May 23, 2000    
This Date's Issues: 4318 • 4319 • 4320

Johnson's Russia List
#4319
23 May 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Carnegie Endowment for International Peace: Arbatov on U.S.-Russian Arms Reduction.
2. Reuters: Putin tells regional leaders they under scrutiny.
3. Voice of America: Peter Heinlein on population and birth rate.
4. smi.ru: Gusinsky Will Laugh Until Berezovsky Cries.
5. Moscow Times: Battling for Position. Five months in the making, 
the Center for Strategic Research's economic blueprint was finally 
handed over to the government Monday. Will Prime Minister Mikhail 
Kasyanov finally read the document, and if so, will he respect it? 
Catherine Belton reports. 
6. Transitions Online: Roy Medvedev, Putin's Riddle. He's strong, 
decisive and energetic, but that doesn't mean Russian President 
Vladimir Putin is sinister.
7. EBRD job.]


******


#1
Carnegie Endowment for International Peace
Washington DC
May 18, 2000


Arbatov on U.S.-Russian Arms Reduction


On May 9, 2000, the Carnegie Non-Proliferation Project hosted Alexei Arbatov, 
Deputy Chairman of the Committee on Defense in the Russian Duma. Excerpts 
from his comments follow. The full text of Mr. Arbatov’s statement can be 
found at the Project web site. www.ceip.org


START II: Delusions of Progress


"There are three principal aspects of the ‘bad news’ with respect to START II.


"Let me start with the substance of this issue. START II was ratified in 
Russia by the Russian Parliament not because Russians think that the threat 
is lower, not because Russians think that nuclear weapons are less relevant, 
nor because the Russian Parliament and public think that the United States 
will be a partner for cooperation and security. START II was primarily 
ratified because the Russian public and political elite think that the 
nuclear threat is great, that the United States is keen on achieving 
superiority, and that nuclear weapons are still as relevant as ever for 
Russian security and U.S.-Russian relations. 


"The principal argument in favor of START II…was that without START II, 
Russia’s forces—with a shortage of funding—would go down in ten years to 
1,000 warheads on their own. At the same time, the United States can easily 
afford to maintain the present level of its strategic forces. In this way, if 
there is no further arms control agreement, in ten years the United States 
may, inadvertently, acquire nuclear forces that are five or six times over 
that of Russia…without spending additional money…


"If Russia were to preserve its forces at the level of START I, which is 
6,000 nuclear warheads, then over ten years Russia would have to spend about 
$33 billion only on strategic nuclear forces and C3I systems. It would mean 
spending 65% of its total defense budget yearly only on strategic nuclear 
forces. If Russia were to keep its forces at the level of START II, which is 
about 3,000 weapons, then it would have to spend $26 billion during the next 
ten years, which would annually account for about 50% of its overall defense 
budget. If Russia was to maintain its forces at the level agreed in the START 
III agreement, which is around 2,000 weapons, then we would have to spend $14 
billion in the next ten years—which would be about 27% of our present budget… 


"If the United States keeps its forces at the level of START I and Russia’s 
[forces] decline because of a shortage of funding, then in ten years the 
American second strike capability, would be 15 times bigger than Russia’s 
second strike capability. At the level of START II the United States would 
have triple the superiority of Russia…Under START III there would be 
approximate parity between the two sides, which implies that for Russia, 
ratification of START II is primarily a way to reduce the American nuclear 
threat.


"The fear of American nuclear superiority and the fear of the United States 
was the principal motive for many members of Parliament to vote for START 
II…Spending 65% of the budget means that nothing will be left for the 
conventional forces and for all other functions for Russia armed forces…


"The second motive…is that Russia considers START II to be an additional 
guarantee of the viability and validity of the ABM Treaty of 1972…Putin made 
a very strong commitment, which is on the record, that if the United States 
unilaterally withdrew form the ABM Treaty, Russia will withdraw from START 
II, and will go in for new MIRVed ICBMs. He also said…that Russia will 
withdraw from all regimes of arms control, including conventional arms 
control.


"Article IV [of the START II implementation law] clearly states that if 
agreement on START III is not reached by December 31, 2003, Russia will once 
again consider withdrawal from START II…By that time, Russia will not have 
completed its reduction—it will only have reached the level of 4,000 weapons…


CTBT Cynicism


"[The] CTBT was passed in the Duma much more smoothly, without such a great 
debate and without such great attention. However, the arguments in favor of 
CTBT were also not necessarily very encouraging either for the American 
government…or for the American arms control community. The first and 
principal argument in favor of CTBT was that it will not enter into force, 
anyway, before the United States and a number of other countries ratify it. 
It was largely seen as a symbolic gesture. 


"The second consideration was that Russia is not going to violate the 
moratorium on nuclear tests anyway. And if the United States or some other 
country does that, then Russia will be able to do the same and the CTBT will 
not be an obstacle. 


"Finally, since Russia is not going to violate the moratorium on nuclear 
tests, it has to maintain stewardship of its nuclear arsenal without natural 
tests. That needs additional funding, which is very difficult to obtain in 
the absence of the CTBT Treaty. CTBT was linked directly with additional 
funding for the stewardship of Russia’s strategic arsenal…


U.S. Obligations


"First of all, the U.S. Senate has to ratify the 1997 documents, then both 
sides have to agree on the START III Treaty, going down to 1000-1,500 
warheads. And maybe we can revise the protocol to the ABM treaty, so that the 
United States may develop its desired ABM deployment area in Alaska. The 
United States also needs to ratify the CTBT, so that we can move on to a more 
stringent non-proliferation regime, and bring India and Pakistan into the 
CTBT as well…


"The ball is now in the American court; it is up to the United States to make 
further steps. If it is done we may achieve a real breakthrough in arms 
control, which will make it easier for us to come to an accommodation on 
European affairs, on Iran, on China, and many other issues of international 
security. However, if that does not happen, the new deadlock in arms control, 
and maybe even the disintegration of the arms control system will greatly 
aggravate the conflicts that we have in the world at large. That will be 
extremely detrimental to international security, to the security of Russia, 
and to the United States as well."
******


#2
Putin tells regional leaders they under scrutiny
By Ron Popeski

MOSCOW, May 22 (Reuters) - President Vladimir Putin moved forward on Monday 
with his plan to tighten control over Russia's sometimes restive regions, 
telling local leaders they would be under close scrutiny to ensure the 
country's laws were upheld. 


His newly appointed cabinet held its first informal meeting and heard pledges 
by Prime Minister Mikhail Kasyanov to complete work soon on a long-awaited 
programme to right the economy. 


Putin, inaugurated three weeks ago, has proceeded quickly with his plan, 
dividing Russia into seven vast administrative zones. He has also indicated 
he wants quick parliamentary approval for legislation to trim the rights of 
local governors and shake up the upper house of parliament. 


At a Kremlin ceremony attended by governors and other local officials, Putin 
presented Viktor Cherkesov, one of the seven representatives he is 
dispatching to oversee the regions. He said failure to observe laws locally 
would not be tolerated. 


"Russia is a federal state. Everything set down in the constitution must be 
implemented both by regions and the central government," Putin said in 
comments broadcast on television. 


"There must be a single way of understanding legislation everywhere 
throughout the Russian Federation." 


Putin's initiative amounts to the most ambitious overhaul of Russian 
government structures since his predecessor, Boris Yeltsin, rammed through a 
new constitution after using tanks to quell a parliamentary rebellion. 


BROAD WELCOME FOR PUTIN'S REGIONAL PROPOSALS 


It has received a broad welcome from officials in Moscow. Even governors 
apparently keen not to displease the new Kremlin leader have supported it, 
though with some reservations. 


During his first weeks in office, the president has also moved to consolidate 
relations with former Soviet republics. 


He toured mostly Moslem Central Asia last week and was to travel to 
neighbouring Belarus on Tuesday to try to inject new life into a five-nation 
customs pact. 


He has also had to maintain his focus on the eight-month-old campaign to 
subdue separatists in Chechnya, where rebels have turned to launching 
guerrilla-style raids on Russian troops. The military said on Monday it had 
foiled rebel plans to raid major towns, but it still reported fresh attacks 
on its positions. 


In his comments at Monday's ceremony, Putin said the changes involved no 
constitutional change, but rather a "move to create a more coherent operation 
of federal structures." 


Some commentators have suggested that the changes will remove some of the 
checks and balances inherent in a federal system to limit the powers of 
central government. 


They also point to the fact that all but two of the Kremlin appointees to the 
regions have a military background. 


Cherkesov is a close associate of the president and was second-in-command at 
the FSB domestic intelligence service headed by Putin before he became prime 
minister last year. 


Parliamentary officials said the State Duma lower house might extend its 
session into July to deal with legislation the president considers vital to 
reforms. The process of considering bills on regional change could begin 
within days. 


At the earlier meeting of senior cabinet ministers, Kasyanov introduced his 
new minister of economic development, German Gref, who heads a think-tank 
currently drafting one of a number of economic plans being considered by 
ministers. 


Gref was applauded by his cabinet colleagues as Kasyanov said the government 
was considering the initial findings of his Strategic Research Centre. He 
said the new programme would be completed by the middle of next month, with 
the cabinet under some pressure already to set indicators for the 2001 
budget. 


******


#3
Voice of America
DATE=5/22/2000
TITLE=RUSSIA / BIRTH RATE
BYLINE=PETER HEINLEIN
DATELINE=MOSCOW


INTRO: The population of Russia is shrinking. There 
has been no official census since 1989, but government 
figures show there are now almost three-million fewer 
Russians than when the Soviet Union collapsed. Moscow 
Correspondent Peter Heinlein reports the main factor 
is a sharp decline in the birth rate.


TEXT: /// SFX OF BABY CRYING, THEN FADE TO. ///


The sound of a newborn baby is becoming increasingly 
rare in Russia. The State Statistics Committee says 
Russian women are having only an average of about one-
point-three children these days, far below what is 
needed to keep the population at its present level.


Experts say the low birth rate is a clear warning sign 
of a pending demographic disaster. Last year, the 
population dropped nearly 800-thousand, and this year 
is expected to be the same.


A demographer at Georgetown University in Washington, 
Murray Feshbach, says if the trend continues the 
number of people living in Russia could drop from its 
present level of 145-million to 80-million by the year 
2050.


There are two other contributing factors for the 
population decline. First, the average Russian man 
dies before the age of 60. Studies show alcoholism is 
the main contributing factor in the high death rate.


Second, Russia has one of the highest abortion rates 
in the world. A study done in St. Petersburg revealed 
that seven out of every 10 pregnancies - 70-percent - 
ended in abortion. Statistics indicate there are 
twice as many abortions as live births in the city.


Experts say the only feasible solution is to encourage 
Russians to have more children. But with the country 
going through a difficult economic transition, young 
couples are increasingly choosing to have either one 
child or none at all.


Thirty-nine-year old Olga is the mother of a 13-year-
old son. She says in the economic turmoil of the 
post-Soviet period, she decided against having a 
second child.
/// OLGA ACT ///
I wanted to have another child, but I could not 
afford it. And I can not afford it. And in 
Soviet times, there had never been a question of 
whether I can afford to have another child.
/// END ACT ///
Olga, who declined to give her last name, says the 
pressure of raising children in a time of falling 
living standards is just too much for many Russian 
families.
/// 2ND OLGA ACT ///
Some families fell apart, so some families were 
in such an unstable situation for many years 
that people felt they just could not have 
children, because they did not know what would 
happen tomorrow. And that is how I feel.
/// END ACT ///
Olga says even at age 39 she would have another baby 
if she felt she could provide the stable environment 
to raise the child properly.


Government reports in recent years suggest the 
declining population could become a threat to Russia's 
national security. Several have suggested that the 
best way to fight the decline is to create an economic 
system that gives couples the security needed to feel 
they can afford children.


But that is a long-term answer. The troubling dilemma 
caused one expert to comment recently that the future 
of Russia is not dying, it is simply not born. 


*******


#4
smi.ru
May 22, 2000
Gusinsky Will Laugh Until Berezovsky Cries 


"Segodnya" runs a whole page story about the Aeroflot case, now that the 
investigators of the Prosecutor General's office arrived in Switzerland to 
carry on the investigation. Earlier, criminal charges of doing illegal 
business had been brought against Boris Berezovsky. According to "Segodnya"'s 
sources, investigator Nikolai Volkov was prepared in early April to 
officially bring the criminal charges against the Duma deputy Berezovsky 
accusing him of fraud and money-laundering. About $400 million made by the 
Aeroflot had been transferred to Berezovsky-owned "Andawa" and "Forus" 
financial companies in Switzerland. The papers that are to be delivered to 
Moscow in a week may lead to bringing another charge against Berezovsky - of 
creating a criminal association. It seems the Aeroflot investigators have 
decided to collect all available materials regarding the key person before 
they approach the Prosecutor General with a request to obtain his sanction 
for the legal persecution of Berezovsky. This is a sort of a guarantee 
against political risks, "Segodnya" says.


Comment: Media-MOST's media are happy to cover the "recent developments" in 
the Aeroflot case. This investigation may inflict Boris Berezovsky's business 
so much harm, that the search in Gusinsky's office might look like a child's 
play. The two oligarchs, indeed, have clinched each other. Yesterday, the 
ORT's Vremya whipped Media-MOST's owner. Gusinsky was portrayed as a real 
"enemy of the people" who is operating in Russia in the interests of the US 
and Israel. No doubt, in response to these accusations (partly justified) 
Gusinsky will take effective steps. Some may say, there was something like 
that in the past - but they will be wrong. In late 1990s, during an ongoing 
struggle between the oligarchs the confronting propaganda machines were 
working for the public and exchanged heaps of "kompromat". Now the show is 
designed for just one spectator, Vladimir Putin. At the beginning of his 
tenure, he promised to keep the oligarchs at equal distance from the Kremlin. 
He started implementing his new policy with Gusinsky. Now it is logical for 
Berezovsky to expect troubles. 


******


#5
Moscow Times
May 23, 2000 
Battling for Position 
By Catherine Belton 


Five months in the making, the Center for Strategic Research's economic 
blueprint was finally handed over to the government Monday. Will Prime 
Minister Mikhail Kasyanov finally read the document, and if so, will he 
respect it? Catherine Belton reports. 


For the Center for Strategic Research, a presidential think tank set up to 
draft a 10-year plan for economic growth, last week brought one nightmare 
after another. It was a week that began amid talk that "The Plan" would 
finally be handed over in all its glory to President Vladimir Putin. Blessed 
by visiting International Monetary Fund economists, the plan would then be 
endorsed by the president. Its architects, some of the country's sharpest 
economic minds, would then assist the government in implementing their 
program - the nation's economic future would be assured. 


Instead, speaking to the State Duma last Wednesday before the 325-55 vote 
that confirmed him in office, Prime Minister Mikhail Kasyanov belittled the 
think tank and its leader, German Gref, asserting that the plan would receive 
"consideration" as the government worked up its own plan, to be ready in 
June. 


International Monetary Fund missions have flown in and out of Moscow over the 
past few months, usually to check on the center's progress. It seems they are 
far from overwhelmed by what they have been shown. At a conference last week 
for foreign investors, the head of the Fund's Moscow office, Martin Gilman, 
questioned whether the plan would find its way into government strategy. He 
also queried whether Russia has the political will to push through the Gref 
plan. 


"The key question now is what policies will be adopted by the government and 
whether reforms will be implemented," Gilman said. 


"Most of the center's policies existed before in former government programs. 
... If they have been tried in the past and are being proposed again, the 
question is why should they work now?" he asked. "The big question we are all 
waiting for is whether Mr. Gref's proposals will actually be implemented." 


And when Gref only just squeaked into the government as economic strategy and 
trade minister, some doubted whether he would be able to save his plan from 
being a mere paper guide to a tiger economy, and become another one of the 
curious might-have-beens littering the country's recent economic history, 
like Grigory Yavlinsky's ill-fated 500 days program. 


However, Kasyanov on Monday was much more accommodating toward the plan as he 
presented Gref to workers at his new ministry, saying the document will be 
used as the basis for drawing up the government's program. 


"I have given orders to the ministries and departments that this groundwork 
be reviewed, and by the middle of June we should draw up the governmental 
economic program,'' Kasyanov was quoted as saying by Interfax. 


It was a warmer welcome than Gref might have expected just six days earlier. 


Panic in Heaven 


In the palatial lobby of the recently completed Vatutinki complex, German 
Gref, the head of the center, padded nervously around in track suit trousers 
and slippers last Tuesday, his mobile phone constantly ringing. Late May snow 
spotted against the windows of the retreat, a lavish country hotel owned by 
the presidential administration. Located about 40 kilometers to the south of 
Moscow, some have described its grandiose structure as corruption-tainted 
property chief Pavel Borodin's swan song for the Kremlin - it is hardly the 
mere "dacha" of earlier press reports. 


Kasyanov was about to go before the State Duma for last Wednesday's vote on 
his candidacy as prime minister, and the Moscow press had been filled with 
rumors for days that he was fighting for ascendancy with Gref's center over 
economic policy. Kommersant had reported Kasyanov was moving to adopt an old 
plan penned by former first deputy prime minister, Communist Yury Maslyukov, 
and was looking to diminish Gref's position in the future government. 


Aides at the retreat Tuesday said Gref was only just beginning to wake up to 
the danger of being usurped by the new prime minister after months of quietly 
planning economic policy in theory alone. A meeting with pro-Kremlin Duma 
faction Unity was hastily arranged for later that day and a meeting with the 
Communists was planned for Thursday in a last-minute bid to shore up 
political support for Gref. Other economists at the retreat said there was a 
danger there would be no one in Kasyanov's new government to make sure their 
plan was followed. 


"Gref, or a sound economist from the center, has to get the post of deputy 
prime minister, otherwise there will be no one able to realize the strategy," 
said Oleg Vyugin, the former firstdeputy finance minister who is now in 
charge of mapping macroeconomic policy for the center. 


"This all depends on the president, but it should happen as long as he 
remains a serious supporter of the center's plan," he said. 


Two days later, the announcements were made on who had made it into the 
Cabinet. Gref was given a post as head of the newly merged Economic 
Development and Trade Ministry. He did not get the rank of deputy prime 
minister. 


"Without the status of deputy prime minister, Gref cannot coordinate the work 
of other ministries to make sure they are following the strategy," Vyugin 
said in a telephone interview later Friday. "I can only pity Gref because he 
has a very complicated task ahead of him. He has a huge administrative burden 
trying to merge the work of the two ministries [economics and trade], and 
he's going to have to tread on a lot of toes, because it's going to mean 
sacking a lot of officials." 


However, Vyugin said hope for coordinating the work of the plan was not lost 
because Alexei Kudrin, an ally who also originated from Gref's hometown of 
St. Petersburg and who had just been appointed deputy prime minister and 
finance minister, appears to have gotten that brief. 


But the new government announced over the past few days appears to keep many 
of the fault lines between opposing financial clans that stymied the 
government of former President Boris Yeltsin. It also retains large numbers 
of officials who rose to power at a time when the circle of Kremlin insiders 
led by Boris Berezovsky - and known as "the family" - and many observers deem 
to be allied with Berezovsky. 


Gref and Kudrin are seen as having close ties to the former architect of the 
state privatization program, Anatoly Chubais, the chief executive at 
electricity monopoly Unified Energy Systems and the main force behind the 
creation last fall of the Union of Right Forces, or SPS, political movement. 


Kasyanov, who will be the undisputed head of the government, is reported to 
be linked to old-guard Kremlin power broker Berezovsky and his main 
instrument, Alexander Voloshin, acting Kremlin chief of staff. 


However, the prime minister has denied having strong links to any one 
oligarchic group, saying he consults regularly with all of the main business 
leaders. 


Alexei Zabotkin, who watches politics and economics at United Financial 
Group, a Moscow brokerage, said recently that Kasyanov was "a product of the 
economic system where a small circle of power brokers use political clout for 
their own financial gain." 


That system of "favoritism" has blocked Russia's economic development over 
the last 10 years, Vyugin said. Wiping out the local version of crony 
capitalism is therefore one of the center's main aims. 


Snakes and Ladders 


Several key points of the plan have already been put forward by Putin and his 
government as future policy . 


Indeed, part of the Gref center's plan to redress the problems caused by 
over-mighty regional leaders was announced Wednesday by Putin, when he said 
he would propose legislation for sweeping changes to the powers of regional 
leaders, changes to wipe away their automatic status as lawmakers in the 
upper house and their accompanying immunity before the law. The measures also 
aim to provide a mechanism for firing regional bosses should they break 
federal law or the Constitution. 


The appointment of presidential representatives to watch over seven districts 
across the Russian Federation was also part of the center's plan to increase 
control over policy in the regions, to remove the court system and other 
federal institutions from the governors' sphere of influence, and to make 
sure regional legislation is in line with federal law. 


However, that legislation, which will significantly reduce regional leaders' 
power bases and cut back regional limits on movements of goods across local 
boundaries, is likely to face delaying tactics in discussion in both chambers 
of parliament despite lawmakers' cautious approval so far. 


And there are no guarantees that the heads of the new federal super-districts 
will act to lower the burden of bureaucracy and arbitrary rule on local 
businesses. They might just add to it. 


Picking and Choosing 


Other parts of the plan have been forwarded by the government as priorities 
for legislative change this year. 


These include the passing of a zero-deficit budget for next year and tax cuts 
to lower the punitive burden that now strangles enterprises and gives them a 
reason to misreport financial data. 


In a speech before the Duma vote on his candidacy for prime minister last 
week, Kasyanov said the government was actively searching for ways to cut the 
tax burden. He said that turnover tax should be eliminated and the payroll 
tax burden should be lowered to 35 percent. Even though Kasyanov, when 
quizzed by the Duma before the vote, said he had "yet to read" Gref's plan, 
both those tax proposals had already been included in the Center for 
Strategic Research's draft program. 


He did not comment on the center's plans to chop income tax to a flat rate of 
13 percent, a proposal that has been widely touted as a cornerstone of 
government tax policy. First Deputy Finance Minister Sergei Shatalov said 
Monday, however, that the income-tax cut measure, along with the others, 
would be forwarded to the Duma in the next few days. 


Kasyanov appeared to jeer at the Gref plan in his speech to the Duma - even 
talking of his interest in a potential rival plan from Maslyukov - saying he 
did not know which parts of it would become government policy. 


Nevertheless, Kasyanov culled many of his main policy proposals to the Duma 
from the Gref program. 


In his speech he called for better oversight of the banking system, the 
introduction of banking deposit insurance and mortgages, and simplification 
of the process for registering small businesses. He also called for wage 
hikes for state officials as part of a plan to wipe out corruption, 
strengthen the court system, cut back regional barriers obstructing the 
movement of goods and the targeting of social subsidies for those most in 
need. 


He also tapped another suggestion mapped out in the plan - the creation of 
individual pension accounts to replace the existing system, under which a 
series of large pension funds, each covering different industries and 
professions, accumulate and invest contributions from today's workers in 
order to pay today's retired population a flat pension. 


Without a change of policy along these lines, the country could face a crisis 
because demographic trends show that the number of elderly citizens as a 
proportion of the total population is growing. This kind of social security 
crunch is already a major talking point in many countries, with Britain and 
the United States just two of the more prominent examples of societies 
dragging themselves toward changes in the way they provide for their citizens 
in retirement. 


Kasyanov also agreed with the center's proposal to liquidate the Road Fund. 
Part of all profit taxes collected in any particular region is allocated to 
the federal and local road funds. This money is supposedly earmarked for 
repairing and maintaining existing roads and for helping to build new ones. 
However, there have been numerous examples of "vanishing" road funds - and 
almost as many examples of overambitious local governments overspending and 
sending their road funds into debt, meaning that the local budget is left to 
pick up the pieces. 


The main areas where the prime minister differed from the Gref center's 
ideas, came in his calls for greater state support for agriculture and 
greater state oversight over the so-called natural monopolies - Gazprom, the 
Railways Ministry, Unified Energy Systems and Sberbank - in order to increase 
their transparency and effectiveness. 


Theory and Practice 


It remains to be seen, however, which parts of the plan Kasyanov will take on 
board as government strategy and attempt to implement. He said Monday that 
the government economic policy would be ready by mid-June after taking in 
proposals from Gref's think tank and other political forces. 


He has called for "energetic, consistent and balanced" policy changes. But 
his handling of the main policy "babies" he has cradled during his time as 
finance minister and Putin's acting prime minister suggest that Kasyanov is 
more interested in gaining control of financial flows and continuing the 
practice of handing out big state subsidies to industry and agriculture. 


The Gref center plan calls for eliminating subsidies and nonpayments. 


Kasyanov, on the other hand, has been one of the main engines behind creating 
a state bank for crediting agriculture, Rosselkhozbank, out of the ashes of 
SBS Agro's branch network. He has persuaded Putin to call on the Central Bank 
to halt bankruptcy proceedings against Promstroibank in order to use the 
bank's structure as the basis for a state bank for crediting industry. 


An official decree for creating Rosselkhozbank was signed in mid-March. And, 
at the beginning of April, the Moscow Federal Court of Arbitration overruled 
a decision by a lower court last year that found Promstroibank bankrupt, and 
returned it to the lower courts for further consideration, Interfax reported. 
There has been no final ruling as yet. 


Both banks would be managed by the Agency for Restructuring Credit 
Organizations, or ARKO. Kasyanov became chairman of the board of the agency 
in mid-February, just before the fortunes of both banks began to change. 


A World of Doubts 


Some observers have expressed doubts over how "radical" the plan is and 
whether it can perform the miracles Gref and his colleagues claim it can. If 
Kasyanov and others were to water the program down, would it really matter? 


Vyugin was sure of one thing: This new plan is different to previous 
government programs - and most definitely superior to them. 


"The program is a lot better than others and has been much better planned. 
But the question of whether it will be implemented does not have any 
answers," he said. 


The plan maps out a strategy for sweeping change under three headings: 
modernization of the economy, social policy and restructuring of the power 
system itself. 


If implemented it could boost the country's gross domestic product by 70 
percent over the next decade, according to the center's estimates. 


However, the plan has not only come under fire from leftist factions in the 
Duma, who have criticized it as being too liberal and as being potentially 
"catastrophic" for the economy, presidential economics adviser Andrei 
Illarionov has said it does not go far enough. 


He called the plan "very restrained and cautious" and said that it maps out 
"gradual steps to push forward the economic policy that has been pursued over 
the last two years and brought the country to the stage of recovery and 
economic growth, however small." 


In essence Illarionov does not see the plan as anything that's going to 
radically change the situation. 


The old man of Russia's reform years, Yevgeny Yasin, has also warned against 
expecting too much from the Gref program. 


"Miracles rarely happen, especially when they are prepared," he said 
Saturday, Itar-Tass reported. 


First Principles 


Vyugin said the center originally sought to answer two questions: What needs 
to be done to stimulate growth? Why, after 10 years of changes aimed at 
installing a market economy, was the economy shrinking? 


The reasons for the shrinking economy were both political and economic, he 
said. Weak executive power meant the government was unable to control the 
implementation of laws or protect the rights of citizens and property 
holders. Meanwhile, "hyper-regulation" of the economy by both the bloated 
bureaucracy and a handful of over-mighty national giants wielding monopoly 
power meant that real market freedoms were virtually nonexistent. Buyers and 
sellers were unable to freely interact to set prices. 


Hyper-regulation exists on both the local and federal level. Regional barons 
have gathered too many instruments of power in their hands, Vyugin said. The 
tax police, the courts and other local representatives of federal 
institutions were in their pockets. Regional laws that contradicted federal 
legislation were regularly passed. (President Putin has recently made a point 
of issuing decrees annulling regional laws deemed to breach federal law.) 
Arbitrary checks and raids on companies as they become profitable have 
stunted the growth of businesses. 


"The environment is so aggressive that it totally opposes the principles of a 
free economy," he said. "Small businesses have been driven out of the playing 
field." 


He said the monopoly of the oligarchs on federal power was the other main 
brake on economic growth. 


"Some businesses are closer to power than others and those that are nearer 
get the benefit of tax breaks and priority access to state and budget 
resources," he said. "This also means total repression of free-market 
competition. Economic gain is not dependent on profit or effectiveness. 


"What we're planning is not a revolution, but it's an attempt to change that 
system of interests. We need to announce that the rules of the game are going 
to be changed," he said. 


******


#6
Date: Mon, 22 May 2000 
From: tracyj@tol.cz (Jen Tracy) 
Subject: Putin's Riddle by Roy Medvedev


David, here's an excerpt from Roy Medvedev's most recent book (not yet
pubished but coming out in a couple of weeks. He gave it to us to print,
we're posting it today.) Hope you find it interesting, Jen Tracy,
Transitions Online



Transitions Online (www.tol.cz)
Putin's Riddle (excerpts)
by Roy Medvedev
He's strong, decisive and energetic, but that doesn't mean Russian
President Vladimir Putin is sinister.
Roy Medvedev is an internationally known historian and sociologist. He is
also the author of Let History Judge.
Translated by Masha Rasner


For a number of years, the theme of presidential elections in Russia has
been the most favorite subject for political forecasts, sociological
studies, and various speculations. Such an interest has been determined by
the special role that the presidency, as an institution, enjoys in the new
Russia, where the country's leader holds much more power than the American
or French presidents. Considering that democratic tradition, civil society,
and a solid multi-party system have yet to be fully developed in Russia,
precisely the president can and must serve as a guarantee of stability,
democracy, and order.


At different times in the last couple of years, sociological studies on the
forthcoming elections have favored just about everybody: Viktor
Chernomyrdin, Oleg Soskovets, Aleksander Lebed, Boris Nemtsov, Yurii
Luzhkov, Yevgenii Primakov. As for Vladimir Putin, who in July 1998 became
the head of the Federal Security Service (FSB), very few people knew or had
heard of him as recently as a year ago. That should not come as a surprise.


Boris Yeltsin had severely cut the importance of the security forces in
Russia, dividing them into several independent units and frequently
replacing FSB directors. The Secretary of the national Security Council was
changed even more frequently. Because of this instability, Putin's
appointment to this position in March 1999 went almost unnoticed. Moreover,
his appointment as prime minister did not get much media or public
attention either. However, as soon as Putin became a legitimate candidate
for the highest state post, he suddenly found many adversaries. Since his
appointment to the post of prime minister in October 1999, his activities
failed earned much public approval. Popular television channels and the
majority of the press spoke against him. News stories often consisted of
rumors and biting commentaries, or, in contrast, concealed facts and
important statements. In some cases, a large-scale, consistent--even if
ineffective--newspaper campaign was enacted.


Throughout the last several months prior to elections, the communist press
especially spoke against Putin. But articles, letters, commentaries,
editorial declarations, and statements of Communist Party leaders are so
primitive and unconvincing that they are not even worth disputing, less
quoting. Radical nationalists from Zavtra newspaper and other
smaller publications did not favor Putin either. Overall, the majority of
Moscow newspapers stood against him. His actions received negative reviews
from publications such as Moskovskii Komsomolets, Komsomolskaya
Pravda, Tribuna, and Obschaya Gazeta. But the most fierce
and uncompromising attack came from the press that supported [liberal
Yabloko party leader and economist] Grigorii Yavlinskii or had ties with
radical democrats of the first wave following the break up of the Soviet
Union, as well as with the information giant Media-MOST or some Western
media sources.


For example, almost every issue of Itogi magazine, published in
Russia with the financial support of the American magazine Newsweek,
contained wicked and biased criticism of Putin. In March 2000, Itogi
still wondered how "an unknown bureaucrat in a split second turned into the
main political figure in Russia." Only the daily newspaper Novaya
Gazeta could have competed with Itogi in hostility toward Putin.
In one of its March issues, the newspaper wrote, "Putin has no talent to
rule the country," "he spends money on Chechnya, while it is desperately
needed for the defense industry;" "Putin is backed not by the people, but
by a horde of small provincial bureaucrats;" "he is reestablishing power
and Communist Party ideology in Russia;" "Putin is a virtual leader, who
does not and cannot have a platform;" "Putin does not do anything, and he
does not have to do anything either before, or after the elections;"
"Putin's inactivity only conceals his lack of confidence;" "under Putin,
Russia as a state will hardly survive till 2001."


Yavlinskii also criticized Putin in Novaya Gazeta, blaming him for
making a deal with the Communists and extreme nationalists, unleashing the
"criminal war in Chechnya," "humiliating Russia," and "destroying Russia's
population." The theme of the ungrateful, deceived, ignorant, and
indifferent populace, unworthy of great Russia, was used by other authors
as well. In the fall and also in December 1999 and January 2000, some
political analysts and authors had hoped that the Russian public would
"change its mind" and lose interest in Putin. They continued to view Putin
as a hallucination that would soon go away.


Many politicians, influential financial experts, and newspapers affiliated
with them did not hide their greatest desire to stop Putin, to see him
crumble and his "incredible ranking" in the polls crash. "Much is expected
from the prime minister," wrote Liliya Shevtsova, a political analyst from
the Carnegie Fund, shortly before New Year's. "But the greater the
expectations are today, the more bitter will be the disappointment in the
new government tomorrow. Public opinion is very unstable, and it is very
much possible that the people will very soon want not an "Iron Felix" [a
reference to Felix Dzerzhinskii, one of Lenin's closest allies known for
his firmness], but a peaceful, wise leader, capable of building bridges,
particularly in Chechnya," wrote Shevtsova.


"Time works against Putin," wrote political commentator Ilya Milshtein in
the fall of 1999. "His popularity peaked these weeks, the electorate loudly
claps its hands, his rivals are lost, and the ruble is barely holding up.
It is obvious what will happen next: the war will stagnate; the people will
wonder in vain, the opposition will gather power; the parliament will still
be there since it cannot be suspended before the presidential elections;
the economy will continue to go to the dogs; the rankings will get flabby,
and his charisma will crumble. With a little bit of time, the public will
realize that it made the wrong choice." "Much is expected from Putin,"
wrote Alexander Konovalov, president of the Institute of Strategic Studies.
"Yet, all of these expectations not only fail to agree with, but also
exclude each other. Putin will still have to make his choices in spite of
that, and as a result, more people will grow dissatisfied and
disillusioned. At the same time, Putin must act now, before the elections.
So, in the end, he may be faced with influential enemies even before the
elections, and these enemies will not wait long to act."


While critical of Putin, in March--before as well as after the
elections--many papers particularly reproached the public that was
ready to and did support Putin on 26 March. In the daily newspaper
Izvestiya, Alexander Arkhangelskii wrote, "It is certain that the
epithet 'obscure' better relates to Russia's public consciousness than to
Putin himself." But before the 26 March elections, at least the style of
articles published by the newspapers Sovetskaya Rossiya and
Zavtra still differed from those of Itogi and ovaya
Gazeta. In the first weeks following the elections, that difference
almost disappeared. Articles and commentaries from journalists Sergei
Parkhomenko, Viktor Shenderovich, and socio-economics analyst Boris
Kagarlitskii could hardly be distinguished from the articles and
commentaries of journalist Alexander Prokhanov. Sovetskaya Rossiya
not only excessively cited, but also reprinted entire articles from the
American press that criticized Putin and the "naive Russians" who voted for
him. Novaya Gazeta commented on Putin's success by saying that he
"stifled his opponents" and that "only a step or two separates Putin's
super democracy from a fascist-like regime." Meanwhile, Putin and his
election team chose not to react to any such accusations. Only during the
night of 26 March, when the election results were already determined, Putin
mentioned "the flow of lies" that had engulfed Russian mass media during
the election campaign and also thanked the voters for their trust and
confidence.


Putin's success as a state leader, a politician, and a human being
surprised many observers and even frightened some politicians and
businessmen, who in response tried to downplay and undermine "Putin's
phenomenon" and his personality. According to political analyst Avtandil
Tseladze, Putin is not even a politician, but an "energetic newcomer from
the second rank of bureaucrats, whose rise to presidential candidacy became
possible only because Yeltsin's regime exhausted its cadres and reserves of
political 'stars'." Tseladze believes that "the main reason behind the
success of the new generation of Yeltsin's appointees lies in their
diligence, high efficiency, tight grip, lack of any ideological beliefs,
pragmatism, and toughness." There certainly is some truth to that, but it
misses the main point. In the absence of adequate inner qualities and
remarkable--even if previously unnoticed--abilities, a second rank
bureaucrat appointed as a prime minister will only become a first rank
bureaucrat. That is what happened with [Viktor] Chernomyrdin, [Sergei]
Kirienko, and [Sergei] Stepashin, but not with Putin.


In the summer of 1999, Sergei Parkhomenko wrote in Itogi about the
future of Yeltsin's appointees and "successors": "More than two centuries
of democratic experience in Europe and North America point to one of the
most fundamental truths of politics--that it is impossible to make a
dull bureaucrat of the past day into today's national leader." Democracies
in many European and Sorth American countries succeeded authoritarian and
even totalitarian regimes that had turned everyone, except maybe one or two
activists, into "dull bureaucrats," or "cogs." However, after the collapse
of the totalitarian regime, many of them found opportunities for
self-growth that they had never had before.


Among many ordinary and insignificant people who came to the position of
power by mere luck or accident were some prominent personalities. Think of
Germany after Hitler's defeat. Under Hitler, Conrad Adenauer, who at the
age of 73 became Germany's first Chancellor, was a "dull bureaucrat." But
today, we mention his name in the list of great reformers of the 20th
century. Ludwig Erhard, who is appropriately considered to be the creator
of the German "economic miracle," also was a little-known staffer at the
Institute of Marketing and Market Studies in Nuremberg during Hitler's
rule. I think that it is not just by chance that when asked about the most
interesting political figures in history, Putin mentions [Charles] de
Gaulle and [Ludwig] Erhard.


I have already written elsewhere that real politicians come not from
institutes or academies. During Soviet rule, Communist Party officials had
to go through special party schools. In today's Russia good politicians
come out of the Academy of Civil Service. Technical schools, institutes,
and universities produce engineers, doctors, teachers, and military
personnel. It is far more difficult to raise school principals, factory
directors, surgeons, and military commanders. But city mayors, governors,
prime ministers, and presidents, i.e. people who must bear responsibility
and be able to make independent decisions in most unpredictable situations,
what institutions do they come from? When we appoint or elect a person to a
position of power, we trust and rely on his or her talents and personal
abilities. In the absence of those talents and abilities, we get another
high-positioned bureaucrat, but not a political leader. In Putin, however,
we appropriately find large reserves of inner power, natural gifts, and
qualities of a top national leader.


Putin does not promise much, but he always keeps his word. He finishes all
endeavors, even the least pleasant ones. He is tough and resolute in
reaching his goal, but unlike Alexander Lebed, he does not start conflicts
and does not like to quarrel in public. Putin's nerves are made of steel,
he can organize others and he is very well organized himself. He is very
cautious and does not like to make rushed decisions. That is why he is
difficult to manipulate.


In February, Izvestiya asked a group of psychologists to draw a
psychological portrait of Putin. The group's final report said that "Putin
is a pragmatic type who keeps everything within himself, makes decisions
based on logical reasoning, and organizes himself in the most efficient
way. He is a serious, sober person with a sense of responsibility. Usually,
societies rest on people of this type. They honestly perform their duties,
keep their word, can organize and finish any undertaking. Their views are
well-thought-out in advance, which is why it is difficult to sidetrack them
and plant doubts in their mind. Russia has never had a leader who possessed
all of these qualities, but that is exactly the type of leader that the
Russian public wanted. Putin fulfills people's desires and expectations."


Many people familiar with Putin and his work ethic first-hand attest to his
abilities and intellect. No one who saw him on TV screens in the last
months can doubt his intelligence. At the same time, some of his
adversaries point to his articles, speeches, interviews, and especially the
recently published book From The First Person: Conversations with Vladimir 
Putin and reproach Putin for the lack of erudition, tiny inaccuracies, and an
inadequate background in literature, music, and diplomacy. Putin has a
Ph.D. in economics. He is full of energy, he is smart, he wants to see,
touch, and discover everything himself, whether it means getting inside a
super fast jet fighter and soaring into the furthest layers of atmosphere
or plunging deep into the Arctic Ocean inside a nuclear submarine. Putin
learns fast, gaining both experience and erudition. By the summer of 2000,
he will reemerge to public view as a more experienced and confident leader
than he was a year ago.


Politicians who deal with Putin or have an interest in Russia would be
mistaken to rely on the assessment of Itogi magazine and see the new
Russian leader as an ordinary, dull person. Putin has already shown that he
is a strong person. His distinct character traits are an ability to make
tough decisions and a willingness to bear the full responsibility for the
consequences. In that respect, he stands apart not only from Yeltsin, but
from Gorbachev as well.


According to sociological surveys done a couple of months prior to
presidential elections, Putin was losing to Primakov in such categories as
"knowledge of foreign policy issues," "awareness of national problems,"
"ability to plan ahead," and "attention to detail." Grigorii Yavlinskii was
able to beat other presidential hopefuls in "knowledge of economic issues."
But Putin celebrated a clear victory in "persistence," "courage and
determination," "keeping composure in critical situations," and "ability to
face the unexpected." In the end, Putin earned the highest marks as a
person "capable to rule a country." At this time, it is still too difficult
to judge Putin's moral qualities and political values. Unfortunately, on
many occasions, decisions and actions of a high-ranking politician cannot
be determined just on the basis of moral norms and conventions. The head of
state is not the head of the Church.


Both Yeltsin and Gorbachev often responded to tough situations by simply
choosing not to do anything and transferring responsibility onto others.
However, a politician cannot be expected to keep his or her hands clean.
Even a surgeon performing an operation often has to fight emotions and deal
with moral principles within himself. Christian Barnard, a famous surgeon
from South Africa who performed the first heart transplant, wrote in his
memoirs that when operating on the heart, he preferred not to know who was
lying in front of him. He even had the patient's body covered in order not
to see the person. There is no place for emotion in the operating room.


******


#7
From: HellmanJ@ebrd.com (Joel Hellman
Subject: EBRD Job
Date: Mon, 22 May 2000 


Job Announcement:
Political Counsellor
Office of the Chief Economist
European Bank for Reconstruction and Development


Ref: WEB 1903 (please quote in your application)


Responsibilities:
* monitor and provide analysis of the political situation and
democratic progress in selected countries in eastern Europe and the former
Soviet Union, with particular emphasis on Russia, Belarus and Ukraine; 
* contribute to the assessment of compliance by those countries with
the political aspects of the mandate of the Bank; 
* contribute to the political aspects of country risk assessment; 
* provide political and regional information to banking teams in the
context of project development; 
* liase with relevant international organisations on the assessment of
the political situation in those countries; 
* contribute to the Bank's research programme in the areas of
political economy and governance. 


Requirements:
* solid background in the history and politics of the region (with a
particular focus on Russia) with at least one postgraduate degree in law,
political science or other relevant social science and interest in
transition economies and international finance; 
* strong analytical and interpersonal communication skills together
with sound judgement enabling the provision of appropriate assessments and
information for government representatives, Bank management and banking
teams; 
* previous working experience in central and eastern Europe; 
* fluency in Russian; the knowledge of another central or eastern
European language would be an advantage; 
* good writing and research skills; 
* ability to work in a team; 
* availability to travel and to work under tight deadlines. 
Please send CV and covering letter in English, by mail or fax, quoting the
vacancy reference and clearly stating the job title, to:
Personnel Department
EBRD
One Exchange Square
London EC2A 2JN, UK
Fax: +44 (0)20 7338 7285 or
+44 (0)20 7338 6097
Your CV must be suitable for scanning. In order to ensure your CV will scan
correctly please use white paper, standard font type and size, and laser
quality print. Please avoid the use of bold, italics, underline, boxes and
graphics. 
E-mail address to send your CVs: resume@ebrd.com 


******

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