March 31, 2000    
This Date's Issues: 4212 • 4213  4214

Johnson's Russia List
#4213
31 March 2000
davidjohnson@erols.com

[Note from David Johnson:
1. The Guardian (UK): Ian Traynor, Putin urged to apply the Pinochet stick.
2. Itar-Tass: Russia Expected to Increase Coffee Consumption this Year. 
3. Moscow Times: Robert Coalson, OSCE Verdict on Elections Outstrips State Propaganda.
4. Peter Juviler: Adam Ulam.
5. Itar-Tass: Threats to RUSSIA'S Security Mostly at Home-Official. 
6. David Mendeloff: A tempered view of Russian history textbook revision.
7. Interfax: Analysis: Russian diplomacy under Putin.
8. Business Week: Paul Starobin, Will Putin Square Off with the West?
9. Christian Science Monitor: Fred Weir, Top of Putin's agenda: wooing foreign capital.
10. Itar-Tass: "Elections in Chechnya Have Been Valid"-Vladimir Putin.
11. The Times (UK): Alice Lagnado, Moscow hints at dialogue with Chechnya.
12. IntellectualCapital.com: Blood Brothers. David Wallis goes inside Russia's old spies network in search of Vladimir Putin's cronies.
13. D&P says election bodes well for Russia ratings.
14. The Times (UK): Michael Binyon, Putin to tackle housing shortage.
15. International Herald Tribune letter: Russian facts. (responseto Jack Matlock)
16. The Guardian (UK): Matthew Norman, Diary. (A St. Petersburg
business experience with Putin)] 

******

#1
The Guardian (UK)
31 March 2000
[for personal use only]
Putin urged to apply the Pinochet stick 
Ian Traynor in Moscow

Vladimir Putin should resort to totalitarian methods to push through
radical economic reform and redeem his promise to make Russia great again,
one of Russia's most successful bankers suggests. 

Petr Aven, president of Alfa, Russia's biggest and most successful private
bank, and a key business supporter of the newly elected president, said
that Mr Putin should model his regime on that of Augusto Pinochet of Chile,
combining Reaganomics with dictatorial controls. 

"The only way ahead is for fast liberal reforms, building public support
for that path but also using totalitarian force to achieve that. Russia has
no other choice," he said in a Guardian interview. 

"I'm a supporter of Pinochet, not as a person but as a politician who
produced results for his country. He was not corrupt. He supported his team
of economists for 10 years. You need strength for that. I see that parallel
here. There are similarities in the situation." 

Mr Aven's advocacy of radical Thatcherism comes at the end of a decade of
mass privatisation of Russian industry, a process which has been
notoriously corrupt and has discredited the very notion of reform. 

Campaigning in opposition to "thievery" of national assets, the communists
did better than expected in last weekend's presidential election that
brought Mr Putin, the Kremlin's choice, to power. The communists took 30%
of the vote, presenting the president with a bedrock of resistance if he
follows Mr Aven's advice. 

German Gref, an adviser drawing up an economic blueprint for Mr Putin and
tipped to be his economics minister, said yesterday that the policies due
out in mid-May would try to make the transition to a normal market system
"in the shortest period possible". 

The policies aimed to produce "a managed market economy" that also tried to
"preserve social stability". 

Mr Aven argued for a more radical approach, cutting welfare and social
provision to stimulate higher economic growth. His prescriptions coincided
with warnings about Mr Putin's authoritarianism from other well connected
international figures. 

In a book about to be published, the billionaire speculator and
philanthropist George Soros says Mr Putin harbours dictatorial tendencies.
He blames misapplication of the free-market gospel as one of the reasons
for Russia's economic crisis. 

And in an interview in the Czech press, the American foreign policy guru
Henry Kissinger predicted that Russia under Mr Putin would be like Portugal
under the 1932-68 dictatorship of Antonio Salazar: "With certain democratic
elements but basically authoritarian". 

Mr Aven is convinced that Mr Putin is the strong leader Russia needs, but
is worried that his innate caution and his willingness to do deals with the
communists will make him fudge and temporise. 

"Nobody follows the law in this country," he said. "Pinochet tried to
enforce obedience to the law and sometimes that's difficult for a country.
Sometimes you need to use force. The only role of the state is to use force
when needed." 

Mr Aven, both of whose whose grandfathers died in Stalin's gulag, denied
that he was urging a return to the repression of the Soviet era. But he
said rampant criminality and corruption could not be tackled by applying
the law. 

"You can't always fight criminals by staying within the law. You can't
always do it peacefully." 

Russia's powerful regional governors would also have to toe the line, he
said, and since they were certain to defend their fiefdoms ruthlessly Mr
Putin would have "to use force to suppress them". 

Mr Aven, a former foreign Russian trade minister, is well regarded as an
economist. Mr Putin, he said, did not have an economic policy, but he had
the right economic instincts and leadership qualities. 

*******

#2
Russia Expected to Increase Coffee Consumption this Year. 

MOSCOW, March 30 (Itar-Tass) - The international coffee association predicts 
that Russia's coffee consumption will increase by four to five percent this 
year as compared to 1999, the association's manager told reporters on 
Thursday. 

According to the manager, Russia imported more than 58,000 tonnes of coffee 
in 1998. The import was 5,000 tonnes less in 1999. However, experts predict 
that the consumption rate will return to the level of 1998. 

Besides, more and more Russians prefer expensive kinds of coffee. At present, 
a Russian on the average drinks 82 cups of coffee a year, including only two 
cups of grinded coffee, four of mixed kinds, and the rest is instant coffee. 

Russia consumes only one percent of the world's coffee export. However, it is 
not too little for a country traditionally preferring tea. But nevertheless, 
Russia is far behind the coffee consumption leaders -- Norway, Sweden, the 
United States and Brazil. 

*******

#3
Moscow Times
31 March 2000
[for personal use only]
OSCE Verdict on Elections Outstrips State Propaganda 
By Robert Coalson 

Now that the presidential election results are in the can, observers have 
been falling over themselves to congratulate Russia on the latest milestone 
in its democratic development. While the government can be excused for 
exaggerating the "free and fair" qualities of the poll, it is more difficult 
to understand many of the remarks of Western observers. 

In this regard, the most outrageous piece of propaganda emerged not from the 
bowels of the Kremlin press office, but from the International Election 
Observation Mission of the Organization for Security and Cooperation in 
Europe, which released its election post mortem Monday. It is difficult for 
me to imagine how any responsible person could put his or her name to this 
document, which grotesquely mischaracterizes the political and social 
situation in Russia. 

The report opens with a statement that the election was held in accordance 
with an election law that "provides a framework for pluralist elections and 
for a significantly high level of transparency in all phases of the electoral 
process." These are the first good words that I have encountered for a law 
that has been widely described as intentionally designed to minimize public 
participation in the process and to firmly establish state control over the 
flow of information regarding the campaign. Even Press Minister Mikhail Lesin 
has stated that, under the law, "the mass media basically have no right to 
even mention the name of any candidate or party." 

As a result, the nonstate media in the regions were essentially locked out of 
election coverage altogether. Just recently, I received the March 16 issue of 
Gazeta Yuga, a nonstate weekly published in Nalchik, a southern city, and 
noted without surprise that there was not a single article about the election 
that, at that time, was just 10 days away.

But what really irked me about the OSCE report was the boldfaced lie that 
"the media in the Russian Federation remain pluralistic and diverse" despite 
some "increasing pressure" during the election season. "Pluralistic and 
diverse"! 

Let's take a look, for instance, at Tambov region, an area with a population 
of 1.3 million only about 500 kilometers from Moscow. According to the best 
information I have, this region is served by 35 general newspapers. Of that 
total, 29 are directly controlled and financed by local governments. Of the 
remaining six, one is published by the Communist Party and five are 
commercial papers, all of which are published and distributed in the city of 
Tambov. The total weekly circulation of all six nonstate newspapers is 95,000 
copies, of which almost half is the Communist paper Nash Golos. The next 
largest circulation nonstate paper in this entire region is Tambovsky Kurier, 
with a weekly press run of just 20,000.

Of course, if locals in Tambov are dissatisfied with this level of pluralism 
and diversity, they can always turn to television, which means 
state-controlled channels ORT and RTV. The European Institute for the Media, 
which also monitored the election last week, noted rightly that "the great 
majority of Russia's 108 million voters rely on ORT and RTR as their only 
source of news." I wonder if the OSCE observers would regard this situation 
as "pluralistic and diverse" if they had to live themselves under such 
conditions or whether they merely think it is good enough for the people of 
Tambov.

Moreover, Tambov is by far not the worst region. The Glasnost Defense 
Foundation and other press-freedom organizations have long despaired over the 
brutally oppressive media environments in Russia's so-called "ethnic 
republics" such as Bashkortostan, Kalmykia and Udmurtia. In these republics, 
one is hard-pressed to find even a token nonstate media presence. Not 
surprisingly, these republics came out most strongly for Putin: Tatarstan, 
for instance, polled 69 percent for Putin; Dagestan came in at 80 percent; 
and Udmurtia came through with 61 percent. In Mordova, where the governor 
stated on March 20 that "Mordova should vote for Putin," 60 percent did.

The power of local state media control in the regions is further illustrated 
by the fact that all seven incumbent governors up for re-election were in 
fact re-elected. According to Kommersant newspaper, Murmansk Governor Yury 
Yevdokimov managed to drum up more than 98 percent of the vote! 

It is perfectly obvious why the powers that be in Russia are satisfied with 
this latest milestone of democracy. But I can't imagine what the OSCE 
election team could be thinking.

Robert Coalson is a program director for the National Press Institute. The 
views expressed here are not necessarily those of the NPI.

******

#4
Date: Thu, 30 Mar 2000 
From: Peter Juviler <pjuviler@barnard.edu> 
Subject: Re: 4210-Kramer/Ulam

In response to David Kramer's sad news about the passing of Adam Ulam.
While those of us not knowing him personally will not miss him in the same
way as David Kramer describes, we surely feel the loss in our own ways
and we celebrate a brilliant lifetime achievement of a scholar who greatly
enriched our profession and enlivened our meetings. Peter Juviler

******

#5 
Threats to RUSSIA'S Security Mostly at Home- Official. 

MOSCOW, March 31 (Itar-Tass) - Russia's security supremo said on Friday that 
the main source of threats to the national security is inside the country 
today. 

"The specific feature of the current period of Russia's development is that 
the internal threats to the national security determine (the whole 
situation)," Sergei Ivanov, secretary of Russia's policy making Security 
Council, said in an interview to Nezavisimaya Gazeta. 

Ivanov said that the internal threats are in "interaction and 
interconnection" with the external threats such as the increasing role of the 
use of force in international relations, a trend towards a bigger difference 
in Russian and American approaches to disarmament and arms control, the 
unedequate actions of other states in terminating the Cold War, and the 
unprecedented activities of international terrorists. 

Commenting on Russia's new concept of national security, Ivanov said that 
particularly the document took into account new trends in foreign policies of 
the USA and other western countries in connection with the NATO military 
campaign against Yugoslavia. 

*******

#6
Date: Thu, 30 Mar 2000
From: David Mendeloff <dmendel@MIT.EDU> 
Subject: A tempered view of Russian history textbook revision

Judith Matloff's optimistic report [JRL 4207] on proposed changes in Russian
history textbooks ("Russia revisits history in its school textbooks")
should be taken with a few grains of salt. Like Matloff, Western
journalists and Russian educators in the early 1990's also confidently
proclaimed that the old "version of history may be, well, history.
Serious rewriting [of textbooks] is going on." In 1991 many educators
had high hopes for a new era in Russian history education. Today many
in the West and Russia--including officials at the Education
Ministry--believe that that new era actually arrived several years ago
with the introduction of the first generation of post-Soviet history
textbooks. But what has actually resulted can hardly be deemed a
revolutionary transformation in the portrayal of Russian and Soviet
history. Because journalists don't have the time to actually read the
textbooks they can't adequately evaluate the claims of their
champions, and readers in the West are left with the mistaken
impression that the texts are profoundly different from their Soviet
predecessors. Not so. Today's textbooks have been rewritten, but in
fundamental ways the content remains much the same. The
Marxist-Leninist rhetoric is gone, but the treatment (or mistreatment,
or general absence) of important events persists. The case of the
Tatars and other Russian minority populations is just one example.

We should be skeptical of the extent of the revision currently
underway. Those now addressing the issue of ethnic and national bias
in Russian education should be applauded and encouraged, but they are
hardly in the majority. For many years now deeply ingrained
historical beliefs in Russia have resisted such radical changes in the
portrayal of Russia's past. Batsyn has been involved in history
education at the Ministry for nearly a decade, yet his enlightened
vision of history education in Russia has hardly been realized in that
time. Some new textbooks may be written, but unless they pass muster
with the Ministry's rather shoddy and frankly nepotistic system of
assessment and sanction, they will only be printed in small numbers
and never be widely used in classrooms. 

Finally, we should hold off on the praise until we have a grasp of the
nature of those new revisions. Matloff quotes Nazif Mirikhanov saying
"We are trying to teach our kids that there wasn't just war. At some
point, Tatars and Russians lived together peacefully and created the
basis for the modern Russian state." This may sound nice, but failing
to evaluate critically Russia's imperial wars and adventures, and
instead focusing on the harmonious cooperation of the Russian
"brotherhood of nations" is a dangerous historical fiction.
Sanitizing history would be a step back: It was precisely such views
that Soviet schoolchildren were fed for decades. Instead, Russian
schoolchildren need to know that throughout history the Russian (and
Soviet) state waged bloody wars and caused a great deal of death and
misery, indeed just as much as others inflicted on ethnic Russians
themselves. Textbooks need to reflect that--they need to be more
balanced, more explicitly self-critical and self-evaluatory--something
that is seriously lacking in the textbooks today.

David Mendeloff 
Department of Political Science & Center for International Studies 
Massachusetts Institute of Technology

******

#7
Analysis: Russian diplomacy under Putin

MOSCOW. March 30 (Interfax) - Russian diplomacy is on the threshold
of changes, which will most likely find expression in its greater
pragmatism and fervor in upholding national interests.
It is expected that this will require if not a drastic revision, at
least the introduction of some corrections in foreign policy priorities.
The Kremlin sent its first message a couple of days before the
presidential elections, on March 24, when the Russian Security Council
discussed the rough draft of Russia's new foreign policy concept. Even
the following day after the elections, won by Vladimir Putin
convincingly, Moscow through Foreign Minister Igor Ivanov reiterated the
impending correction of aims in Russia's approaches to international
affairs.
From Ivanov's remarks it transpires that under President Putin,
"consistence, predictability, and mutually advantageous pragmatism" will
make up the core of Russian diplomacy, which should "closer than before
be tied in with long-term internal development tasks and measured with
the country's real possibilities and resources."
Moscow also pledges to pay more attention to safeguarding Russian
economic interests abroad and to "the protection of the rights and
interests of Russian citizens and compatriots and national business in
foreign states."
So, the overall line of changes in Russian foreign policy has been
spelled. However, the details have been left out so far.
Interfax has learned from Kremlin sources that time to publicly
specify all plans of innovations in Russian diplomacy has not yet come
since, after the concept draft discussion in the Security Council, the
document has been sent for elaboration.
At the same time, according to sources, even now some innovations
"can be presupposed with a significant degree of probability." For
instance, if we talk about protocol, there is every indication that
"meetings in saunas with
a best friend," which Boris Yeltsin made habitual in contacts with
foreign leaders, will finally become a thing of the past.
Unofficial summits won't be abolished, but it looks as if they
"will move from saunas and little hunter houses to palaces and
theaters," in the style of Putin's meeting with British Prime Minister
Tony Blair in St. Petersburg recently, sources believe.
Significantly, by some information, the Japanese Prime Minister
Keidzo Obuci's recent offer to Putin to hold an informal "meeting to
become friends" has this time been received in Moscow "not as jubilantly
as during Yeltsin's times."
Indicative in this connection is an eyewitness-recounted episode
with Putin, who, being in Novosibirsk demonstratively passed by a little
house with a bath where in his time Boris Yeltsin hosted "his best
friend Helmut."
Sources also believe that the idea of a geopolitical "troika of
Russia-Germany-France" is going to the background in the Kremlin.
Yeltsin fostered this idea in many ways proceeding from "especially
friendly and confidential personal relations" with ex German Chancellor
Helmut Kohl and French President Jacque Church.
"Kohl's epoch sank into oblivion. In this sense, the current
Chancellor Gerhard Schroeder displays restraint, and the French
President has become nearly the most severe European critic of Moscow
for its actions in Chechnya," sources explained.
According to them, instead of "the troika", Russia can now
concentrate efforts on the establishment of "special relations" with
London as a potential mediator of a dialogue between Russia and the
West. The new ambassador to Britain Grigory Karasin, for one, believes
that "Russian-British relations have a stupendous potential of affecting
relations between Russia and the West as a whole."
What confirms this new line is that, according to sources, Putin
may pay his first foreign visit as Russian head of state to London.
Putin also plans some other foreign trips. In July, he will travel
to Okinawa to attend a G8 summit there. And from there, by some
assumptions, the new Russian president may go to Beijing.
However, it is not ruled out that the time order of the visits may
change. The Kremlin, sources note, "say that China alongside India
embody Russia's foreign policy and economic priorities by taking
expanding military cooperation into account."
According to experts, the Kremlin has not overlooked the fact that
Chinese President Jiang Zemin was the first foreign leader to
congratulate Putin on his election triumph. Even though, obviously, it
was much simpler to do for the Chinese leader than for others, given the
time difference between Beijing and Moscow.
The prospects for Russian-American relations look far dimmer,
especially if we bear in mind the official change of power in the White
House forthcoming in January next year, a change, which by a logical
assumption can incur foreign policy corrections in Washington, too.
It is almost certain that a victory of the democratic candidate,
incumbent Vice President Albert Gore at the U.S. presidential elections
in November 2000 has far fewer surprises in store for Moscow than a
triumph of the republican George W. Bush. The first has experience of
cooperation with Moscow. The second, judging by his election campaign,
is set for linking tougher U.S.-Russian relations with "respect for
America's national interests."
Even now, one of the chief irritants of Russian-American relations
is Washington's plan to create a national anti-ballistic missile [ABM]
system. American analysts are so concerned over the shaping situation
that they do not rule out a return to the confrontation period, if the
U.S. unfolds the national ABM system. This, experts fear, may do away
once and for all with any notion of nuclear parity between Moscow and
Washington and induce the stung Russia to revive "the cold war" if not
in full at least in some of its elements.
This view is on the whole arguable. What is indisputable is that
Moscow will clearly not leave Washington's decision to create the
national ABM system unanswered. And the response, according to Interfax
sources at the Russian Defense Ministry, may be "asymmetric" up to an
exit from the START-1 Treaty, freezing START-2, and walking out of
START-3 negotiations.
Much will be cleared up in April, when Russian Foreign Minister
Igor Ivanov, who, Kremlin sources claim, will apparently retain his post
in the new Cabinet, will set out on a visit to the U.S. But that will be
in the future.
In the meantime, it can be said that one of the distinctive
features of Putin's election campaign was an explicit priority to
domestic policy issues. During his extensive domestic trips, he very
rarely addressed international topics. By his entire behavior, Putin
made it clear that up until now he attaches more importance to domestic
affairs, regarding foreign policy only as an instrument to run them.
This does not mean that foreign policy under President Putin will
be downplayed. Foreign policy will be tougher under the Kremlin's new
boss.
The BBC believes that Putin has sent a number of signals that he is
capable of the most resolute actions if he feels a threat to the vital
interests of Russia.

*****

#8
Business Week
April 10, 2000
[for personal use only]
Commentary: Will Putin Square Off with the West?
By Paul Starobin 
By Starobin is Moscow bureau chief. 

>From Beijing to Washington, political leaders are wondering how to deal with 
newly elected Russian President Vladimir V. Putin. The 47-year-old leader has 
yet to reveal details of his foreign-policy vision. But this much is clear. 
He wants Russia to stand tall--or at least, taller--in the world. ``It would 
be unreasonable to be afraid of a strong Russia, but one should reckon with 
it,'' he declared in an ``open letter'' to voters shortly before they elected 
him on Mar. 26. ``One can insult us only at one's own peril.''
Expect the young and healthy Putin to strike a more assertive and 
independent foreign policy posture than his pro-Western predecessor, Boris 
Yeltsin, ever did. True, Putin craves to take his place on the world stage on 
an equal footing with the leaders of the U.S. and major European powers. But 
he's going to do it his way. Putin is almost certain to develop closer ties 
with China--a geopolitically important step, especially if U.S.-Chinese 
relations fray over Taiwan.
WORRISOME SIGN. Just as important, Putin will make sure Russia is respected 
as a ``great power'' in its own neighborhood. The brutal Chechnya war 
underscores his zero tolerance for rebels within Russia. But Putin is also 
taking a stronger line with the country's neighbors--forcing Ukraine to pay 
its energy debts, for example. And he has vaguely pledged to protect ethnic 
Russians in the Baltics who complain about discriminatory treatment, a 
worrying sign for republics such as Latvia.
The question is whether Putin's efforts to build new respect for Russia 
will lead to confrontation with the West. For now, Putin seems hopeful of 
putting Russian-Western relations on a better standing--despite U.S. and 
European criticism of the Chechen war. Putin is the one taking the 
initiative, sources say, for a tete-a-tete with U.S. President Bill Clinton. 
The pair discussed a possible meeting when Clinton called Putin on Mar. 27 to 
congratulate him. They hope to meet before the July Group of Eight meeting in 
Okinawa. ``Putin wants to be constructive,'' says Robert Legvold, a Russia 
watcher at Columbia University.
Putin seems willing to negotiate arms control and security issues with 
Washington. Clinton wants Russia's agreement to revise the 1972 
anti-ballistic missile treaty so the U.S. can build a limited national 
missile defense. Putin would want something in return--perhaps the right to 
sell its missile-defense technology to potential customers such as South 
Korea. Putin is also looking for a deal from the Paris Club of creditor 
governments on reducing $40 billion in Soviet debt. Encouraged by Putin's 
promises to enforce the rule of law, the creditors are likely to give him a 
break.
Still, the West should not cater to the new Russian leader. After all, 
Putin appears to be indifferent toward such basics of democracy as freedom of 
the press. He views the secret police, in whose ranks he has spent his 
career, as a patriotic institution and plans to use ex-KGB agents to root out 
corruption. Until recently, he has blocked an independent evaluation of 
allegations of human-rights atrocities in Chechnya.
CHINA ROAD. It may be time for the West to take a harder line on Russia. That 
poses risks, namely the potential for Russia to play the China card. What 
Beijing wants most is weapons: Russia sells China some $1 billion in arms 
annually, including fighter jets capable of bombing Taiwan. A powerful 
Kremlin faction of generals and diplomats argues that the path of long-term 
Russian security points toward Beijing. ``There are very influential groups 
inside the Russian government who are in favor of moving our attachment more 
toward China and away from the West,'' says Alexander Saveliev, a defense 
analyst at the Russian Academy of Sciences in Moscow.
These are unsettling prospects. And yet, any sober calculation of Russia's 
global status suggests that Russia needs the West more than the West needs 
Russia. And whatever its generals think, Russia has more to gain from America 
and Europe than it does from China. That's why the West should be unafraid 
about laying down rules for Putin--and brace for a period of testing. Putin 
is often described as both an opportunist and a cynic, but there is no doubt 
one attribute that he respects: power.

*******

#9
Christian Science Monitor
31 March 2000
Top of Putin's agenda: wooing foreign capital
While foreign investors in Russia see new opportunities, experts see more of 
the same. 
By Fred Weir, Special to The Christian Science Monitor

What's the definition of an optimist in Russia? Someone who believes that 
tomorrow will be better than the day after. 

It's an old joke, often recycled over the past decade as Russia stumbled from 
economic atrophy to hyperinflation to industrial depression, and then to 
complete financial collapse and government default in August 1998. 

After years of turmoil and decline, many Russians had started to see mere 
stagnation as something to aim for. Foreign investors - those who did not 
flee after the 1998 crisis - just tried to hang on in the Russian market. 

But the sudden arrival in the Kremlin of Vladimir Putin, who on Sunday won a 
decisive first-round electoral victory to become Russia's second post-Soviet 
president, has greatly inflated expectations. "We are very hopeful that at 
last the basic obstacles to working effectively in Russia will be addressed," 
says Alexander Tatarinov, who heads the Russian office of German electronics 
giant Grundig. "The main thing is: Putin is seriously talking about fighting 
poverty. That's the key to expanding the consumer base. Too few people in 
this country are buying things." 

His upbeat mood seems widely shared. "This is a moment of flux, which opens 
up a lot of opportunities we haven't seen in this frozen economic landscape 
for a long time," says Scott Blacklin, president of the American Chamber of 
Commerce in Moscow. "Putin seems to have grasped the nettle that you have to 
get this economy growing again if you want to do anything else." 

Mr. Putin has said a great many things to tickle the ears of businesspeople. 
In a manifesto published in December, he acknowledged Russia has fallen far 
behind the curve of global economic development and would require radical 
steps to put it back on track. He promised to crank up growth on the order of 
8 to 10 percent annually within a few years. Key to it all would be outside 
companies. "Our growth would be long and slow without foreign capital," he 
wrote. "But we are short of time, so we must do our best to attract foreign 
investors." 

Direct foreign investment in Russia was low throughout the 1990s, reaching a 
peak of about $6 billion in 1997. Last year, $4.26 billion was received and 
the Russian Economics Ministry forecasts that will rise to about $5 billion 
this year. Overall, investment in the Russian economy amounted to 14.7 
percent of gross domestic product in 1999 - compared to 40 percent of GDP in 
China, Malaysia, and Thailand, all fast recovering from their recent economic 
slump. 

Can Putin break Russia's downward cycle? "Absolutely," says Yuri Kotler, a 
chief adviser with the Kremlin-sponsored Center for Strategic Research, which 
is preparing Putin's long-term economic program. "The first thing is to form 
a government with the professional competence and the authority to tackle the 
problems. This is being done right now." 

So far, Putin's message has been long on talk of consolidating society, 
restoring the national will, and establishing strong authority, and 
depressingly short on specifics. Mr. Kotler rattles off a list of tasks the 
new Kremlin leader has committed himself to, which includes establishing a 
"dictatorship of law" to ensure that all economic players are given equal 
treatment. Also on Putin's agenda, he says, is a serious war on corruption, 
radical slashing of the government bureaucracy, and comprehensive tax reform. 

But Russian liberals have been promising the same things since the 1991 
demise of the Soviet Union. Former President Boris Yeltsin launched 
successive anti-corruption campaigns and talked up a storm about the need to 
impose strict rule of law. But Transparency International, a German think 
tank, consistently places Russia near the top of its annual list of the 
world's most-corrupt states. 

"Unless there are very radical departures from past practices, nothing is 
likely to happen here," says Grigory Sapov, an expert with the Institute of 
National Economic Models, a liberal think tank in Moscow. "I don't think 
Putin's pre-election silence on his strategic plans was a clever campaign 
ploy. I think they really have no idea what to do. In that case, foreign 
investors would better put their money into China." 

If Putin is serious about getting reform on track, experts say, the single 
most credible signal he could give would be to declare war on the country's 
"oligarchs" - the handful of well-connected tycoons who won Russia's economic 
crown jewels in often- rigged Yeltsin-era privatizations. In the run-up to 
the elections, some of these oligarchs, including the outspoken Boris 
Berezovsky, were allowed by acting President Putin to vastly increase their 
holdings by snapping up crucial media and industrial assets. 

"We've been very impressed by some of the things Putin's liberal entourage 
has been telling us," says Blacklin. "But there is also a darker, more 
conservative group among the people who surround Putin, who contributed to 
bringing him to power. That includes the oligarchs ... who have been above 
the law and have caused great difficulties to foreign investors. 

"Does Putin have the will to get rid of them? That is an open question, and 
the answer will be the Russian president's litmus test." 

******

#10
"Elections in Chechnya Have Been Valid"-Vladimir Putin.

MOSCOW, March 30 (Itar-Tass) - "One may say that all threats by band 
formations have not been fulfilled, and the elections in Chechnya have been 
held," President-elect of the Russian Federation Vladimir Putin stated at a 
meeting with Vice-Premier, government representative in the Chechen Republic 
Nikolai Koshman on Thursday. 

According to Koshman, a total of 74 per cent of voters took part in the 
elections, 54 per cent of them gave their votes to Vladimir Putin, 20 per 
cent -- to Gennady Zyuganov and 11 per cent -- to Umar Dzhabrailov.

"The elections have passed in a normal way," Koshman said, although there 
were some problems. He mentioned, in particular, the fact that insignificant 
complications took place only at one of the polling stations in the republic. 

The vice-premier also said that information in some mass media about an 
alleged sortie of militants in the the district of Nozhai-Yurt does not 
correspond to reality. 

He noted that "voters in Nozhai-Yurt were the third in the republic in terms 
of activity. 

"There have not been any critical remarks on the election procedure in 
Chechnya from the Organisation for Security and Cooperation in Europe (OSCE), 
Koshman informed. 

******

#11
The Times (UK)
31 March 2000
[for personal use only]
Moscow hints at dialogue with Chechnya
FROM ALICE LAGNADO IN MOSCOW

MOSCOW gave its first hints this week that it is ready for a political 
dialogue with Chechnya. The Kremlin's spokesman on the province said that 
Aslan Maskhadov, the Chechen President, may be given amnesty if he is proven 
not to have blood on his hands. 

Sergei Yastrzhembsky said that Moscow would work out conditions for 
negotiations with the former regime. These would include the elimination of 
all "bandit formations" and the handing over of the "most odious" bandits. 
President Aushev of neighbouring Ingushetia could be an intermediary in talks 
between the Kremlin and Mr Maskhadov, he added. 

Some believe that Viktor Chernomyrdin, the former Prime Minister, may 
negotiate on the Russian side. Mr Chernomyrdin successfully negotiated with 
Shamil Basayev, the top Chechen field commander, when Mr Basayev took 
hundreds of hostages in the Russian town of Budyonnovsk in June 1995. 

There are doubts, however, about Moscow's true intentions in opening up a 
dialogue with Chechnya. Russia refuses to move from its position: if it 
grants the Chechens any of their demands it would set a precedent for other 
republics to fight for independence and perhaps make Russians question the 
need for a long war that only ends in satisfying the conditions of 
"terrorists". "They primarily want negotiations to be visible to the West," 
said Yevgeni Volk, a political analyst at the Heritage Foundation. 

Western leaders have been pressing Moscow to begin talks with Chechen leaders 
for months now. If oil prices fall, and with them the Russian economy, Moscow 
may need to ensure that it receives loans from the IMF and the World Bank. No 
one can monitor negotiations in order to find out whether they are effective, 
and they could go on for months or even years. 

There are also those in the Russian Government, however, who genuinely want 
to talk to Chechnya and may be looking to give Mr Maskhadov a role in the 
process. A source in Mr Yastrzhembsky's office admitted that Moscow was 
trying to give the Chechen leader a chance. "It looks that way, yes," he 
said. 

Aleksei Malashenko, a Chechnya expert at the Carnegie Centre in Moscow, said: 
"Mr [Vladimir] Putin [the Russian President-elect] understands that the war 
will not end without negotiations, without recognising some of the military 
and political groups in Chechnya." 

Meanwhile, the new President may impose presidential rule on Chechnya for 
some time. Government officials are due to meet on April 27 to discuss the 
restoration of Chechnya. A decision has not been made on whether the ghostly, 
flattened capital, Grozny, will be rebuilt, and many think Gudermes will 
instead be made the republic's new centre. 

It emerged yesterday that Colonel Yuri Budanov, a tank regiment commander, 
had been arrested and charged over the rape and murder of an 18-year-old 
Chechen girl. He was arrested on Wednesday, the same day that Amnesty 
International released a report accusing Russian troops of torturing and 
killing innocent civilians in the region. 

The Red Cross has only just been given permission by Russian officials to 
have access to detainees in Chechnya, presumably prisoners of the so-called 
"filtration camps". The charity has also asked Mr Putin to conclude its 
investigation into the murder of six Red Cross workers in Chechnya in 
December 1996. 

As spring slowly comes to Russia, the fighters are able to intensify their 
efforts. About 150 rebels beat back a unit of soldiers who attempted to 
rescue a convoy ambushed in the southern mountains yesterday. The rebels 
reported that 50 troops were killed in the convoy, an accusation predictably 
denied by Russian commanders. 

****** 

#12
IntellectualCapital.com
March 30-April 6, 2000
Blood Brothers
David Wallis goes inside Russia's old spies network in search of Vladimir 
Putin's cronies.
by David Wallis 
David Wallis, a columnist at the Washington Post Travel section, also 
contributes articles to The Nation, GQ and The New York Times. 

On the eve of his victorious presidential election last week, Russian 
President Vladimir Putin, a former KGB agent, pledged to recruit his 
colleagues from the Soviet spy service to eliminate the Ebola-like corruption 
that contaminates the country. 

Where can Putin headhunt for the heavies to get this done? He should look no 
further than the downtown Moscow headquarters of the Club of State Security 
Veterans, a cross between a Racoon Lodge and an employment agency for former 
spooks.

Join the Club

The KGB-sponsored putsch that failed to topple Mikhail Gorbachev in 1991 and 
the ill-fated bid by rightists to seize the government two years later cost 
several hundred thousand secret policemen their jobs. Even those who played 
no direct role in the coup attempts were often fired with little more than a 
paltry pension and a "dosvedanya, comrade.”

More than 1,500 of these rebels without a cause joined the Club of State 
Security Veterans. Membership has its privileges; for dues of a few dollars a 
month ex-spies can relax in a drab lounge reeking of cigarettes and grouse 
about cowboy capitalism. The club also helps members adapt to the private 
sector, providing retraining, resume advice (perhaps change “exterminated” to 
“expedited”) and a job bank, because corporations, especially Western ones, 
often employ former spies to protect their assets.

“Many of us were young when we [were forced out]. Since we were raised in the 
Soviet system -- a collective system -- we came to the conclusion that only 
by working together could we prosper,” explains the Club’s Grand Poobah 
Valery Velichko, who touts his purged cronies as ideal employees. “The KGB 
didn’t accept fools. Many agents speak several languages. We had discipline. 
And our physical conditioning was impeccable. We were the cream of the crop,” 
brags the sober ex-KGB colonel with thick black spectacles that obscure his 
standard-issue sinister eyebrows and beady eyes.

To join the club, which opened seven years ago, prospective pledges need not 
fill out a lengthy application. “They just write down their names. We already 
know who they are,” says Velichko, 54, who doubles as the head of a thriving 
security company. “Anyone who doesn’t have blood on their hands is welcome to 
join.”

A new generation

While violent crime has diminished from the days when some Western 
entrepreneurs would return home from Moscow in coffins, Velichko -- like an 
increasing number of Russians -- yearns for a return to a strong central 
government that can clamp down on graft. "Nonobservance of [the society’s] 
laws is becoming the norm of behavior,” Velichko complained to a local 
newspaper. “The simple citizen has come to fear the police, while criminals 
have come not to, and have no reason to." Enter the ex-KGB. “If we defend a 
commercial structure, the government [and the Mafia] won’t seek bribes,” vows 
Velicko. “Both sides know that former KGB agents must be contended with and 
they are scared of us.”

Potential employers, however, might think twice about relying on former KGB 
agents; old habits die hard. Some ex-spies keep a close eye on their new 
bosses on behalf of the government. “Used to be that the KGB watched you for 
free,” observes one expat banker. “Now you have to pay them for their 
services.”

Velichko scoffs at the idea that his men can be bought once they are bought. 
“Former employees of the KGB have a code of honor [and] would never inform on 
their employers,” he protested to The Moscow Times. But this comes from a man 
who betrayed his last boss. Back in the Soviet era, Velichko served in the 
Ninth Directorate -- the equivalent of the Secret Service’s White House 
detail, the same unit involved in imprisoning Gorbachev and his family at 
their dacha during the short-lived 1991 coup. Velichko acknowledges 
participating in the plot but offers conflicting accounts as to his specific 
role.

“To this day I think [the coup] was the right thing to do. We were trying to 
preserve the power of the Soviet Union," declares Velichko, sitting beneath a 
portrait of Stalin’s notorious enforcer, “Iron” Feliks Dzerzhinsky, who 
founded the CHEKA (the forerunner to the KGB) as well as introducing 
interrogation techniques such as vonorezh, rolling the accused in a 
nail-encrusted barrel.

Hey, but that was the old KGB. “When people talk about the KGB they always 
refer to the purges of 1937. Well, I was born in 1945,” says Velichko, 
half-smiling like a funeral director. “I think that maybe 10 percent of the 
population might harbor negative feelings, but the other 90 percent accept 
us. They look up to us.” Listening to Velichko can make one question whether 
his brutal organization’s initials actually stood for "kinder, better, 
gentler.” 

******

#13
D&P says election bodes well for Russia ratings
ELECTION RESULT BODES WELL FOR RUSSIAS SOVEREIGN RATINGS 

London (March 30, 2000) - Duff & Phelps Credit Rating Co. (DCR) believes that 
the victory of Vladimir Putin in the March 26th presidential elections bodes 
well for an improvement in the sovereign ratings of the Russian Federation. 

DCR currently rates Russia's long-term foreign currency obligations CCC 
(Triple-C), reflecting missed payments on commercial obligations and a 
precarious balance of payments position. 

At the same time, DCR rates Russia's eurobond obligations at B- 
(Single-B-Minus), reflecting the view that the authorities would choose to 
maintain debt service on these obligations, given a modest outstanding 
amount, the relatively light servicing schedule and the desire to access the 
eurobond market in the future. 

According to Nick Eisinger, an associate director in the sovereign ratings 
group, Putin's convincing victory, combined with a largely co-operative and 
stable duma (parliament) should produce a favourable backdrop for the 
implementation of crucial economic and political reform. The task of 
reforming the Russian economy will be fraught with difficulty and remains 
subject to a number of uncertainties, but the current political situation, 
combined with a cyclically induced economic upturn offers Russia a good 
window of opportunity to implement meaningful structural reform. 

The favourable outlook is further strengthened by the deal reached in 
February with the London Club of private creditors to restructure US$32 
billion of Soviet-era debt. The rescheduling deal will help alleviate 
external liquidity pressures on Russia over the short to medium term, and 
should pave the way for the countrys return to international capital markets 
by 2001. With political uncertainties out of the way, Russia should now be 
able to move forward on negotiations with the IMF, and hopefully to secure a 
further round of external debt restructuring with the Paris Club of bilateral 
creditors. Clearly, favourable outcomes on both of these fronts would 
significantly strengthen the countrys creditworthiness. 

Despite the improved political situation, Eisinger says that DCR will wait 
for President Putin to announce his cabinet and looks for further details of 
his economic programme before taking any decision to upgrade the sovereign 
ratings. A comprehensive economic programme that addresses Russias 
significant fiscal problems will be crucial to any lasting improvement in the 
creditworthiness of the sovereign. Meanwhile, a fundamental strengthening of 
civil institutions will be a prerequisite of any meaningful amelioration of 
the business environment. Strengthening the rule of law, curbing bureaucracy 
and tackling strong vested interests must all play a key part in restoring 
investor confidence and, crucially, in attracting sizeable sums of foreign 
direct investment into the country. 

Reform is also vital to reduce Russias vulnerability to capital flight and to 
ensure fiscal consolidation that can be sustained through economic cycles. 
Strong oil prices through 1999 and 2000 have underpinned both the fiscal and 
current account positions, while the weak rouble has aided domestic industry 
by encouraging import substitution. These improvements are of a temporary 
nature, however, especially given the likelihood of oil prices falling in the 
months ahead, while the benefits of a weaker rouble will soon evaporate. 
Unless the government undertakes a wide-ranging reform programme, these 
improvements will disappear. 

Duff & Phelps Credit Rating Co. (DCR) is a leading global rating agency with 
34 local market offices providing ratings and research on debt issues and 
insurance claims paying ability in more than 50 countries. For information on 
DCRs analysis of Russia, visit DCRs Web site at http://www.dcrco.com. DCRs 
research is also available on Bloomberg at DCR<GO>, FirstCalls BondCall 
Direct/Research Direct at http://firstcall.com and Multex at 
http://www.multex.com, as well as through other third- party providers. 

******

#14
The Times (UK)
31 March 2000
[for personal use only]
Putin to tackle housing shortage
FROM MICHAEL BINYON IN MOSCOW

VLADIMIR PUTIN promised new measures yesterday to tackle the housing issue, 
one of Russia's most intractable post-communist problems. 

Soaring prices, frequent evictions and an acute shortage of affordable new 
flats have made housing a key issue. The President-elect told a committee of 
senior advisers that he wanted swift action to increase the housing stock, 
especially for low-income groups. This follows a campaign promise to develop 
the fledgeling mortgage industry, provide more low-rent public housing and 
shelve privatisation schemes to stop widespread exploitation. 

Most Russian flats, especially the jerry-built "panel" buildings of 
Khrushchev's time, are appalling. Heating may be free but the walls are 
usually cracked, the partitions paper-thin, and most blocks are infested with 
Russia's oldest and most hated enemy, the cockroach. 

But at least there used to be a camaraderie in the shared apartments. With 
the end of communism, flats were turned over to their owners and the market 
made its influence brutally felt. Those in Moscow's city centre were beseiged 
by the nouveaux riche, prepared to pay large dollar sums. Their shady 
associates were used to "persuade" people, especially the elderly, to move. 

An average flat in Moscow costs about £440 a square metre, a sum that a young 
couple or middle-class workers could never earn in a lifetime. 

The Russian Government has tried to set up a mortage system but so far with 
little success. This month the US-Russia investment foundation announced a 
credit of $100 million (£63 million) to finance mortgage programmes. Russians 
are hoping that Mr Putin will encourage cities and banks to overcome the 
bleakest legacy of communism. 

******

#15
International Herald Tribune
March 31, 2000
LETTERS TO THE EDITOR
Russian Facts

Regarding ''He's on the Right Track'' (Opinion, March 29) by Jack F. Matlock 
Jr.:
In Ambassador Matlock's article on the Russian elections, his last line 
reads, ''We should congratulate the people on a peaceful and orderly transfer 
of power.'' Anyone who does that will be the laughingstock of Russia. 

Peaceful and orderly it was, just like in Soviet times. Democratic it was 
not. Vladimir Putin was forced upon the people, the ''election'' being only 
an investiture. Ask any Russian. They know the facts, and they know that 
authoritarian rule is in the works.

PETER B. MARTIN.
Valprionde, France.

******

#16
The Guardian (UK)
31 March 2000
Diary 
Matthew Norman

Taking note of the International Monetary Fund's call yesterday for 
Vladimir Putin to straighten out Russia's legal system and protect foreign 
investors, the newly elected president may be interested in the story told by 
Sid Shaw, now the owner of Elvisly Yours, the Presley memorabilia shop in 
London's Baker Street, but once the proprietor of St Petersburg's first 
western supermarket. The shop was officially opened in July 1992 by the 
town's deputy mayor, one V Putin, who was the man in charge of promoting 
foreign trade. And yet despite this, within a couple of weeks Sid ran into 
problems when the store was harassed by the city council and police, and Sid 
himself was accused of being a drug dealer. Not until November did Sid 
finally managed to contact Putin, who told him he would do everything he 
could to help. Exactly what he did do is unclear, but three weeks later, when 
Sid was briefly out of the country, Russian police broke into the shop and 
seized all the goods and fittings. "We never heard from Putin again," said 
Sid. Five months later Sid recovered his goods thanks to the independent 
prosecutor's office, but it was too late to save the business. "Putin helped 
ruin 10 years of my life," says Sid. "He didn't raise a hand to help me." 

*******