plea 
negotiations with federal prosecutors. 

Just last week, state and federal banking regulators formally sanctioned the 
Bank of New York for "deficiencies" in its anti-money-laundering practices, 
according to an agreement signed by the bank. 

But the regulators did not impose any monetary penalties against the bank and 
stopped short of more serious sanctions. The Federal Reserve and the New York 
State Banking Department took the Bank of New York to task for lax auditing 
and risk-management procedures in businesses involving international banking, 
funds transfers and stock listings for foreign companies. 

The fact that the regulators' actions were not more serious reportedly came 
as something of a relief for bank officials. 

Nonetheless, experts said the regulators' actions were unusual measures taken 
because of substantial problems with the way the Bank of New York supervised 
accounts handling funds from overseas, particularly from Russia. 

*******

#13
Putin Plans for Chubays, Berezovskiy Examined 

Obshchaya Gazeta
10 February 2000
[translation for personal use only]
Article by Yelena Dikun: "The Oligarchs Are in Suspense Waiting for 
March" 

The Kremlin needs people who are slightly 
similar to Chubays. The replacement of the king is a great human drama 
for his entourage. Of the people who made policy under Yeltsin and whom 
his successor inherited, no one is certain of his career future after 26 
March, although no one can accuse Putin of black ingratitude either. 
The Kremlin apparatchiks say without any particular admiration that their 
new patron has masterfully "suspended" the cadre question, trying in 
every way to avoid a split in his camp. 
"Of course, we will all be driven out of here," one of the political 
technologists close to the court told the Obshchaya Gazeta [OG] 
correspondent in confidence. "But under Putin we will be driven out 
with our things, while under Primakov we would have been driven out 
without them." Emotional preparedness for "removal" is widespread among 
the second-rank figures who uncomplainingly gave up their positions to 
the acting president's Petersburg recruits. But that certainly cannot 
now be said of the first-rank figures and of those who until quite 
recently symbolized the main centers of influence. Thus, the prospects 
of the main court groupings, those of Boris Berezovskiy and Anatoliy 
Chubays, remain uncertain. It is their future that intrigues the 
political elite most of all. 
There are very contradictory opinions regarding Anatoliy Chubays's 
status in Putin's system of personnel priorities. Some, for the most 
part representatives of the Kremlin administration, claim that Anatoliy 
Borisovich has fulfilled his historical mission and his services are no 
longer needed. Others under the strictest confidence talk about a 
"contract" supposedly concluded between Putin and Chubays. According to 
that version, throughout the election campaign, Anatoliy Borisovich, who 
affects the electorate like a strong allergen, is "lying on the bottom" 
in order to rise to the surface in the prime minister's office. Yet 
others assure us that the honored reformer feels wonderful "at the 
cut-out switch" and aspires to nothing more. 
But actually relations between the two Petersburgers are taking shape 
in a way that cannot be called unambiguous. On the one hand, Vladimir 
Putin recalls the years working together with Chubays in Anatoliy 
Sobchak's administration with pleasure. At the same time, Putin's 
associates decisively reject the persistent belief that Vladimir 
Vladimirovich came to Moscow at Chubays's wishes. In the new version, 
Pavel Borodin organized this move. At one time Putin rendered a minor 
service to the Kremlin steward, and when after Sobchak lost the election, 
he was left without a job, Pal Palych was the first to extend him a 
helping hand. Aleksey Kudrin, from the same region, also helped Putin 
get a job in the president's administration. It is notable that today 
Putin singles out Deputy Minister of Finance Kudrin as the economist he 
likes most of the "old Petersburgers." 
Anatoliy Chubays cannot boast of such public signs of the "monarch's" 
sympathy. A recent example is the acting president's speech at the 
Ministry of Justice collegium. At that time Putin suddenly came down on 
the leadership of RAO YeES Rossii: they are doing a terrible job, he 
said, of collecting payments in "real money." It very quickly became 
clear that the acting president was misinformed and had been given 
inaccurate figures. Chubays was offended and demanded satisfaction. 
An official investigation was organized in the Kremlin administration, 
but they could not find the offender who set up their patron. Or they 
did not want to. 
Putin's subordinates say that their chief continues to have high 
regard for the country's chief energy producer, but Anatoliy Borisovich's 
excessive "rigidity" and "explicit Bolshevik foundations" disturb him. 
"Vladimir Vladimirovich would like to see people like Chubays, only more 
flexible, in leadership positions," one of Putin's comrades shared with 
the OG columnist. Judging from everything, a "man like Chubays" is 
still not Chubays. 
The story of Putin's interrelations with Berezovskiy is less 
complicated, although from the very start, it was burdened with annoying 
misunderstanding. The Petersburgers gaily relate how Vladimir 
Vladimirovich met Boris Abramovich. Chubays called from Moscow and 
asked Putin to organize a meeting for Anatoliy Sobchak with an American 
Congressman who was flying in from Tbilisi in the company of some 
Georgians. Vladimir Vladimirovich managed with great difficulty to 
convince the St. Petersburg mayor to receive the unexpected guests. And 
suddenly, when the reception was in full swing, he saw that one of the 
Georgians was dozing in the corner. People say that Putin was very 
angry at that point and in a fit of temper flung out the words: "The 
bastard, he will never set foot here again." He immediately called 
Chubays: what kind of people are you sending us here? You can imagine 
Putin's surprise when it became clear that the sleeping "Georgian" was 
Boris Berezovskiy. Only after moving to Moscow did Putin learn the role 
that Boris Abramovich plays in big-time politics. From the banks of the 
Neva, it had seemed to him that he was just a successful businessman. 
People who are part of the acting president's closest circle claim 
that after the election he will not tolerate Chubays and Berezovskiy's 
aspirations to run the country. "If they have an intelligent, positive 
proposal, he is prepared to listen, but nothing more." 
This rule supposedly applies to all members of the former "family" 
without exception. "The group of spoiled oligarchs is intentionally 
spreading rumors that things are bad for them, but actually everything is 
fine. They are behaving like Chechens who say that they have all been 
wiped out, and the next day open fire from around the corner," says one 
of Putin's comrades who came to the capital from Petersburg. Perhaps, 
however, he is simply a St. Petersburger with a grudge. At any rate, an 
oligarch like Roman Abramovich has not been dismissed from the Kremlin 
yet, and people in Putin's administration speak of his possible removal 
without confidence. Old cadres still hope that the new president does 
not have enough of his own people and will also have to use those 
nurtured by Boris Nikolayevich. 

*******

#14
Russia to Ask Creditor Governments to Forgive 50% of Debts

Moscow, Feb. 15 (Bloomberg)
-- Russia said it will ask creditor governments to reduce its $42 billion 
Soviet-era debt by more than half to match the write-off won from bank 
creditors. 

Persuading Western governments to a debt reduction agreement on similar terms 
to the accord reached last week with international banks will be difficult 
after Germany, the biggest creditor, said yesterday it's not prepared to 
forgive any of the debt, The Financial Times reported. 

Russia will resume talks with creditor governments known as the Paris Club in 
the second half of 2000, said Finance Minister Mikhail Kasyanov, after he 
returned from the successful talks in Frankfurt with bank creditors. After 
winning a 57 percent reduction of its $32 billion bank debt in net present 
value terms, Russia will seek to reduce its remaining Soviet-era debt by 
about the same, he said on Russia's NTV television. 

``Russia will be formulating its position based on the principle of equal 
treatment,'' Kasyanov said. ``We will be asking Paris Club to consider the 
possibility of giving us analogue conditions for a reorganization of the 
total debt.'' 

Russia stopped making payments on about $70 billion of its Soviet-era foreign 
debts two years ago, after defaulting on $40 billion of domestic debt in 
August 1998. The government vowed to continue servicing debts of the Russian 
Federation, while seeking to negotiate new terms with creditors on debts 
incurred prior to the 1991 breakup of the Soviet Union. 

Deadline Approaching 

Creditor governments agreed in August to reschedule $8 billion of payments 
due in 1999 and 2000. 

A new agreement must be reached by the end of this year. The next Group of 
Seven industrialized nations summit in Okinawa, Japan in July will be the 
occasion for Acting President Vladimir Putin to raise the issue, analyst 
said. 

A Deutsche Bank AG-led creditors' committee agreed Friday to forgive as much 
as 50 percent of the debt, ending talks that lasted more than a year. The 
agreement lowers Russia's debt burden in the next few years as it faces a 
peak of payments on its other foreign debts. 

``Mr. Kasyanov is being optimistic if he thinks he can walk into Paris Club 
negotiations and say that because they've received these terms from the 
London Club they should get the same'' from government creditors, said Roland 
Nash, director of credit analysis at Renaissance Capital in Moscow. 

While Germany may not want to write off the debt, it might agree to lower 
interest rates and extending repayment far into the future, said Peter Boone, 
director of research at Moscow-based Brunswick Warburg brokerage. 

``On the politics side it will be extremely difficult for Germans to write 
off the debt,'' Boone said. ``So, they will give cash flow relief, but they 
won't write off the debt.'' 

Ultimately, before Russia will be able to persuade Western governments to 
write off its debts, it will have to improve its relations with those 
countries, strained by Western criticism of Russia's war in Chechnya. 

``Creditors have a political agenda,'' Nash said. ``They will use the debt as 
a political lever with Russia. There will be a substantial political agenda 
behind the talks.'' 

*******

#15
Russia welcomes Clinton praise for Putin

MOSCOW, Feb 15 (Reuters) - Russia welcomed U.S. President Bill Clinton's praise for Acting President Vladimir Putin on Tuesday and said it shared Clinton's wish for dialogue on security and disarmament. 

The Foreign Ministry said in a statement that it had noted Clinton's ``constructive statements'' in an interview broadcast live on the Internet by Cable News Network. 

``The Russian leadership shares the U.S. president's expressed wish to activate bilateral dialogue, particularly in the fields of security and disarmament, to overcome the noted dangerous standstill,'' the statement said. 

``We also note confirmation from the U.S. leadership of the importance of decisive steps taken against international terrorism.'' 

Relations between the United States and Russia have been strained in the past year. Moscow objected to NATO's bombing raids in Yugoslavia and the United States has been forthright in its criticism of Russia's campaign to subdue separatist rebels in Chechnya. 

U.S. Secretary of State Madeleine Albright noted differences with Moscow but praised Putin during talks in Moscow this month. NATO Secretary General Lord Robertson is to visit Moscow on Wednesday. 

In his interview, Clinton said he believed on the basis of Putin's performance since taking office on New Year's Eve that the United States could ``do business'' with him. 

He said his impression of Putin was that of a ``very strong, effective, straightforward leader'' and that he hoped for more progress on disarmament after Russia's presidential election next month in which Putin is the favourite. 

He also said that Chechen rebels bore some of the responsibility for five months of conflict with Russia. 

The ministry statement said a series of important meetings were planned to improve the two countries' ties and strengthen international peace and stability. 

*******





 

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