May 24, 2000    
This Date's Issues: 4321 • 4322

Johnson's Russia List
#4322
24 May 2000
davidjohnson@erols.com


[Note from David Johnson:
1. The Globe and Mail (Canada): Geoffrey York, Heroin and HIV sweep through Russia.              Dirt-cheap Afghan drugs ravage young people.
2. Washington Times: David Sands, Chubais says Putin shows promising start with reforms.
3. Christian Science Monitor: Fred Weir, Taming Chechnya, Russia too.
President Putin is expected to impose direct rule, further centralizing 
power. 
4. The Guardian (UK): Ian Traynor, Hunters have become the hunted.
Russians in Chechnya have every reason to fear for their lives.
5. Washington Post: Jim Hoagland, Putin Prioritizes.
6. AP: US Optimistic on Nuke Pact Changes. (Strobe Talbott)
7. Bloomberg: Russia's Lukin on Outlook for Clinton's Moscow Visit.
8. Rossiiskaya Gazeta: Vladimir Gurvich, DELAY-ACTION BOMBS FOR THE RUSSIAN ECONOMY.
9. Financial Times (UK): Russia's securities watchdog faces an uphill struggle:                          John Thornhill and Arkady Ostrovsky report on attempts to bring order to the country's financial institutions.
10. Reuters: Swiss give more documents to Russian prosecutors.]


*******


#1
The Globe and Mail (Canada)
May 24, 2000
Heroin and HIV sweep through Russia
Dirt-cheap Afghan drugs ravage young people
GEOFFREY YORK


St. Petersburg -- Katya had it all. The beautiful daughter of a wealthy 
businessman and his lawyer wife, she was one of Russia's golden youth, the 
privileged elite of an impoverished society.


She took her vacations in Paris and Prague. She hobnobbed with foreigners as 
a tour guide in St. Petersburg's palaces and museums. She was a final-year 
student at a prestigious law school.


But Katya had a secret. Twice a day, she searched for a vein in her arms, 
prepared a needle, and injected a quarter-gram of heroin.


Last year, unable to pass her exams, Katya was expelled from university. She 
tried to quit drugs, but failed. Now she pays for her fix the only way she 
can, by working as a street prostitute.


Heroin addiction has exploded to devastating levels in Russia in the past two 
years. Production in near- by Afghanistan, the world's largest source of 
heroin, has skyrocketed. Vast quantities of Afghan drugs are flooding into 
Russia from smuggling routes in the mountains of Central Asia. 
Dealers are also making their own synthetic versions.


Heroin has become so cheaply and freely available that it lures hundreds of 
new addicts every month, from Siberia to the Baltic Sea, even in small 
provincial towns and remote northern cities. At the equivalent of $50 a gram, 
heroin in St. Petersburg is a fraction of the price in North America.


"Heroin is easy to get," Katya says. "It's a lot easier than marijuana now."


Igor, a 23-year-old addict in St. Petersburg, began using drugs when he was a 
teenager, but he switched to heroin in 1998 because it was the easiest drug 
to buy. "It's a strange situation," he says. "There's so much of it. Within a 
kilometre of here, there are 20 places you can get heroin. You can't buy 
anything else these days."


The number of Russian drug users has more than tripled in the past six years, 
authorities say. They estimate that Russia now has almost three million drug 
users, including 500,000 addicts. Of these, about 80,000 are addicted to 
heroin, and the number is rising exponentially.


Largely because of the heroin epidemic, Russia is suffering one of the 
world's fastest-growing rates of AIDS and HIV infection. The number of new 
HIV cases in Russia last year jumped by an astonishing 350 per cent, and 90 
per cent of the new cases were drug addicts who caught the infection from 
sharing needles.


The vast majority of the latest HIV-infected Russians are less than 30 years 
old. "An entire generation will perish," warns Dr. Vadim Pokrovsky, a leading 
Russian epidemiologist.


In Moscow, the number of people infected with the AIDS virus in January was 
five times greater than a year earlier. Almost all were drug addicts. In many 
provincial cities, the rate of increase is even more dramatic. In the 
Siberian region of Irkutsk, the number of HIV cases has soared from barely 
200 to about 5,000 in the past year alone.


Because of its financial woes, Russia has budgeted less than $2-million for 
AIDS prevention this year. Its hospitals, already overcrowded and 
impoverished, are straining with the burden of the new AIDS patients.


"Russia's health-care system is completely unprepared for this," says Vinay 
Saldanha, a Canadian who co-ordinates an AIDS training project in eight 
Russian regions with $1.5-million in Canadian government financing.


"Nobody was expecting it to spread so quickly," he says. "Most of those 
infected haven't got sick yet, but they will get sick. They will all need 
hospital care in the next few years -- and there's nowhere to put them."


In some regions, such as the Baltic seaport of Kaliningrad, as many as 70 per 
cent of drug users are infected with the AIDS virus, he says. "They've almost 
lost the battle."


Officially, only 36,000 Russians are infected with the virus, but experts 
believe the number is closer to 300,000. At the current spiralling rate of 
increase, as many as 10 million Russians could be infected by the year 2005, 
according to Dr. Pokrovsky.


This, in turn, would contribute to the demographic catastrophe that is 
causing a steady decline in the Russian population. By the year 2050, 
Russia's population could fall below 100 million, compared to its current 
population of 146 million, some analysts say.


In some of Russia's hardest-hit regions, up to 90 per cent of the street 
prostitutes are infected with the AIDS virus -- mostly as a result of their 
drug addiction.


On the mean streets of St. Petersburg, most prostitutes are aware of the AIDS 
threat. "In the place where I work, in our 'office' on the street, they say 
there are three girls who have it," Katya says.


At the age of 23, her face is pale, her voice is hoarse, and she is 
recovering from hepatitis. Blood is clotted on the skin of her wrist where 
she injects the drug.


"They say one of them is already sick. I'm really scared of it. I try to use 
each needle only once. Very often my friends ask me for needles. I'll give 
them one, but I never use an old needle."


She takes her old needles to an anonymous-looking bus parked on a back street 
near the biggest concentration of prostitutes. There she exchanges the old 
needles for new ones, along with a package of sterilized tissues and condoms.


The needle-exchange program, run by the private Revival foundation, is one of 
the few in Russia. For the addicts, it is a lifesaver. Tests have found that 
12 per cent of the old needles are contaminated with HIV.


After warming herself inside the bus for a few minutes, Katya is ready to go 
back to work. She powders her face, applies her lipstick, glances into a 
mirror to adjust her blue beret, and walks out into the cold, dark streets of 
this northern city, where she will charge her customers as little as 500 
rubles, (about $27) an hour.


A quarter-gram of heroin costs only 250 rubles. But the prostitutes have a 
lot of expenses. They have to pay their pimps. And they have to bribe the 
corrupt police officers who patrol the district. The standard bribe is 50 
rubles to every police vehicle. When the police change shifts, the next 
patrol vehicle again has to be bribed. "Otherwise they arrest you and put you 
in jail for the night," Katya explains.


She began using soft drugs when she was 16, but she switched to heroin in 
1998 to relieve the stress and nervousness of her university exams.


"I like it," she says. "It makes you feel cool. We like to feel cool. But 
then you get addicted. When I get up in the morning, everything is aching and 
I need an injection."


For the heroin merchants, the profits can be huge. In Tajikistan, a 
mountainous ex-Soviet republic on the border of Afghanistan, a gram of Afghan 
heroin can be bought for little more than a dollar. By the time it is sold in 
St. Petersburg, the same gram of heroin has a street value of $55.


The police and border guards can be bribed to ignore the trucks and airplanes 
that bring tonnes of heroin from Central Asia into Russia's major cities. In 
some cities, small packages of heroin are sold openly in food markets and 
newspaper kiosks. In others, such as St. Petersburg, the dealers sell drugs 
in secure apartments, using cellphones and pagers to communicate with 
customers and warn of police raids.


"The flood of drugs is colossal," says Svetlana Suvorova, a counsellor in the 
needle-exchange program. "The addicts are becoming younger and younger. We've 
seen some addicts younger than 13, and they say they've been taking drugs for 
years. They can purchase drugs almost anywhere."


The easy supply of drugs is not the only reason for the heroin epidemic. 
Analysts link it to the post-Soviet breakdown of order, the economic 
collapse, rising corruption, and the loss of ideological faith. "These people 
don't have a sense of the future, they have few economic prospects, and 
they're looking for an easy way to avoid their problems," says Mr. Saldanha, 
the Canadian. "They don't care about tomorrow."


Igor, the young heroin addict in St. Petersburg, recently collected 142 old 
needles from drug users in his neighbourhood and took them to the bus to 
exchange for new needles. He also took along blood samples from three friends 
who want their blood tested for HIV.


"They're afraid to go to their local medical clinic because they would be 
officially registered as a drug user and then they'll never get a job," he 
says.


"They have nowhere else to go. There's no support for them. Some try to quit, 
but it's rare. Even to get into a hospital here, you have to buy your own 
medication first."


As he returned to a nearby subway station, he glanced at a row of prostitutes 
huddled outside the station. All of them are heroin addicts, charging their 
clients just enough rubles to pay for a quarter-gram of the drug, he says.


Igor remembers the day when a friend introduced him to heroin. "He said, 'Try 
it, it's nothing dangerous, it's nothing frightening.' Now I curse that day. 
He's not my friend any more."


Dr. Nikolai Vlasov, chief of an AIDS ward at a St. Petersburg hospital, 
struggles to cope with 29 patients in a ward with 25 beds. Two years ago, the 
ward was two-thirds full. Now the hospital has been forced to add a second 
ward with another 12 beds to cope with the pressure.


"Drug use is the engine of the epidemic," he says. "Our drug users have many 
bacterial infections, because of their use of non-sterile needles. They're 
difficult to treat. We lack good antibiotics at this hospital. Our financing 
is not enough."


One of his patients, 24-year-old Maxim, had been using heroin for six years 
when he discovered in December that he was infected with HIV. "It's like when 
you see a traffic accident on TV -- you never think it will happen to you," 
he says.


Now he's in hospital, being treated for pneumonia. "I know a lot of drug 
users who are ill, but they never get treatment because they're afraid of 
being tested for HIV. So there's going to be a new wave of infected people in 
the future."


In a nearby hospital room, 20-year-old Luda is eight months pregnant. She 
became infected with HIV from sharing drugs. For years, she had injected 
herself with a cooked solution of poppy straw, sharing a container of the 
liquid with 10 or 15 other users at a dealer's place.


Luda finally quit drugs, but the withdrawal was six months of torture. "Every 
night you're dreaming of injecting," she recalls. "All day you're thinking 
about it, 24 hours a day. You can't think of anything else -- not food or 
anything. All of your bones and joints are aching, you can't sleep, you have 
chills."


Now she worries that her baby could be infected with the AIDS virus when it 
is born. Across Russia, about 350 babies have been born infected.


"I try not to think," she says. "I try to go on living. We have to live."


*******


#2
Washington Times
May 24, 2000
[for personal use only]
Chubais says Putin shows promising start with reforms 
By David Sands


Anatoly Chubais, who plotted much of Russia's checkered economic reform 
program the past decade, said yesterday that new President Vladimir Putin has 
gotten off to a promising start by introducing liberal reforms.
But Mr. Chubais, a leading business "oligarch" who heads the country's 
biggest electricity company, said in a Washington visit that the new 
president will have to put his immense popularity on the line to overcome 
resistance in Moscow and in the regions.
"When you listen to Putin's economic team discussing reform, the 
question is only whether the steps in question are radical enough," said Mr. 
Chubais. "There's no discussion any more of whether to do it or not."
He recalled that as minister of finance under former President Boris 
Yeltsin he was accused by the Communist-dominated legislature of selling out 
to the "bourgeoisie" when he recommended cutting the country's top tax rate 
from 45 percent to 40 percent.
Mr. Chubais said the debate now among such Putin advisers as Finance 
Minister Alexei Kudrin and Economic Development Minister German Gref is 
whether the country is ready for a flat, across-the-board 13 percent income 
tax rate.
With his economic program under review, Mr. Putin has moved quickly to 
assert his authority, introducing a plan to rein in the country's 89 regional 
governors and taking at least symbolic steps to curb the oligarchs as well.
Russian tax police Monday raided a Russian car maker with ties to tycoon 
Boris Berezovsky, perhaps the most powerful and politically connected of the 
oligarchs who grew rich on Mr. Chubais' privatization program of the 1990s.
Many in Moscow hailed the move as the first step to clip Mr. 
Berezovsky's power, but the Russian rumor mill also buzzed with suggestions 
that the oligarch had orchestrated the raid himself to mask his continuing 
clout inside the Kremlin.
The raid follows a similar one last week on offices of Media-MOST, an 
independent media conglomerate controlled by rival oligarch Vladimir Gusinsky 
that has been critical of the Putin government.
Mr. Chubais yesterday condemned the raid on the Media-MOST offices and 
cautioned that any effort to scale back the oligarchs will take time.
Mr. Chubais predicted that the Russian State Duma (lower house of 
parliament) would eventually approve Mr. Putin's plan to rewrite the domestic 
balance of power by dividing the country into seven new administrative 
regions overseen by presidentially appointed "superenvoys."
While designed to make Russia's government more consistent and reduce 
the power of the country's largely autonomous regional governors, the 
implementation of the plan may run into trouble closer to home, Mr. Chubais 
predicted yesterday.
"Obviously, the governors won't be happy with a new layer of 
supervision," he said. "But also this affects the rights of the ministries in 
Moscow. The main fights over implementation might not be in the regions but 
in the capital."
Mr. Chubais, who served for a time as Mr. Yeltsin's first deputy prime 
minister and now has a seat in the Duma, remains an intensely polarizing 
figure in his homeland.
Many blame the country's disastrous early experiences with privatization 
and unregulated economic liberalization on Mr. Chubais. His re-emergence in a 
lucrative post at one of the country's biggest firms has also inspired 
grumbling.
But Mr. Chubais told a small Washington luncheon yesterday that his 
market-oriented Union of Right Forces party sees an opportunity as the 
largely unknown Mr. Putin lays out his agenda.
Meeting over the weekend, Union of Right Forces activists attempted to 
unite liberal democratic elements in Russia with a goal of electing 50 
mayors, 15 local governors and 20 percent of the Duma.
Conspicuously not included in the gathering was liberal standard-bearer 
Grigory Yavlinsky of the Yabloko Party. Mr. Yavlinsky polled a disappointing 
5 percent of the vote in Mr. Putin's March 26 electoral triumph, and Mr. 
Chubais said the outcome sent a message.
Yabloko "is always against, against any budget, against any government 
suggestion, and that's why they're losing popularity," he said.
Mr. Chubais said he strongly backed an alliance of all Russia's 
pro-market parties in coming elections.


******


#3
Christian Science Monitor
May 24, 2000
Taming Chechnya, Russia too
President Putin is expected to impose direct rule, further centralizing 
power. 
By Fred Weir, Special to The Christian Science Monitor


If there were any doubts as to whether President Vladimir Putin intends to 
make good on his pledges to restore order and Russia's reputation as a world 
power, they are quickly being dispelled. But some critics say such gains may 
come at the expense of the country's moves toward democracy. 


In the latest example, Mr. Putin is said to be ready to declare direct 
Kremlin rule over Chechnya, a move that will mean security forces, rather 
than civilian administrators, remain in charge of the rebellious Caucasus 
republic. 


"It seems that power in Chechnya will come out of the barrel of a gun for the 
foreseeable future," says Alexander Konovalov, director of the independent 
Institute of Strategic Assessments in Moscow. "In many areas now we see Putin 
attacking complex problems with a single answer: more centralization and 
stronger Kremlin power." 


Less than a month after his inauguration as the country's second elected 
president, Putin is revealing himself as a man in a hurry to make sweeping 
changes to the economy and political system. But critics warn his changes may 
lead back toward a long tradition of authoritarian rule rather than apply 
fresh democratic approaches to the country's deep and intractable ills. 


Last week, Putin ordered Russia divided into seven administrative zones, each 
run by a presidential appointee. Of the seven men chosen to fill the 
positions, five are from the military or security forces. Gen. Viktor 
Kazantsev, who until recently commanded Moscow's troops in Chechnya, will 
oversee the North Caucasus administrative district where the republic is 
located. 


A battery of draft laws before the Kremlin-friendly Duma, the lower house of 
parliament, would give Putin unprecedented power to fire any of the country's 
89 elected regional governors. Governors also would be barred from their 
current seats in parliament's upper chamber. 


And in a cost-saving move strongly criticized by environmental groups, the 
president disbanded Russia's only federal environmental agency last week, 
transferring its responsibilities to the Natural Resources Ministry. 
Greenpeace said the ministry has a history of approving "illegal and 
environmentally hazardous projects." 


Putin launched the latest military invasion of Chechnya in September, shortly 
after he was named prime minister by former President Boris Yeltsin. He has 
vowed not to repeat the mistakes of the 1994-1996 Chechen conflict, which 
ended in a humiliating withdrawal of Russian forces. 


While other regions will retain their elected legislatures and governors, the 
plan for Chechnya now under consideration will involve a form of emergency 
rule for at least two years. "We are discussing a model for direct 
administration over Chechnya, to fit within the general new model of federal 
government in the whole country," says Pavel Krasheninnikov, chief of the 
Duma's legislative committee. 


Supporters say it is the only way to restore constitutional order to the 
devastated republic, as well as to rebuild its infrastructure, reopen 
schools, pay pensions, and get public transport running again. 


"It's necessary that life be brought back to normal in Chechnya," Putin said 
on Monday. "People should see a clear demonstration by the central 
authorities that they will not be left to the mercy of fate." 


Such statements appeal to the Russian public. After a decade of political 
drift, disorder, and economic decline, many Russians appear ready to embrace 
tougher government if it can deliver greater social security and even a touch 
of economic prosperity. In a survey earlier this month by VTsIOM, Russia's 
largest independent polling agency, 81 percent of respondents said they were 
ready to sacrifice personal freedoms for more order in the country. 


But critics say the direct-rule plan is a clear sign the Kremlin has no idea 
of a political solution. "The war in Chechnya is far from over, it will go on 
for years," says Pavel Felgenhauer, an independent military analyst in 
Moscow. "A law on direct rule will only cast a blanket of legal legitimacy 
over the perpetual counterinsurgency." 


Mr. Felgenhauer notes that in the past week, the Russian military has seen 
its highest casualties in months. "The Chechens are preparing counterattacks 
that will show, once again, that the Army simply cannot contain this 
situation. Moscow is in no position to reliably control the territory of 
Chechnya, much less design a working government for it." 


The Kremlin appears to have dismissed the options of setting up a dialogue 
with legitimate Chechen leaders, such as elected President Aslan Maskhadov, 
or installing a provisional, pro-Moscow Chechen government. 


"This is not on the agenda anytime soon," says Emil Pain, a onetime adviser 
on ethnic policy to Mr. Yeltsin. "The level of distrust is growing on both 
sides. It's very hard to see how any serious Chechen forces could get 
involved in a pro-Russian administration at this point." 


Experts say the Kremlin is turning to the most extreme solution because it 
lacks any political vision for the war-torn region and because it fears 
offending the powerful military. "Putin is trying to escape reality by 
handing Chechnya to the generals," says Alexander Iskanderyan, director of 
the independent Center for Caucasian Studies in Moscow. "The military will be 
happy with this, but they will not solve anything there in two years, or 20 
years." 


Some even warn the Chechnya scheme is a harbinger of how the Kremlin intends 
to deal with all of Russia's fractious republics and regions. "Direct rule 
for Chechnya is in character with Putin's plan for the whole country, which 
he has already said is direct Kremlin rule everywhere," says Felgenhauer. 


******


#4
The Guardian (UK)
May 24, 2000
[for personal use only]
Hunters have become the hunted 
Russians in Chechnya have every reason to fear for their lives
Ian Traynor in Tangi Chu, Chechnya


On a ridge above this battered Muslim village in the foothills of southern 
Chechnya, 30 young Russian servicemen are digging in to wait for the enemy. 
They are in forbidding, hostile territory. They say they are reclaiming it 
for Mother Russia from Chechen separatist guerrillas. They are very 
frightened. 


The steep slopes facing the young soldiers are densely wooded and the lush 
new spring foliage provides perfect cover for the mountain partisans for whom 
the Russians are a sitting target. Birds rustling the trees are enough to set 
the Russians on edge. 


"Down in the village there are only women and old people, although we can see 
the men's dirty shoes sitting at the door. We ask where they are and they say 
they've gone visiting relatives," explains Lieutenant-Colonel Vyacheslav 
Volosnikov, the deputy commander of the unit of interior ministry troops on 
the ridge. "But we know the men are in the hills and we're expecting them to 
come over the mountains any time." 


The ridge trenches are the southern-most fixed Russian position on the war's 
western flank. Eight months after President Vladimir Putin committed 93,000 
troops to bludgeon Chechnya into submission, the lumbering Russian military 
machine is becoming bogged down, while the nimble guerrillas take their 
hit-and-run war to the Russians. 


"There was a time when we were the hunters and the [Chechen] fighters were 
the prey. Now things are becoming the other way round," mumbles Colonel 
Alexander Likhachev, an acting regiment commander at the sprawling Russian 
military base at Urus Martan four miles north of Tangi Chu. 


Every Russian convoy on the roads of Chechnya is at risk of ambush. The 
occupying forces generally stay within their heavily fortified garrisons for 
fear of attack. There is minimal contact with the locals they are meant to be 
"liberating". 


"I feel it is my duty to be here if my people are in danger," says Col 
Volosnikov, a Moscow volunteer who has signed a five-year contract to serve 
with special police troops in Chechnya. "But some might say I'm a fool." 


Vladimir Kostin, 26, on sentry duty at the Urus Martan base says: "It can be 
terrifying here. Five of my friends have been killed. Only a fool would not 
be afraid." 


Last week 51 Russian servicemen were killed in Chechnya. But there is no 
public clamour for the war to end nor any sign that the Kremlin is ready to 
back down. Officially the Russian death toll is twice that of the eight-year 
war in Afghanistan. In 18 months of war in Chechnya in 1994- 96, the Russians 
officially lost 1,954 troops. Since last October they have officially lost 
2,004. 


But if the Russians, trapped by their "victory" in Chechnya, are the hunters 
becoming the hunted, in Tangi Chu it is not difficult to see why. 


It was here, 20 miles south of Grozny, in March that a Russian officer raped 
and murdered Heda Kungayeva, an 18-year-old Chechen girl, in the sole war 
atrocity admitted by the Russian top brass. According to Human Rights Watch, 
the Russians laid siege to Tangi Chu for three months, cutting water and 
power, stripping men naked at funerals and beating them in public, dragging 
them into the hills and holding them in pits in the ground until their 
families paid ransoms. 


Four escaped witnesses to the terror tactics told US human rights monitors 
that the villagers had to buy weapons from the Russian troops which they 
would then give back to the Russians in return for their menfolk. One man was 
taken away, beaten, then bought back three times, the witnesses said. 


But the Chechens of Tangi Chu, insists Lieutenant-Colonel Valery Chenoveryan, 
a Russian regional army spokesman, are friendly. He said they were supplying 
water and materials to help the Russians build a sentry post. But when 
questioned further he quickly changed his tune. A group of western reporters 
visiting the area under tight Russian control asked to be allowed to talk to 
the villagers. 


"That's not a question, that's a provocation," said the officer. "There can 
be fighters in every house. The weapons are not there in the mornings. But 
they come out in the evenings." 


And not just in Tangi Chu. A bomb blast in Urus Martan at the weekend killed 
one Russian and wounded several others. So wary are the Russians that the 
base outside the town is ringed by five security perimeters. Guard duty is 
doubled at night because if the Russians have tenuous control of the towns 
and villages during the day, in the hours of darkness they belong to the 
separatists. 


Mikhail, a veteran of 24 years in the Russian military who has just been 
granted leave because his daughter is ill, says of his three months in 
Grozny: "This is not our war. I don't know what we're doing there. 


"It's terrible and it will go on for a long, long time. Everybody hates us. 
The women in the markets tell us we'll all be killed, that the rebels will 
recapture Grozny just like they did the last time." 


It is not just the Russian military that is the target of such venom. Life 
for indigenous Russian civilians in a Chechnya under the Russian military 
yoke is just as hazardous and fearful. 


Nina Vasilyeva is head of the local authority in the village of Mekenskaya in 
relatively quiet northern Chechnya. The village has been under Russian 
control since October and is in an area that is historically more 
pro-Russian. 


But only 300 Russians remain. There were once 2,000. "Everyday life is 
impossible here. You can't go anywhere," says Ms Vasilyeva. "They don't tell 
you they hate you, but you can see it in their eyes. I don't know if there is 
a solution to this hatred." 


She did not want the job, but was talked into it by the local military 
commander. She asked him to provide 20 Russian military police for the 
village. He said he could not because he could not guarantee their security. 


She used a Chechen driver to chauffeur her during the day. But he has now 
said he can no longer drive her because the Chechen leaders in the shadows 
have warned him he will be killed for "working for the Russians". 


Even miles from the main war theatre, the Russians appear to be under siege. 
The military headquarters in the village of Naurskaya is like a cold war 
fortress - coils of razor wire, mines, fences, concrete bollards, snipers on 
the roof. 


In a field full of forget-me-nots outside Mekenskaya, simple blue wooden 
Orthodox crosses mark the graves of dozens of Russians killed when a Chechen 
bus driver went on a shooting spree last year. 


"We just try to keep to ourselves, not bother them and hope they won't bother 
us," says Tatyana Kupushkina, a Mekenskaya Russian whose brother has been 
killed, by her Chechen neighbour, she said. "Now we have the Chechens dancing 
on our graves. How would you feel about that?" 
******


#5
Washington Post
May 24, 2000
[for personal use only]
Putin Prioritizes 
By Jim Hoagland


After a long period of mixed signals, Russian President Vladimir Putin has 
made it clear to the Clinton administration in recent weeks that arms control 
comes low on his priority list now. The White House has all but abandoned 
hope for a significant arms control deal with Putin at next month's summit in 
Moscow. 


In a letter on the summit covering a half-dozen pages that his foreign 
minister, Igor Ivanov, carried to President Clinton in late April, the 
Russian leader barely mentioned the nuclear arms reductions and missile 
defense issues that the White House saw as the potential strategic 
centerpiece of the Moscow meeting, according to U.S. and diplomatic sources.


Instead Putin spent five pages delivering his version of "It's the economy, 
stupid." He outlined plans to make Russia more self-reliant and to end its 
financial chaos. Subsequent contacts between senior officials of the two 
governments have sustained this Russian focus on the economy.


A more detailed picture of the still mysterious Putin emerges from 
descriptions by participants of the preparatory diplomatic contacts for the 
June 4-5 summit. Putin is as cool and cautious in dealing with Washington as 
Boris Yeltsin was effusive and bold. The former KGB agent compartmentalizes 
where Yeltsin linked.


Yeltsin traded Russia's strategic cooperation for Clinton's support for 
Yeltsin's position inside Russia. But Putin shows no interest in being that 
palsy with the American president. And he does not seem prepared to restore 
arms control to its once central role in U.S.-Russian relations.


This may be the central revelation of the Moscow summit: Putin seems to mean 
it when he says he wants Russia to be more self-reliant. He is not eager to 
increase Russian indebtedness to the West, or to grant Washington influence 
over his relations with his military or his domestic policy options. That is 
part of the reason why arms control is not at the top of his agenda for this 
summit.


The key question in the preparatory contacts has been whether an agreement 
could be announced at the summit on principles to govern U.S.-Russian 
negotiations over amending the Anti-Ballistic Missile treaty, which restricts 
the ability of both nations to deploy national missile defenses.


In January both Putin and Ivanov indicated to Secretary of State Madeleine 
Albright that they were open to talking about the ABM treaty as well as 
working toward a START III accord requiring significant new reductions in 
offensive nuclear warheads.


But in recent contacts, including his April visit to Washington, Ivanov 
ducked Albright's invitations to move ahead on arms control, according to 
U.S. officials. He focused instead on explaining how the United States could 
deal with perceived threats from North Korea by other means.


A visit to Moscow last week by Clinton's national security adviser, Sandy 
Berger, convinced the White House that Putin was not simply playing 
hard-to-get as a pre-summit negotiating ploy, and U.S. officials began 
briefing reporters on the administration's lowered expectations for the 
meeting.


"This will not be an arms control summit," a senior official said late last 
week. "We hope these talks will move things forward for subsequent meetings, 
but right now we do not expect the summit to produce a breakthrough."


Putin's generals have reportedly told him he should not trade ABM 
modifications for a START III treaty. Russia has more to fear from the 
removal of restraints on U.S. missile defense than it does from the steadily 
growing numerical superiority in nuclear warheads Washington will achieve by 
2008 without a new strategic arms accord, they maintain.


Washington expected Putin to be tempted by the prospect of locking in a 
modest missile defense system in the twilight of Clinton's presidency rather 
than risking a Republican victory in November and a possible tearing up of 
the ABM treaty thereafter. But any temptation for Putin to give diplomatic 
gifts to a lame-duck administration would have evaporated after Sen. Jesse 
Helms announced several weeks ago that he would block any arms control deal 
struck by Clinton.


The summit is nonetheless likely to produce some substantial agreements for 
Putin and Clinton to herald. Headway has been made on a nonproliferation 
agreement to keep plutonium out of the hands of nations that might use it for 
bombs and on other plutonium disposition issues. Expanded cooperation on 
space launches also qualifies as "low-hanging fruit" that could be plucked in 
Moscow, according to one official.


Putin has set about consolidating power and restoring Russia, and he is 
intent on doing both his way. This meeting for Putin is not so much a summit 
as a steppingstone, for a long journey.


*******
#6
US Optimistic on Nuke Pact Changes
May 24, 2000
By VLADIMIR ISACHENKOV

MOSCOW (AP) - Trying to end a growing dispute over U.S. calls to amend a
key nuclear arms agreement, an American envoy said today he believed that
Russia can be persuaded to accept changes in the treaty. 


In Moscow to discuss next month's U.S.-Russia summit, U.S. Deputy Secretary
of State Strobe Talbott said a possible compromise could be linked to cuts
in both nations' nuclear arsenals. 


``We think this can be done cooperatively with the Russians,'' Talbott said
about U.S. calls to amend the 1972 Anti-Ballistic Missile Treaty. 


Nuclear arms control will top the agenda for President Clinton's June 3-5
summit in Moscow with President Vladimir Putin. 


Talbott, speaking to reporters, said he hoped his talks with Russian Deputy
Foreign Minister Georgy Mamedov could make progress, although he
acknowledged there were strong differences. 


``We have got some disagreements, and they are tough disagreements, but we
also have a serious atmosphere in the dialogue,'' he said. ``I think we
have been making a little bit of progress every time we talked.'' 


After years of delay, the Russian parliament recently approved the START II
Treaty, which would roughly halve U.S. and Russian nuclear arsenals to
3,500 warheads each. 


Putin says he wants further cuts in START III, now under negotiation, but
has warned that Moscow would tear up all arms control agreements if the
United States violates the ABM pact. 


The United States wants to amend the treaty to develop a limited national
missile defense system against attack from so-called rogue states such as
North Korea. The 1972 treaty banned nationwide anti-missile systems. 


Talbott said a compromise on ABM was possible. 


``Our intention is to keep the ABM treaty very much part of the foundation
of the international arms control,'' he said. ``We don't want to see the
ABM treaty violated. We don't want to see it weakened. We want to see it
strengthened.'' 


Moscow says the U.S. plan would tilt the strategic balance in Washington's
favor by undermining the deterrent value of Russia's nuclear arsenal. It
rejects U.S. arguments that the system would be unable to fend off a
massive missile attack of the kind Russia is capable of launching. 


Analysts say Moscow may bargain for deeper cuts under START III and other
concessions in exchange for its agreement to ABM changes. 


But the U.S. Joint Chiefs of Staff on Tuesday expressed reservations about
Russia's proposal to reduce each side's arsenal to 1,500 warheads, saying
it prefers to stick to the 2,000-2,500 warheads already envisaged. 


Talbott said that progress on the ABM and further nuclear cuts could be
linked. ``If we can continue to make progress on the defense side, I think
that will open the way up for further progress on START III,'' he said. 


He dismissed claims that any arms control agreements with Russia reached by
the Clinton administration in its last year in office will be blocked by
Republicans in the U.S. Senate. 


``It's not a lame duck administration,'' he said. ``This is an
administration that is full of energy and determination, particularly to
take advantage of the opportunities we have in the U.S.-Russian relations
and arms control.'' 


*******


#7
Russia's Lukin on Outlook for Clinton's Moscow Visit: Comment


Moscow, May 24 (Bloomberg)
-- The following are comments by Vladimir Lukin, deputy chairman of 
Russia's lower house of parliament, the Duma, and a former ambassador to the 
U.S. Lukin, a member of the Yabloko faction, also heads the Duma's committee 
for international affairs. Lukin was speaking in an interview ahead of U.S. 
President Bill Clinton's visit to Moscow in early June. 


On main topics to be discussed during Clinton's visit: 


``On the threshold of the election campaign in the United States, there will 
be discussed two major questions. The first question concerns American 
internal policy and the other one is Clinton's personal problem. The internal 
question is the following: what Russia can do to help Democrats in elections? 
The personal question is how Russia can help Clinton to become a historical 
figure. The U.S. president is currently preoccupied with these two problems. 
Possibly there is one more question, concerning Hilary running for Senate 
elections. But I am afraid we can't help in this point.'' 


On the START II and ABM treaties: 


``Of course compromises will be discussed regarding the ABM treaty. Here our 
possibilities are limited, especially if Clinton aims to achieve something 
suitable for himself before the elections. Our task is to postpone discussion 
until after the American elections. Whoever will be elected - (Al) Gore, 
(George W.) Bush - it will be better and more rational for us to talk with 
them after the elections. And for the moment I can't say with whom it will be 
better to discuss the matter. Maybe the first three months with Gore and the 
second three months with Bush, when severe Republican, anti-Russian rhetoric 
will give way to Republican rationality and smaller dependence on global 
schemes and Russia's internal problems. That is why I think that during this 
visit discussions of these items will not be very successful. Besides the 
U.S. Congress does not approve of certain acts of Russia's authorities. I 
mean the scandal with limiting the freedom of mass media. Clinton can be 
accused of making concessions to Russians while the Russian government is 
violating democratic principles. That is why I think that the time of visit 
is not very favorable for us. 


``Concerning START II there can be only one question: when are Americans 
going to ratify the entire text of START II. The thing is that Americans 
ratified START II, but did not ratify the agreement of 1977. That is why the 
treaty can't go into effect until all these documents are ratified.'' 


On cooperation concerning sales of nuclear technology: 


``If the Americans believe that we delivered to Iran and other countries 
something that violates our treaty their accusations should be more concrete, 
they should name people, addresses. We should not just shout at each other. 
This approach will take us nowhere. Besides it will be correct if we don't 
discuss the problems out loud. Apart from this question our talks are 
overloaded with all kinds of problems.'' 


On Chechnya: 


``For the time being, Americans decided to freeze discussion of the Chechen 
war. They think that first of all they should establish good relations with 
the new Russian power. Americans are rational people. In general the level of 
discussion of Chechnya deliberately lowered the West. They are giving Putin's 
government time to look into all problems.'' 


On Caspian oil: 


``This problems interests Americans to the extent in which Caspian oil is an 
important strategic factor. It turns out now that that Azerbaijan is far from 
being Kuwait. It turns out besides that, in the north of the Caspian Sea 
there is much more oil than in the region of Azerbaijan. The Caspian factor 
is not such an important international matter, so I doubt if this question is 
going to be the major topic of talks. Once it emerges it will be discussed 
from the point of view of cooperation and tapping the oil fields on 
conditions of mutual commercial interest.'' 


On IMF loans: 


``There will be discussed American support for Russia in negotiations with 
the Paris and London Clubs (in debt restructuring talks). This is a serious 
problem. As for the loans, I would rather insist on non-allocation of (IMF) 
loans, while the U.S. will be insisting upon their allocation. Possibly we 
would be able to find compromise solution. 


******


#8
Rossiiskaya Gazeta
May 24, 2000
[translation from RIA Novosti for personal use only]
DELAY-ACTION BOMBS FOR THE RUSSIAN ECONOMY
The Russian-European Economic Policy Centre (RETsEP) 
presents its regular analysis of the current economic situation 
of Russia and its forecast for the near future 
By Vladimir GURVICH

The first conclusion drawn by the Centre's specialists is 
that on the whole Russia has achieved macrostabilisation of the 
economic situation. Most economic indicators characterising the 
general state of the economy testify to the development of 
positive tendencies. In the first quarter, industrial output 
increased by 12 percent, as against the relevant figure for 
last year. Foreign trade turnover over the same period amounted 
to 32.8 billion dollars, which is 33 percent higher than the 
last year's indicator, and trade surplus equalled 14 billion 
roubles.
Gold and hard currency reserves of the Central Bank 
reached their record high level - 17.6 billion dollars.
The population's financial and social situation has 
somewhat improved against this background.
The number of job-seekers dropped by more than 2 percent.
By the end of March, the tension coefficient on the labour 
market was 2.2 percent, as against 5.5 percent in March of last 
year.
The government practically settled its debts, with the 
federal budget surplus equalling 38 billion roubles.
However, everybody is anxious about one question: how 
stable is the current situation?
The Centre's analysts think that there is every ground for 
such anxiety: several powerful delay-action bombs have been 
planted under the present favourable situation, and they are 
capable of exploding the entire Russian economy. The first one 
is the existence in Russia of a large non-market sector.
According to the assessment made by the scientific chief of the 
Higher School of Economics Yevgeny Yasin, it reaches 40 percent 
in Russia. These are loss-making enterprises "sponging on" the 
profitable ones. If their subsidising is not stopped, sooner or 
later they will stop economic growth.
The second charge is the shadow economy. If a considerable 
part of settlements is still made bypassing the banking system, 
through offshore zones, the economy will get neither home nor 
foreign investments. This problem is especially topical today, 
because the main volume of capital investments belongs to the 
companies themselves. And these resources are extremely limited.
The situation is aggravated still further by the fact that 
the current economy has got into the so-called "institutional 
trap". The rules of the game that have evolved in it suit many 
people. It is not so easy to destroy this system of interests. 
Yevgeny Yasin believes that the new president, who has got a 
mandate of trust from society, including for conducting 
resolute and unpopular measures, has such a chance. Vladimir 
Putin should propose that the Russian business circles and 
society adopt new rules of the game and conclude a sort of 
public accord pact.
In the opinion of RETsEP's specialists, the further 
success of reforms will depend on whether macroeconomic 
stabilisation will develop into a microeconomic one. The thing 
is that the majority of Russian enterprises and companies have 
found themselves in a complex situation. Compared to the early 
1970s, the average "age" of the equipment has almost doubled.
At the same time, they have nearly no hope for an influx of 
foreign investments, since the national banking system lies in 
ruins, and capitals from abroad come in small volumes because 
of the unfavourable investment climate.
Dealing with delay-action bombs, one never knows when they 
may explode. But this will inevitably happen one day, if these 
bombs are not defused in time.

*******


#9
Financial Times (UK)
May 24, 2000
[for personal use only]
Russia's securities watchdog faces an uphill struggle: John Thornhill and
Arkady Ostrovsky report on attempts to bring order to the country's
financial institutions:


Igor Kostikov, a pinstripe-suited financier from St Petersburg, is a man
with a daunting mission. As the recently appointed head of Russia's Federal
Securities Commission, Mr Kostikov is charged with the seemingly thankless
task of regulating the country's wild capital markets and financial
institutions. 


This week, he's in London, hoping to persuade a largely suspicious world
that things in Russia are really changing for the better. 


"The banking system and the securities markets have not become major
sources for the development of the Russian economy," Mr Kostikov says of a
system where the mattress has traditionally been preferred to the bank
account by cautious savers. 


"There are two difficulties connected with this. The first is the
investment climate, including taxation. The second is the corporate
governance regime. If we can make progress in these two areas then we can
dramatically change the situation in the economy." 


Mr Kostikov believes Russia's chief challenge is to build trust between all
the different players in Russia's market economy. At the highest level that
means restoring the population's confidence in the country's political
leadership, which was so badly battered by President Boris Yeltsin's
erratic political manoeuvres. 


But his principal task is to build faith in the integrity of Russia's
securities markets following the government's default on its domestic debt
market in August 1998. 


In keeping with the new rhetoric of President Vladimir Putin about
strengthening the role of the state without stifling enterprise, Mr
Kostikov argues that the commission has to intervene more to prevent market
abuses, while at the same time removing bureaucratic barriers to market
entry. 


He says his top priority is to work with the finance ministry, tax
authorities, and parliament to improve the corporate governance regime and
entice Russian investment into the securities market. 


Towards that end, Mr Kostikov is hoping to introduce a voluntary code of
practice, based on the OECD principles of corporate governance, by the
beginning of next year. 


He also wants to increase market transparency and to introduce tougher
regulation for professional market participants. In particular, he says
accounts of clients should be clearly separated from the accounts of market
professionals to prevent traders and brokers using clients' money to their
own advantage. 


At present there is no clear distinction between the two types of accounts. 


Mr Kostikov also aims to increase the competition in the market, which he
says, has been dominated by a few monopoly players. 


But Mr Kostikov's energetic predecessor, Dmitry Vasiliev, now head of the
association for investor protection, doubts whether Mr Kostikov is the
right man to impose fair rules on the game. He claims that Mr Kostikov is
too closely connected to some of Russia's most powerful "oligarchs". 


In a letter to the World Bank, Victor Pleskachevsky, a Russian member of
parliament who chairs the subcommittee for stock markets, has also
expressed his concern about Mr Kostikov. He claims that the actions of the
commission have the interests of small investors in Russia. 


Mr Kostikov denies any impropriety and says that Mr Vasiliev himself is
closely linked to Anatoly Chubais, the head of the Russian electricity
monopoly, UES. 


The exchanges reflect the highly charged background against which the
would-be guardian of the probity of Russia's financial markets has to
operate. The effectiveness of his commission will ultimately depend on the
political will and ability of President Putin's new government to defend
the weaker participants in Russia's capital markets. 


******


#10
Swiss give more documents to Russian prosecutors

APPENZELL, Switzerland, May 24 (Reuters) - Swiss judicial authorities said on 
Wednesday they handed over more documents to Russian prosecutors at a 
three-day meeting to discuss a series of cases involving alleged fraud and 
bribery. 


The Russian deputy prosecutor Vassili Kolmogorov and judicial officials 
Serguei Aristov and Vladimir Lyseiko met with 11 Swiss counterparts from 
Sunday to Tuesday. 


In a statement, the Swiss prosecutor's office said the two teams discussed 
the state of affairs in such probes as the Mabetex, Forus/Andava and Bank of 
New York case. 


It said documents requested by the Russians as part of legal assistance had 
been handed over. 


Mabetex is denying allegations it has paid bribes for obtaining lucrative 
government contracts to renovate the Kremlin. Pavel Borodin, who was a key 
aide to former Russian President Boris Yeltsin and headed the Kremlin's 
property empire, is denying allegations he took any bribes. 


Financial companies Forus Services and Andava are denying allegations they 
were involved in diverting hard currency from the Russian airline Aeroflot, 
which Russian investigators suspect amounts to $600 million. 


A former executive of the Bank of New York and her husband pleaded guilty in 
February in the U.S. in a money-laundering scheme on behalf of Russian banks. 


The Swiss statement said the investigators would meet again in Russia next 
year. 


******

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