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Johnson's Russia List


March 19, 2000    
This Date's Issues:  4180  4181

Johnson's Russia List
19 March 2000

[Note from David Johnson:
1. AFP: Russian vote could go to second round as Putin lead wavers.
2. AP: Putin Pushes for 1st-Round Election.
3. Itar-Tass: Putin Condemns Coalescence of Money and Power.
4. Itar-Tass: Russians Place most Trust in Army, FSB-Poll. 
5. Russia Journal: Andrei Piontkovsky, The Russian golden bough.
(on Putin myth-making)
6. Moscow Times: Jonas Bernstein, Putin Decides Friends, Foes.
7. Dimitri Devyatkin: Smashing TV's -- Boycott the election and television advertisers.                    (re importance of Western advertisers' money)
8. Voice of America: Barry Wood, PUTIN'S ECONOMY. (Views of
David Hexter and Anders Aslund)
9. US News and World Report: Christian Caryl, Catch a rising czar. Is Russia's next president a power freak, a reformer, or both?
10. Moscow Times EDITORIAL: CEC Defies Logic With Ballot Ruling.
11. Itar-Tass: Patriarch Urges Russians to Go to March 26 Poll. 
13. Joseph Stiglitz and David Ellerman: New Bridges Across the 
Chasm: Macro- and Micro-Strategies for Russia.
This is a very long paper. If you want the full text contact
David Johnson or the web location indicated here.)] 


Russian vote could go to second round as Putin lead wavers

MOSCOW, March 18, (AFP) - 
Russia's acting leader Vladimir Putin has been losing popularity which will 
force next weekend's presidential election into a second round, according to 
a survey released Saturday.

As the poll came out, Putin vowed to put Russia's struggle against poverty at 
the top of his action list if elected head of state in next weekend's 

A Public Opinion Foundation (POF) poll for ORT television said Putin's 
approval rating has fallen five points to 48 percent, under the 50 percent of 
the vote needed to win the Kremlin post outright in the first round.

A POF survey last week gave Putin a 53 percent approval rate.

His nearest rival, Communist Party leader Gennady Zyuganov has an approval 
rating of 19 percent, exactly the same as last week.

Putin, who became acting president on December 31 with the shock resignation 
of Boris Yeltsin, had built up such a huge lead in opinion polls that most 
saw the result as a foregone conclusion.

Surveys previously gave him more than 50 percent, enough to win in the first 

Putin seems certain to secure strong support from the 100,000 Russian troops 
serving in Chechnya, where voting began Friday nine days before polling day 
for the rest of Russia. The acting president's standing is based on his 
hawkish campaign in Chechnya.

But speaking to regional leaders in the southern Russian city of Voronezh, 
Putin on Saturday promised to devote as much government cash as possible to 
social needs.

"Social policy is a key problem for our country," Putin said at the 
Chernozemye forum of leaders from southern Russian regions.

"The main task of the government is to protect people from need," he said. 
"Our main misery today is poverty. We can overcome it only through robust 
economic growth."

"We will do everything possible to ensure that a maximum amount of funds are 
used for resolving social problems," Putin said.

Putin has largely steered clear of pork-barrel pledges on the eve of 
elections. But with one-in-three Russians living below a poverty line of 
1,820 rubles (63 dollars) a month, social policy is likely to prove a 
perennial headache for the new head of state and his cash-strapped 

Putin signalled earlier that one of the main thrusts of his economic strategy 
would be to cut Russia's notorious oligarchs down to size and try to create a 
new industrial landscape without powerful business tycoons.

Putin told a radio station that he would take on the tycoons who for years 
have wielded huge influence in the Kremlin due to their formidable wealth and 
extensive contacts.

"Such a class of oligarchs will cease to exist," Interfax news agency quoted 
him as telling Radio Mayak. "Unless we ensure equal conditions for all, we 
won't be able to pull the country out of its current state."

Business barons have been blamed for many of Russia's economic woes, 
everything from snapping up state enterprises on the cheap, siphoning funds 
abroad, failing to invest in industry and shifting assets around in 
less-than-transparent manoeuvres.

Putin's comments come amid intense speculation as to the forces behind his 
bid for the Kremlin.

In 1996 elections, Boris Yeltsin had to rely on the campaign funds of a 
clique of businessmen, who then jostled furiously for position during his 
presidency in a bid to curry influence and secure favour.

But Putin is so far ahead in opinion polls that he has spent very little on 
his campaign.


Putin Pushes for 1st-Round Election
March 18, 2000

MOSCOW (AP) - With his standing in the polls dipping, acting President 
Vladimir Putin urged voters Saturday to elect him with a clear majority to 
avoid a second round, but denied that he's worried about winning. 

On a campaign trip to the southern city of Voronezh, Putin was cautious about 
the outcome of the March 26 election, saying he would prefer a clear decision 
to avoid a runoff. But he said his call was based solely on a desire to save 
the country the expense of a second-round vote. 

Recent polls show support for Putin down by 2 to 3 percentage points compared 
to the 60 percent he had received in recent weeks. Putin's nearest rival, 
Communist Party chief Gennady Zyuganov, trails with about 20 percent, while 
most of the other candidates barely show up in the polls. 

``I count on success, but it's not of major importance in which round to win. 
It's the result that matters,'' Putin said Friday. 

On Saturday, Putin said the first round of voting will cost about $5.3 
million. If a second round is necessary two weeks later, it will cost an 
additional $3.5 million, he said. 

``This is nearly as much as all the pensions paid in the Moscow region,'' 
Putin said in an interview with the Mayak radio station aired Saturday. 

Putin said if he wins, there will be no room in his administration for the 
business moguls who amassed so much influence under Boris Yeltsin that they 
became known as Russia's ``oligarchs.'' 

``Such a class of oligarchs will cease to exist,'' he said. ``We will work 
with all layers of society.'' 

The centrist Unity political party, which strongly backs Putin, issued a call 
Saturday to young people to vote for Putin, urging them not to be apathetic 
or assume the election outcome is a foregone conclusion. 

Putin ``has a historic chance to pull Russia out of crisis and lead the 
country on the path of dynamic and stable development,'' the movement said in 
a statement. 

Putin, whose tough stance on the war in Chechnya has buoyed his popularity, 
said he will not repeat the mistakes of the last Chechen war, when Russian 
forces were defeated by rebels. 

The 1996 withdrawal from Chechnya was a mistake, he said, according to the 
ITAR-Tass news agency. ``We have already left once,'' he said. ``I do not 
want to call it a crime or give my assessment of the fact, but it was a big 

Putin said most of the rebel forces in Chechnya have been eliminated, and 
some Russian troops could soon be withdrawn. But he said rebels could still 
unite into groups and commit terrorism. 

``It means that we will leave the amount of armed forces necessary to deal 
with these issues,'' he said. 


Putin Condemns Coalescence of Money and Power.

MOSCOW, March 18 (Itar-Tass) -- Acting President Vladimir Putin said on 
Saturday he would be ready to interact with anybody for whom Russia's 
interests are important in case he wins the presidential elections on March 

Asked about his attitute to tycoons, Putin said "it depends on whom you call 
tycoons. If you mean representatives of big business, this is one thing. We 
will co-operate with them, as well as with representatives of medium-size and 
small businesses. We will work with all layers of the society." 

"If you mean representatives of the groups that coalesce or contribute to 
coalescence of power and capital, this class of tycoons will be no more. If 
we do not create equal conditions for everybody, we will not be able to pull 
the country out of the state it is in today," Putin noted. 


Russians Place most Trust in Army, FSB-Poll. 

MOSCOW, March 18 (Itar-Tass) - A poll by the Russian independent public 
opinion research center (ROMIR) suggests that the Russsians place most trust 
in the army and the Federal Security Service (FSB). 

The poll was conducted in a 1,500 population of Russians older than 18 in 40 

Asked about state, public and other institutions they trust most, 52 per cent 
of respondents said they trust and another 20 per cent said they "totall 
trust" the military and the FSB. 

Police rated much lower, with 42 per cent of those polled saying that they do 
not trust and 27 totally mistrust police. 

Only 24 per cent were in "trust" and four per ccent in "totally trust" 
cqategory. The remainder were uncertain. 

The poll found 38 per cent of respondents to trust and 19 per cent to totally 
trust the Church. Twenty-one per cent said they do not trust and 11 per cent 
totally mistrust the Church. Eleven per cent were uncertain. 

The poll showed that power is held in far lower trust compared to the army 
and the FSB. Of those polled, 30 per cent said they trusr and four per cent 
totally trust the judiciary, while 34 per cent do not trust and 19 per cent 
totally mistrust it. 

The rating pattern for executive power was similir. Some 30 per cent trust 
local authorities and the federal government and four per cent totally trust 

The mistrust rate was 37 per cent, and total mistrust in the range of 20-23 
per cent. Eight per cent were uncertain. 

Still less trust was shown for the State Duma, or parliament's lower house. 

Of those asked, 49 per cent said they totally mistrusted the State Duma and 
25 per cent that they mistrusted it. 

Mistrust in the Federation Council, or the upper house, was respectively 19 
and 42 per cent. 

Only 17 per cent said they trust the State Duma and 20 per cent the 
Federation Council. 

Commercial banks have the lowest trust of the Russians, with 80 per cwent of 
respondents stating their mistrust. 

The state-owned Central Bank rated better. Thirty nine per cent of 
respondents said they do not trust it and 24 per cent totally mistrust it. 
Respectively ten and 13 per centy were uncertain. 

The poll has shown that the Russians have not lost all trust in the mass 
media. Some 37 per cent said they trust and a similar percentage said they do 
not trust the media. Total mistrust was stated by 17 per cent and total trust 
only by five per cent. Four per cent were uncertain. 


Russia Journal
March 20-26, 2000
The Russian golden bough

The longest election campaign in the history of the young Russian
quasi-democracy is drawing to a close. Dismissed governments, a bloody war
in Chechnya, Boris Yeltsin’s sudden resignation – all these dramatic events
have been no more than fragments in the desperate battle fought out by two
oligarchic clans – the Kremlin clan and Moscow Mayor Yury Luzhkov’s clan. 

Victory went to the more cynical and merciless of the two. 

The experience of previous campaigns hasn’t brought us any closer to a
civil society, nor to a mature system of genuine political parties. Rather,
the contrary is true. Luzhkov’s Fatherland (Otechestvo) and the Kremlin’s
Unity (Yedinstvo) are just disposable bureaucratic variations on the "party
of power" – created for the purposes of whichever electoral campaign is at
hand and not designed to last until the next campaign. Voters were offered
not programs detailing how to pull the country from its crisis, but myths
created and purveyed by an obedient mass media.

First was the Primakov myth – Primakov as a great diplomat, economist,
statesman and father of the nation. Primakov had the luck to resemble
former Soviet leader Leonid Brezhnev, both physically and in terms of
policies, and that image was successfully fed by his PR people to a weary
and disoriented public. To the common man, Brezhnev, and his Primakovian
incarnation, came to represent the post-Soviet myth of a golden age. 

Of course, voters weren’t so naive as to seriously think that the new
Brezhnev would bring real improvement to their lives, but the whole
Brezhnev—Primakov image was designed to tug not so much at the strings of
voters’ consciousness as at their subconscious longing for calm, stability
and non-involvement.

The Kremlin campaign masters saw with horror that the Primakov myth was
about to capture the imagination of whole swathes of the people. This
called urgently for a counter-myth that would tug at other strings in the
collective psyche. Shock-producing events like Shamil Basayev’s raid on
Dagestan and the mysterious explosions of Moscow apartment blocks created
the ideal opportunity. 

A new virtual figure stepped onto the stage – a young and energetic
intelligence officer who issued clear, abrupt orders, sent regiments into
the heart of the Caucasus and delivered horror and death to terrorists and
the enemies of Russia. And Russia’s feminine soul, yearning for a willful
master, left the sedately respectable Primakov for the embrace of the young

Having pressed the right button in the public’s minds, the Kremlin
mythmakers are now consistently exploiting the image. Suddenly, all the TV
channels begin broadcasting chilling warnings about terrible threats
hanging over the savior of the fatherland’s life. Evil terrorists are
plotting to attack that which is most holy to us, but brave little Pooh
brushes the danger aside and sets off for his teacher’s funeral in St.
Petersburg. And Russia, full of maternal instinct, wants to gather up and
protect defenseless Pooh in her warm embrace.

The imagemakers, when they perused the textbooks on psychoanalysis, learned
that the woman is not only a mother, she is the female of the species,
thirsting for the conquering alpha male. And suddenly we see a well-known
actress dashing about in the foyer at an electoral meeting, hysterically
declaiming the text she’s learned – "He’s a real man! So virile, such
virility! I can feel it."

This looks more like the democracy of primitive societies, when the tribe
would elect as their leader the most virile male who could satisfy great
numbers of wives. Though, as J. Frazer writes in "The Golden Bough," an
unenviable fate awaited the chosen leader. 

At the first sign of treacherous weakness, the wives would inform the
leader’s subordinates, who would announce their verdict and take the leader
to a special hut where he would be hanged.

(Andrei Piontkovsky is director of the Center of Strategic Research in


Moscow Times
March 18, 2000 
PARTY LINES: Putin Decides Friends, Foes 
By Jonas Bernstein 

At the risk of sounding like a broken record (a skipping CD?), Russia's 
perennial problem is the massive gulf between the declared intentions of its 
rulers and their actual impulses and behavior. 

Take the 1977 Soviet Constitution. It committed the country to 
"non-intervention" in the internal affairs of other states (Article 29); 
equal rights for citizens of "different races and nationalities" (Article 
36); "freedom of speech, of the press, and of assembly, meetings, street 
processions and demonstrations" (Article 50) (!); and "freedom of conscience, 
that is, the right to profess or not to profess any religion, and to conduct 
religious worship" (Article 52) (!!). 

Today, Vladimir Putin is promising a "dictatorship of the law" - one set of 
rules for all Russians. Last week, Kommersant newspaper gave a glimpse of how 
the acting president might apply this principle after March 26 in an excerpt 
from six interviews conducted with Putin by three Moscow journalists. 
Selected excerpts from these conversations have been brought together in a 
book titled "In the First Person: Conversations With Vladimir Putin." 

The most interesting part of the Kommersant excerpts involves Andrei 
Babitsky, the Radio Liberty correspondent detained in Chechnya in January and 
subsequently "exchanged" to Chechen rebels for Russian POWs (at least 
according to the Russian government's version). In a heated round of 
questions and answers - which apparently took place before Babitsky was 
released by his Chechen captors, re-arrested in Dagestan and finally freed 
and allowed to fly to Moscow - Putin charges that Babitsky was "working 
directly for the enemy ... for the bandits," and calls him a "traitor." When 
his interviewers challenge the authorities' right to "exchange" a Russian 
citizen to unknown bandits, Putin reveals himself as something less than a 
strict constitutional constructionist. 

"You say that he is a Russian citizen," Putin says. "Then he should behave 
according to the laws of his country if he expects to be treated in 
accordance with the same laws." 

Fast forwarding through the Kommersant excerpt (to continue with the 
audio-electronic imagery), you come to Putin's explanation about how he wound 
up leaving St. Petersburg for Moscow in 1996. It was at the urging, he 
explains, of Pavel Borodin, the long-time associate of Boris Yeltsin who 
headed the Kremlin's "property management" department until earlier this 
year. Putin served as Borodin's deputy before climbing farther up the career 
ladder, and the interviewers ask him whether this might help explain 
Borodin's recent appointment as state secretary of the newly formed 
Russia-Belarus union - despite the fact that Borodin is at the center of a 
scandal involving alleged Kremlin bribe-taking and money laundering. 

Shouldn't you have "sorted out" these "scandalous accusations," they ask 
Putin, before nominating Borodin? 

Putin now switches to his American Civil Liberties Union-lawyer persona. 

"I proceed from what the law says," he solemnly declares. "There is a golden 
rule, a fundamental principle of any democratic system and it is called 
presumption of innocence." 

So what do we have here? We have two Russian citizens, neither of whom has 
been tried in a court of law. Yet the acting president, declares one of them, 
an opposition journalist, to be a "traitor" who has been "working directly 
for the enemy," while presuming the other, a high-level official and his 
former boss, to be innocent until proven otherwise. 

Am I alone in finding this not only rather discouraging but quite alarming? 
In fact, the dichotomy in Putin's attitude toward Andrei Babitsky and Pavel 
Borodin is far and away the most worrying thing in the 24 hours' worth of 
interviews that Putin gave for the book. By contrast, his comment that a 
"super-centralized state" is part of Russia's "genetic code, its tradition, 
the mentality of its people" is far less worrying, given that it seems 
clearly calculated to appeal to the gosudarstvenniki, or statists, in the 
reading audience. And his comment about the August 1991 hard-line coup 
plotters - that their means were wrong but that their "task," preventing the 
Soviet Union from collapse, was "noble" - is also less disturbing, even if it 
is heartfelt. After all, a majority of Russians were probably sorry to see 
the Soviet Union disintegrate. This, however, does not mean they would have 
supported keeping it together by the sword. 

No, the most revealing thing about the Putin interviews is his starkly 
different views of Babitsky and Borodin. Which is undoubtedly why these 
comments were cut from the book. 


From: "Dimitri Devyatkin" <>
Subject: Smashing TV's -- Boycott the election and television advertisers
Date: Sun, 19 Mar 2000 

Dear David and readers of Johnson's Russia List,

On March 11, the movement, "Soyuz 2000" created a stir in Moscow with an
infamous television-bashing demonstration in front of the central statue of
Karl Marx. Several young demonstrators lifted two vintage Soviet
"televiziori", and heaved them against the monument. A young man with a
green Mohawk-hairdo briefly danced on the ruins as foreign correspondents'
cameras whirred. There were probably 50 other young Muscovites in
attendance, at the Marx monument March 11 and again March 18 near City
Hall, holding placards and giving their views to the press. They are the
self-declared "Left Against the Election of Putin." They urge voters to
skip the coming presidential election completely. By participating in the
election, they say, even by marking the ballot "None of the Above", you are
acquiescing in the system.

These young activists explain their revulsion to television as a response to
the cacophony of media pushing for Putin. "Soyuz 2000" argues that
television is the purveyor of the brutal war against the Chechens. They have
called for a boycott against advertisers who buy ad time on Channel 1 ORT
and Channel 2 RTR, the two government-owned and controlled television
networks. "Soyuz 2000" says the two channels are non-stop propaganda
machines for the war, and they make it possible to keep the war going by
whipping up public support.

"Soyuz 2000" says -- Take the boycott to the big advertisers. Knowingly or
not, by paying for commercials on those two channels, advertisers are
supporting the war. Two of Russia's most odious commentators are Sergei
Dorenko on ORT, who often analyzes the war, and Nikolai Svanidze on RTR. For
commercials on just those two commentators' shows, "Soyuz 2000" handouts
name the advertisers and give the amounts they pay. Here is the list as
provided by "Soyuz 2000":
ï‚· Proctor & Gamble, makers of Safeguard soap and Head and Shoulders shampoo,
spends over $200 million on Russian advertising overall, and on the
commentators, over $5 million,
ï‚· Nestle's, maker of Nescafe coffee, also $5 million
ï‚· Mars, maker of Snickers, also $5 million
ï‚· Wrigley's, $3 million
ï‚· Pepsi Cola, $1 million
ï‚· Coca-Cola, $1 million.

They say they won't feel as guilty afterwards, knowing they spoke out
against the headlong rush to support Russia's new strong man. "Soyuz 2000"
knows there is no chance to stop Putin from coming to power, and that their
efforts are purely symbolic. They say the election is simply a way of giving
the new government an aura of respectability. After the election, many see
hard economic times coming, for which a tough new leader will be needed.
"Soyuz 2000" says the war in Chechnya was "begun" by Kremlin insiders -- a
little "virtual war" that got out of hand, a horrible spectacle created for
Russian television, all to get Putin elected.

The leaders of the "Soyuz 2000" movement are several well-known Moscow
political activists:
ï‚· Oleg Shein -- a Deputy in the Russian State Duma from Astrakhan,
co-chairman of an inter-regional union of labor unions called "Defense" and
part of the movement to create a new "Worker's Party".
ï‚· Boris Kagarlitsky -- a political scientist, coordinator of "Soyuz 2000"
columnist for the popular newspaper "Novaya Gazeta", whose articles are
often translated on JRL. Kagarlitsky was a dissident in Soviet times, who
got elected to the Duma in the early 1990's and during the 1993 storming of
the Russian Parliament by Yeltsin's troops, ended up in a Moscow prison
until a torrent of international phone calls got the jailers to release him.
ï‚· Ivan Zasursky, a young journalist, author of the book "Mass Media: The
Second Republic" about the caving in of post-Soviet media to Russia's new

"Soyuz 2000" reminds people that "A real patriot has to understand how
important these foreign contributions are." Without their ad money, Russian
TV wouldn't be able to support the war so strongly. When you lather up with
Head and Shoulders shampoo or bite into a Snickers candy bar, you are
indirectly supporting the war.

For a refreshing surprise, see the "Soyuz 2000" Website at


Voice of America

INTRO: Oil exporting Russia is benefiting from the 
tripling of oil prices over the past year and foreign 
investors are confident that Vladimir Putin will 
capitalize on improved government finances to launch a 
new round of economic reform. V-O-A's Barry Wood 
reports that even if more rigorous reform is undertaken 
success is not assured.
TEXT: David Hexter who has been the Moscow 
representative of the European Bank for Reconstruction 
and Development says the oil bonanza has created a 
huge opportunity for Russia to actually build a market 
economy. Speaking at an investment forum in New York 
(March 16), Mr. Hexter says if Mr. Putin is to succeed 
he will have to remedy the problems that have stymied reform 
in the past.
//Hexter act// 
The banking system is still a mess. There has 
been no attempt at systematic structural reform. 
The civil service remains bloated. The taxation 
system has not been reformed after years of 
everybody saying this. The court system remains 
extremely weak. And there has been no 
fundamental restructuring of industrial 
//end act//
At another forum (March 17) in Washington, Carnegie 
Endowment researcher Anders Aslund cautions against 
expectating quick reform of the banking system. While 
otherwise optimistic about Russia's economic 
prospects, Mr. Aslund believes Mr. Putin will move 
slowly in removing former Soviet central bank chief 
Viktor Geraschenko from the Central Bank of Russia. 
//Aslund act//
The question is how fast can Putin do away with 
him. Of course there are ways to do away with 
him. But it is quite difficult. He needs to have 
a majority in the Duma behind him. So I think 
this is a test. If Putin is really serious about 
getting something in order he will take on 
//end act//
Mr. Aslund says as long as Mr. Geraschenko heads the 
central bank there can be no reform of the banking system. 
At the same American Enterprise Institute conference, 
Congressional Research Service analyst John Hardt said 
Mr. Putin must undertake far reaching institutional 
reforms, creating the rule of law, to instill business 
confidence. Mr. Hardt is pessimistic, saying the 
flight of capital out of Russia has risen in the past few months.
//Hardt act// 
This is going up. This is a suggestion to me 
that the system is still perverse and it is not 
headed in the right direction. That there need 
to be basic changes.
//end act//
Panelists did not agree on whether Mr. Putin will wage 
a battle against the endemic corruption that has done 
so much to discredit Russia's past efforts at reform. 
However, Mr. Aslund believes the oligarchs that 
dominate the Russian economy will not dominate Mr. Putin.
//Aslund act//
The oligarchs are essentially down and out as of 
August 1998. It was one of the best features of 
the financial crash, that it took out most of 
the oligarchs. Now you have a few standing. 
Essentially, it is (Andre)Berezovsky and 
Avramovich (they are both well-known tycoons) 
that are trying to pursue it in the old way. And 
I'm in not doubt that Putin will take them out. 
//end act//
Acting-president Putin has promised to unveil his 
economic reform program before the March 26th presidential election.


US News and World Report
March 27, 2000
[for personal use only]
Catch a rising czar
Is Russia's next president a power freak, a reformer, or both?
By Christian Caryl 

The future leader of Russia made his first trips to the West 
incognito, helped by his fluent command of German. Years later, he was still 
wearing German clothes and touting the virtues of the German educational 
system. Orderly, prosperous, and up-to-date, Germany embodied everything he 
wanted for Russia. But he could only modernize his country, he believed, with 
the help of a centralized state, a strong army, and some no-nonsense 
leadership. And, of course, the secret police.

That, in a nutshell, was the story of Peter the Great. But the parallels 
between the 18th-century czar and the man poised to become Russia's second 
popularly elected president are eerie. Russians are betting that 47-year-old 
Vladimir Putin, like Peter, can push Russia out of an era of psychological 
and economic depression. "People want a strong leader," says Michael McFaul 
of the Carnegie Endowment for International Peace. "The time is ripe for a 
guy like him."

Tough guy. After a decade of confusion and chaos, Putin -- acting president 
since Boris Yeltsin's abrupt resignation in December -- has miraculously
to unite Russians around a vague combination of reforms and tough leadership 
encapsulated in his ambiguous promise to establish a "dictatorship of the 
law." Mikhail Amosov, a leader of the liberal Yabloko party, notes that 
Putin's favorite themes are market reforms and strengthening of the state. 
But, he adds, Putin "hasn't talked much about basic democratic values." 

And that worries some in the West. Deputy Secretary of State Strobe Talbott 
criticizes Russian conduct of the Chechen war -- perhaps Putin's signature 
undertaking in the Kremlin -- as "brutal and counterproductive in many ways." 
Another senior U.S. official speaks of a "Jekyll and Hyde" factor, a 
competition between Putin's reformist and authoritarian sides. Says Dimitri 
Simes, president of the Nixon Center in Washington: "He may be a more 
reliable partner but also a tougher rival."

The yin and yang of Putin's personality emerge from an examination of his 
biography. A career officer in the KGB, stationed mostly in the East German 
city of Dresden, Putin recruited spies and coordinated the work of Soviet 
intelligence agencies and their East German counterparts. It was an 
eye-opening introduction to politics. "In the '70s and early '80s, 
medium-ranking KGB officers criticized the party for being corrupt, old, and 
backward," says Oleg Gordievsky, a top Soviet spy who defected to Great 
Britain in 1985. At first, they placed their hopes on KGB chief turned Soviet 
leader Yuri Andropov, then on Andropov's protege, Mikhail Gorbachev. "But by 
1988 the situation was different. By that time they saw that Gorbachev was 
destroying the system."

The collapse of communism led Putin directly into the political arena. After 
returning to his hometown of Leningrad in 1990, he left the KGB and went to 
work for reformer Anatoly Sobchak, a former law professor at Leningrad State 
University who would soon become the city's mayor. Sobchak was desperate for 
people with administrative talent and foreign experience, and Putin made 
himself useful as the head of the city's new Committee on Foreign Economic 
Relations. Leningrad, renamed St. Petersburg following the failed 1991 coup 
attempt, was poised to become the gateway to a newly capitalist Russia, and 
it was Putin's job to attract foreign investors and promote the necessary new 
infrastructure. "We started from scratch," says Vladimir Churov, who worked 
with Putin for five years. Even critics give Putin credit for attracting 
foreign businesses to the city at a time when other places in Russia could 
barely compete.

Black belt. By 1996, Sobchak's government had sunk into a mire of financial 
mismanagement and corruption allegations. Mentioned in connection with 
several scandals, Putin kept a low profile and somehow managed to scrape by. 
A teetotaler and a black belt in judo, Putin was renowned for his cool, 
pragmatic manner. "If he was unhappy, he never screamed, he never humiliated 
anyone," says Vatanyar Yagya, a deputy in the city parliament. "He simply 
expressed his displeasure." An accomplished bureaucrat, Putin displayed a 
fine grasp of legal subtleties and negotiating techniques. "He always kept 
his word, but he made a point of not throwing words around all over the 
place," says Vladimir Yakovlev, a senior official in the St. Petersburg city 
government. (Putin wasn't just a grind though. Yakovlev recalls that when he 
and Putin visited the United States as part of an official delegation in 
1993, Putin used their one free day to rent a car and drive around New York.)

Sobchak lost his re-election bid in 1996, but associates like Putin moved on 
to bigger jobs in Moscow. His first job in the capital involved administering 
the Kremlin's vast foreign property holdings. His boss was soon beset by 
allegations of corruption, but once again, no sleaze stuck to Putin. He was 
promoted again, this time to a powerful department that managed the Kremlin's 
relations with Russia's unruly regions. 

Clearly, Putin was a man on the move. In 1998, Boris Yeltsin named him 
director of the Federal Security Service (FSB), the KGB's main successor. 
Putin immediately cut 2,000 jobs, then installed a bunch of his KGB chums 
from St. Petersburg. The interlopers were dubbed "Varangians" by resentful 
Muscovites, an allusion to the Norse princes invited in to restore order to 
Russia in the Middle Ages. 

But Putin's reforms at the FSB were not aimed at making the organization more 
democratic; the point was to make the agency more loyal to Yeltsin. Putin's 
directorship coincided with an unprecedented smear campaign against General 
Prosecutor Yuri Skuratov, who accused Putin of trying to destroy his 
reputation after Skuratov aired corruption allegations against Yeltsin and 
Pavel Borodin. Putin also seized every opportunity to praise Andropov and 
laid flowers on Andropov's grave to mark the 85th anniversary of his birth. 
In August 1999, Yeltsin appointed Putin prime minister, the penultimate step 
in his unlikely rise to the highest office in the land.

Since then, Moscow's political class has been struggling to figure out 
Putin's real agenda and fighting to help refine it, a struggle known to some 
as draka za ukho, "the fight for his ear." Adherents of Putin's brighter side 
point to his years of loyal service at the sides of Sobchak and Yeltsin and 
his achievements in launching St. Petersburg on the path of market reform. 
Many of his advisers boast well-founded liberal credentials. They range from 
his deputy chief of staff in the Kremlin, Dmitri Kozak, regarded by St. 
Petersburg democrats as one of their best and brightest, to German Gref, a 
relatively liberal economist who runs a new think tank tasked with drawing up 
a new economic strategy for Putin. In recent weeks, Putin has raised 
reformers' hopes by speaking favorably about tax reform, small businesses and 
foreign investment, and a referendum on the private ownership of land.

Taking control. But there are plenty of marks on the other side of the 
ledger, too. Putin has tightened government influence over the media and 
heaped scorn on Russian journalists who criticize the Chechen war. He has 
accused Russian environmental groups of committing espionage for the West and 
has supported legislation that would give the security services control over 
the Internet. He is restoring Soviet traditions like military training in 
secondary schools and political counterintelligence in the armed forces. 
After the landslide victory of his political allies in last December's 
parliamentary elections, Putin quickly concluded a pact with the Communists 
and spurned the democrats who had supported him. "He's a person who, based on 
his personal history, cannot be a democrat or a liberal," says Boris 
Vishnevsky, a St. Petersburg reformer and Putin critic. "He's a person who 
strove for power and got it. But I think that it's more than he bargained 
for. He's a little man who has gained great power."

Vishnevsky recalls how Sobchak assigned Putin the task of persuading members 
of the city parliament to reschedule planned mayoral elections in 1996. Putin 
succeeded in the end, but the campaign he managed was marred by dirty 
tactics, from death threats to lies about deputy attendance figures during a 
crucial vote.

But even Vishnevsky gives Putin high marks for his negotiating skills --
senior U.S. officials who are impressed by Putin's skill at adjusting his 
arguments to his interlocutors. When Putin met with Secretary of State 
Madeleine Albright for the first time as acting president, he laid out a 
carefully reasoned argument about Russia's intervention in Chechnya, 
portraying it as a crucial defense against the spread of Islamic 
fundamentalism on Russia's southern frontier. Referring pointedly to 
Albright's Czech origins, Putin compared Russia's stand in Chechnya to those 
who opposed appeasement at the start of World War II.

But can Putin make good on his tough talk? Lately he has thrilled Russians 
with promises to crack down on the country's hated oligarchs, powerful 
businessmen with privileged access to the corridors of power. But the reality 
of his past seven months as Russia's prime minister (an office he still holds 
along with the acting presidency) has been far less exalted. Recent weeks 
have seen a series of management shake-ups in key industrial companies that 
have looked remarkably thuggish even by Russia's rough standards -- some of
benefiting powerful oligarch and Putin booster Boris Berezovsky. When St. 
Petersburg democrat Ruslan Linkov visited Putin at FSB headquarters in August 
1999 to talk about political extremism, he asked Putin why offices in the FSB 
headquarters in St. Petersburg were still displaying portraits of Vladimir 
Lenin and Felix Dzerzhinsky, the founder of the Soviet secret police. Putin's 
response: "If I have them removed, I won't be able to keep the people here 
under control."

Still, everything could change after a big Putin election victory March 26. 
"The first thing he will do when he comes to power is to eliminate the people 
who put him there," says Yuri Shchekochikhin, a deputy of the Russian 
parliament. "That's the first law of Russian apparat politics." Says 
Gordievsky: "In Russian political life, each leader projects a completely 
different image of himself on the way to power than afterward." That Putin is 
capable of the unexpected became evident recently when he suddenly began 
speculating about extending the term of the Russian presidency to seven years 
from the present four -- a change, he quickly added, that would take effect
after his first term in office. Putin for 11 more years? Now there's thinking 
fit for a czar. 

With Thomas Omestad and Kevin Whitelaw 


Moscow Times
March 18, 2000 
EDITORIAL: CEC Defies Logic With Ballot Ruling 

There is supposed to be a "none of the above" box on the presidential ballot, 
and some are actively encouraging a nihilist protest vote. The Central 
Election Commission counters that since "none of the above" is on the ballot, 
it must be treated like a candidate. Specifically, Alexander Veshnyakov has 
said that "none of the above" must have its own campaign account at Sberbank, 
just like other candidates; discussing those who have organized "none of the 
above" protests, he implied that they were engaged in official campaign 
"agitation," and so should have funded their activities - the handful of 
posters and placards, the TV sets smashed against Karl Marx's statue - out of 
an official "none of the above" account. Let's consider this for a moment. 

-By this logic, isn't the CEC required to open a Sberbank account for "none 
of the above" and to deposit 400,000 rubles - the official amount the 
government gives each candidate to play with? If some group is willing to 
step forward to represent the "none of the above" campaign, can it then have 
access to this account? 

-What happens if "none of the above" overspends, or campaigns aggressively 
right up to the final hour of the vote, or does not run all of its financing 
through Sberbank? Our understanding is that the candidate is supposed to be 
fined, disqualified or otherwise sanctioned. So, what then - "none of the 
above" gets taken off the ballot? Gets sent to jail? 

-More broadly: Is Veshnyakov saying that any and all political speech is now 
"agitation" that must be run through Sberbank? The Moscow Times this week 
endorsed Grigory Yavlinsky. We did it for free. Are we required or expected 
to accept a payment of some sort from the Yavlinsky Sberbank account? If we 
do not, then have we broken the law? 

This interpretation of the law is obviously ridiculous. But Veshnyakov has 
been on national television offering it, telling those who publicly back 
"none of the above" that they should watch their step. This is becoming 
something of a pattern. There is Press Minister Mikhail Lesin's murky warning 
to deny "terrorists" access to mass media; there is acting President Vladimir 
Putin's strange take on Andrei Babitsky. (We particularly appreciate the 
president's insistence that Babitsky volunteered to be traded into servitude, 
and Kommersant's follow-up question: And if he had volunteered to be shot? 
And Putin's charmingly dismissive reply that such a thing would have violated 
"internal instructions.") 

The common thread? A menacing, and confusing, government interpretation of 
the law that limits what you are allowed to say. 

- Matt Bivens 


Patriarch Urges Russians to Go to March 26 Poll. .

SERGIYEV POSAD, Moscow region, March 18 (Itar-Tass) - Patriarch Alexy II of 
Moscow and All Russia on Saturday called on all his fellow countrymen to take 
part in the upcoming presidential elections on March 26. 

"Much in our life will depends on these elections, and I think none of us can 
shirk his civil duty," the patriarch told journalists at the convent in the 
village of Khotkovo, Moscow region. 

In the tragic 20th century, Russia has lived through many upheavals -- two 
world wars and one civil war, a revolution and repressions, the Primate of 
the Russian Orthodox Church said. 

"The future of our country and its people which deserves a better lot will 
depend on each of us," he said. 

"It is important to make the right choice," Alexy added. He stressed that 
people should "judge (candidates) not by their words and promises, but by 
what they are doing to revive Russia". 


Russia Today press summaries
March 17, 2000
Who Does Putin Trust?

The presidential election will start in a week, but we still do not have an 
answer to the question that is Mr. Putin? However, some understanding can be 
obtained from the official list of persons he empowered to act for him during 
the election campaign. It seems that there was a competition to get onto the 
list. The persons responsible for selecting candidates for Putin had the 
objective of representing all social strata.

The list can be divided into three groups. The first is "officials" (204 
persons), the second - "public" (189 representatives), and the third -“ 
"businessmen" (143 representatives).

The first group includes 73 State Duma deputies, some heads of local 
administrations, Defense Ministry, Interior Ministry, Customs, FAPSI and Tax 
Police officials, First Deputy commander of the Missile Troops main 
headquarters, The Caspian Fleet commander, The Black Sea Air Force commander 
and many others.

According to the Law on Presidential Election, people who are empowered to 
act for the candidate campaign for him. The same law says, however, that 
people who occupy state offices or are part of the military are forbidden to 

There are a lot of officials among Putin's confidants. According to law, the 
administration must grant them non-paid leave during the campaign. For 
example, the head of the Schelkovsky district administration in Chechnya took 
a leave to campaign for Putin a month ago. Does this mean that he does not 
use his administrative resources, such as means of communication, 
transportation and security to move in the dangerous territory?

The greatest state monopoly -- the Railroads Ministry -- has been beheaded 
during the presidential election because very many top railroad officials are 
involved in campaigning for Putin.

Putin's list follows the pattern once prescribed by Bolsheviks to gain power 
-- to seize strategically important objects: railroads, Post Services and 


[NOTE FROM DAVID JOHNSON: To obtain the full text of this
paper contact me or the indicated website.]

From: "stanislav menshikov" <>
Date: Thu, 16 Mar 2000

Dear David,

This is a brand new paper that was presented recetly on the ECAAR panel on
the Russian Economy in Boston. It has also been placed on the ECAAR-Russia
web site ( together with other papers.

I believe this to be one of the best papers on Russian reform and it fully
deserves to be brought to the attention of readers of the JRL. 

I took the liberty of skipping the list of references and the accompanying
charts. These are available on our site (as above). This is, of course, a
preliminary version and is meant for personal use only.

Stanislav Menshikov

New Bridges Across the Chasm: Macro- and Micro-Strategies for Russia
by Joseph Stiglitz and David Ellerman
World Bank*

Table of Contents

Four Bridges
Growth and Inflation
Fiscal Policies and (Re)Privatization
New Enterprise and Job Creation
Rebuilding Social Capital
Public-Private Partnerships
Reform Based on Credible and Effective Government
Filling the "Socialist Blackhole"
Rethinking Restructuring
Restructuring Large Firms
>From "Bigger is Better" to "Small is Beautiful"
How to Do Spin-Offs?
Role of the Government
What About Foreign Investors?
Rethinking Corporate Governance From Scratch
Infrastructure for Bankruptcy and Restructuring
More than just Bankruptcy Laws
Reorganization Versus Liquidation Bankruptcies
Enterprise Restructuring and Support Centers (ERSCs)
Reorganization Bankruptcy through the ERSCs
Liquidation Bankruptcy through the ERSCs
Other Functions of ERSCs
Finance for Entrepreneurs and Small Businesses
Special Problems in Transition Economies
Capitalizing Social Capital
SME Finance Support Programs
Finance for Export Promotion
Agricultural Finance and Support Programs
Entrepreneurship Promotion and Education
Entrepreneurship Culture
Incremental Entrepreneurship
New Adult Education Institutions
Secondary Schools
Colleges and Universities
Public Education
Entrepreneur and Small Business Support
Business Training Centers
Government Support Programs


This century has been marked by two great economic experiments. The
outcome of the first set, the socialist experiment that began, in its more
extreme form, in the Soviet Union in 1917, is now clear. The second
experiment is the movement back from a socialist economy to a market
economy. Ten years after the beginning of the transition in Eastern Europe
and the Former Soviet Union: How do we assess what has happened ? What
are the lessons to be learned? Surely, this is one of the most important
experiments in economics ever to have occurred, a massive and relatively
sudden change in the rules of the game. As rapidly as the countries
announced the abandonment of communism, so too did western advisers march
in with their sure-fire recipes for a quick transition to a market economy.

A decade after the beginning of the transition in Eastern Europe and the
Former Soviet Union (FSU), and two decades after the beginning of the
transition in China, the picture is mixed. Each country started the course
of transition with a different history, a different set of human and
physical endowments. Some had lived under the yoke of central planning and
authoritarianism for most of the century, while in others it was imposed
only in the aftermath of World War II. Those countries bordering Western
Europe with encouraging prospects of European Union integration were
clearly in a different position than the land-locked countries of Mongolia
and the former Soviet republics in Central Asia. Counterfactual
history—what would have been but for the policies that were pursued—is
always problematic, and no more so than when there are so many variables
with which to contend. Yet, the disparity between the successes and
failures is so large that it calls out for interpretation and explanation,
and in any case, the public debate has already begun. 

Some have formulated the public debate about the transition as a question
of fast versus slow. But that seems an ill-formulation since one can find
successes and failures on both sides of the fast-slow dichotomy. Some
countries tried to "jump over the chasm in one leap" such as Russia but
their leap did not reach the other side and now they will take much longer
to climb back out of the chasm. Other countries progressed more
incrementally and found that well-designed incremental reforms, such as the
Chinese agricultural reforms, can proceed quite rapidly. Other countries
tried to just "go slow" and sat on one side of the chasm erecting many
half-bridges that went nowhere–many pseudo-reforms that were dead-ends.

The task now is build new bridges across the chasm which means to change
institutions in a determined but incremental way. We begin by outlining
four macro-strategies or bridges, and then we turn to a long list of
"micro" suggestions, many of them drawn from the experience over the last
decade in transitional economies.....


Sometimes just to know that a competitor has made a breakthrough is enough
to spur a company to make the same innovation on its own. Even scientists
in one country can make a breakthrough knowing only that scientists in
another country have already done so. In other words, just knowing that a
journey is actually possible sweeps away half the excuses for not making
the journey oneself.

We now know that a successful transition is possible. Poland, Slovenia,
Hungary, and Estonia can be counted as successes and the Czech Republic and
Slovakia are close behind if not across the finish line themselves. Each
country has its own history, its own strengths and weaknesses, but each
learned to use its strengths and overcome its weaknesses to make the

We now know that it is no quick leap across a chasm and we know that
half-hearted bridge-building attempts will leave only half-bridges going
nowhere. With ten years of transitional experience, there is much to be
learned from the successes and failures. Indeed, within the broad expanse
of Russia, there have been many local success stories, and likewise in
neighboring countries. Rather than hatch some new optimal master plan in
Moscow, it is a time to promote decentralized experimentation, benchmarking
between experiments, and learning from the successes. We can point you to
lessons, strategies, and examples that can be the basis for learning, and
we have tried to do so here. Transformation can be neither imposed nor
given as a gift from the outside; transformation is a do-it-yourself
project. The task is not an easy one, but the rewards are great, and one
fears even to contemplate the consequences of failure.


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