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Johnson's Russia List


March 24, 2000    
This Date's Issues: 4193  4194   4195

Johnson's Russia List
24 March 2000

[Note from David Johnson:
1. Reuters: Elaine Monaghan, US cooler as Putin awaits Kremlin 

2. Voice of America: Peter Heinlein reports on political seminar
in Moscow. (Mike McFaul, Timothy Colton

3. Itar-Tass: Prosecutor-Gen Office Refuses Action Over Ryazan 

4. Itar-Tass: "Vladimir Putin Is Very Healthy Man" Health Minister. 
5. Moscow Times: Viktor Rodionov, With an Energetic New Tsar, 
What Next? 

6. Russian Election Seminar at Atlantic Council in Washington.
7. Election resources from Feature Story News.
8. The Economist (UK): CHARLEMAGNE, Boris Berezovsky, puppeteer 
or future victim? 

9. Reuters: David Chance, Investors seek reforms in Putin's 

10. H. Mark Hubey: On Conspiracies, History, Economics and 

11. Jamestown Foundation Prism: Elena Dikun, Chubais vs. 
Berezovsky: Who will be the kingmaker? THE OLIGARCHS BATTLE FOR 


ANALYSIS-US cooler as Putin awaits Kremlin mantle
By Elaine Monaghan

WASHINGTON, March 23 (Reuters) - President Bill Clinton used to woo Boris 
Yeltsin with billions of dollars, hugs and encouragement when his friend was 
seeing off anti-reformist threats, saying he wanted Russia to be a symbol of 

But that was 1993, the heady early days of the new Russia and Clinton's first 
year in power, before international lenders knew they had underestimated 
Russia's problems and how much cash would flow into the hands of a few 

U.S. passions for Moscow have cooled as Russian voters prepare to paint a 
democratic gloss on Yeltsin's hand-picked successor Vladimir Putin in an 
election on Sunday. 

The poll is in reality a one-horse race with all bets on a former spy with 
scant political track record whose bloody war in Chechnya leaves a bad taste 
in Washington's mouth. 

``He talks the talk but he doesn't walk the walk,'' Ariel Cohen of the 
conservative Heritage Foundation think tank said of Putin, predicting Clinton 
would be forced to bridge a credibility gap with Congress on the new man in 
the Kremlin. 

In fact Clinton has little choice but to cautiously back the pragmatic Putin. 

It was easier in the early 1990s to talk hopefully of reform and Bush also 
supported giving cash to Yeltsin -- though his comment that he did not know 
if there was enough money in the world to solve his economic problems seems 
prophetic now. 


Bilateral relations are still recovering from a deep freeze which followed 
NATO's bombing campaign against forces of Yugoslav President Slobodan 
Milosevic a year ago, though Putin has since thawed ties with the Western 
military alliance. 

But relations could ice over again if fears come true of new fighting in 
Montenegro, Serbia's Western-leaning junior federation partner, or in an 
ethnic Albanian area of Serbia. 

``The West would do almost anything to avoid getting drawn into another 
Balkan conflict but it may not have a choice. Then Russia would be 
infuriated,'' said Anatol Lieven, senior associate at the Carnegie Endowment 
for International Peace. 

While the West heaved a sigh of relief when it saw it would be dealing with a 
much more coherent man in Moscow, Putin's actions since becoming acting 
president on New Year's Eve have sent a shiver down Washington's spine. 

The United States has condemned civilian bloodshed in Chechnya, demanding an 
inquiry into reports of torture, executions and the mysterious case of a 
radio journalist who went missing in Chechnya until Russian forces handed him 
to rebels in a prisoner exchange. 

``We will judge our relationship by steps he takes, not so much by words he 
uses,'' State Department spokesman James Rubin said. 

``And in some cases that may lead to profound concern and criticism, and in 
some cases that may lead to encouraging cooperation,'' Rubin added. 


What the United States has liked so far has been Putin's identification of 
economic problems, energetic approach to reform and obliging comments on 
working with the West. 

Back in 1993, then Secretary of State Warren Christopher pledged undying 
allegiance to reformers like Yeltsin and warned against complacency after he 
survived an impeachment attempt. 

``Our eggs are really in the basket of democracy and free market reform and 
it happens at the moment (that) Yeltsin is, by far, the best exponent of 
that,'' he said. 

This time Clinton is not quite sure what kind of basket he is putting his 
eggs in. 

But he is hoping Putin's short-term struggle to get Russia on its feet will 
not darken the legacy of promoting democracy and reform which Clinton hopes 
to leave behind when his presidency ends early next year. 

His worry of ``loose nukes'' ending up in the wrong hands will be addressed 
if Putin can persuade the Russian parliament to ratify START-2, an arms 
reduction treaty signed by Clinton's predecessor George Bush in January 1993, 
analysts say. 

Clinton is also struggling to persuade Moscow to amend the 1972 
Anti-Ballistic Missile treaty, the basis for subsequent arms control pacts, 
so Washington can build a missile defence system to protect itself against 
``rogue states.'' 

But these are modest ambitions compared to Washington's longer-term hopes of 
seeing a fully democratic and economically reformed Russia working closely 
with its European neighbours and fulfilling its vast economic potential. 


Voice of America

INTRO: As Russia's presidential campaign draws to a 
close, the question is not who will win, but whether 
Acting President Vladimir Putin will get the majority 
he needs to win in Sunday's first round of voting. V-
O-A Moscow correspondent Peter Heinlein reports 
political analysts are already looking ahead to what 
kind of a president Mr. Putin will be.

TEXT: A panel of United States and Russian political 
scientists gathered in central Moscow days before the 
election to analyze the presidential campaign and look 
to the future. The consensus is that Vladimir Putin 
has a better than even chance of winning without a 

If he fails, he will easily defeat Communist 
challenger Gennady Zyuganov in a second round. 

The virtual certainty of this outcome clearly disturbs 
many analysts. Stanford University professor Michael 
McFaul says this campaign has been, in his words, 
"depressingly the same" as those of the Soviet era.
The presidential election is being dominated by 
the State and the remnants of the Communist 
Party of the Soviet Union. In other words, all 
the organizational, financial, capital, whatever 
you want to call it, ten years later is being 
dominated by things that were left over from the 
old system. There are no new parties, no new 
/// END ACT ///
Another panelist, Professor Timothy Colton of Harvard 
University, says he sees no chance of a return to 
the Soviet Union. But he worries that Russia under a 
President Putin could revert to a police state.
/// COLTON ACT ///
He (Putin) is in no position to re-institute the 
Soviet system, and I don't think we should worry 
about that. But he does talk about a strong 
state, and my indecision has to do with my 
inability to understand what he means by a 
strong state. If it's just a code word for the 
K-G-B taking over, that would be a disaster. I 
don't think that's quite what he means, but 
there's a police state side to this.
/// END ACT ///
The analysts in Moscow agree Mr. Putin's remarkable 
popularity was largely fueled by the success of the 
war in Chechnya. But his ratings have already peaked, 
and are declining as voters gradually learn more about 
him. Stanford University's Michael McFaul says Mr. 
Putin may disappoint voters if he is unable to 
continue working miracles.
He performed one miracle already, that is he defeated 
the Chechens. That was a year ago not considered 
possible. They were considered superhuman, national 
liberation leaders, (who) defeated the Russian army. I 
think the expectation is that he will do that again 
and again, and my prediction is that he will fail.
/// END ACT ///
Still, Russians seem to like what they see in Mr. 
Putin, though Michael McFaul and others believe most 
voters are not exactly sure why.

Andrei Ryabov of the Moscow Carnegie Center said that 
may be a second miracle performed by Mr. Putin and the 
Kremlin inner circle. Eight months ago, few analysts 
would have believed President Boris Yeltsin could name 
his successor and have Russian voters accept the 
choice. But that is exactly what is happening. 


Prosecutor-Gen Office Refuses Action Over Ryazan Exercise. 

MOSCOW, March 23 (Itar-Tass) - The Office of Russia's Prosecutor-General has 
refused to institute criminal proceedings in connection with the fact of the 
conduct of an anti-terrorist operation by Federal Security Service (FSB) 
personnel in Ryazan on September 22, last year. 

An official at the centre of information and public relations told Itar-Tass 
on Thursday that during a verification of the legality of the actions to 
plant three bags of sugar and a simulated explosive device in an apartment 
building, the FSB personnel acted within the sphere of their competence in 
connection with a "package of preventive measures aimed an ensuring the 
safety of citizens" during the Anti-Terror Vortex operation in autumn last 
year "in view of the sharp aggravation of the situation brought on by a 
series of terrorist acts". The legality of actions of the FSB personnel was 
verified in view of an application by Ryazan residents. 



"Vladimir Putin Is Very Healthy Man" Health Minister. 

MOSCOW, March 23 (Itar-Tass) - Russian Public Health Minister Yuri 
Shevchenko, replying to reporters at a briefing in the Government House, said 
that "Vladimir Putin is a very healthy man, and, God grant, let him preserve 
his health as long as possible". 

According to the minister, Putin "eats correctly, goes in for sports, makes 
daily dozens and constantly goes for walks". Shevchenko noted at the same 
time that he did not make a medical checkup of the acting president. 

Replying to reporters, what was his role in saving the life of Putin's wife 
Lyudmila who had got in an accident, Shevchenko answered: "Lyudmila Putina 
was saved by neuro-surgeons of the military medical academy which I headed at 
that time. 

"Therefore, my role in her saving boiled down to the following: Vladimir 
Putin called me and asked to transfer his wife to another hospital." 
Shevchenko added that Lyudmila is now "quite healthy", although she had 
suffered from a serious injury of the spinal column in the past. 

The minister also expressed opinion that practice of a detailed medical 
checkup for Russian presidential candidates "can be introduced but it should 
be tactful and take into account rights of personality with respect to 
openness of diseases". 

In the minister's opinion, this question "should be examined collectively". 
"Each man and not only president should be checked up. Sure, we check up in 
detail pilots, cosmonauts and members of other trades and professions. 

"It is quite natural that a person who is supposed to run the country, could 
undergo such a checkup," Shevchenko noted. 


Moscow Times
March 23, 2000 
With an Energetic New Tsar, What Next? 
By Viktor Rodionov 
Viktor Rodionov, who holds a doctorate in economics, formerly worked as a 
journalist with Pravda. He submitted this comment to The Moscow Times.

In a few days, citizens will cast their votes for a new president. And it 
appears that the winner has already been determined. So, assuming Putin is 
elected, what happens next? 

First, all of the Voloshin types will have to leave the government, those who 
like the Kremlin chief of staff are stuck to the ship of state like so many 
barnacles hindering its movement. Boris Yeltsin's regime was famous for the 
unprecedented growth of the bureaucracy, both centrally and locally. Putin's 
actions in this regard will be hailed by the average citizen and will only 
increase his popularity; such a practical politician won't give up the chance 
to please the man on the street. 

But the bureaucrats won't be the only ones affected. If elected, Putin will 
"put things in order" on a number of issues, including fighting crime, 
exposing the wrongdoings of those at the highest levels, and dealing with the 
mass media. The freewheeling atmosphere that journalists enjoyed during 
Yeltsin's regime, when they were allowed to poke fun at the head of state, 
will come to an end. There have already been hints to that effect, although 
there have also been assurances that freedom of speech should be guaranteed. 
I am not so sure that, in these new conditions, The Moscow Times would last 

On a number of issues, especially on fighting crime and restricting the 
media, the new administration will receive unqualified support from the 
majority of the population. Some of the intelligentsia will attempt to 
protest on the issue of the media, but its voice will fade until it becomes 
inaudible. But these problems won't touch the working man so long as he has 
vodka, bread and sausage on the table - all of which the administration can 

The second factor that will come into play, but not immediately, will be the 
routing of the fuzzy Yeltsin slogan: "Take sovereignty, as much as you can 
digest." Regional leaders will feel the heavy hand of Moscow. Some have 
already sensed this and are ingratiating themselves with the new leader. But 
Tatarstan's leader, Mintimir Shaimiyev, asked that Putin be like Yeltsin, a 
democrat, which can be thus decoded: "Don't get in the way of our being the 
kings of our castles." But that won't happen, as evidenced by events in 
Chechnya. As for other regions, their time will come. Now, just before the 
elections, is no time to talk to Shaimiyev, Kemerevo Governor Aman Tuleyev, 
Primorye region's Yevgeny Nazdratenko and their ilk. The ever more insistent 
talk of limiting the number of federation subjects points to one thing: 
bringing to heel the regional leaders who feel too free. Once again, Putin 
will be lauded by a significant portion of the population, since the behavior 
of certain regional leaders turns many people off and makes them feel they 
have no rights under such arbitrary rule. 

The third new element from Putin will be the normalization of relationships 
with other CIS members. The Moscow summit of CIS leaders and talks with Kiev 
about its debt to Russia have confirmed that a new system of cooperative 
relations will be developed. The old thesis is being confirmed: the younger 
brothers aren't going anywhere without the oldest. The years of so-called 
independence showed the illusory nature of the ability of the leaders of the 
former Soviet republics in solving their economic problems, often to the 
detriment of Russia. If the Yeltsin administration gave loans and then 
forgave debt, the Putin administration will be enact a strict keeping of 

A fourth point involves relations with the rest of the world. Serious steps 
will be taken to improve relations with Western nations: ratification of 
START II and other bilateral and multilateral issues. Putin plans to go to 
Japan this summer with the intention of expanding cooperation with the G-8. 
Only by drawing on the cooperation of other G-8 countries can Russia take on 
the challenge of the 21st century in science and technology. Putin may also 
take on the challenge of resolving the issue of the Kuril Islands, which will 
show his strength as the leader of a powerful government. 

I conducted a kind of sociological survey among my friends. Almost every one 
said that he or she wouldn't vote for Putin. Two months ago, on NTV, another 
survey was conducted: 20,000 people responded, and 17,500 said they disagreed 
with Putin's handling of the events of Jan. 18 in the Duma. It seemed obvious 
at the time that those events would spoil his chances. But in Russia, it's 
not important how the people vote - what's important is how the votes are 

Only a few days remain before the elections. No matter what, Russia will 
enter the 21st century with a new, tough leadership, with an end to the free 
reign of many of its provincial leaders and CIS allies, and with a hope for 
respect and dignity from the rest of the world. 


From: Wayne Merry <>
Subject: Russian Election Seminar at Atlantic Council
Date: Thu, 23 Mar 2000 

Russian Election Seminar at Atlantic Council: The Atlantic Council of the
United States invites you to a panel discussion on The Russian Presidential
Election: Its Significance and Prospects on Monday March 27, 2000 from 2 to
4 p.m. at the Atlantic Council Conference Room, 11th Floor, 910 17th Street
NW (west side of Farragut Square, between I and K Streets). Panelists: John
Colarusso, Professor of Anthropology and Linguistics, McMaster University,
Ontario; Thomas Graham, Jr., Senior Fellow, Carnegie Endowment for
International Peace; and E. Wayne Merry, 
Director, Program on European Societies in Transition, The Atlantic Council.
RSVP 202-7784990.


Date: Thu, 23 Mar 2000
From: simon marks <>
Subject: Election resources from FSN

Resources from Feature Story News on Russia’s

Feature Story News (FSN) will be providing extensive
coverage of Russia’s Presidential elections throughout
the next few days. Individual broadcast news items
are being posted on FSN’s website at,
and include:

-- an exclusive audio interview with Yabloko leader
Grigory Yavlinsky;
-- an audio interview with the Carnegie Endowment’s
Lilya Shevtsova;
-- ongoing election coverage from FSN’s Moscow
Correspondents Charles Maynes and Owen Fay.

Click on “Latest News – Listen Now” for continuing
world news updates; click on “Top News In Depth” for
individual items from Moscow. Real Player is
required for all these presentations, and can be
downloaded directly from FSN’s website.

Also…on Friday March 24th, FSN’s Chief Correspondent
Simon Marks will be have an in-depth background report
on the Presidential election campaign on “The News
Hour with Jim Lehrer” on PBS. Check listings for
details or visit for a
transcript. Additional election previews from FSN
can be heard on “MarketPlace” and Pacifica Network
News, both on public radio stations nationwide. 

Finally, don’t miss this week’s edition of “Campaign
2000: The Russian Elections”, a special audio webcast
produced by FSN for the Carnegie Endowment for
International Peace. This week’s program, to be
posted at, will include a discussion with
Carnegie Endowment senior associates Mike McFaul and
Nikolai Petrov. Real Player is again required, and
can be downloaded directly from CEIP’s website.


The Economist (UK)
March 25-31, 2000
[for personal use only]
Boris Berezovsky, puppeteer or future victim? 

WILL Boris Berezovsky, Russia’s oligarch-extraordinary, see out the year in 
jail, exile or the comfortable nook between business and government that he 
currently occupies? The answer will give a clear sign of where the country is 
headed under Vladimir Putin, who is set to be elected president on March 

Mr Berezovsky embodies the distinctive characteristic of the ruling elite in 
post-Soviet Russia: cynical ruthlessness. By his own account, two guiding 
principles for dealings with other people are that “anyone can be bought, and 
everyone has his price.” Sitting in a sumptuously restored tsarist mansion 
that his car-dealing company Logovaz runs as a business club, he quickly adds 
a caveat: “It is impossible to buy feelings. All the rest it is possible to 

He can be both charming, almost hypnotically so, and terrifying. George 
Soros, an American financier and former friend, wrote recently that, after 
they fell out, “his anger gave me the chills. I literally felt he could kill 
me.” Mr Berezovsky responds with a blizzard of insults against Mr Soros. He 
is a “hypocrite” for mixing business with philanthropy, “dirty”, “a 
liar”—and, to cap it all, he has “bad taste”. “He says this building is a 
typical mafia house,” snorts the Russian indignantly. “But we won a prize for 
the renovation!” 

Mr Berezovsky made his fortune by understanding how the Soviet, then Russian, 
economy was changing. A mathematician, he started by selling software; an 
early coup, he says, was persuading a Soviet committee to tell 30,000 state 
institutions to buy his programs. Then he bought cars at the cheap official 
price and sold them at the free-market one. Next came media holdings: he 
snapped up a large chunk of Russia’s biggest television station. Then there 
was oil, in particular Sibneft, a large company now striving for 
respectability, whose spokesmen get tongue-tied when asked about Mr 
Berezovsky’s exact role in it. Recently his holding companies have been 
“consolidating” (a favourite word of his) the aluminium industry. And the 
future? “The Internet.” 

Not that he has much time for business. In his version of events, he has 
barely spared a minute for it since 1996. His main official post was running 
the Commonwealth of Independent States, a zombie-like shadow of the Soviet 
Union. He is now a deputy in the Duma, the lower house of parliament, for the 
impoverished southern republic of Karachaevo-Cherkessia. 

For all this, Mr Berezovsky is distrusted, even detested, by many Russians. 
He is their prototype oligarch: an over-mighty tycoon who feeds on his 
connections, most notably to Boris Yeltsin’s inner circle. In the past he has 
boasted of his ability to swing Kremlin decisions, and has spoken of the 
“privatisation of cash flow” as a natural stage in unscrambling the Soviet 
economy. Others are less polite. Though Mr Berezovsky has not been charged 
with any wrongdoing, he was recently denied a visa to Switzerland, where he 
usually attends the annual talkfest at Davos; Swiss prosecutors are 
investigating the role of two of his Geneva-based companies in handling the 
overseas revenues of Aeroflot, Russia’s national airline. Mr Berezovsky 
alleges corrupt ties between Swiss officials and his political enemies in 

Maybe Mr Berezovsky’s number is up. Mr Putin’s austere, disciplined style is 
a world away from the indulgent, ostentatious cronyism of the Yeltsin era. 
Though he praises Mr Putin publicly, the president-in-waiting has been 
noticeably cooler in return. He said pointedly this week that he wanted the 
oligarchs cut down to size. He has specifically criticised some of Mr 
Berezovsky’s dealings in a way that would have seemed inconceivable in past 
years, when the tycoon seemed to have a base at the heart of the Kremlin. 
“Beware of Greeks bearing gifts,” was Mr Putin’s frosty reaction when Mr 
Berezovsky endorsed him for president. 

Yet Mr Berezovsky’s Trojan horse seems still securely stabled in the Kremlin. 
Most of his close friends from the Yeltsin era, such as the past and present 
chief of staff, Alexander Voloshin, and the consummate Kremlin insider, 
Valentin Yumashev, an imidzhmeker who played a leading part in promoting Mr 
Putin in the West, seem as powerful as before. The same story is broadly true 
in the government, though Mr Berezovsky himself denies the close ties widely 
assumed to link him to such top figures as Mikhail Kasyanov, now tipped to be 
promoted from finance minister to prime minister. 

So Mr Berezovsky is certainly not on the skids—yet. In any event, Mr Putin 
would be wise to keep him reasonably sweet, at least until after the 
election. Mr Berezovsky, after all, has a stellar campaigning record. He 
brought Mr Yeltsin back from a political abyss in 1996, and conjured up a 
successful pro-Kremlin alliance of regional governors in last year’s 
parliamentary elections. Coupled with awesome television firepower, this 
grouping destroyed Fatherland, a regional alliance led by Yuri Luzhkov, the 
mayor of Moscow, and Yevgeny Primakov, another former intelligence boss 
turned prime minister, who briefly threatened the Kremlin clan’s hegemony. 

So even if Mr Putin loathes Mr Berezovsky, as some say he does, and regards 
his influence as pernicious, there would be no point in turning on him and 
his chums until after the election. Things could be very different then. When 
he was running the FSB (a successor to the KGB), one of Mr Putin’s main 
tasks, which he balked at, was to grapple with Mr Berezovsky’s hold on it. Mr 
Berezovsky enjoys parliamentary immunity, but political pressure, if it were 
strong enough, could have it lifted. Nobody as powerful as Mr Berezovsky has 
ever faced criminal charges in Russia. 

Yet Mr Berezovsky himself seems sanguine. Mr Putin’s ascendancy, he argues, 
represents a highly desirable “consolidation of power”. Mr Yeltsin broke the 
communist system; now it is time to build another type, first at government 
level, then among an energetic new elite. Eventually, a new society will 
emerge. Russia will then become liberal and democratic, says Mr Berezovsky, 
but in the meantime, “We sometimes need a lot of power.” In safe hands, of 
course. Preferably his. 


ANALYSIS-Investors seek reforms in Putin's Russia
By David Chance

LONDON, March 23 (Reuters) - Foreign investors want more than just a 
continuation of the status quo from Vladimir Putin if, as is widely expected, 
he wins Russia's presidential election on Sunday. 

They want to see Putin make progress on issues such as corruption, land 
reform and dealing with the vast country's unruly regions and say that if he 
does, Russia's stock market could once again attract investment from outside 
the narrow range of country specialists and hedge funds. 

"We are looking for a president who will be active on tax and land reform and 
I am reasonably optimistic that Putin will make progress in those areas, 
although it may take some time," said John-Paul Smith, emerging Europe equity 
strategist at Morgan Stanley Dean Witter. 

Acting President Putin's economic policy is hazy. 

He has promised a level playing field for business, without corruption and 
the attendant oligarchs who dominate Russian companies. He has said he will 
enforce tax collection and pass land reform bills. 

But his commitment to taking on the oligarchs, who built huge business 
empires from Russia's shambolic privatisation, was put in doubt when 
businessman Boris Berezovsky won control recently of 60 percent of Russia's 
aluminium output, adding to substantial oil and media interests. 


Morgan Stanley's Smith believes that if Russia does tackle these issues it 
will enable investors to move from a top down investment approach - one based 
on looking at the broad economy - to a fundamental value-driven approach. 

"For many investors, the most interesting event this year is not the 
presidential election but the question of when oil companies move to 
international accounting standards," he said. 

On the macro-economic level, the successful restructuring of $32 billion of 
debt earlier this year and more positive noises from the International 
Monetary Fund imply that if Putin is succesful in his micro restructuring, 
agreement on further debt deals and the release of IMF funds could be in the 

"What is clear is that many people who have met President Putin have been 
impressed by what he wants to do," IMF acting managing director Stanley 
Fischer said on Wednesday. 


Mark Cooke, London-based fund manager at Brunswick Capital Management Ltd, 
whose funds under management have risen from $40 million in the first quarter 
of 1999 to $370 million now, said recent client trips to the U.S. had 
convinced him there was a lot more interest in Russia. But he said there was 
little new cash. 

"I do not think that people are overly enthusiastic about Putin per se, but I 
think there is a belief that there is a fighting chance that things will get 
better," he said. 

He noted that recent action in the equity market, which is up 21.3 percent 
year to date in dollar terms according to the International Finance Corp 
Russia Index <.GPDRU>, has been driven by a domestic liquidity boom. He said 
foreign investors have been largely sidelined. 

Cooke said that foreign investors were now looking outside the big five core 
holdings in Russia -- oil giants LUKoil <LKOH.RTS> and Surguneftegaz 
<SNGS.RTS>, telephone companies Rostelekom <RTKM.RTS> and Vimpelcom <<A 
HREF="aol://4785:VIP">VIP.N</A>> and utility Unified Energy System 
<EESR-p.RTS> -- and said the depth of Russia's economic recovery would 
support this process. 

Industrial output rose 13.7 percent in February from a year ago and oil 
prices remain in excess of $30 a barrel, the macro picture is looking good 
and Finance Minister Mikhail Kasyanov believes Russia could grow three 
percent this year. 

Signs of recovery are also encouraging longer-term direct investment, Cooke 
noted, with Russia saying that foreign direct investment rose to $4.3 billion 
in 1999. 


For both equities and fixed income assets, the immediate aftermath of the 
election could see both equities and fixed income assets trading quietly for 
some time after recent gains. 

"What could go wrong? Well there could be a renewed terror campaign by the 
Chechens in European Russia; oil prices could collapse; or there could be 
another huge corporate governance scandal," Brunswick's Cooke said. 

"Overall however, I think the remarkable thing about this election is the 
lack of excitement and the assumption that it is going to proceed in an 
orderly fashion," he said. 


Date: Thu, 23 Mar 2000 
From: "H. Mark Hubey" <> 
Subject: On Conspiracies, History, Economics and Politics

Those that are discussing conspiracy theories should pay careful attention
to logic and mathematics. First, it is not necessary for there to be a
large conspiracy in order for the effect to look the same. This has
basically been proven by simulations in the new theory of complexity. For
example, the flocking behavior of fish and birds is not due to their deep
understanding of aerodynamics or their practicing to create global behavior
that seems carefully rehearsed and a result of much drilling. Following
very simple "local" 
rules can easily create complex global behavior. The behavior of Russia
today regarding the lack of capitalism, human rights, or democracy is not a
result of any conspiracy either. It is the result of habits developed over
centuries that have become common everyday behaviors among the peoples.

The results, if observed very carefully, and compared against other nations
is this: compared to western nations Russia has been on a "war footing" for
centuries. In "normal" Western nations, rationing of goods, supporting the
government almost unconditionally, laws against free speech and freedom of
the press, and the like are usually resorted to in extreme circumstances,
such as a war that threatens the very survival of the nation, and usually
when it is under attack by a power as strong as the nation being attacked.
After the war is over, rationing and constraints on freedom and
unconditional support of the "great leader" gives way to normal behavior. 

The "normal" behavior consists of multiple roads to power, such as
politics, business/commerce, and the media. Similarly government organs are
normally created to keep the others in check and balance so that "absolute
power" does not corrupt absolutely. In Russia there was only one way, in
other words, it was basically a vertically integrated empire-building
machine with practically a military hierarchy. Even a criticism of those
that are supposed to govern the state correctly was deemed treason. 

It was well-suited to its task of empire building in the heyday of empire
building even if it allowed the incompetent to rise to high ranks lacking
the system of checks and balances and thus being prone to corruption. After
all, it is a free press that reports on corruption so that those in
government who have been entrusted with their duties by the people can
remain basically honest.

Examined in the phase space of proper parameters (as above) Russia has
always been on a war footing. Communism simply grafted the Prussianism that
made Prussia strong enough to defeat France onto the Russian system of
government. Thus the empire-building state continued, clothed in modern
words emanating from the theology of communism.

Therefore it was expected that today's behavior should have occurred. It
should have been expected that the nomenklatura would not have given up its
advantaged position and would have worked doggedly to sabotage any
moves that would have weakened their position of affluence. It should have
been expected that the West would have found it difficult to believe that
Russia would have changed so easily. It should have been expected that
the profit motive that drives businesses would have made western businesses
behave according to their motives. It should have been expected that the
Russian people would have expected the "benevolent father West" to come
over and save them, having gotten used to having things done for them (by
their rulers and government). It should have been expected that the common
strain in Russian history "being attacked from the outside" and
"fighting for survival" would have been used again to re-create the
militarily-hierarchical government, meaning quite simply an attack on the
other branches of power (e.g. the media); threatening the basic
democractic idea of competing ideas by defaming people and other organs of
being traitors; 
and the different views to be sublimated into the only one of supporting
the government.

Yes, all of this should have been expected.

The main reason for all of this is that those whose business it is to study
Russia and the USSR are still suffering from myopia, the same myopia that
they have been inflicted with for a few centuries.

Those that study history usually do not know economics, and sometimes even
history; those that study politics do not know history; those that study
economics don't care about politics or history. And those that claim to 
study all three are still in confusion over the lack of materialization of
the end of capitalism.

The Russian empire did not grow like that of Rome or the Ottomans. It did
not grow like those of the Arabs; there was no ideology. Neither did it
grow like that of the UK which was based on technology. Nor did it
supernova like that of Greece, or Napoleonic France, or that of Germany. 

The Russian empire was built on a population explosion. 

As long as it fought against outnumbered nations who were armed with bows
and arrows it did fine. When after defeating Napoleon, Russia decided it
was powerful enough to buck the system, it was promptly taught a lesson by
GB, France and the Ottomans in the Crimean War. Russia did not make this
mistake again until after WW1. Before that it continued its tactic of proxy
warfare (for example in the Balkans) and pulling the rug out from under
France and GB. (This same proxy warfare was something Russia practiced for
decades in the guise of the USSR all over the world.) After the
"Revolution" once more Russia felt strong enough to challenge the world,
especially armed with a new weapon (communism). But once again it did not
work. It did not work even after WW2.

Now that it is over, it is time for Russia to try to become Numero Uno, in
the way that other nations did it. So far the only nations that have
floated to the top are mostly in Western Europe. The way it happened was
also basically ordained by history and the laws of evolution. When there
was basically no technology, the only way to have more was to take it from
others. Thus was imperialism was born. With the new age of technology, it
became possible to create more and have more without stealing or forcefully
taking it from

The only reason imperialism did not die immediately with the advent of the
science revolution was because as usual the social, economic and moral
sciences lag behind the physical sciences, for a few centuries at least.
Today it is basically not necessary to conquer more lands to be rich. The
developed nations export both food and machines. Except for oil (which is
not a renewable resource) it is no longer feasible for nations that are
tied to a single export commodity to get rich peddling it.

The only real form of wealth is scientific knowledge. It is the only form
of wealth that allows the creation of other forms of wealth. Even oil
became a great source of wealth because of scientific and technological

Russia is rich in this form of wealth, that of scientific knowledge.

Because the present-day political entities are still left over from the
days of imperialism, the future will not see any more empire-building
conquests. Instead the future will see the break up of the residues of
empires at the same time it sees the re-creation of large multi-ethnic
entities based on respect and

Russia, as it is, will not be allowed into the EU. It has to respect basic
and fundamental forms and norms of human rights.

Small nations (e.g. Lichtenstein, Monaco) survive in Europe, and indeed in
other parts of the world. There is no reason why all the small nations in
and around Russia's periphery should be gobbled up by Russia. That is not
how the West sees the future of the world. The West leads the world in many
respects, not only technology. It has to also lead the world in morality,
and morality dictates basic human rights be accorded to humans, including

Large empires have broken up and will continue to be broken, while large
multi-ethnic entities such as EU, NATO, OSCE, Organization of African
States, NAFTA, etc will continue to be built up. Tidal waves of this 
On Conspiracies, History, Economics and Politics phenomenon are sweeping
from the West towards the East. Russia is now caught in the crest of this
wave. It is Russia's turn to join the West. It is being invited to join the

Every nation's true wealth is in its people. Russia has to learn to create
a real nation of free peoples. And since its population is highly educated,
once the laws and regulations are in place, its economy will bounce up
rather quickly.

Russia's place in world history is secure. The only question is how many
more black spots in their image Russia's leaders are willing to leave the
future generations of Russians. 

So much for conspiracy. If all small decisions are made, there is no need
to make big decisions. When the people have been trained "correctly" the
results will follow as predicted whether they seem conspiratorial or not.


March 2000 No. 3 Part 1 of 4

Chubais vs. Berezovsky: Who will be the kingmaker?
By Elena Dikun
Elena Dikun is a political columnist for Obshchaya gazeta. 

At a meeting with his trusted advisers at the end of February, Acting
President Vladimir Putin spoke of his attitude to the oligarchs: "They
should be kept at an equal distance from power, and should have equal
opportunities." It was thus important to "prevent any of them from attaching
themselves to power and using this for their own ends." Shortly before this,
Putin the presidential candidate had made his position even more explicit in
an election address to voters: "How should we structure our dealings with
the so-called oligarchs? On an equal footing, of course! In exactly the same
way as we structure our dealings with the owner of a small bakery or shoe
repair shop." Alas, Putin's assertions are as yet merely good intentions;
the fact is that the financial clans and small shopkeepers are not equals.


Opinion is divided on the status of Anatoly Chubais on Putin's list of
priority appointments. Some people--primarily members of the Kremlin
administration--claim that Chubais has fulfilled his historical mission and
that his services are no longer required. Others talk of a "contract"
between Putin and Chubais, suggesting that during the election campaign
Chubais--who has a deterrent effect on the electorate--will "lie low," but
will be appointed prime minister after the election. A third group claims
that the veteran reformer is quite happy with his current role as head of
RAO UES (United Energy Systems of Russia) and does not aspire to anything

Relations between Putin and Chubais are in fact ambiguous. On the one hand,
Putin has fond memories of working with Chubais in Anatoly Sobchak's
administration in Leningrad [St. Petersburg]. On the other, Putin's
colleagues refute the widespread view that Putin came to Moscow under
Chubais' patronage. Apparently former presidential executive secretary Pavel
Borodin arranged the move. Putin had once done the Kremlin official a small
favor, and, when Putin was left out in the cold after Sobchak failed to get
reelected, Borodin was the first to offer him a helping hand. Putin's aides
say that their boss still values Russia's energy supremo, but is worried by
his excessive stubbornness and "distinct Bolshevist tendencies." "Vladimir
Vladimirovich [Putin] would like to see people like Chubais in positions of
power, but more flexible versions [of power]," says one of Putin's
associates. Boris Nemtsov, one of the leaders of the Union of Right Forces,
is more blunt in his explanation as to why Putin will never appoint Chubais

as prime minister and will always keep him at a distance. "People in the
Kremlin are alarmed at the thought of Chubais running the government. Even
if he were taken on only as a security-guard on a collective farm, it would
soon become clear who was in charge. The boss could take a holiday. My
feeling is that when Putin wins the election, he will try to form an
nondescript, apolitical government. There is a big difference between
Yeltsin and Putin. Boris Nikolaevich was not afraid to have strong
personalities around him; he was not worried about being eclipsed by them.
Unfortunately, there is a discernible trend towards grayness now. Even if
Putin wants to change things, he will do it through his "gray mice." But in
order to push through the reforms that are most important for the
country--reform of the banks, taxes, pensions and the social sphere--you
need the political will, you need strong personalities."

Those closest to Putin say that after the elections he will not tolerate any
ambitions which Chubais or Berezovsky may have for running the country. "If
they have any sensible, positive suggestions, he is prepared to hear them
out, but no more than that." This rule supposedly applies to every member of
the "family" which was Yeltsin's legacy to Putin. It is possible, however,
that the pulling force of Boris Berezovsky and Roman Abramovich may linger
within the Kremlin, as suggested by the recent story of the privatization of
the aluminum market.


At the beginning of February, Sibneft and LogoVAZ--companies owned by court
businessmen Abramovich and Berezovsky--acquired from Lev Chernoy shares in
three leading aluminum factories, one alumina plant and the Krasnoyarsk
hydroelectric power station. They now control 70 percent of the country's
aluminum industry. A huge row erupted over this massive deal. The State Duma
ordered the industry committee to launch an immediate investigation, and
high-ranking officials demanded that order be imposed in the industry
forthwith. The one thing that everybody wanted to know was: Did the prime
minister know of Abramovich and Berezovsky's plans, or had they neglected to
inform him? For three weeks Putin refused to be drawn, but was eventually
forced to answer what was a very awkward question for him. He announced that
he knew nothing of the deal, and, to forestall further questions, said that
he was not required to know. In other words, the transfer of shares from one
proprietor to another was a run-of-the-mill operation which might only be of
interest to the anti-monopoly ministry.

However, it makes little real difference whether Putin "knew." Either way it
is bad news for him. If he did know, it means that he approved. If he didn't
know, it means that the "family" oligarchs do not feel the need to confer
with him. At first glance, the state might not appear to lose out much if
the aluminum business is controlled, not by Trans World Group and the
British subject Lev Cheerio, but by Abramovich and Berezovsky. We are, after
all, talking about private, not state, ownership. And the antimonopoly
ministry has no reason to worry either. They should have worried five years

ago when the Cheerio brothers privatized Russia's aluminum market. All that
has happened is that an amicable agreement has been reached on the transfer
of a chunk of ownership from one pair of private hands to another.

Such is the logic of official explanations. Impeccable in form, but not in
essence. According to our sources, circumstances forced Lev Cheerio to
relinquish his aluminum business. His former colleagues say that the
aircraft metal is "no longer as lucrative as it was." The old tolling system
used to ensure good returns, but the Russian government abolished tolling a
couple of months ago.

But surely such hardened businessmen as Abramovich and Berezovsky would not
have bought factories that were going to the dogs? Indeed, high-ranking
officials in the White House say, in strict secrecy, that the new aluminum
bosses are twisting Vice-Premier Viktor Khristenko's arm in an effort to
persuade him to reintroduce tolling. It transpires that Abramovich and
Berezovsky bought the aluminum plants in the hope of bringing back tolling
and thus recovering their outlay. Khristenko is resisting, but no one knows
how long he will have the strength to do so, particularly as the
businessmen-deputies are relying on the Unity party, which is loyal to
Putin, to help them lobby for tolling in the Duma.

Many experts believe tolling to be straightforward preferential treatment by
the state. And if the new aluminum bosses eventually succeed in securing the
former privileges from the government, then it is the state that will pay
for their acquisition. But then this is par for the course for Boris
Abramovich: He never uses his own money to buy things; he does so only at
other people's expense.

Yet what alarms the political establishment is not how much these prosperous
entrepreneurs will make from their aluminum, but the fact that control of
the aluminum market will give them privileged access to the new president.
This disrupts the plans of Chubais and all of Putin's right-wing fellow
travelers, who were keen to shift the political spheres influence in their
own favor. They also wanted to purchase the aluminum business from Cheerio
and thus add to their political clout. A highly placed Kremlin official, who
maintains informal contacts with both clans, offered me the following gloomy
observation: "In private, these people say quite bluntly: If we don't get
them, they'll get us. Both groups think the same way." On this occasion, it
is clear that Chubais has been outmaneuvered.


The plot of the latest "aluminum wars" is amazingly similar to last autumn's
Transneft skirmish. Then, it was once again the Abramovich-Berezovsky group
which managed to topple the oil company chairman--a Chubais placeman--from
his post and replace him with their own man, thus wresting control of a
powerful source of finance from the Right. The battle for Transneft and the
struggle for aluminum both represented a major trial for Putin. Both cases
were a test of his independence and his determination under pressure from
the "family," personified by Abramovich and Berezovsky. It is in the
presidential candidate's interest to show in every way possible that he has

nothing to do with such bad company, but in both these cases, he appeared to
be involved with the very people with whom it would be better not to be
associated in the run-up to the elections. The news of the aluminum deal,
and the mere suspicion that it would not have gone ahead without a nod from
Putin, already casts a dark shadow on him.

Aware that ignorance would not put Putin in a good light either, his staff
are now saying that he was informed of the imminent sale, but "only in very
general terms," and being up to his eyes in the affairs of state he did not
attach particular significance to it, trusting the head of the presidential
administration Alexander Voloshin, who was the mover behind the deal.

The result is that the boss has been exposed again--and much more blatantly
than in the Transneft case. Back then Putin was the number two and could
hide behind President Yeltsin. Now he has no such cover, and if he can still
be shown up it means he is not yet his own boss, but a tool in the hands of
the Kremlin "family." This naturally does not gain him any authority,
particularly in the eyes of his wavering allies.

All that the Union of Right Forces (SPS) has got out of Putin so far has
been some positive words about the referendum initiated by the Right.
Chubais, who insists on unconditional support for Putin, trumpeted this as a
great success for SPS, but his colleagues felt that they had been cheated:
Abramovich and Berezovsky get the aluminum and all they get is a referendum.
Not a fair exchange. After such an insult, the Right opted to defy Chubais
and refuse Putin "their support" in the elections. This may not be a
terminal split. Some SPS leaders comfort themselves with the hope that
Abramovich and Berezovsky's aluminum purchases are "their last heist before
the elections," and that Putin will not forgive their effrontery. As one
prominent figure in SPS noted, in 1996 the oligarchs were more discreet:
First they worked for the common cause, and only then divided the spoils of
victory. But this time "they are taking risks and forcing their way ahead.
This is a good sign. If they are in such a hurry, it means they have no
guarantees for their future."

Curiously, the current conflict between two groups is almost an exact repeat
of the notorious scheming during the last presidential elections. On that
occasion also, there were two groups behind the throne who were equally
determined to help Yeltsin get reelected as president. In one camp were
Korzhakov, Barsukov and Soskovets, and in the other Chubais, Berezovsky and
another six bankers. Both groups were channeling funds into the same kitty
and for the same ends, but they harbored a deep hatred of each other. Today
there are once again two groups backing Putin and fighting each other over
one and the same thing--to make the future president indebted to them. For
the moment those associated with Abramovich and Berezovsky have a
qualitative and quantitative advantage. But it should not be forgotten that
in 1996 it was Chubais who eventually got the upper hand.


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