April 27, 2000    
This Date's Issues:  4271 • 4272  

Johnson's Russia List
#4272
27 April 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Bloomberg: Russia's Ivanov Promises US Businesses Open, 
Easy Investment.
2. Bloomberg: US, Russian Legislators on Bank of New York Probe.
3. New York Times: William Safire, Dangerous Summit.
4. Itar-Tass: Gas Prices Go up in Russia. 
5. Panel on "Trafficking in Human Beings: The U.S. Government's Response"                                  at American University.
6. Ray Finch: IKEA property.
7. Financial Times(UK) letter: Henri Bardon, Federated socialist 
Europe is the wrong model for Russia.
8. Financial Times (UK): Federalism fails the people of Vladivostok: 
Almost a decade after opening up to the world, the Russian city is 
in a mess of its own making, reports John Thornhill.
9. Paul Stilwell: Seagull's News Sheets.
10. Joel Ostrow: New book Comparing Post-Soviet Legislatures.
11. Kennan Institute meeting report: Predictions for the Putin Presidency/Steven Solnick.
12. BBC MONITORING: RUSSIA MAY STOP NUCLEAR POWER PLANTS IF CURBS LOSS OF OIL, GAS - GREENPEACE.
13. RFE/RL: Paul Goble, Liberalization And Democratization.
14. St. Petersburg Times: Gary Peach, Russia's Commodities Addiction.
15. Financial Times: John Thornhill, Russia claim on foreign property.
16. Vremya ORT: INTERVIEW WITH SECURITY COUNCIL SECRETARY SERGEI IVANOV ON THE NEW MILITARY DOCTRINE OF RUSSIA.]

******

#1
Russia's Ivanov Promises US Businesses Open, Easy Investment

Washington, April 26 (Bloomberg)
-- Russian Foreign Minister Igor Ivanov promised an audience 
including representatives of Lucent Technologies Inc., AES Corp. and Pepsico 
Inc. that the incoming Russian government will push for increased foreign 
investment, make business regulation more fair, reform the tax system and 
fight corruption. 

In a visit to Washington before the presidential inauguration of Vladimir 
Putin on May 7, Ivanov wooed foreign investors and called for renewed efforts 
by the U.S. Export-Import Bank and the Overseas Private Investment 
Corporation in Russia. 

One of the Russian government's first priorities will be to get new foreign 
investment in Siberian and North Caspian Sea oilfields, he said. 

``Our top priority is to improve the investment climate in Russia and to gain 
more foreign investment,'' Ivanov said in a speech to the U.S.-Russia 
Business Council. 

Earlier today, Ivanov met with members of the U.S. Congress and the military. 
He also met with Republican presidential candidate George W. Bush. The goal 
in the meetings was to ``speak frankly, to speak about the problems that 
still exist between our two great countries,'' Ivanov said. 

The worst problem is the ``attempts to besmirch the business reputation of 
Russia,'' with news stories about money laundering and corruption, Ivanov 
said. Those problems have been exaggerated for political gain, he said. 

Another problem that ``alarms'' Russia is the increased use of anti-dumping 
investigations by the U.S. to block Russian imports, he said. 

And he renewed his call for a ``constructive alternative'' to the collapse of 
the 1972 anti-ballistic missile treaty. Without the treaty, the nuclear race 
of the Cold War could resume, he said. 

``The treaty is an issue of key importance to international stability and the 
relations between our two countries,'' Ivanov said. 

*****

#2
US, Russian Legislators on Bank of New York Probe: Comments

Moscow, April 27 (Bloomberg)
-- A group of U.S. congressmen visited Moscow this week for talks with 
Russian legislators about the U.S. investigation into money laundering 
through the Bank of New York Co., ahead of planned Russian parliamentary 
hearings on the topic. 

Below are comments by U.S. Congressman James Leach, who is the House banking 
committee chairman, Alexander Shokin, chairman of the Duma's banking 
committee and former deputy prime minister, Sergei Yegorov, president of the 
Russian Bank Association and Irina Khakamada, Union of Right Forces deputy in 
the Duma. 

Leach: 

``The interests of Russia and America are precisely the same. There is no 
desire to be combative, but to be cooperative with Russia and Russia's 
concerns at this time. Any money that is legally taken out of Russia ought to 
be returned. Much of the money that comes out of this country might be quite 
proper. 

``The banking system should be designed to spur commerce and not be designed 
as a basis or a vehicle for money laundering. America's concerns are all 
Russia's concerns, not anti-Russian concerns.'' 

Shokin: 

``We want to hold hearings with the participation of our U.S. colleagues. 
Last year, the U.S. Congress held hearings under the leadership of Mr. Leach, 
that took a very harsh anti-Russian position. Our aim is to use this scandal 
around the Bank of New York to discuss a range of questions that arise out of 
this scandal. Now, new (correspondent) accounts (of Russian banks) are not 
being opened and old ones are being closed. The resulting message is -- do 
not do business with the Russians. 

``Money laundering is not Russia's problem, it is an international problem. 
Russia cannot solve it by itself. 

``Our role is to formulate approaches to solving this problem and not allow 
it to be interpreted as a Russian problem and connected mainly with Russia.'' 

``Two issues have been mixed -- capital flight and money laundering. I think 
capital outflows from Russia are a result of the fact we haven't legalized 
property. Our so-called oligarchs, who ran in the Duma elections, appeared as 
though they have no money at all. Without serious institutional reforms, any 
administrative bans we introduce will always have loopholes. Russian capital 
turnover abroad is normal and a result of money fleeing tax controls. 

Yegorov, on a decision by some U.S. banks to close or decline to open 
correspondent accounts with Russian banks: 

``We think this action wasn't thought through, to say the least. We feel that 
politics, rather than economics guided those decisions. Many of those 
(Russian) banks were dependable partners.'' 

Khakamada: 

``We found two enemies for ourselves -- corruption and `mean' Russian capital 
that is leaving Russia . . . Instead, we want it to sit in Russia and work, 
work, work. Laws can be improved over and over again, but there comes a point 
when one has to stop. What we in Russia cannot understand is that we need to 
create an environment in which it is not beneficial to steal and take the 
money out of the country. Then, it will stop. Capital is moving where it is 
more beneficial to be.'' 

*****

#3
New York Times
April 27, 2000
[for personal use only]
Dangerous Summit
By WILLIAM SAFIRE

WASHINGTON -- In six weeks, the cock-of-the-walk president of Russia and the 
lame-duck president of the U.S. will hold what Churchill called "a parley at 
the summit" in Moscow. 

The central subject: Russia's need to cut the cost of maintaining thousands 
of missiles aimed at the U.S., and America's need for limited defense against 
rogue-nation missiles. 

The threat to American cities is no longer from the huge Soviet missile 
arsenal, as it was when the Antiballistic Missile Treaty was signed three 
decades ago. That's when the superpowers agreed to stay vulnerable, each 
largely defenseless against the other's nuclear weaponry. 

Today the growing threat comes from rogue states and terrorists. Defense 
Secretary William Cohen made the case yesterday: Saddam Hussein could build a 
nuclear bomb, buy a missile from North Korea and invade his neighbors on the 
presumption he could act with impunity -- because he could credibly threaten 
to kill millions of Americans if we dared to intervene. 

Recognizing this potential blackmail threat, Congress passed and President 
Clinton signed a proposal to develop a defense against a few missiles. This 
is not the space-based shield derogated as "Star Wars" to block an all-out 
Russian attack, but a necessary precaution against a terrorist's nuclear 
blackmail or any accidental launches. 

Clinton has promised to decide this summer (after his meeting with Vladimir 
Putin) whether to move beyond development to deploy a national missile 
defense. His announced criteria: Will it work? Will it upset the world? Is it 
worth the money? 

Will it work? It's not easy to shoot down a missile with another missile; one 
test succeeded, another flopped. But many who insist it will never work were 
doubtful our technology could ever put a man on the moon. 

World opinion? The Russians, the Chinese, the U.N.'s Kofi Annan, joined by 
Britain's Tony Blair, have all come out against the U.S. achieving safety 
against terrorist nukes. 

Worth the money? The Congressional Budget Office just put out an estimate 
that this plan, adding in all conceivable bells and whistles, might cost $60 
billion over the next 15 years. Sounds expensive, but that annual $4 billion 
is less than two-tenths of 1 percent of the federal budget -- not a bad 
insurance premium to pay for protecting a city's population. 

Putin's gambit at the summit will be to offer Clinton this package: Russia 
will finally go along with Start II, reducing the Russian and U.S. stockpiles 
of missiles, provided (1) the U.S. agrees to slash its stockpile in half 
again in Start III, and (2) Clinton adheres to the ABM treaty and allows U.S. 
cities to remain vulnerable to attack from rogue states and China. 

Pretty shrewd opening, because Russia cannot afford to keep even its reduced 
missile force operational, and wants the U.S. to weaken itself beyond 
prudence in Start III. By making a big deal out of not touching the ABM 
treaty, Putin cleverly puts his counterpart with the stronger hand at a 
disadvantage: the legacy-hunting Clinton will be tempted to cave on one or 
the other -- ABM or Start III -- to make a deal that he can say is historic. 

Putin knows that a limited missile defense poses no threat to Russia's 
deterrent. But what he has done is to create a valuable bargaining chip out 
of nothing. 

Clinton is being snookered by it. His new security spokesman, Mike Hammer (to 
gun-toting La Femme Nikita at Justice, now add Mickey Spillane's hero at the 
White House), told yesterday of "our efforts to preserve the ABM treaty" by 
amending it. 

The Clinton response to Putin's gambit is likely to be a plea for a minor 
modification in the ABM treaty that would lock us into a puny, not just a 
limited, defense. When Putin oh-so-reluctantly accedes to this, all those 
resentful of U.S. power will applaud his statesmanship. Clinton would then 
match the Russian's concocted "concession" by slashing our missile force in 
Start III, which is Putin's other goal. 

A better deal is no deal at all. Go to Moscow; work the fence; sign 
environmental stuff, and kick the can of worms that is serious national 
missile defense down the street to the next president, who will have a fresh 
mandate to ensure American safety. 

*****

#4
Gas Prices Go up in Russia. 

MOSCOW, April 26 (Itar-Tass) - Gas prices are to go up in Russia as of May 1, 
2000; industrial consumers will be charged 20 percent more for gas, gas 
prices for federal electric power stations will go up by 40 percent and 
ordinary consumers will be charged 15 percent more, Director General of the 
"Mezhregiongas" enterprise Valentin Nikishin declared during an intercom 
conference on Wednesday attended by journalists from 60 regions of Russia. 

A decision to raise gas prices has been made following three months' 
discussions organized by the Federal Energy Commission. According to a 
resolution passed by the commission, gas prices will go up by 21 percent on 
average, although "Gazprom" managers had insisted on 35 percent, motivating 
price increases by the need to put new gas deposits into operation. 

The Federal Energy Commission agreed to a considerably lower price increases, 
admitting however, that price increases due in May will not help resolve the 
problem of gas shortages on Russia's internal market. Thus, Gazprom managers 
are planning to raise the problem again in September, Nikishin said. 

Officials from the "Mezhregiongaz" have admitted that the 15 percent increase 
in gas prices will tell hard on the population, and especially those who use 
gas heaters. However, Mezhregiongaz experts believe that a lot will depend on 
the local authorities since retail gas prices for the population exceed 
wholesale gas prices in the majority of regions by 1.5 and even two times. 

*******

#5
Subject: Panel on Trafficking
From: nmarwin@american.edu (Nancy Marwin)
Date: Wed, 26 Apr 2000 

Panel on "Trafficking in Human Beings:
The U.S. Government's Response"

The Transnational Crime and Corruption Center (TraCCC) at American
University is sponsoring a panel on "Trafficking in Human Beings: The U.S.
Government's Response." The panel speakers will be Mr. Stephen Warnath,
General Council and Senior Advisor on Organized Crime and Trafficking at
The President's Interagency Council on Women; Mr. James Puleo, Acting
Director, Bureau for International Narcotics and Law Enforcement Affairs,
Department of State; Mr. Lou de Baca, Senior Trial Attorney, Criminal
Section of the Civil Rights Division, Department of Justice; and Ms.
Jeannie Gregori, Program Specialist, Office for Victims of Crime,
Department of Justice.

The panel will be held on Tuesday, May 2, from 3:00 to 5:00 p.m. in the
School of International Service Lounge at American University. Everyone is
welcome to attend. If you plan to attend, please RSVP TraCCC at (202)
885-2657 with your name and contact information.

American University is located at 4400 Massachusetts Ave. NW, Washington,
D.C. 20016.
Please let us know if you need directions to the campus.

******

#6
Date: Wed, 26 Apr 2000 
Subject: IKEA property
From: "Ray Finch" <rcf43@juno.com>

Though I have not been following all of the press regarding the 
IKEA-tank trap debate, I thought that I’d share a memory from 
a former life. IKEA was one of our clients when I was serving as 
director for corporate security for a western consulting firm in 
Moscow. By the time I arrived, plans to build the first IKEA store 
in the Khimki district had already been finalized, and we had put 
together a security contract to basically guard the land
before construction began. Though my memory is fading, I seem to 
recall that IKEA’s decision to build in Khimki had less to do with 
logistics or location than it did with the amount of bribes it would 
have taken to build in Moscow proper. Anyway, for almost a
year, our Russian security subcontractor kept an almost 24 hour watch
over this piece of terrain (though it didn’t seem likely that anyone 
was going to abscond with this property).

One day we received a report from the security guards that there was 
some construction starting on the opposite side of Leningradskiy Shosse, 
and that the patrol guarding this site claimed that this was going to 
be the new IKEA superstore. When we finally sorted out
what was going on, it turned out that we had been guarding the wrong
piece of property for almost a year. It took some slick negotiating 
skills (and some extra IKEA capital) to work out a Bosnia-like 
arrangement between the two competing security firms. My guess
is that the current dilemma will be resolved along similar lines. 

******

#7
Financial Times(UK)
27 April 2000 
LETTERS TO THE EDITOR
Federated socialist Europe is the wrong model for Russia

>From Mr Henri J. Bardon. 

Sir, The European model of federated socialism and state dirigisme may not
be the right recipe for Russia, nor for political stability on the European
continent ("How Russia can be helped to help itself", April 25). The only
economic "miracle" in Europe in the last 10 years is that of the UK and
Finland. 

It is amazing how socialistic politics and economic dirigisme are still so
entrenched in Europe and seem still to dictate the thinking of the
political elite as it relates to foreign policy and investment. I think it
is fitting that the article dedicated to the engagement of Russia by Europe
does not include any mention of the European Bank for Reconstruction and
Development. The European Bank's total net disbursement has shrunk from
Euros 1.3bn (Dollars 1.24bn) in 1998 to a mere Euros 700m in 1999. This is
obviously not a successful recipe and maybe it should be changed. Wasn't
the idea of a European Bank for Reconstruction put forward by Jacques
Attali to engage eastern Europe back in 1991? I think it imperative that we
study the success and failures of engagement and investment in Russia and
draw conclusions before we start another wave of investments in Russia. 

When I read a statement such as this coming from a leading European
politician: "Greater emphasis should be put on Russia's building and
strengthening effective state structure . . ." I shiver at the prospects.
What does this mean? Shall we assist the Russian government in
re-nationalising industries that have been privatised? Shall we revive the
will of the state at the expense of private entrepreneurs? 

Let me humbly suggest that possibly the economic model of a federated
socialist Europe is not the proper economic model for Russia today. It is
heartening to see that Vladimir Putin has chosen London as the first
European capital to visit after his elections. Maybe he wonders what
policies have caused the UK to have the lowest unemployment figures in
Europe, a powerful economy, and a strong currency! Here in the US, even in
Seattle, we know the answer to this question; and we think Mr Putin is
right and hope that he will not listen to the honorable gentlemen from
France. 

Henri J. Bardon, President, Euro Asian Investment Holding, 701 Fifth
Avenue, Suite 3600, Seattle, WA 98104, US 

******** 

#8
Financial Times (UK)
27 April 2000
[for personal use only]
Federalism fails the people of Vladivostok: Almost a decade after opening
up to the world, the Russian city is in a mess of its own making, reports
John Thornhill

It would appear to take something akin to perverse genius to prevent
Vladivostok from flourishing. 

With its natural harbour on the eastern edge of the Eurasian land mass at
the end of the Trans-Siberian railway, Vladivostok seems destined to boom
again one day - just as it did at the start of the 20th century - by
channelling Siberia's vast natural resources to the hungry economies of
Japan, China and South Korea. 

When the formerly closed Soviet city opened up to the outside world again
in the early 1990s, many observers predicted that the region's cheap and
highly educated workforce, its rich fishing fields and exotic local scenery
would attract investors and tourists in droves. 

Yet almost a decade later, Vladivostok remains mired in a mess of its own
creation. Its poor population endures shoddy public services and periodic
electricity blackouts. Even by the nation's alarming standards, crime in
Russia's wild east is rampant (the preferred assassination technique
appears to be to lower a bomb from a rooftop and explode it outside the
sleeping victim's window). Once- hopeful foreign investors have returned
home disillusioned and light-pocketed, having been muscled out of
investment projects by criminal gangs or the local administration. 

"There is no distinction here between ours and yours, between public and
private, between criminal and clean," says one dejected Japanese investor,
noting that much of the region's economic activity just "disappears". While
Russian statistics show that the region exports Dollars 330m of fish to
Japan every year the corresponding import figures from Tokyo suggest the
trade is worth more than Dollars 1bn, he says. 

Local residents say they rejoiced at the prospects for the region in the
early 1990s when President Boris Yeltsin instructed Russia's 89 regions to
swallow as much power as they could stomach. They believed that for the
first time in decades they would be able to determine their own destinies
with far less deference to the federal centre, seven time zones away. 

But Vladivostok has become one of the most graphic examples of Russian
federalism gone wrong and the local population is turning back to Moscow
for salvation. How events develop in the city will provide a big test of
whether - and how - the newly elected president, Vladimir Putin, intends to
deal with Russia's powerful regional barons. 

Alexander Kirilichev, president of the Primorsk Shipping Corporation,
blames the region's problems squarely on the shoulders of Yevgeny
Nazdratenko, the local governor who has dominated the city's politics for
the past six years and who was re-elected in December - amid widespread
allegations of electoral falsification - for another four-year term. 

Mr Kirilichev alleges that Mr Nazdratenko holds sway over many of the
region's biggest companies, its media outlets, and its courts and is
scaring away investment by his arbitrary actions. "All power is
concentrated in one pair of hands and there are no democratic principles
here. There is a dictatorship," says Mr Kirilichev, who stood against the
governor in the December elections and claims to have won the contest with
2 per cent more votes. 

"I prefer to believe in the dictatorship of the law as advocated by the new
president Putin. Without a change in the system of power Russia does not
have a future," he says. "Putin's programme will create a new legal base
for the country and we will be able to change people who do not fulfil
federal laws." 

The opposition leader says he has been in touch with the Kremlin and
believes that Mr Putin will resolve the situation by the summer. Perhaps,
he suggests with a grin, Mr Nazdratenko may soon be appointed an
ambassador, which would remove him from Vladivostok. 

However, Mr Nazdratenko is a cunning politician, with strong financial
backing, who has seen off several efforts to unseat him in the past. In the
late 1980s the FSB, the internal security organ, sent one of its top men to
squeeze Mr Nazdratenko after some transfers of federal funds went missing.
In spite of substantiating many of the allegations made against the
governor, the FSB could not oust him. 

Mr Nazdratenko has angrily rejected all the accusations against him and has
blamed the region's ills on Moscow for failing to fulfil its own budget
obligations. But he has also tried to win personal favour with Mr Putin by
backing the pro-presidential Unity movement in the parliamentary elections
in December. 

Victor Larin, director of the Vladivostok branch of the Russian Academy of
Sciences, believes that Vladivostok provides a sorry example of regional
devolution of powers but argues that the concept can still work if it
proceeds within a stronger framework of federal laws. 

******

#9
Date: Wed, 26 Apr 2000
From: Paul Stilwell <stilwell@cwcom.net> 
Subject: Seagull's News Sheets

I thought that your JRL readers, given their interest in Russia, may also be
interested in a news service we provide free to our clients. It's called
"Seagull's News Sheets, Project Finance in Russia and FSU". In essence, the
News Sheets focus on practical issues that are relevant to the development of
finance for projects in Russia and the other FSU states. The emphasis is on
sources of finance, such as the multilateral agencies, export credit agencies
and commercial sources, and certain structural issues, rather than political
and macro-economic debate. We produce about 2 or 3 News Sheets per month.

If anybody is interested, could they please send their contact details (name,
organisation, phone and fax numbers and E-mail address) to me at
stilwell@cwcom.net or by fax to 44-1962-844535 (also phone number).

Seagull Financial Services Limited, London is a project finance boutique that
specialises in helping clients to develop projects in Russia and the other
FSU states.

Paul Stilwell
Director
Seagull Financial Services Limited

******

#10
Date: Wed, 26 Apr 2000
From: "Joel Ostrow" <JOstrow@ben.edu> 
Subject: New book Comparing Post-Soviet Legislatures 

I just wanted to alert you and the recipients of your service that I have
just published a book comparing the early post-Soviet legislatures. 
The book, "Comparing Post-Soviet Legislatures: a theory of institutional 
design and political conflict," develops a comparative institutional 
framework for explaining variations in the conflict-management 
capacity of new legislatures. It blends theory-building in the areas of
comparative legislatures and new institutionalism with in-depth case 
studies of legislatures in Russia, Estonia, and to a lesser extent 
Ukraine and some other states. The substantive
issue that receives the greatest focus is budgeting. As such, the book
should be of interest not only to those who follow post-Soviet affairs, 
but also to students of legislatures, institutions, and budget processes. 
The book, published by Ohio State University Press, is
available now. Here is the Amazon link:

http://www.amazon.com/exec/obidos/ASIN/0814250440/ref%3Ded%5Foe%5Fp/103-5331
136-8240660

Thanks,
Joel M. Ostrow
Assistant Professor of Political Science
Benedictine University
5700 College Rd.
Lisle, IL 60532
(630) 829-6470
jostrow@ben.edu

******

#11
Kennan Institute meeting report
Predictions for the Putin Presidency/Steven Solnick
By Joseph Dresen

"Russia: New President, Same Old Politics?" (March 27, 2000) Lecture at the 
Kennan Institute of the Woodrow Wilson International Center for Scholars, 
Washington, D.C.

"It is commonplace to refer to the Russian presidency as one with sweeping 
powers, commented Steven Solnick, Associate Professor of Political Science, 
Columbia University, and former Title VIII-Supported Research Scholar, Kennan 
Institute at a Kennan Institute lecture on 27 March 2000. In reality, the 
Russian presidency is much weaker than it appears on paper. The newly elected 
Russian President, Vladimir Putin, will confront certain constraints 
regardless of what he chooses to do as president of Russia.

In examining the nature of the Russian presidency, Solnick compared the 
characteristics of executive succession in the Soviet era to succession in a 
Western democracy. Soviet leaders, Solnick stated, were at their weakest at 
the start of their term, and they consolidated power over time. Soviet-era 
leaders were selected by political elites put into place by their 
predecessors and had to spend the first years of their rule placing their own 
supporters in positions of power and influence. Yeltsin, however, was an 
exception to this rule and followed the Western model of beginning his term 
at his strongest with a "honeymoon" period.

When it comes to Putin, we do not know if the Western or Soviet model will 
apply, declared Solnick. Many commentators believe that he will start with 
his own honeymoon period, but that assumes that Russian democracy will 
continue to follow the Western model. Some observers note that Putin could 
not have come to power without the support of certain oligarchs and regional 
leaders, and therefore suspect that he may be a puppet. The recent 
consolidation of Russia's aluminum industry into the hands of Berezovsky and 
his allies is cited as evidence of Putin's lack of independence. The truth is 
that it is still too soon to tell, Solnick concluded. Even if Putin is able 
to put his own team into the government, there are still structural 
constraints on what he will be able to attempt or accomplish.

Putin's relationship with the Duma will be one such constraint. The January 
power-sharing agreement in the Duma between Putin's Edinstvo Party and the 
Communist Party split committee chairs between the two giving the post of 
Speaker to the Communists. This allocation of positions is locked in for the 
four-year duration of this Duma. Solnick predicted that this situation could 
pose a problem for Putin, tying him in the future to the compromises he had 
to make in the past in order to get elected. Putin may be faced with a Duma 
bearing a "nasty resemblance" to the sort of legislature that Yeltsin had to 
deal with in 1992-93, which was formed in part because of the compromises 
Yeltsin had to make to rise to power in 1990-91.

The fragmentation of power between the federal and regional levels will 
impose another important constraint on Putin. The erosion of power from the 
federal center to the regions is unlikely to be arrested easily, remarked 
Solnick. Regional governors have tremendous power within their own regions. 
Regional administrations are increasingly taking roles as large shareholders 
in regional enterprises, giving the governors economic power and resources 
for independent action.

Putin is unlikely to try to challenge the governors directly. Solnick noted 
that Putin, from his experience in running the unsuccessful reelection 
campaign for St. Petersburg governor Anatoly Sobchak, understands the power 
of elections to bring about incremental change better than other politicians 
do.

Thus, Solnick predicted, we are unlikely to see Putin attempt to return to a 
system of appointing governors or undertake any action which affects all 
governors simultaneously. Instead, Putin will engineer policy shifts to 
foster dissention among the governors. One example is Putin's suggestion to 
establish appointed officials, "Governors General," who will have supervisory 
responsibility over groups of regions. This would force governors within 
these macro regions to compete against each other for influence. At the same 
time, Putin will present his approach not as an attempt to take power for the 
center, but to restore equality among regions. Given the unequal powers and 
privileges enjoyed by different regions, this is something that most 
governors can support, declared Solnick.

Solnick concluded with observations based on Putin's published campaign 
biography and recent press quotes. It is clear, emphasized Solnick, that 
Putin remains incredibly respectful of and loyal to the KGB and its 
successor, the FSB. Putin originally studied law not because of an interest 
in law, but to be recruited by the KGB. He believes that the KGB was and is 
an organization of consummate professionals, and anything the KGB did in 
Soviet times that was "unfortunate" was the fault of the Communist Party.

Putin believes that the needs of the State trump the rights of the 
individual. Solnick cited one response from Putin regarding Andrei 
Babitsky--the Radio Free Europe/Radio Liberty correspondent who was arrested 
while reporting on the war in Chechnya--as particularly troubling. Asked 
whether Russia's trading Babitsky to Chechen fighters in exchange for Russian 
soldiers violated Babitsky's rights as a Russian citizen, Putin stated "he 
should behave according to the laws of his own country if he expects these 
laws to be observed with regard to him."

Joseph Dresen is program associate at the Kennan Institute. 

*******

#12
BBC MONITORING
RUSSIA MAY STOP NUCLEAR POWER PLANTS IF CURBS LOSS OF OIL, GAS - GREENPEACE
Text of report by Russian news agency Ekho Moskvy on 25th April 

[No dateline as received] Greenpeace Russia distributed a report on 25th 
April, the eve of Chernobyl Remembrance Day, saying that Russia may have an 
opportunity to stop utilizing electric power generated at nuclear plants if 
it reduces losses of oil and gas. 

"Nuclear power generation is a dangerous mean of electricity production that 
has no future. Numerous accidents at nuclear facilities, including the 
Chernobyl plant disaster that happened 14 years ago, say to the fact," the 
Greenpeace report says. 

Greenpeace experts for the first time ever have made calculations showing 
that fuel saved by reducing oil and gas losses to the standards of the 
developed countries will be sufficient to produce more electric power than is 
being generated now by all Russian nuclear power plants. 

According to various estimates Russia loses from 10m to 20m tonnes of crude 
and from six to 50bn cu.m. of natural gas annually. Moreover, about 18bn 
cu.m. of casing-head gas is burnt at the oil fields. The adopted world 
standard limits crude oil production and transportation losses to less than 
0.1 per cent of the produced amount. 

"Russia is the only country in the world where production and transportation 
losses of millions tonnes of crude are accepted as normal," said Oganes 
Targulyan, Greenpeace Russia oil project coordinator. "Apart from enormous 
economic losses, it results in great environmental damage. Crude oil pollutes 
large territories and kills everything in its path," he added. 

Over 100,000 tonnes of crude were spilled in just one major pipeline rupture 
in the area of Usinsk in the Republic of Komi in 1994. Natural gas leakages 
boost global climate changes, as methane has a powerful hothouse effect. At 
the same time its burning is much less harmful for the climate. 

The report says that development of power-saving systems and the utilization 
of ecologically clean power sources, such as wind turbines, solar panels, 
biogenerators, small hydroelectric power stations and others should become an 
alternative to nuclear plants. 

Greenpeace calls on Russian and Western companies to invest not into 
construction of the new and maintenance of the old nuclear plants, but into 
the pipelines' revamp to prevent loses and into development of power-saving 
technologies. 

*******

#13
East/West: Analysis From Washington -- Liberalization And Democratization
By Paul Goble

Washington, 25 April 2000 (RFE/RL) -- The failure of elections in many 
post-communist countries to give populations control over their governments 
has led ever more analysts to argue that societal liberalization must precede 
political democratization.

The latest to make this argument is Jack Snyder, a Columbia University 
political scientist. In a newly-published book, he suggests that economic 
growth, a middle class, and a civil society are necessary preconditions for 
democratic governance.

And he sharply criticizes groups like Human Rights Watch, which call for 
public debate and free elections in countries which lack these institutional 
arrangements. Such an approach, Snyder writes, have made many problems in 
these societies even worse. 

In some respects, Snyder's argument is both compelling and unanswerable. As 
he points out, there have been few genuine elections in places where at least 
societal liberalization has not taken place.

In fact, even those individuals and groups most committed to the 
institutionalization of the electoral process, in countries which have not 
known democracy before, freely acknowledge that voting requires certain 
social preconditions.

But Snyder's analytic insight contains within it a policy prescription that 
could lead to a situation in which democracy in some of these countries might 
not only be delayed, but even put off altogether.

Indeed, arguments of the kind Snyder makes are likely to be used by those who 
-- for whatever reason -- want to reduce pressure on the post-communist 
elites to democratize, or who believe that economic forces alone will 
transform these countries.

And such arguments are also likely to be welcomed by some post-communist 
rulers who already are insisting that their people are "not ready" for 
democracy -- or at least, are not ready for its complete version. 

There are three reasons such a convergence of attitudes and ideas between 
Western governments and post-Communist regimes could postpone the 
democratization of the latter.

First, the incomplete liberalization of these societies has created a new 
class of vested interests against whom the democratic process may be the only 
effective weapon for most of the population. 

The nomenklatura privatization that has taken place in many of these 
countries has created a class of powerful oligarchs. The only time most 
leaders are prepared to take this group on is when they are forced to win 
support in elections.

The elimination or reduction of such pressure will thus have the effect of 
allowing the oligarchs to continue to control post-communist transitions and 
thus make them much longer than might otherwise be the case -- even in the 
economic field. 

Second, societal liberalization may or may not produce democracy, for as 
Snyder himself shows, such liberalization may be hijacked by nationalists of 
one kind or another. 

The freeing up of resources through liberalization, Snyder notes, gives 
elites the chance to mobilize the population frequently along nationalist 
lines. Indeed, that is the basis of the title of his monograph, "From Voting 
to Violence." 

Snyder argues that four kinds of nationalism have occurred in democratizing 
countries: counterrevolutionary, revolutionary, ethnic, and civic. And he 
notes that three of the four have often generated violence and undermined any 
hope for liberal democracy.

But he does not stress that the one exception to this discouraging pattern -- 
civic nationalism -- has emerged where democratization and liberalization 
have developed together, rather than one racing ahead of the other.

It is precisely that linkage, that need to keep the two working together, 
that Snyder's compelling argument may lead some in both the post-communist 
world and the West to ignore. 

And third, any lessening of Western pressure on these countries for greater 
democratization will almost certainly lead leaders there to conclude that 
they need not move in a democratic direction to attract Western support. 

Such a development not only will reduce the amount of freedom people in those 
countries will have anytime soon, but could in many cases create the 
condition for instability and violence during transitions from the current 
generation of leaders to the next. 

Obviously, the relationship between liberalization and democratization is 
complex, but both logic and the historical record suggest that one will not 
necessarily produce the other. Even more, they indicate that assuming the 
contrary may in the end preclude the emergence of either. 

*******

#14
St. Petersburg Times
25 April 2000
Russia's Commodities Addiction
By Gary Peach

The broad picture of Russia's economy has reverted straight back to the 
1980s. Over the past 10 years the country's leadership has done virtually 
nothing to remedy its raw-materials dependency. If the new president and his 
government is serious about addressing this age-old flaw, if they dilly-dally 
on this one, the economy will suffer for years to come.

Exports last year amounted to $74.3 billion, slightly higher than in 1998. 
Imports, however, declined drastically, and Russia was left with a $33.2 
billion trade surplus, allowing the government to finance its foreign debt 
even as it was being shunned by international creditors. But due to the steep 
devaluation of the ruble, foreign currency earning exports accounted for 40 
percent of gross domestic product ($182 billion last year), a phenomenal 
increase. In 1998 they amounted to only 26 percent.

In other words, Russia, in two years, has doubled the share - and importance 
- of exports in its national economy. What's more, the structure of these 
exports hasn't changed: oil, gas, ferrous and nonferrous metals. According to 
the Trade Ministry, 44 percent of all exports last year consisted of raw 
materials.

Meanwhile, exports of finished goods have stagnated. If in 1998 exports of 
machinery and equipment accounted for 11.3 percent of all exports, last year 
they amounted to a paltry 10.8 percent.

Once again, Russia's economic fortunes have become directly linked to 
commodity prices. Luckily 1999 turned out to be a banner year for commodities 
so that bureaucrats are now congratulating themselves for last year's 8.1 
percent rise in industrial product. As expected, the folks at the Finance 
Ministry promptly used every opportunity to tax exports: By the end of the 
year tax receipts had far exceeded budgeted targets, and duties on export 
revenues contributed 30 percent of federal revenues.

Thankfully, the commodity-dependency, in comparison to Soviet times, has been 
thoroughly discussed and documented. In fact, the issue was never so 
blatantly illustrated as in March, when OPEC gathered in Vienna to decide the 
immediate future of oil prices. The Russian press was inundated with reports 
on the meeting, and U.S. pressure on the OPEC to raise production, thus 
lowering world prices, was interpreted as an attempt to undermine the 
"budding prosperity" of the Russian economy.

OPEC notwithstanding, the predicament of President-elect Vladimir Putin is 
quite clear. The Russia of 2000, as was the Soviet Union of the 1980s, is 
"addicted to oil." The point isn't so dire that, should commodity prices 
collapse across the board as they did in 1986, Russia will fracture and 
split. Rather, the economy will undergo a lengthy period of stagnation with 
high inflation, capital flight and refuge in the shadow economy.

For this reason there is a wide discrepancy in economists' predictions as to 
how Russia will fare in 2000. Estimates in GDP growth fluctuate from 1.5 
percent to 5 percent, and Putin proclaimed last week that the economy grew by 
8 percent year-on-year during the first quarter - though many observers would 
like to check his data. The latest statistics show that direct investment and 
consumer confidence are on the rise, so the picture does appear to inspire 
hope.

But only in the short term. First, much of the direct investment is flowing 
toward the same commodities-related industry. Secondly, just because the 
Russian consumer is feeling more confident these days doesn't mean he is 
going to buy a Lada. The task is to make Russian goods competitive on world 
markets and to diversify the country's export structure. For that the economy 
will need billions in foreign investment. And that will come only when 
lawmakers have adopted a conducive, predictable Tax Code and the nation as a 
whole has learned how to treat investors fairly.

*******

#15
Financial Times
27 April 2000
[for personal use only]
Russia claim on foreign property
By John Thornhill in Moscow

Russia might have claims to foreign property worth up to $400bn, including 
several tonnes of Tsarist gold held in bank vaults in the US, UK, France and 
Japan, the parliamentary state property committee said on Wednesday. This 
compares with Russia's total foreign debt of $158bn. 

Igor Lisinenko, a prominent businessman who is now deputy head of the 
parliamentary property committee, said he was backing legislation that would 
introduce far stricter management of the country's foreign property, which 
includes Tsarist-era assets, Soviet-era banks, 1,500 commercial companies, 
and investments. 

He said that, if properly managed, these assets could generate hundreds of 
millions of dollars of revenues for the federal budget each year and be used 
to reduce Russia's external debt obligations. 

Mr Lisinenko said the chaotic management of the state's foreign assets 
inspired corruption and had generated only $11m for the budget last year. He 
said proposals were being developed to establish a unified federal agency, 
which would draw up an inventory of foreign assets and manage them more 
effectively. 

When compound interest rates were taken into account, Mr Sirotkin estimated 
that Russia owned gold worth $23bn in the US, $50bn in the UK, $25bn in 
France and $80bn in Japan. 

An official at the Bank of England said the bank could not comment on gold 
deposits held by other clients. But she added that the Foreign Office had 
presented a report to parliament in 1986 confirming that the Soviet Union had 
no claims to any assets in the UK arising before 1939. 

However, Russia has itself promised to honour some financial claims arising 
before the 1917 revolution. 

******

#16
TITLE: INTERVIEW WITH SECURITY COUNCIL SECRETARY SERGEI IVANOV ON 
THE NEW MILITARY DOCTRINE OF RUSSIA
(VREMYA ORT PROGRAM 21:00, APRIL 24, 2000)
SOURCE: FEDERAL NEWS SERVICE

Anchor: In the last few days a lot of events have happened.
The Federation Council has ratified the START-2 treaty, the State
Duma has ratified the nuclear test ban treaty, nuclear disarmament
talks began in the US and the Security Council has approved the
final draft of our military doctrine which has been signed by the
President and has come into force as of today. Has our life become
any safer? With me in the studio is Secretary of the Security
Council of Russia Sergei Ivanov. 
Good evening. The previous doctrine was drafted in 1993. What
things have become outdated by comparison with the new document or,
to put it in other way, what new insights have we got into the
issues of our security during the past 7 years? 

Ivanov: Seven years is a significant period of time and it
enabled us to take a more critical look at the world around us, to
see the threats that emerged mainly because of the demise of the
Soviet union and, most important, new external and internal
political realities have emerged. It forced us to take a more
pragmatic look at things especially in the field of defense. And as
a result of these deliberations a new military security doctrine
came into being which, in my view, accurately reflects the
situation in this field as it is today. 

Q: There are no more illusions. 

A: That's right, there are no more illusions. We have become
convinced that we live if not in a unipolar world, certainly in a
world that looks very much like a unipolar world. And as we have
repeatedly declared, we would like to see a multipolar world. And
in this connection we have lowered the ceiling for the use of
nuclear weapons. Let me say outright that it does not mean that we
are engaging in saber rattling and trying to scare our neighbors
with any actions connected with possible use of such weapons. But
at the same time we say clearly that if there is no aggression
against Russia and its allies, there will be no use of nuclear
weapons. 

Q: The previous language was rather more romantic. 

A: Yes, in the Soviet times, I should say, it was a little on
the romantic side and it was politicized. This is no longer the
case.

Q: Perhaps you will correct me, but upon reading the document
one gets the impression that it is in some ways a response to the
actions of the US and NATO in Yugoslavia. 

A: You are right, but only up to a point. One also has to bear
in mind Chechnya and much else. But to some extent, yes, the
experience of Yugoslavia has shown that some countries which I
don't have to mention here, see the world as a free zone of their
actions and feel that they can use armed force without the decision
of the United Nations. 

Q: And If our doctrine had been written two years ago, how
would Russia have acted in that situation? 

A: If the doctrine had been adopted two years ago, I think we
would have acted in pretty much the same way as we have, but
perhaps, in a more resolute manner at the very beginning. I mean we
would have shown more determination not in being dragged into this
conflict, but in upholding our interests by foreign policy and
diplomatic efforts above all. And secondly, a bold introduction of
our paratroopers into Kosovo, something that we have already done. 

Q: Is the creation of the Russia-Byelorussia state reflected
in the doctrine? And, of course, everybody is interested in the
military group 300,000-strong, which is being set up on the border
between Russia and Poland. 

A: In principle, the allied relations that are to be built up
with Byelorussia over the next few years. And I would like to
stress that we do not yet have a union state although the process
of its creation has been declared. We have embarked on the road of
creating a union state. That may take several years. But our
military services and special services are coordinating their work
with those of our Byelorussia comrades, partners and colleagues. 
To answer specifically your question about 300,000 group of
forces, the plans to create it existed three years ago. I would
like to stress that there is nothing new in these plans. We are
coordinating the actions of the armed forces of Byelorussia and
Russia on a large space stretching from the Leningrad Military
District and covers the entire Moscow Military District and our
exclave in Kaliningrad. The Byelorussia group, about 80,000-strong,
is coordinating its actions with the 220,000-strong group in three
military districts, that's if you consider Kaliningrad as an
independent entity. And what has been declared does not mean that
tanks will start rolling and infantry will be on the march.

Q: You have allayed many fears there. 
START-2 is tied in with ABM system and the argument is over
whether the US will withdraw from the ABM system to set up a
national missile defense. Will the upcoming Clinton-Putin meeting
find some imaginative way out of the political impasse?

A: I don't know if the meeting will be able to produce some
unorthodox solution. The meeting, very tentatively, has been fixed
for early June this year. But I think that the ratification by our
Duma and later the Federation Council of these treaties will make
it more difficult for the Americans to withdraw from the ABM
treaty.
Speaking about the ABM treaty we will consider it, with some
grounds, to be the cornerstone of all strategic stability and
violation of this treaty would trigger a collapse of all the
existing offensive arms limitation agreements. Because these
weapons can and must be reduced only on condition that both sides
know that even 1,500 warheads -- and this is our goal under START-3
which hopefully will come in for vigorous discussion with the
American side -- even that number of warheads in the opinion of our
experts will be ample to penetrate through the national ABM system
with the Americans hypothetically are going to create over the next
20-25 years. The effectiveness of that system is a big question
because our experts believe that an effectiveness of less than 0.8,
that is, if 8 missiles are apprehended out of ten, is very
doubtful. 
Time will tell. Anyway, we are not going to withdraw from any
agreements and Russia has stated clearly that it favors compliance
with all the international agreements and obligations regarding
limitation of offensive arms and it is not going to withdraw from
the existing treaties. 

Q: I can't help asking you about Chechnya. Many of the people
I have interviewed in this studio have said that the military are
doing their job there and the politicians should be doing theirs.
A political concept is needed for a political way out of what is
happening there. The military will not by themselves solve this
problem. They will take it only so far. And the question is, where
do we go from here? 

A: Well, first of all, with all due respect for the military,
the Interior Ministry, and the special services, they have not
completed their job. As you know, there are still scattered units
in the mountain areas which offer resistance not in the shape of
organized actions, but by staging ambushes or bandit attacks. This
job should be followed through and there are no doubts in the minds
of most people in this country. But I do agree with you that sooner
or later the process of political settlement should begin. The
question is, with whom and when? 
Most of the current leaders in Chechnya who are in the
liberated part of Chechnya which really means almost all of
Chechnya, have repeatedly spoken against organizing elections of
the new political leaders of Chechnya. Time is needed for
stabilization. I agree with that and I think a period of two or
three years is needed for emotions to cool, for people to look
around them and, most importantly, to begin to live normally
because elections are only possible in normal, human conditions.
After ten years when all life, the whole system of power, the
social structure and the law enforcement structure, were virtually
nonexistent, one cannot expect the Chechens who remain on the
territory, and that's less than a third of the population in 1991
-- a certain transitional period is needed. 
As for Maskhadov, Vladimir Putin has spoken on Friday about
the possibility of talks with him and the conditions that he has
outlined. I have nothing to add. As for the Mufti of Chechnya and
other authoritative people in Chechnya, we have long been in the
process of negotiation with them and we hope to build up this
process. 

Q: Thank you for joining us. We will probably invite you in
the future because we want life in Russia to become safer, if only
little by little. 

*******

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