April 1, 2000    
This Date's Issues: 4215 • 4216 • 4217

Johnson's Russia List
#4216
1 April 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Itar-Tass: Putin Sends Birthday Greetings to US Vice-President.
2. Robert Kaiser: Optimist/Pessimist.
3. Bloomberg: US Clears Way for $500 Mln Loan to Russia's Tyumen.
4. Reuters: Putin says tennis main sport for Russia ministers.
5. International Herald Tribune: Flora Lewis, Contradictory Signposts 
at Russia's New Fork in the Road.
6. PRESS CONFERENCE WITH ALEXEI ARBATOV, STATE DUMA DEFENSE COMMITTEE DEPUTY CHAIR, MARCH 29, 2000 on the future of Russian policy.
7. The Daily Telegraph (UK): Alexander Chancellor on the eXile.
8. Rossiyskaya Gazeta: Russia's Kudrin Cited on Foreign Debt at 
Senate Session.] 

*******

#1
Putin Sends Birthday Greetings to US Vice-President.

MOSCOW, March 31 (Itar-Tass) - Russian President-elect Vladimir Putin has 
congratulated U.S Vice-President Albert Gore on his birthday, Itar-Tass said 
quoting a report received from the presidential press service on Friday. 

In his message of greetings Putin praised Gore for his contribution to 
building confidence and promoting mutual understanding between the United 
States and Russia. 

"I hope the positive foundation that has been created will make it possible 
to make further progress on the path of developing Russian-U.S relations," 
Putin emphasized. 

*******

#2
Date: Fri, 31 Mar 2000 
From: kaiserb@washpost.com (Robert Kaiser)
Subject: Optimist/Pessimist

Another candidate for best version of Russian optimist/pessimist jokes: A
pessimist thinks things will get worse. An optimist thinks things can't get
worse. (Radio Yerevan, 1950s or 1960s.)

******

#3
US Clears Way for $500 Mln Loan to Russia's Tyumen

Washington, March 31 (Bloomberg)
-- The U.S. government reversed a decision to block $500 million in 
loan guarantees to a Russian oil company that it withheld in December in the 
``national interest,'' giving a vote of confidence to the new government of 
Vladimir Putin. 

The decision allows the U.S. Export-Import Bank to move ahead with the 
guarantees, which OAO Tyumen Oil Co. plans to use to purchase oil refinery 
and exploration equipment from Dallas-based Halliburton Co., among others, to 
rehabilitate a refinery and a Siberian oil field. 

U.S. Secretary of State Madeleine Albright revoked the decision following 
``an extensive review'' of accusations against Tyumen, said State Department 
spokesman James Foley, adding that the company ``has clarified a number of 
concerns.'' Foley also cited the Russian government's ``successful 
completion'' of plans to sell Tyumen to private investors. 

Albright's objections were based on ``concerns about respect for shareholders 
and creditors rights in bankruptcy proceedings,'' Foley said. Tyumen had been 
accused of forcing a company into bankruptcy to take over ownership. 

Foley said the timing of the decision -- five days after Russia elected Putin 
as its new president -- was ``coincidental.'' 

``She's just made her decision today, but it reflects an ongoing and 
deliberative process,'' he said. Still, he stressed Putin has ``made clear 
public statements recognizing the importance of protecting investor and 
creditor rights.'' 

James Harmon, president of the Export-Import Bank, said in a statement he was 
``pleased'' with the decision, and he ``expects the board of directors will 
take this matter up at its earliest possible opportunity.'' The next board 
meeting is April 14. 

Thousands of Jobs 

Tyumen Oil, Russia's fifth-largest oil producer, issued a statement saying it 
hopes the Ex-Im Bank will soon approve the guarantees so it can pursue its 
strategy of becoming one of the world's largest integrated oil companies. 

``These loan guarantees will create thousands of jobs in the U.S. and Russia 
and enable significant cooperation with Western partners on technical and 
managerial levels,'' said Tyumen President and Chief Executive Simon Kukes. 
``These projects will also help integrate Russia even further into the world 
economy.'' 

The Russian government, which had owned 49 percent of Tyumen, sold its shares 
to private investors after the Ex-Im Bank withheld the loan guarantees. 

Tyumen is also settling its differences with BP Amoco Plc, the world's No. 3 
oil company, which were at the center of the dispute. 

The two companies wrangled for months over a production unit of OAO Sidanco, 
once Russia's sixth-largest oil producer, that later entered bankruptcy 
proceedings. Tyumen moved to acquire the unit at a bankruptcy action on Nov. 
26 that drew protests from BP Amoco and other investors, including U.S. 
financier George Soros. 

In Talks 

BP Amoco said earlier this month it was in talks with Tyumen on joint 
exploration and cooperation to revive the bankrupt oil company and salvage 
the investment. 

BP Amoco and Tyumen hope to reach agreement soon on dividing ownership of 
Sidanco, which settled with creditors in January to end a year of bankruptcy 
proceedings. 

Albright's decision doesn't mean the U.S. is no longer concerned about 
investor rights in Russia, Foley said. Putin and his government told the U.S. 
they are also concerned, and are ``determined to improve the investment 
climate'' in Russia, he said. 

The State Department blocked the loan guarantees in December under a rarely 
used law allowing it to interfere with such financing if it believes the 
national interest is at stake. 

Albright sent a letter at the time of her decision to the bank's board 
calling on the directors to reject the loan, saying the move would ``clearly 
and importantly advance U.S. policy in Russia,'' the bank said. 

Albright's letter didn't specify what U.S. interest was at stake with the 
guarantees, although she said the aid should be denied only ``for the time 
being,'' signaling the administration was open to reversing its position. 

The U.S. government has focused on the need to protect shareholders' rights, 
and human rights activists urged the loans be blocked because of Russia's 
invasion of Chechnya. 

The administration denied the fighting in Chechnya was a consideration, 
saying its only concerns were business practices, transparency, the rule of 
law and corruption. 

The rejection was seen as fueling tensions with Russia at a time when the 
International Monetary Fund is also withholding loans to the country. 

*******

#4
Putin says tennis main sport for Russia ministers

MOSCOW, March 31 (Reuters) - Russian government ministers apparently prefer 
tennis to judo, despite acting President Vladimir Putin's addiction to the 
martial art. 

Putin said on Friday that judo, his favourite sport, had not yet caught the 
fancy of most ministers. 

Most of them, he told reporters while attending a judo competition in the 
Urals city of Chelyabinsk, were more interested in tennis. 

``For the moment, we get no peace from the tennis players,'' he said with a 
smile in comments broadcast on television. 

Putin, elected president last Sunday on the first ballot of an early 
election, has cultivated an image as an athletic, can-do politician. 

Tennis was the favourite sport of his predecessor, Boris Yeltsin, who 
resigned on New Year's Eve. 

Putin attended the competition after touring a nuclear research and 
production centre near Chelyabinsk. He then left for the town Magnitogorsk, 
further south, where Russian media said he intended to go skiing at the 
weekend. 

*******

#5
International Herald Tribune
1 April 2000
[for personal use only]
Contradictory Signposts at Russia's New Fork in the Road
By Flora Lewis 

PARIS - The Western leaders congratulated Vladimir Putin on his election as
president of Russia and a series of state visits can soon be expected. The
theme will be good relations and goodwill to Russia's dour new leader.

What choice is there? A stable, confident, economically healthy Russia,
which Mr. Putin promises to produce, is also completely in Western
interests. But the question is how he expects to get there and what
troubles may be caused in the course of his campaign to restore his
country's great power status, at least psychologically.

He has denounced corruption and promised to separate the ''oligarchs from
the power.'' But the recent acquisition of 60 percent of aluminum
production capacity, Russia's third-largest foreign currency earner after
oil and gas, by the super-oligarch Boris Berezovsky seems to contradict the
promise. 

It is true that the election was democratic in procedure - if scarcely fair
in terms of media treatment - for the second time in the country's history.
Reason for congratulations. But Mr. Putin has done nothing to show
democratic instincts, which appear scarcely to have been cultivated in his
long, disciplined training as a KGB agent and spy.

The deal he made with Boris Yeltsin, who in effect anointed him as
successor in the Kremlin, and made official in his first decree on taking
office as acting president at the beginning of the year, guaranteed Mr.
Yeltsin and ''his family'' immunity from prosecution.

''Family,'' in Moscow politics, refers to the entourage as well as to
actual relatives, and it is not known whether Mr. Berezovsky is covered by
the agreement. He obviously is not worried, and there is no question of
transparency. In any normal democracy, the names and the details of the
aluminum deal would have to be made public.

The brutal war in Chechnya and its atrocities brought Mr. Putin popularity
as a resolute, decisive man of action and order, for which the Russian
public came to yearn in recent turbulent years.

Reports that the FSB, the new name of the old KGB, planted the explosives
that killed about 300 Russians in their apartments and blamed Chechen
terrorists for the crimes have never been fully confirmed or disproved.
Intimidating accidents have befallen journalists who tried to investigate.
In any case, what is left of independent media has come under increasing
constraints.

Mr. Putin has been very vague in his policy statements, and the new
government will not be formed until May, when he will be inaugurated, so
there is a sense of great uncertainty about his plans. 

Two Moscow quips reflect both the air of sober competence that Mr. Putin
projects and the questions of his intentions. One was a journalist quoted
as saying: ''Mikhail Gorbachev and Boris Yeltsin wanted to do good, but
didn't know how. Putin knows how but we don't know what he wants.'' Another
is that Mr. Putin has set himself a model for his regime: Korea - but it is
not clear whether that means North or South.

He is surrounding himself with former KGB comrades, not because he wants
more police power but because he says he trusts them personally and
considers them efficient. He has promised a big increase in military
funding, despite the confirmed failure to pay salaries of many state
employees.

The problems and failures have been piling up and are well identified. It
is hard to understand why Russia has done so much worse than other former
Communist countries in seeking a transformation. An added
generation-and-a-half of Communist dictatorship cannot account for so much
going wrong.

Neither can what the West did or did not do. It probably did not make much
difference. It would be a real misfortune for policy toward Russia to
become a campaign issue in the United States now. Russia is too important
to ignore but too difficult to predict.

The circumstances, the personalities, the opportunities for both
improvement and deterioration make this a time when the wisest approach is
a policy of ''wait and see,'' reacting as things develop. 

Despite the belief of many Russians that the Western aim is to make their
country weak and impotent, there is truly a consensus in the West that a
strong and effective government based on democratic principles is in
everyone's interest. But we in the West cannot make it so, with or without
big loans. Given the mixed signals, we can only hope that Russian history
is taking a new fork in the road, one that will lead it to recovery from
its dreadful combination of maladies.

******

#6
The Future of Russian Policy
TITLE: PRESS CONFERENCE WITH ALEXEI ARBATOV, STATE DUMA
DEFENSE COMMITTEE DEPUTY CHAIR
(NATIONAL PRESS INSTITUTE, 10:03, MARCH 29, 2000)
SOURCE: FEDERAL NEWS SERVICE http://www.fednews.ru

Moderator: Dear colleagues, let us begin the press conference.
Our guest is Alexei Georgiyevich Arbatov, deputy chair of the State
Duma Defense Committee. He is in a hurry to return to the Duma and
that is why we will conduct this press conference at a brisk pace.
The theme of the press conference is The Future of Russian Policy.
Alexei Georgiyevich, you have the floor.

Arbatov: I thank everybody for coming at short notice. I will
not be making any lengthy opening statements. Besides, there are no
grounds so far for such statements. There is little hard
information about the policy of the new Russian president. We can
only guess. It is absolutely clear that he, too, is not yet clear
on many things. He does not have any grandiose plan. He only has
some preliminary considerations and directions.
The staff that he has formed, consisting of several centers,
first of all the Center for Strategic Studies, is now engaged in
brain storming. They are bringing together all the specialists on
various problems whom they know and whom they respect. They are
conducting meetings, asking for materials and are trying to
formulate the policy of the new president, at least for the coming
year.
What do we know about Vladimir Putin? Apart from his
biography, a rather simple one as he himself puts it, we can judge
by his deeds, by the eight months that he has been in government
before the elections, starting with last August.
Of course, his powers were quite limited. At first there were
parliamentary elections and then the presidential ones. His policy
was seriously influenced by election considerations. It was
important for him to bring the necessary political groups into
parliament so as to make parliament more pliant. He does not want
work with parliament to be based on principles of confrontation, as
it was in the past. 
After that he immediately had to start competing for the
presidency, the most important post in the country. That was the
biggest height he had to scale. That is why his policy, with the
exception of only one issue, was extremely vague.
The campaign in Chechnya was the exception. It began under
him, under his leadership, if not military then political. He
naturally did not want and could not retreat here. And here we have
information for conjectures about his future policy.
As to all the rest, I mean economy, internal policy, foreign
policy, we had more public relations exercises than the formulation
of a real course for the subsequent period. For understandable
reasons that I have already mentioned. The main task for him was to
win the presidential post. After that he got the chance to get down
to drafting his policy.
The statements that he has made so far had something to
promise everyone. He suggested a moderate course. When he spoke in
favor of government intervention in the economy he also said that
it was necessary to preserve market relations. Stricter order in
the country but with the preservation of democratic principles.
Streamlining of the federation, restriction of the powers of the
regional barons, the governors and presidents of ethnic republics,
but at the same time preservation of the principles of federalism.
Protection of Russia's interests in foreign policy, upholding of
its positions, revival of respect in Russia, respect for its status
of a world power and at the same time constructive cooperation.
Everything was based on this principle. On the one hand and on
the other hand. But now that Mr. Putin has become president he will
have to decide on one hand or the other hand. You see, in practical
politics one always has to adopt "either or" decisions. While
pressing for one set of aims one has to sacrifice some other set of
aims, pressing for results in one area one has to forgo results in
some other area. Here a choice will have to be made. As it is said,
in politics the choice is always between the bad and the very bad. 
The circumstances of present-day Russia, as different from the
United States and other prosperous countries, for instance Western
Europe, determine precisely such a choice for Russia. The choice
will be not between the good and the bad, not between the greater
and the lesser evil, but between a big evil and a very big evil,
between serious concessions or a catastrophic defeat. I regret
this, but this is how matters now stand.
You see, the previous ten years have placed Russia in such a
situation. Any person, especially a new president, deserves to be
treated in accordance of the principle of guilty until proved by a
court of law. As it is said in the West, he deserves the benefit of
the doubt. That is why we should wish him success and support him
in every way in all his good endeavors. 
Nevertheless, we already can draw some conclusions. Let us
take the war in the Caucasus. That is something that has already
definitely and clearly happened. It provides us with hard facts for
analysis. 
On the one hand, of course, it was necessary to put an end to
that lawlessness there. And here Putin displayed resolve, he has
shown himself as a resolute leader. Not as President Yeltsin when
in 1994 he could not make up his mind to the last moment and then
threw us into the abyss of an absolutely unprepared war. In this
case we had preparations and organization, a more precise system of
decision-making. We must give Putin credit for that. And the army
in Chechnya now looks different. It is achieving the aims that it
has been set. True, these aims may not fully coincide with the
tasks of stabilization and constitutional settlement. But the
military aims set to the army are being achieved by it much more
effectively than our army did in 1994-1996. 
On the other hand, this is being accomplished with big losses
for the army, with even bigger damage and devastation for the
peaceful population. The intent to achieve goals regardless of
damage is a feature that has already clearly manifested itself. We
must bear that in mind.
Another issue. Civic society, even an immature civic society,
which is the foundation of a democratic society, a democratic
country always bases itself on a legal framework, on relevant
democratic procedures. In fact, the whole of democracy boils down
to procedures that ensure concurrence of societal interests, the
drafting of the optimum course, a possibility to quickly change
this course should it run into hitches. There is feedback. This, in
fact, is the essence of a democratic system.
The war in Chechnya, unfortunately, shows us that there is
much disregard for this aspect, the procedural and legal one. It is
only the peaceful population and not only the country as a whole
that are suffering from this. The army suffers as well. I do not
have any explanation for the failure to declare a state of
emergency in Chechnya. The only explanation is that they wanted to
avoid any constraints. They needed a free hand to achieve quick
political results.
Otherwise, a decision would have to be adopted by the
Federation Council, it would have to be cleared with the governors,
they would have to be persuaded, it would be necessary to achieve
a consensus, clearly identify the strategic aims, the time and
geographic framework, the framework for the operation of various
federal bodies. All this is required even by the old law on the
emergency situation. It would also be necessary to amend the law so
as to allow the use of the armed forces in such situations. This is
something that the old law does not allow. 
If all this were done ... by the way, there was no special
rush. As you will remember that no time limits were set, no
political aims were set. It was said that the aim was to solve big
tasks without any deadline. In other words, all the things I
mentioned could have been done. In that case, obviously, the
operation would have been conducted differently and there would
have been fewer losses suffered both by the federal troops and the
local population. 
In fact, we could have even avoided a big war. If the Chechen
leaders had seen that such a consensus was being reached, that they
are not just being scared, that all this was in earnest, that the
troops would not only stay at the borders but also cross them, if
they had seen that the whole country had really decided to solve
this problem, who knows, Maskhadov in such circumstances could have
coped with the irreconcilable field commanders and agreed to a
compromise. But this was not done and we are now clearing up the
mess.
The military operation in Chechnya is not over. It is simply
that the war is entering a new stage, the most convenient, familiar
and acceptable for the anti-government forces. And no end of the
war is seen. On taking over the territory of Chechnya we have
shouldered the burden of a huge number of problems that cannot be
solved overnight. 
It is not clear how the new president is going to solve them
since he can now permit himself a certain flexibility. 
In conclusion I will say that Putin was elected with a mandate
from the forces that support the principle of order in the country,
revival of national pride and dignity, upholding Russia's interests
and increasing the role of the state. These are the principles of
a strong state. And he owes his victory largely to support from
clearly nationalistic forces. 
It depends first of all on Putin to determine the extent to
which his policy will depend on this. A lot depends on his own
inclinations, considering the big powers that he has now got. And
much will depend on the extent to which the country can resist
attempts to cardinally change the democratic system and the
mainstays of a market economy that we have put in place over these
years despite the huge mistakes and costs. 
There also exist serious external constraints because Russia
economically depends on other countries and international
organizations. Russia is very vulnerable and these vulnerabilities
can be exploited from outside if Russia decides to return to the
Soviet past, to the neo-imperialist past. As I said, there are
substantial external constraints. 
As to practical results, we will see them in the course of the
first 100 days after the inauguration.

Moderator: Thank you, now we will take questions.

Q: RIA Novosti. What will be Putin's foreign policy
priorities? I know it is hard to guess, but still. 

Arbatov: If we are to speak of the immediate future, I am sure
that the main foreign policy priority will be to get promises of
credits and to finally solve the question of restructuring our
debt. Otherwise, our year 2000 budget will fall to pieces and
everything else that depends on it, including the financing of the
armed forces. This budget has a spending item that exceeds even the
entire budget of the Defense Ministry -- the servicing of our
external and internal debt. And these payments already include the
credits and the agreements on restructuring that are yet to be
achieved. 
In a market economy any policy must rely on financing
otherwise it will be nothing more than words and slogans. We must
reach agreement on these issues if we do not want the budget to
start falling apart from the middle of the year, if we do not want
a huge monetary emission and a huge inflation.
How far is the new president willing to make concessions in
matters that are demanded of him by the countries on which the
solution of financial questions depends? This is not clear yet. And
here there are several moments. The war in Chechnya is one
question. All these processes have actually been put on hold
because of the Chechen war.
If Mr. Putin, who no longer has to flirt with all the
nationalistic and great-power groups, decides to introduce a state
of emergency and create the necessary legal framework for all that
is happening in Chechnya, if he tries somehow to find a common
tongue with some of the acceptable leaders of the opposition, if he
manages to find such leaders, although they are not visible now,
then the West will be only happy to stop this political pressure
which did not seek. But that is already another matter. Besides,
Kosovo exerts a big influence as well. In any case, the West will
be happy to discontinue this pressure and say, look, now there is
a new president, he has firm positions and he is searching for a
political settlement. 
In addition to this Putin could make the State Duma ratify a
number of important agreements for the West, very important ones,
like START-2, the nuclear test ban treaty and so on. Thereby, in
the same stride, he would put the United States in a difficult
situation because the allies of the United States have already
ratified the treaty while the United States has not. Then there is
the Open Skies treaty, the treaty, I mean, the adapted treaty on
the reduction of armed forces in Europe.
Putin can do all these things. As we have seen in recent
months in the course of hearings, he is capable of organizing the
executive branch and directing it at this aim. And they will be
able to accomplish this, if they want. And he will do this if he
gets firm assurances from the West that the question of credits
will be solved. 
He has already sent the West some positive signals. For
instance, about the resumption of cooperation and partnership with
NATO. It was like an invitation to a constructive dialogue. But if
the West starts demanding something more, starts insisting on some
full surrender in the Northern Caucasus or impose some additional
terms, as the United States might do in respect of ABM-related
matters, then everything may collapse once again. 
As different from Yeltsin Putin is seriously limited in what
he can do. Yeltsin could afford to come to a summit, quickly assess
the situation a minute before the time to make his speech and come
out with some grandiose proposal, as impressive as it is stupid. He
could afford such things. 
Putin cannot afford to do that because it would ruin his
reputation in the country which is the basis of his political
position and of the hopes that people, political groups and
individual agencies pin on him. He cannot afford to do that, he
will act in a circumspect manner and he will be careful not to
improvise as he once did over possible accession to NATO. He badly
burned his fingers on that and I think the lesson sank in to him.
He is a young man and he has an alert brain. Unlike Yeltsin he will
learn these lessons instantly and will never repeat such things.
The situation also depends on some extraneous circumstances
albeit they are inside the country. How will things develop in the
North Caucasus? Two scenarios are possible there. Under one
scenario, active and massive resistance will come to an end, if
only for a time and elementary law and order may be established.
There will be clashes and attacks and acts of sabotage, but the
opposition will not be seizing cities -- and that it an important
indicator. 
But things may develop in a different way. The militants will
rest and regroup, the trees will break into leaf, the snow will
come off the mountain passes and they will start seizing first one
city then another city then a third city. And there, again unlike
Yeltsin, Putin won't be able to give up Chechnya and say that we
have won the war. The restrictions on him are much more substantial
than on Yeltsin. He will have to bring the troops back and resume
large-scale hostilities and then there will be no question of any
agreements with the West, there will be no loans, treaties will
remain unratified and we will be on a collision course with the
NATO countries, especially with the US and its allies, especially
because we, too, have many complaints with regard to the West which
they are not in a hurry to address.

Q: The newspaper Inostranets. Can you predict a roll-back to
the Soviet times on humanitarian matters such as free exit from and
entry into the country, that important achievement of recent
decades? Considering Putin's background and the overall context
today?

Arbatov: You understand that this is a possibility, but it is
not simply the new president's background or previous profession
because it is quite clear that the communist and nationalist groups
which see eye to eye on many things would like to establish tougher
control and impose certain restrictions under the cover of sweet
talk about the need to stop illegal trade, leakage of secrets, the
flight of capital and organized transborder crime. And while
Yeltsin could ignore the pressure of these groups, Putin won't be
in a position to do it. And I can very well imagine that.

Q: Please, what will be the new president's personnel policy
with regard to the government and the president's administration?

Arbatov: This is something that is extremely difficult to
predict because in matters of hiring personal things are important,
more important than rational calculations. If Putin had at any time
clashed with a person in line of duty and in his personal life,
that person may be eminently qualified for this or that post, but
he would never be appointed. 
But in principle, I think that some members of the old
administration -- in the government, and in the president's staff
will keep their posts for at least a year. Some key figures such as
Voloshin, Chubais and Kasyanov. But a lot of new people will come
to the government and the administration who will be lifted up by
Putin, skipping several steps because obviously he would want to do
two things. First, he would want to have a team and within a year,
I think, he will have the full team either by replacing all the
former government officials or by replacing some of them while
forcing all the rest to recognize him as their unquestionable
leader. That's one thing.
Secondly. The pattern of such assumption of power -- as an
heir and not simply on the strength of election results when a new
president comes and picks an entirely new team -- that pattern
suggests that Putin would seek to shake off the influence on him of
the people who brought him to power. This should inevitably happen.
And this points first of all to the so-called oligarchs and to some
members of the president's staff and the government staff,
including the so-called "family" because having won a national
mandate of confidence in the first round so convincingly he will
find it impossible to pursue his own policy with the people around
him who brought him to power and feel that he is beholden to them.
So, I think that during the year he will dump those whom he
doesn't need in the executive branch and those who helped him to
come to power -- that is inevitable.

Q: And to follow up on that question. Is it possible that Mr.
Putin will offer some job to Grigory Yavlinsky?

Arbatov: I think you should put that question to Grigory
Yavlinsky or to Vladimir Vladimirovich, and not to me. I am an
outside observer. My feeling is that he won't offer him anything.
So, the question as to what Yavlinsky would agree to become
irrelevant.

Q: What about the relations with the State Duma, with the
political forces?

Arbatov: Of course, Putin is much better placed in his
relations with the State Duma than the former president. What is
the line-up in the Duma with regard to Vladimir Vladimirovich? I
won't name the groups of deputies, you know them very well, and the
number of votes that they command. Other things are more important.
For example, the toughening of the internal political system, a
regime of restrictions, the enforcement of law and order, which may
be fairly loosely interpreted. Putin will have the full support of
the nationalist and communist groups, they are at one there, there
is no difference between them. 
The same is true of the campaign in the North Caucasus.
Although Zyuganov was very critical of him during the election
campaign, that was pure rhetoric. The communists give their full
backing to the operation and they will support any measures aimed
at "restoring order" there which has become a kind of omnibus term.
As for economic issues, Putin may take some measures which
will meet with opposition from the communists, but they will be in
the minority because all the nationalist groups which advocate the
strong state support Putin and his initiatives; and the
right-wingers, of course, will support him as a matter of ideology.
On foreign policy, Putin, as far as the Duma is concerned,
will have a lot of room for maneuver because any moves aimed at
exacerbating the confrontation with the West and rapprochement with
alternative partners in Asia or other parts of the world will have
the unanimous support of the communists and nationalists. The
right-wing minority will be powerless to change anything.
By contrast any steps aimed at rapprochement with the West
which the communists may oppose will be backed by the right and by
the pro-government groups. So, I don't think he will have any
problems with the Duma.

Moderator: A free hand.

Arbatov: Totally free hand.

Q: The newspaper Metro. What do you think of the possibility
of creating a two-party system with the communists, perhaps, as one
party?

Arbatov: One can create anything here, one can create a party
and bring it to power in three days. The important thing is whether
that system really reflects the interests of society. During the
last six months, as far as I can see, serious and profound changes
have taken place in the political life of the country. This was
highlighted by the parliamentary and the presidential elections.
The fragmentation into 4-5 main groups that existed before
September has now been replaced by a more simple system. In effect
there exist three parties. And these three parties cover the entire
range of sentiments and priorities in society.
One party is the party of power, the party of law and order,
to put it crudely. They support Putin, they are those who voted for
him and for Unity. It is a large section of society. Another part
is, of course, the communists. They feel nostalgic for the past and
want to move "forward" toward the past. And the third is a small
force. They are those who express the interests of democratic
circles and political groups in our country: middle-class
intelligentsia, young people committed to democratic principles.
Everything depends on how that third force will be able to organize
itself.
It will itself determine whether it will become a major force
or remain a small force, even though it is a third force. We can
roughly say that 50 percent belongs to the party of law and order;
30 percent are committed to social interests, that's the
communists, and the democratic party commands some 7 percent of the
seats. But it can take in many of those who are scattered at
present. It may grow to 15 and even 20 percent and even 25 percent.
But that would depend not so much on extraneous matters as on the
ability of the third force to organize itself, to identify the
right social interests and respond to these interests, not to
deliver arcane lectures but to speak with people as equals, in a
friendly and straightforward manner and not in a convoluted,
arrogant and whimsical way. And to make compromises. To make
compromises, form coalitions and be prepared to forego personal
interests and personal ambitions.
Then that core may acquire additional votes, and political
clout and seats in parliament. But that does not depend on external
circumstances, but on the third force and if that happens, then we
would be able to say that Russia, thank God, has worked out a
system of checks and balances and with all the possible veering to
the right and to the left it will not be diverted from the
democratic path. That force need not gain the majority, it is
enough for it to become a comparable second force. If it commands
20-25 percent that would be enough. 
By the way, that would give the ruling party greater room for
maneuver. I think Putin should welcome such a development. He
doesn't feel very comfortable when there is such a serious tilt in
the rest of society, apart from the forces which directly support
him, a tilt in favor of the communists when he will be exposed only
to pressure from that side.

Q: Just a few words about the economic program which is being
prepared.

Arbatov: It is a mysterious program, nobody has ever seen or
read it. So, one can't comment on it. Judging from the people
recruited to develop it, it will be in principle a market-oriented
economic program. It won't envisage massive nationalization or
redivision of property or abolish private ownership.
But we have seen many abstract programs, but it's another
matter, how this program will be implemented. It is quite possible
that Putin, with his current authority will manage to implement
much of what Yeltsin has failed to implement before serious
resentment develops in society. To take a number of steps, for
example, private ownership of land and many other things. That is
quite possible if he has the wish, the awareness and the
inclination to do so.
The people surrounding him now are by and large people who may
offer him such a program.

Q: Could you name some of them?

Arbatov: Chubais, for example. And yes, Illarionov, Mau,
prominent individuals.

Q: What will be the military doctrine under Putin?

Arbatov: It is already in place, there is no need to guess.
The first thing he did before being elected president was to
approve a new national security concept and a new doctrine has
effectively been adopted. All he will have to do will be to sign it
formally after his inauguration. Everything is in place.
There are several points about the program that cannot be
described as absolutely new but that are much more emphatically and
definitely presented than in the previous documents of this kind.
First of all, the course to resist the mono-polar world in the
person of the United States and NATO. A much stronger accent in the
military field to resist NATO, especially with due account for such
scenarios as in Yugoslavia. 
In the past this was ignored and the military doctrine rested
on two pillars: nuclear deterrence and preparation for local
operations, including peacekeeping ones. Now it has a serious third
element -- the creation of a counterbalance to a threat that can be
roughly described as the Balkan model, the use of force not by some
Taliban but precisely by NATO, the most powerful military coalition
in the world.
There is, of course, the question of resources. The president
military budget definitely does not have enough money for these
three models of deterrence -- the Balkan model, local wars. This
means that the military budget will have to be increased as a
minimum to 3.5 percent of GDP. At present, as you know, it amounts
to 2.5 percent of GDP.
This will be very difficult to accomplish considering the
financial difficulties that we have with the year 2000 budget. But
in the next budget, perhaps, military spending will be really
properly increased and there will be a restructuring of military
planning and military development.
Here we face a fundamental question: if the Balkan scenario
suddenly becomes the prevailing one in our military doctrine, and
there are many forces, including in the general staffs, who are
insisting on this, then nothing will come out of our cooperation
with the West. This will contradict our foreign policy ties and our
external economic tasks. We simply cannot shift the accent in our
defense policy to confrontation with NATO in the field of
conventional armed forces and armaments and at the same time hope
for a development of cooperation with the European Union, count on
getting new credits and on a restructuring of our debt. This will
collide. This is something that cannot be combined.
This will be one of the choices that I mentioned at the very
beginning. In politics, as different from an election campaign, you
cannot say on the one hand and on the other hand, you have to make
a concrete choice. And our new president will have to make this
choice.

Moderator: Let us have the last question.

Q: Alexei Georgiyevich, have you seen any signals of progress
as regards START-2 and the other treaties? Have you seen any
signals from the presidential administration?

Arbatov: Yes, we have received a very strong signal. We have
had constant hearings on this issues over the past few weeks and
the position of the administration in favor of the ratification of
all these treaties was firm and clear as never before. I mean
START-2 and the comprehensive nuclear test ban treaty. As well as
the Open Skies agreement. This set of agreements on arms reduction
and limitation has been given a very strong impetus. And if the
final signal comes from the Kremlin the Duma, I think, will easily
ratify the agreements in the course of April and May.
I think that from Putin's point of view, proceeding from the
tremendous support that he has inside the country, it would be the
best opening move in foreign policy to put all these documents on
the table, these documents that under Yeltsin were suspended in
mid-air for many years. In this case, I assure you, the West will
have to tone down its pressure over Chechnya. And then it will be
much easier to get credits, considering the general mood in the
West. The West yearns to have in Putin a partner, a partner who, as
different from Yeltsin, can guarantee fulfillment of agreements.
Yeltsin, you see, very easily reached agreements on everything but
never delivered.
This is all so logical that it is hard to believe that Putin
is not going to do this. On the other hand, anything can happen in
Russia. As they say, never stake your last dollar.

Moderator: Do we have any more time for questions?

Arbatov: Well, two more questions.

Q: Getting back to the military theme. Will our army get only
stable financing under the new president or will its reform get off
the ground at long last as well? I mean the forming of a
professional army. Or will support be limited to financing alone?

Arbatov: Let us distinguish between what can be done and what
will be done. What can be done in Russia? We made serious
calculations lately. In principle, we can make a tremendous stride
along the road of military reform, make our army stable and worthy,
capable of fulfilling all its tasks very quickly, in a matter of
two or three years. This can be done if we increase military
allocations to 3.5 percent of GDP from the present 2.8, if we
simultaneously reduce the army from 1.2 million to 800,000 men, if
we redistribute budget spending properly between quality and
quantity. I mean procurement of new hardware, military science,
research and development which at present accounts for less than 30
percent of all spending. If we redistribute spending to have a
50:50 ratio, we will be able to reach a fundamentally new level in
the course of three years while preserving the most advanced
defense industries, doubling the wages of soldiers and officers and
placing the army on a fully professional level. This can be done.
I hope that Putin and the people who are close to him will
accept this model and implement it with resolve. But I do not know
what decision they are going to take. I am not sure that this model
is going to be accepted because support by the army, the armed
forces, the Defense Ministry is extremely important to Putin. He
has the unanimous support of the army as well as of all the law
enforcement and power structures. A reform of the type I mentioned
will make it necessary to overcome resistance. I mean resistance
that is always put up by huge organizations when somebody wants to
reform them even in their own interests and for their own good.
Alas, this is a law of life. It is an open guess if he decides on
such a step in the first year of his presidency. Personally, I
doubt this very much.
I doubt it very much that Putin is going to abandon the draft
and switch to enlistment. This is really not in his style, this
really is not in line with his so far stated views and especially
those of the circles that have given him their unqualified support.
This does not tally.
And if the first year is missed nothing is going to be changed
afterwards.

Moderator: I thank everybody.

********

#7
The Daily Telegraph (UK)
31 March 2000
[for personal use only[
MEDIA NEWS: GONE TO PRESS
By Alexander Chancellor (Chancellor@dial.pipex.com)

ONE job I would not have wanted over the past couple of months is that of a 
foreign correspondent in Moscow. A week after British journalists indulged in 
their annual, self-congratulatory awards ceremony in London, a title has been 
awarded in Russia to the "Worst Journalist of Moscow, Year 2000". The winner 
emerged from a tournament organised by a fortnightly magazine called The 
Exile that offers foreigners a guide to Moscow nightlife. The magazine is run 
by two young expatriate Americans, one of whom, Matt Taibbi, was once, I am 
told, a professional basketball player in Mongolia. In each of the last five 
issues, the fearless Mr Taibbi has been analysing the reports of 32 British 
and American correspondents who were set against each other in pairs for a 
knockout competition. His pieces, which are full of sporting analogies, are 
voluminous and digressive, but often extremely funny and breathtaking in 
their ferocity. He judges his journalistic colleagues by a variety of 
criteria, among them the quality of their writing, their diligence or 
laziness, and their entertainment value, but above all by their attitude to 
the Putin regime. Mr Taibbi allows for no doubt about his own position on 
this. "The election of Vladimir Putin was a dark day for Russia, and for 
America too," he writes. "By himself, Vladimir Putin is just another petty 
dictator with a Swiss bank account, an army of drunken cops at his disposal, 
and a willingness to trample his own mother if she crosses him in public. The 
world has produced thousands of these monsters. They're a dime a dozen, 
nothing new. What is new, and what is even more disgusting than the rise of a 
petty dictator, is the phenomenon of a gallery of independent onlookers 
insisting that we believe that these petty dictators aren't bad but good; 
that authoritarianism is okay as long as business is good." 

Britain lost the tournament. The title of Worst Journalist, announced 
yesterday, went to David Hoffman of The Washington Post for the gentleness of 
his reporting on Putin and his chums. He won in the final against John 
Thornhill of the Financial Times, whom Mr Taibbi calls "the city's most 
enthusiastic good-news merchant". 

It is a relief to be able to report that Marcus Warren of The Daily Telegraph 
was badly beaten. Mr Taibbi lists him among a group of brave journalists 
willing to lose the co-operation of the Russian authorities in the Chechen 
war by refusing to be spoon-fed stories by them. 

Of a piece by Warren on Feb 15 ("TV puppets come under fire from Putin 
court"), Mr Taibbi writes: "It hits all the cylinders; it supports a cause 
worth supporting in the Kukli people, doesn't try to do too much and is 
wittily and entertainingly written. Pieces like this are what British 
reporters are designed for." 

The libel laws prevent me from quoting much of Mr Taibbi's abuse but news 
agency reporters are castigated for their exiguous, cliche-ridden 
vocabularies and female columnists for their alleged jealousy of Russian 
women. One journalist for whom I feel rather sorry is Giles Whittell of The 
Times, who, accused by Mr Taibbi of drawing too much inspiration for a couple 
of his articles from the local English-language paper, e-mailed him the 
following letter (which he promptly published): "Dear Matt, I have much 
enjoyed your worst journalist series and am of course guilty as charged. I 
would be lost without the Moscow Times because my Russian is miserably bad 
and the Exile is not a daily. In a lame bid to avoid the humiliation of 
continuing to the final, I would now like to bribe you with the 
food/entertainment both of your choice." 

Mr Whittell was, of course, trying to be charmingly self-deprecatory but Mr 
Taibbi is not a man on whom to practise such arts. 

They had lunch, anyway, and Mr Whittell, for whatever reason, was knocked out 
of the tournament. 

****** 

#8
Russia's Kudrin Cited on Foreign Debt at Senate Session 

Rossiyskaya Gazeta 
30 March 2000
[translation for personal use only]
Report by Anna Kozyreva under "In the Russian Federation Federation 
Council" rubric: "The Main Thing Is Not To Accumulate Debts" 

Aleksey Kudrin, Russian Federation first deputy 
finance minister, appeared at a session of the senate with government 
information on the state and servicing of the Russian Federation foreign 
debt. 
The draft 2000 foreign borrowing program has now been submitted to 
the State Duma. But Kudrin noted that the debt will not actually 
increase. Of course, Kudrin stressed, it has now reached a critical 
size and in the next few years we will have to pay $15-16 billion a year. 
The government therefore intends to continue trying to get part of the 
former USSR's debt written off. As of today 36.5 percent of the nominal 
value has been written off, but taking account of deferments and 
preferential credit rates the figure is actually around 52 percent. 
Talks are currently being held with the Paris Club on truncating the 
debt. 
This year Russia will have to pay around $10.2 billion, including 
$5.6 billion on the main debt and the rest in interest. In the first 
quarter $2.4 billion has already been repaid, and what is more out of our 
own funds. 
Any day now, Kudrin stressed, in accordance with the agreement with 
the World Bank Russia should receive a $100-million tranche of the credit 
for the coal sector. It is also expecting to receive $100 million from 
Japan. A program to establish unified management of the state debt has 
already been devised. Here the deputy minister stressed that no 
additional structure would be required. 
Servicing the state debt is a problem of how realistic the budget is, 
the deputy finance minister believes. But the main thing is that debts 
must not be accumulated. 
Yesterday Ivan Shabanov was elected chairman of the upper chamber's 
Security and Defense Committee. 
Voronezh Oblast Governor Ivan Shabanov has become chairman of the 
Federation Council Security and Defense Committee. The post of chairman 
of this committee had been vacant for around three months. 

*******