April 26, 2000    
This Date's Issues: 4268 • 4269 • 4270  

Johnson's Russia List
#4270
26 April 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Reuters: Russia's Putin orders Svyazinvest sale - agencies.
2. Reuters: British, Israeli spies are best-Russian official.
3. Itar-Tass: Public at Large to See HITLER'S Remains for First Time.
4. International Herald Tribune: Max Jakobson, Putin Wants to Be Strong Against Daunting Odds.
5. The Times (UK): Bronwen Maddox, Gorbachev fears too-powerful US.
6. Interfax: RUSSIA WILL USE NUCLEAR WEAPONS IF NECESSARY, SAYS TOP 
MILITARY COMMANDER.
7. BBC MONITORING: NEWSPAPER SAYS NEW RUSSIAN MILITARY DOCTRINE STILL FAR FROM PERFECT.
8. RIA Novosti: NEGATIVE IMAGE OF RUSSIA HURTS WESTERN BUSINESS, SAYS RUSSIAN OIL BARON.
9. Itar-Tass: RUSSIAN DEFENCE PLANTS MAJOR CONTRIBUTOR TO PRODUCTION 
GROWTH LAST YEAR.
10. Financial Times (UK): How Russia can be helped to help itself: 
Laurent Fabius and Hubert Vedrine set out a framework for a constructive 
new relationship between the EU and Moscow.
11. Chicago Tribune: Colin McMahon, FOR PUTIN, THE DEVIL'S IN LOCAL POLITICS.      (re St. Petersburg)
12. NTV's Hero of the Day: Interview with Boris Nemtsov.] 

*******

#1
Russia's Putin orders Svyazinvest sale - agencies

MOSCOW, April 26 (Reuters) - Russia's President-elect Vladimir Putin has 
ordered Communications Minister Leonid Reiman to prepare the sale of a 
quarter of telecoms holding company Svyazinvest, agencies quoted Reiman as 
saying on Wednesday. 

The sale of 25 percent minus two shares of the holding, which controls almost 
all Russian telecoms, is a weathervane for investment interest in Russia. 

But Reiman said after a meeting with Putin that it would not take place 
immediately, Ria news agency said. It quoted him as saying it could be ``in 
the foreseeable future,'' at a time when the shares could be sold at a better 
price than now. 

The government, which owns three-quarters of Svyazinvest, intended to retain 
a 50 percent minus one share stake in the holding, he said. 

The government sold a blocking 25 percent plus one share stake in Svyazinvest 
in 1997 for $1.9 billion. 

The sale was seen as the most successful Russian privatisation and made to a 
group including billionaire George Soros. However, Soros later called it the 
worst investment decision of his career and later attempts to sell the second 
stake were postponed by the government, citing market conditions. 

Svyazinvest CEO Valery Yashin says the government might postpone the sale, 
previously planned for 2000, because the price of the second stake should not 
be lower than the first one. 

*******

#2
British, Israeli spies are best-Russian official

MOSCOW, April 26 (Reuters) - A high-ranking Russian security official praised 
British and Israeli spies on Wednesday, saying they ranked with Russian 
agents as the best in the world. 

Sergei Ivanov, head of the Security Council which advises President-elect 
Vladimir Putin, also said spies from the United States had too much money and 
were spoilt. 

``Ours, British and Israeli,'' Ivanov, a former worker for the KGB Soviet 
security police, told the Argumenti i Fakti weekly newspaper when asked which 

country had the best agents. 

``British counter-intelligence has an excellent school and traditions, they 
prepare their agents very well,'' he said. 

He said Israeli agents could get help from Jews the world over, who would not 
hand the agent over if approached. 

``The Americans have too much money. This leads to an impression that 
everything in the world can be bought and you don't have to use your head,'' 
he said. 

Spying disputes between the West and Russia are still fairly common although 
the heyday of the Cold War is long past. 

Russia recently arrested a U.S. citizen and a Russian on charges of trying to 
gain secret information on an underwater sea missile. The Russian FSB 
counter-intelligence agency also recently announced it had arrested a Russian 
on charges of working as a spy for Britain. 

*******

#3
Public at Large to See HITLER'S Remains for First Time. .

MOSCOW, April 26 (Itar-Tass) - Adolf Hitler's remains will be shown to the
Russian public at large for the first time. They are put on display at the
exhibition "The Agony of the Third Reich. Retribution", opening on
Wednesday at the Exhibition Hall of Federal Archives. 

The exhibition was sponsored by several archive agencies of Russia with the
participation of the Russian Federal Security Service, the Defence Ministry
and the Foreign Ministry, Itar-Tass learnt from director of the Russian
State Archives Sergei Mironenko. 

According to the director, "the exposition contains some 150 exhibits:
Hitler's genuine belongings, documents as well as other historic materials
from the Nazi bunker, the last shelter for the ringleaders of the Third
Reich at the end of the Second World War". 

The most graphic exhibits include the sinciput of Hitler's cranium with a
bullet hole, pictures of the Nueremberg Tribunal with scenes of executions
of the main Nazi criminals, Goebbels' diary and other genuine belongings of
the chieftains of the Third Reich. 

Most materials have not been on show previously and were in archives as
part of investigation files. 

*******

#4
International Herald Tribune
April 26, 2000
[for personal use only]
Putin Wants to Be Strong Against Daunting Odds
By Max Jakobson 
The writer, a former Finnish representative at the United Nations,
contributed this comment to the International Herald Tribune.

HELSINKI - Government is rated differently in the West and in Russia. In
the West it is good or bad, in Russia it is strong or weak.

The West hopes that Vladimir Putin will be a good president who will
promote the rule of law, democracy and a market economy. But Russians have
lost interest in ideologies.

According to a current joke, they have finally understood that what the
Soviet leaders told them about communism was all lies and what they told
them about capitalism was all true.

So now they hope that President-elect Putin will be a strong leader who
will create order, put an end to corruption and criminality, and show the
world that Russia is still a great power that deserves respect.

That is how the elite feels about him. Expectations among ordinary people
may be more modest - that salaries and pensions be paid on time.


The intentions of the new president-elect are subject to intense
speculation in Moscow, but so far very few facts are available. This is
understandable, for Mr. Putin is a man who casts no shadow. It is hard to
find a precedent in history for the rise to power of a man who has never
held political office or exercised leadership or authority in any other field.

Nor has he made any significant contribution to the public debate on
important issues of our time. His only merit is competence and loyalty as a
civil servant of secondary rank.

What this means is that he did not reach the presidency by his own efforts.
He was lifted to the top.

What is his relationship to the shadowy powers that chose him as their
instrument? Did he pay his debt in full by granting Boris Yeltsin and his
family immunity against prosecution, or is he still beholden to his backers?

Mr. Putin has promised to put an end to the political influence of the
oligarchs, as the financial tycoons are 

called, but not everybody is convinced that he will be able to keep that
promise. George Soros, who has devoted much effort and spent a great deal
of money to promote an open society in Russia, suspects that powerful
oligarchs have a hold on the new leader.

There is speculation that the bombing attacks last fall in Moscow that were
used to justify the ''war against terrorism'' in Chechnya - a war
successfully exploited by Mr. Putin in his election campaign - were the
work of agents provocateurs. This would not be the first time in Russian
history that such a thing had happened.

However that may be, the fact that conspiracy theories are taken seriously
in Russian political circles is revealing in itself. It is an indication of
the poisoned atmosphere prevailing in Moscow. As a result, Mr. Putin's
every word and gesture are analyzed with a view to detecting hidden motives.

What is clear is Mr. Putin's strong personal interest in military matters.

Recently the members of his cabinet waited in vain for the president-elect
to join them at their regular weekly meeting, because he could not resist
the temptation to spend a day aboard a submarine cruising in the Barents Sea.

He has promised to modernize the armed forces and to restore to the defense
establishment the prestige it enjoyed in Soviet times. Less clear is where
the money for this will come from. The recent increase in oil revenues is
unlikely to last.

Yes, Vladimir Putin is determined to become a strong leader in the Russian
tradition, and his powers as president appear to enable him to achieve
this. But it is unrealistic to cling to the fixation on a supreme leader
that the world was used to in Soviet days, when the Communist Party wielded
unlimited power over the lives of the people and could enforce every order
emanating from Moscow.

In recent years power has steadily seeped away from the center to the
regions. The federal government has been severely weakened. It is unable to
collect all the taxes due to it, partly also because a large part of the
Russian economy is still based on barter.


Corruption and crime are usually mentioned as the main problems confronting
the new president, but no less serious is the decay of the social
infrastructure. The deterioration in public health services is a constant
drain on the vitality of the population, which is in steady decline. And in
many parts of Russia the environment has been damaged beyond repair.

Mr. Putin has assumed leadership in a country with deep-seated structural
problems. He will have to be judged by his performance. He may turn out to
be a leader both strong and good, but expectations must be related to the
daunting task he faces.

*******

#5
The Times (UK)
26 April 2000
[for personal use only]
Gorbachev fears too-powerful US
FROM BRONWEN MADDOX, FOREIGN EDITOR IN NEW YORK

MIKHAIL GORBACHEV yesterday warned the United States of its dangerous 
"superiority complex" and said that, if the 21st century became known as the 
second "American Century", the rest of the world would have suffered. 

Speaking in New York, the former Soviet President criticised Madeleine 
Albright, the US Secretary of State, for saying that there were exceptional 
circumstances in which the US had the right to use military force 
unilaterally, even if other countries objected. "I don't think the world will 
accept this approach," he said, responding to a speech by her on Monday 
night. 

In a passionate statement of the dangers of the US abusing its position as 
the world's sole superpower, Mr Gorbachev said that, if the US dominated the 
21st century as it did the last, "what about the rest of us?" Declaring that 
Europe extended "from the Atlantic to Vladivostok - and even to Vancouver", 
he urged the US to engage more deeply in a partnership with Europe. 

European and Asian concerns about US imperialism in the aftermath of the Cold 
War dominated the one-day conference, Global Forum 2000, organised by The 
News Corporation, parent company of The Times, on America's role as the 
world's greatest economic, military and cultural power. 

Gathering on Wall Street, symbolic heart of the phenomenon of US economic 
growth, leading politicians appeared most concerned about whether the 
prosperity and power of the US could be too much of a good thing. 

Europeans, in particular, seemed anxious to pick and choose from the American 
Dream, wanting Microsoft but not McDonald's, partnership but not domination. 
Jean-Claude Trichet, Governor of the Banque de France, invoking the now 
familiar epithet of the "American hyperpower", called on the US to "exert its 
influence with responsibility and self-restraint". He said the US had a 
"tendency to underestimate its own influence". 

These laments have not been lost on US commentators and academics, who have 
indulged in an outpouring of self-analysis. 

Their tone was reflected in a speech by Newt Gingrich, former Speaker of the 
House of Representatives, who said yesterday that the US had to "learn to 
listen, to be a partner", a change that was a "real stylistic challenge". 

*******

#6
RUSSIA WILL USE NUCLEAR WEAPONS IF NECESSARY, SAYS TOP MILITARY COMMANDER
Interfax 


Moscow, 25th April: Russia's "nuclear umbrella" will protect its allies,
Col-Gen Valeriy Manilov, first deputy chief of the Russian General Staff,
told a Tuesday news conference at the Interfax main office. 

Manilov did not rule out the possibility of Russia's being the first to use
nuclear weapons. "We abandoned the non-use of nuclear weapons in 1993.
Guided by the principle of transparence, we say that we would use our
entire potential, including nuclear weapons, in the case of nuclear
aggression or conventional aggression that we cannot stop by other means.
We say this in no uncertain terms," Manilov said. 

Russia will so act if its allies fall victim to aggression, he added. 

Russia's new military doctrine essentially sets out that nuclear arms will
not be used if there is no aggression, Manilov said. In effect, nuclear
arms are an instrument for forestalling aggression, he said. 

If the West had not criticized it, the new Russian military doctrine would
have been regarded as unsatisfactory because it "clearly sets out the main
priority: the realization and protection of Russia's national interests",
Manilov pointed out. 

Russia does not view any country as a potential aggressor, he noted. "The
reverse is true: we regard all countries as potential partners in upholding
security and stability in the world. We propose to assure peace and
stability through partnership, which is equal cooperation and neighbourly
relations," he said. 

*******

#7
BBC MONITORING
NEWSPAPER SAYS NEW RUSSIAN MILITARY DOCTRINE STILL FAR FROM PERFECT

The Russian military doctrine endorsed by the Security Council on 21st
April is still far from perfect, even though it is about the fourth version
to have been drawn up in the last three years. It does not take into
account the war in Chechnya or provide political or military assessments of
similar conflicts in Russia that have involved the armed forces. The
following is the text of a report published by the Russian newspaper
'Segodnya' on 22nd April: 

With the words of President-elect Vladimir Putin "today we must bring this
work to an end!" ringing in its ears, the Security Council yesterday
ratified the Russian military doctrine without any undue formalities.
Security Council Secretary Sergey Ivanov noted that, once the text of the
main military document had been discussed at a session in February, the
authors had not had to make any fundamental alterations to its content,
only editorial amendments which made it possible to "give the document a
finalized shape from the legal point of view". 

The process of the emergence of the Russian military doctrine was not only
long, but also contradictory. `Segodnya' has learnt that, in the past three
years alone, four (absolutely incompatible) versions of the draft were
drawn up. However, we can only pass judgment on the draft drawn up by the
collective at the Defence Ministry Military-Strategic Research Centre,
which was submitted for discussion by the media in October 1999, and it
should be noted that it created a great deal of fuss both within the
country and abroad. 


This is first and foremost because in this version the United States and
its allies were defined indirectly (but in such a way that nobody had any
doubt) as being our likely adversaries. Moreover, the version was
excessively aggressive - it allowed for the possibility of a large-scale
nuclear war, calculating that our armed forces would be prepared to conduct
military operations even in conditions of nuclear contamination. All the
politics, including the American thesis, was later removed from the text.
The illusions that after an exchange of nuclear strikes our soldiers would
go on the offensive and dig trenches (even the Chernobyl epic inspires no
confidence in that possibility) also disappeared from the text.
Nonetheless, in conversation with this `Segodnya' correspondent, Valeriy
Manilov, the first deputy chief of the General Staff, agreed that even the
final version of the military doctrine was still far from perfect. 

An interesting detail was noted, for example, by Aleksey Arbatov, the
deputy chairman of the State Duma Defence Committee. In his view, the
thesis of Russia's readiness to use nuclear weapons first in the event of
its being unable to halt aggression by conventional means lowers the
"nuclear threshold" (the Soviet military doctrine had clearly noted that we
would not be the first to use nuclear weapons). Other experts, for their
part, noted that the version of the military doctrine that has already been
approved does not prescribe events such as the Chechen war, in which the
army is playing the main role, nor does it provide a political or military
assessment of similar armed conflicts within the country. Consequently, the
new Russian doctrine is not actually so fresh after all. 

******

#8
NEGATIVE IMAGE OF RUSSIA HURTS WESTERN BUSINESS, SAYS RUSSIAN OIL BARON
RIA Novosti

London, 25th April: Mikhail Khodorkovskiy, chairman of the board of the
Yukos oil company, has told a London conference that Western business hurts
itself by creating a negative economic image of Russia. 

"In the last two years some Western media have started presenting Russia as
a monster. Large Russian companies are shown as small monsters sitting on
the back of one giant monster, Russia," he said. 

Khodorkovskiy criticized decisions made by a number of Western banks and
investment companies to fire their Russian market analysts. As a result,
Western business has lost an opportunity to monitor recent economic
developments in Russia, he said. 

"I fully understand the reasons behind the Western investors' restraint,
but I cannot agree with the rating level they give Russia today",
Khodorkovskiy said. Yukos is slowly recovering from the aftermath of the
conflict with its Western shareholders and plans to supply products worth
50m-100m US dollars to the world market "in order to remind it of us", he
added. 

Khodorkovskiy said that the Yukos financial strategy has moved on from
repayment of debts to "a modest level of investment". The 1998 oil price
slump resulted in Yukos "practically terminating any capital investments".
Investment projects resumed only in the second half of 1999 and will
quadruple this year, he said. 


******

#9
RUSSIAN DEFENCE PLANTS MAJOR CONTRIBUTOR TO PRODUCTION GROWTH LAST YEAR
ITAR-TASS 

Moscow, 24th April, ITAR-TASS correspondent Nikolay Novikov: Over the next
few years, Russia's arms exports will rise mainly as a result of an upturn
in its defence industry, Russian Deputy Prime Minister Ilya Klebanov
predicted in an interview with the ITAR-TASS correspondent today. 

Among the combination of factors that will facilitate an increase in
Russian arms exports, the deputy prime minister singled out stricter
procedures in and control over the work of defence plants on the
international arms market, the introduction of stricter state controls in
the area of military-technical cooperation, more energetic marketing
activities, a subtler approach to Russia's participation in international
arms exhibitions, and closer relationships with prospective partners in the
countries potentially interested in the purchase of Russian arms at
governmental level. 

The defence industry accounted for more than 40 per cent of industrial
production growth last year, "the best indicator among all the sectors of
the Russian economy", Ilya Klebanov said. 

The deputy prime minister said that in 1999, for the first time in recent
years, the state defence order was funded fully. In the first quarter of
this year, however, the state defence order was not funded quite as it
should have been, although such a development had been anticipated. 

"As regards the allocation of budgetary resources, the first quarter is
always the most troublesome. We are yet to reach the economic level at
which the budget ensures the even quarterly allocation of money. It will
take Russia several more years for its economy to gain momentum and for us
to be able to ensure that the defence order is funded evenly," the deputy
prime minister explained. 

"In the subsequent quarters of this year, the defence plants will catch up
on the money allocated in the budget's articles of expenditure for the
fulfilment of the defence order," he said. 

*******

#10
Financial Times (UK)
25 April 2000
[for personal use only]
How Russia can be helped to help itself: Laurent Fabius and Hubert Vedrine
set out a framework for a constructive new relationship between the EU and
Moscow:
The writers are the finance minister and foreign affairs minister of France. 

With Vladimir Putin's election as president of Russia roughly 10 years
after the collapse of the Soviet Union, the time has come for the European
Union and others to reassess their relations with his country. 

We can now evaluate a decade of efforts to uphold reforms and ease Russia's
transition from a centrally-planned monolith into a free- market democracy.
Clearly, the record is mixed. 

On the positive side, Russia has changed, and changed peacefully. The
culture of democracy is now deeply ingrained, although not yet perfect.
Citizens enjoy an unprecedented level of personal freedom, which they are
unlikely to yield. As for the economy, support for the balance of payments
and macroeconomic aid have helped reduce inflation, and so mitigated the
impact of the financial crisis. 


Yet Russia is clearly a far cry from a functioning market economy.
Production has plummeted, demand and investment both remain low, living
conditions have deteriorated, and capital flight - legal or not - vastly
exceeds the level of foreign aid. 

This assesment is not ours alone: Mr Putin himself has characterised Russia
as a rich country of poor people. In his view, Russia faces the prospect of
sliding into the second, and even third, echelon of world states. The
honesty of this appraisal, no matter how sombre, is a welcome development
in itself. 

An essential reason for these shortcomings is the lack of institutional and
structural reform. Mr Putin noted that Russia suffered from the absence of
firm and generally recognised rules. While economic stabilisation
objectives were met from 1995 onwards, priority should also have been given
to achieving a functioning judiciary, robust institutions, clearly defined
property and investment rights, and the rule of law. 

The roles of government and state institutions were too easily discarded
after years of bureaucratic rule. While the disappearance of the Communist
party as the main apparatus of the state was welcome, no other institution
has taken its place as the backbone of society. 

To say this does not imply nostalgia for the kind of totalitarian rule
under which the Russian people had long suffered. An efficient market
economy requires an authority to enforce the rule of law. Rus sia has
lacked such an authority for a decade: one that could collect taxes,
enforce bankruptcy laws, and provide social security. Corruption and
cronyism have become entrenched, and foreign investors have been scared off. 

As a result, many in Europe and elsewhere doubt whether it is worth helping
Russia. In fact, the EU has good reasons to pursue a policy of long-term,
active co-operation. There cannot be security and stability on the European
continent without a positive contribution by a co-operative Russia. 

This is unlikely if poverty, misrule and instability prosper. On the
contrary, such a Russia may be tempted to find an outlet for domestic
frustrations in a damaging display of might. The ills of an unstable Russia
may also spill over into Europe. The question is not whether to help, but
how to do so. 

With this in mind, we have circulated a letter to our EU and G7 colleagues
in the finance and foreign ministries. Clearly there is no magic wand, but
we believe the time has come for the EU to base its relations with Russia
on a set of guidelines for co-operation: 

* Greater emphasis should be put on Russia's building and strengthening
effective state structures, and developing a stable and transparent legal
framework. Russia must commit itself to the rule of law: this will enable
the state to play a regulatory role within the limits of democracy, and
thereby foster development. 

* Crucial Russian reforms must be completed before it is too late. These
include overhauling the tax system and customs tariffs; fighting corruption
and money-laundering; restructuring the banking system to allow greater
transparency and accountability; providing investors with stability and

legal security; enacting reliable land ownership rules; building a
respected and functioning judiciary; and providing social security. 

Co-operation with Russia must primarily rest on a firm political commitment
by the Russian authorities to pursue vigorously a reform- oriented course.
Any fresh rescheduling of Russian debt cannot be separated from the global
economic debate on aid strategy, and relies on reforms to ensure that its
effects last. Russia's debt is economically sustainable provided that
structural reforms are implemented, allowing the high growth potential of
the economy to be realised. For our part, we should refrain from exporting
ready-made recipes for reform, but we must be clear on our conditions. 

* Our co-operation must be consistent with our security and political
objectives. Europe has specific security interests vis-a-vis Russia that
cannot be addressed solely through the US-Russia strategic dialogue. Nor
should the latter be pursued at the expense of the former. Different
agendas should be treated on their merits, and no undue linkages made
between arms-control related negotiations and economic assistance. 

In standing ready to help Russia, the EU does not have to turn a blind eye
to Russia's misbehaviour in Chechnya. Contrary to what some critics say,
there is no contradiction between long-term and short-term objectives -
between the imperatives of European values and the necessities of European
geopolitical interests. 

Our fundamental disapproval of the way Russia has so far dealt with the
painful Chechen problem, and our equally fundamental willingness to help
Russia, are two sides of the same coin. A state based on the rule of law,
where firmly-rooted institutions peacefully address disputes and
conflicting interests, where violence is ruled out as a means to solve
conflicts - whether political or commercial - is essential for a thriving
economy. It is also essential for a lasting, stable and peaceful solution
to the problems in Chechnya. 

Pursuing such a new course requires determination and consistency on the
part of the EU. We hope the new leadership in Russia will share the same
spirit. 

*******

#11
Chicago Tribune
25 April 2000
[for personal use only]
FOR PUTIN, THE DEVIL'S IN LOCAL POLITICS 
By Colin McMahon 
Tribune Foreign Correspondent 

ST. PETERSBURG, Russia -- In the West his reputation is thriving, but at home 
President-elect Vladimir Putin is struggling to seize control over domestic 
issues and his first move to reassert Kremlin domination over Russia's 
political regionshas been thwarted.

Facing almost certain defeat, Putin's candidate for governor in his hometown 
of St. Petersburg has dropped out of the May 14 elections.

Incumbent Gov. Vladimir Yakovlev, a longtime Putin rival, is the heavy 
favorite.

The conflict is important not only because of St. Petersburg's economic and 
political clout as Russia's second city. It also shows the difficulties Putin 
faces as he tries to wrest control from Russia's bosses.

Like Yakovlev in St. Petersburg, many governors have close ties to rich and 
powerful business interests. They usually control the local media. They often 

are popular with their electorates. Some have links to organized crime.

But there are many reasons beyond bare-knuckle politics for Putin to tread 
carefully in challenging the governors.

Russia is supposed to be building a democracy, and the newly elected Putin is 
widely regarded as the vessel of this transformation. In the West he is 
celebrated as a strong leader with which the world can do business.

On June 4, President Clinton plans to travel to Moscow for a summit with 
Putin that will focus on a broad range of issues, including arms control. 
These and other expected appearances on the world stage lend Putin the 
gravitas of a world leader to be reckoned with and courted carefully.

But in Russia, the president-elect is still struggling. The prolonged and 
bloody military campaign into Chechnya in a bid to subdue rebels was 
initially popular but could quickly turn into a liability as the casualty 
toll mounts.

On Monday, another 15 Russians soldiers were slain in a rebel Chechen ambush.

And, though Putin has displayed an undeniable international appeal and a 
master's command of national politics, regional politics may prove another 
matter. Outside Moscow, Russia's governors are in control.

The governors have, in large part, been legitimately elected. Challenging 
them just because they differ with Kremlin policy or Putin's politics would 
do more than just trouble voters. It would violate Russia's constitution.

Beyond that, some of Russia's 89 regions have proved to be ideal testing 
grounds for free-market reforms. Should the Kremlin restrict regional 
independence too much, it could impede innovation.

Putin enjoys a modest mandate, having narrowly avoided a runoff by winning 53 
percent of the presidential vote on March 26 against a large field of 
candidates. In St. Petersburg, he scored more than 60 percent. But such 
popularity would not guarantee victory in a showdown with Yakovlev or other 
regional chiefs.

"Putin is not all-powerful," said Mikhail Amosov, a St. Petersburg city 
deputy from the opposition Yabloko faction. "Just because a region supports 
him does not mean that Putin can dictate to a governor.

"The paradox is that it is good that Putin is not all-powerful," Amosov said, 
expressing skepticism about a new plan that would force Yakovlev to cede some 
authority to a local economic czar chosen by the Kremlin.

"I don't like Yakovlev," Amosov said. "But an administrator directly 
appointed and ruled by the Kremlin, this is not a good idea."

Yabloko members once helped lead the Yakovlev administration. They share 
credit for budgetary reforms and other changes that helped St. Petersburg 
draw $700 million in foreign investment last year. That is more than three 
times the total of 1996, when Yakovlev took office.

Now Yabloko lawmakers are among Yakovlev's fiercest critics. They accuse 
Yakovlev of violating civil rights and democratic principles. They say 
corruption plagues the Yakovlev administration and accuse him of being soft 
on organized crime.

St. Petersburg remains Russia's capital of contract murders. The city has 
recorded scores of such killings over the last few years, about 200 since 

1997. The killings unsettle foreign investors. Yet they have a relatively 
minor impact on the electorate.

According to a recent poll, more than a third of St. Petersburg's residents 
think Yakovlev and the city administration are involved in the killings. The 
governor, however, remains popular.

This is partly because the slayings rarely affect average people, mostly just 
rich businessmen. Yakovlev is also seen as a decent administrator who pays 
pensions, fixes up the city and keeps foreign tourists flowing in.

"Yakovlev has the support of the people and the business community," said 
Yakovlev aide Valentin Makarov. "This opposition is about some groups in 
Moscow trying to get revenge for losing to Yakovlev in 1996."

Putin was one of those losers.

At the time, Putin and Yakovlev were both deputies to St. Petersburg Mayor 
Anatoly Sobchak. But Yakovlev broke from Sobchak, a Putin mentor who died 
this year, to run against him for mayor.

Putin managed Sobchak's re-election campaign. Yakovlev trounced him.

Putin regarded Yakovlev as a traitor. Before parliamentary elections last 
December, pro-Kremlin media enthusiastically targeted Yakovlev and his party. 
At Sobchak's funeral in February, the Kremlin tried to avoid any public 
meeting between Putin and Yakovlev.

Yakovlev's opponents hoped that Putin would back someone like former Prime 
Minister Sergei Stepashin. Instead, the Kremlin turned to Valentina 
Matviyenko, a first deputy prime minister who appealed to no one in St. 
Petersburg.

When business magnate and longtime Kremlin adviser Boris Berezovsky allied 
himself with Yakovlev, Matviyenko's hopes died.

"What is going on in St. Petersburg is a huge, terrible defeat for Putin in 
his hometown," said Boris Nemtsov, a former Kremlin official whose right-wing 
party was again feeling abandoned by Putin. "The Russian president, voted for 
by more than 60 percent of local people, has no candidate of his own."

Some analysts contend that Putin does have a candidate: Vladimir Yakovlev.

They say that Yakovlev has pledged loyalty to Putin in exchange for Putin's 
clearing the way to what is now expected to be an easy re-election.

******

#12
NTV
Hero of the Day with Svetlana Sorokina
21 April, 2000
Interview with Boris Nemtsov, Vice Speaker of the State Duma of Russian 
Federation, member of the Union of Right Forces Fraction
[translation by Olga Kryazheva" <okryazhe@hotmail.com>
Research assistant, Center for Defense Information]

SS: Hello. “Hero of the Day” is on air. Members of the international 
conference devoted to Russia returned tonight from London. One of those who 
participated in this conference, vice speaker of the State Duma Boris 
Nemtsov, arrived to our studio straight from the airport. Hello Boris 
Yefimnovich, and thank you for coming here.

BN: Good evening.

SS: Boris Yefimovich, first of all, your impressions, what are the attitudes 
towards us in regards to Chechnya?

BN: Well, according to British newspapers, the attitudes are horrible, I 
have not seen a single article with a positive attitude towards Russia, even 
during the visit of our president to London. To speak about business, it is 

more pragmatic, today many foreigners again make money in Russia; there is 
the fastest growing market in Russia. A number of companies that are based 
in London City, I would like to emphasize, made about 300% in currency 
during the first quarter. The interest of business in Russia 
is higher than the interest of the media or public opinion. As for…

SS: In other words, Chechnya is one thing, involvement in our economy is 
another, or are they connected?

BN: Of course, they are connected. For example, many criticized Tony Blair 
for inviting Putin, although I think that he did the right thing. I approve 
the fact that our president went there on his first business trip abroad. 
Many newspapers spoke about Putin’s meeting with the British queen 
sarcastically and with a jeer. I think in reality it is our mistake, we have 
to speak openly about our position, and we have to defend our views. Why did 
British defend NATO’s position, when they bombed Kosovo? This case is 
similar. Because propaganda machine worked in its full capacity, and members 
of the Parliament, and members of the government, and military, all 
conducted an explanatory campaign. In our case, nobody does it in the West 
for us. The conference filled this gap at some extend, but not completely.

SS: Boris Yefimovich, do you remember that remarkable case in Davos when 
they asked our leading politicians who is Putin? There was a long pause, and 
then everybody laughed; no answer followed. It happened before the 
elections. Was the question “Who is Putin?” asked again this time, or is it 
clear now?

BN: It is clear. Today businessmen think that Russia is getting to the point 
of political stability, and they invest money. All they can assess is the 
scale of economic growth, and the questions whether the capital taken out of 
Russia will be returned, whether there will be a fight with corruption, 
whether Kremlin would be nationalized, in other words would get rid of 
oligarchs, whose influence is tremendous. They ask clear questions. 
The last appointments, including the appointment of the president’s adviser 
on economic questions Andrey Illarionov, overall were taken positively. 
Again, the most unpleasant thing is the situation in Chechnya, and it looks 
like we can’t do anything about this public opinion in the West; we just 
have to find some common ground on this matter, starting from the beginning, 
because the situation is out of our hands. One more time I’d like to
emphasize 
this number of protestants pointing fingers at the president…

SS: By protestants you mean protestors?

BN: Sure, protestors, by the way, the are protestants also. So this number 
of protestors is very rare.

SS: By the way, Boris Yefimovich, was this conference more political or more 
economic.

BN: It was mostly political, the members of all fractions of the State Duma 
attended. It was remarkable. Most importantly, I think that British 
authorities, particularly Tony Blair, wants to become a mediator of 
relations between Russia and the West, fairly thinking that Davos is not 
interested in Russia, the interest toward Russia decreased. He thinks that 

business with Russia should go through London. Overall, it is not a bad 
idea, and I think we should by any means support English authorities on this 
matter.

SS: So in this sense, the conference was economic, right?

BN: Right. Nevertheless, a lot of businessmen, including famous, and our oil 
companies were represented there, and RAO UES Russia, and bankers, and 
representatives of the “Most” group attended. It was pretty official. Next 
year, I think the members of the government will join us in London, and 
maybe it will become a center of relations with Russia. What are the main 
questions? In reality, there were only three main questions discussed. 
First, whether the Russian capital would be returned. Why was this question 
asked? Because if this capital does not want to go to Russia, why should 
foreign capital?

SS: Makes sense.

BN: Foreigners say: “First, you should invest money in your economy 
yourselves, and we’ll follow you then.” The capital flight was about 
$150-200 billion, tremendous amount of money, a lot more than we borrow from 
international organizations.

SS: Did any of the participants have an answer to this question?

BN: I had a proposal, not an answer.

SS: I know your proposals.

BN: I have two of them: first, to create a favorable investment climate in 
order to prevent robbery; second, to rationalize taxation. Besides, there 
was a proposal to…

SS: Solve the problem of Soviet debt?

BN: No.

SS: It is also an interesting proposal.

BN: I am talking about investments now. So regarding investments, the 
proposal is as follows. I think that the president of Russia using his 
authority and trust that he still has among the voters can invite famous 
Russian entrepreneurs and businessmen and quietly offer them to invest money 
into Russian economy. I don’t think they will be able to reject the offer.

SS: Do you want to know a secret?

BN: Yes.

SS: Vitya Shendrevich has already said that he would comment on that in the 
next “Itogo” program.

BN: I don’t doubt he would. Maybe I'm saying that just for him, so he can 
repeat
an absolutely obvious idea. Firstly, business wants to have normal
relations with the Kremlin; secondly, business does not want to be taken as
some robbery; and thirdly, investing in Russia is a really beneficial
business. I don’t think that it is the only measure that should be taken,
but we should not deny it, and then.. here in Russia until we see some…
What is our problem? The problem of trust. Let’s say the law of legalizing
the capital flight is ratified in Russia, according to which the capital
and where it comes from will not be examined. There will be no tax police…

SS: And where the money went…

BN: And nobody will ask where the money went. Who would believe this? Who 
would believe in this law? Nobody will. And if there are examples of famous 
people who took the capital out, and nothing happened to them, they were not 
imprisoned for it, more so, they were thanked, then many will say that it is 
the time to get the money back from the Swiss banks. So even though I 
respect Shendrovich, say hello to him, but…


SS: So, Boris Yefimovich, you are still an idealist…

BN: Well…

SS: This is a very good personal feature.

BN: Well, I am not sure if I am an idealist, but many wealthy people in 
Russia believe, that even though it is Russian, it is a very effective way 
of returning the capital.

SS: This is the first question you talked about… that was raised at the 
conference.

BN: The first and the second, and it is also the question of debt; our debt 
is over $150 billion, including our $100 billion debt from the Soviet 
communist times. Back in 1991 Russia obliged to pay it back.

SS: You just have an original idea that…

BN: Yes, and what happens? What happens is that we have to pay $10 billion 
just this year, but we could have spent this money on a pension increase. Do 
you know how much this increase would be if we don’t pay—the pension would 
double. Now…

SS: This is a former vice Prime Minister of social affairs speaking…

BN: Absolutely not. This is a person who cares about its county’s future 
speaking, that’s it…

SS: I am sorry, let me interrupt you, Boris Yefimovich. Your proposal that 
Paris club should solve the problem of Soviet debt, and Russians then 
provide the favorable climate for the Western investors… It seems that if 
they don’t solve the problem of our debt, we would kill investors.

BN: Well, let’s not say that, by doing nothing we are already killing them. 
I think that the subject of negotiations is very clear. You see, Russia can 
not give away 40% of all its revenues in debt payments. None of the 
countries is able to do that, so nobody does it. On the other hand, we are 
willing to take into account the advice of how to improve investment climate 
and create good conditions for investments. I think it is a very good deal, 
and nobody seems to oppose it.

SS: I think that to create a favorable climate for investments is our main 
goal and no matter what, we have to do everything to reach it.

BN: You are absolutely right. But ten years have passed and almost nothing 
was done about it. Of example, take this famous agreement on dividing 
production…

SS: So then, as soon as they waive us our debt, everything will be perfect 
for investors…

BN: Absolutely not. Waiving of the debt can depend on making some clear tax 
decisions, decisions on private ownership rights and defending human 
rights.

SS: So the Duma will take some responsibilities.

BN: Yes, including… It is a very patriotic position. It is like killing two 
birds with one stone. On one hand, we are removing the debt, and at the same 
time giving the opportunity to increase salaries, pensions, etc. On the 
other hand, we are creating favorable conditions to return capital back 
to the country and attract new capital. I think it is not a bad idea…

SS: So, what was the Western reaction on this proposition?

BN: Well, I don’t know about Western, I just know that the reaction of the 
audience…

SS: What was it?

BN: Like in the old Soviet times—long and loud applauds. How else would they 
react?

SS: Well.

BN: If the proposition is reasonable…


SS: Third question on this conference you said was…debt payment, 
investments, and what else?

BN: And the third problem that worries everybody is corruption fight, right?

SS: Right.

BN: I think that here we have reached a consensus. For all Russian parties 
and movements, including the Union of Right Forces and for all Western 
businessmen and politicians this is a key problem. Nobody wants to deal 
with the Russian bureaucracy, not only in the power structures, but also on 
the roads, with GAI, Ministry bureaucrats, with governors, and mayors. 
Until this problem of corruption fight becomes absolutely unavoidable and 
key problem of the president and the government, nobody will believe us. 
This is the conclusion we made.

SS: Did you meet with Margaret Thatcher?

BN: We meet with her regularly, and we met last time, too.

SS: Was it a meeting of two acquaintances or was there something interesting 
to it?

BN: You know, countess Thatcher still plays a relatively significant role in 
the political life of Britain and even influences the staff policy, although 
it may seem that she resigned long ago. She has a very different viewfrom 
British position in regards to Chechnya. She is closer to us, then to the 
West. You know, iron lady, she has always supported extreme measures.

SS: Sure.

BN: I have to tell you that her position is crucial for us. She asked a lot 
of questions about perspectives for Russia’s development and still believes 
that only competitive market will lead Russia out of crisis, only the order 
of law, only this kind of firm and harsh order of the executive power. I 
think that her ideas are a lot more realistic than some remarks of the 
current politicians.

SS: On a totally different topic, coming back to our land from London, from 
their attitudes toward us, I would like to ask you about the situation in 
St. Petersburg. When would you finally define you position on who is going 
to be a common candidate?

BN: First of all, you know we had a meeting of two factions of the Union of 
Right Forces and Yabloko, and thank God, we have reached a consensus that 
there should be only one candidate and we decided to conduct a social 
research. I think a week before the elections there would be only one 
candidate left, who would have the highest level of trust, according to the 
objective data of sociological research. It is some natural primaries and it 
can give an objective result. Everybody agreed with it.

SS: Today, there was an interview with governor Yakovlev on “Echo of St. 
Petersburg.” He spoke about moving the State Duma and Federation Council to 
St. Petersburg. What do you think about this idea?

BN: Overall, this idea of decentralizing… Our favorite Moscow is Washington, 
New York, Los Angeles, and Las Vegas in one, right?

SS: Right.

BN: In other words an administrative, financial, entertainment, and cultural 
center.

SS: A country within the country, so to speak.

BN: It is wrong. They discriminate other cities and regions, and in this 
sense some decentralization will give a strong impulse. Moscow’s old 
bureaucracy would not move to St. Petersburg, that is why there is 

possibility of a generation change, including the state machine; there is a 
possibility to attract new people, new generation to the management, and 
this gives us a hope. So the idea is not bad, although Petersburg will have 
to get rid of the fame of the criminal capital of Russia, and governor 
Yakovlev will have to do something. I got an impression that he does not do 
a thing about it, and even on the election eve businessmen are killed, 
and the St. Petersburg fame of second capital fades and its fame as a 
criminal capital becomes more and more definite. One thing that strikes me 
in this whole story is that the level of trust in the acting governor, 
despite new political assassinations, is still relatively high. I still do 
not understand this paradox of our soviet reality.

SS: Well, everybody that could seriously compete with him left this field, 
as Yakovlev said today, they accidentally got there and accidentally left.

BN: You know that this is a very massive Putin defeat, because he does 
not have his own candidate in his native city, I think that Stepashin, as he 
mentioned it at Sobchak’s funeral, should have gone until the end, even 
despite lack of support from the Kremlin. There are some things that are 
remembered for a long time. Especially everything that happens during 
funerals is remembered for a few years, right? And I think that he made a 
wrong decision when he denied it, and Kremlin would have supported him if 
Stepashin said that he would go until the end. I also feel sorry for 
Valentina Matviyenko and this whole story; she accidentally got trapped in 
it and had to resolve it. Everything was clear beforehand, and it was a stab 
in the back of Vladimir Putin’s authority. I think we have to do our best to 
form a competition for Yakovlev. We cannot give up St. Petersburg without a 
fight.

SS: I also wanted to ask you this. It was brought up in Yakovlev’s 
interview. They spoke about whether to appoint or elect the heads of the 
federation subjects—the governors. You also were a governor in the recent 
past, what do you think about this broadly discussed problem: 
appointment or election of governors?

BN: My stand on this is as follows. We have to keep the election of the 
governors, so that the Kremlin does not appoint them, otherwise every 
governor will do his best not for the people, but for the Moscow officials, 
forgetting about his duties. On the other hand, the procedure of firing the 
elected governors should be established, so that if the governor breaks the 
Constitution or Russian laws, he can be fired by the president’s and the 
Supreme Court’s decision. In order to avoid political decisions and 
violations like in Luzhkov’s case, it is the Supreme Court which has to make 
this decision. Registration, according to the Constitutional Court, was 
recognized illegal, so the word was changed into “enlisting” and nothing was 
done about Luzhkov. There are some other unpleasant examples. Let’s say, the 
famous governor of Krasnodar region Kondratenko forbids to take grain out of 
Kuban, having decided to let Russia starve and break the single economic 

space of the country, a gross violation of the Constitution. If the 
president appeals to the Supreme Court, and if the Supreme Court considers 
this is a constitutional violation, then Kodratenko looses his position. I 
am sure all of the governors, whether they are elected or not, would 
immediately straighten up and like little kids obey the law.

SS: So, if I understood you correctly, you want to improve the procedure of 
firing in case there is…

BN: Not to improve, simply establish the procedure of firing an elected 
governor. Impeachment for a governor should be established, we even have an 
impeachment for the president, but we don’t have one for the governor. My 
point is that our governors are even more protected then the president. And 
why? They are the members of the Council of Federation, so they are immune. 
Imagine, a governor controls money, property, does magic on this territory, 
like some count, and nobody can do anything about it because he is…

SS: Immune?

BN: Yes, he is immune, this is another topic…

SS: We don’t have enough time to discuss it, although I wanted to talk about 
it with you, including the deputy immunity in the Duma, but our time is up. 
Thank you, Boris Yefimovich, to remind you, we spoke with the Vice Speaker 
of the State Duma Boris Nemtsov, who just came back from London, from the 
conference that was devoted to Russia. Thank you for visiting with us, all 
the best, good bye!

*******

Web page for CDI Russia Weekly: 
http://www.cdi.org/russia