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Johnson's Russia List


May 25, 2000    
This Date's Issues: 4323

Johnson's Russia List
25 May 2000

[Note from David Johnson:
1. AP: Russia Announces Tax Reform Plan.
2. Bloomberg: Russian Growth Lures Investors; Now They Want Concrete Changes.
3. Literaturnaya gazeta: Liliya Shevtsova, Political Conformism Bordering on Lackeydom.
4. Moscow Times: Yevgenia Albats, Putin Trumps Society With State Might.
5. Dale Herspring: Whither Putin?
6. Reuters: Gorbachev registers new Russian party.
7. Financial Times (UK): Chicago goes to Moscow. Amity Shlaes uncovers 
an unexpected interest in free market economics in the Russian 
8. Boston Globe: David Filipov, Chechen war leaves air of hatred, mistrust in village.
9. Reuters: Russia ministry sees no reprimands over Yugo visit.
10. Reuters: Russia has not ruled out Afghan strikes - Ivanov.

12. Financial Times (UK): John Thornhill, Putin strengthens his levers of power.
13. Reuters: Putin gives boost to new Russian regional envoys.
14. PRNewswire: Russian Human Rights in Retreat Under Putin's Watch, Witnesses Testify.]

Russia Announces Tax Reform Plan
May 25, 2000

MOSCOW (AP) - In a major economic policy move, President Vladimir Putin's 
administration unveiled plans today to slash income tax rates in hopes of 
spurring the lagging economy. 

``The time has come for the government to make a decision to lower the tax 
burden,'' Prime Minister Mikhail Kasyanov said at a Cabinet meeting. ``This 
will stimulate production, broaden the tax base and encourage economic 

Putin's plan envisages establishing a flat 13 percent income tax rate, 
instead of the current scale ranging from 12 percent to 30 percent. 

It is also intended to streamline the system, eliminating taxes that have 
proved ineffective, according to a government statement. 

The plan is the most concrete indication of the course Putin intends to 
follow. Until now, Putin, who took over the presidency Dec. 31, has said 
little about his economic plans beyond vague promises to continue market 

Economists have cited Russia's high taxes and convoluted tax laws as a major 
drag on the economy. Massive tax evasion keeps the government so cash-poor it 
can't pay its bills. 

The government says lowering the income tax would encourage both individuals 
and companies to declare their real wages. As part of the plan, the 
government says it is planning to strengthen enforcement, which remains weak. 
Specific enforcement measures were not immediately laid out, however. 

At the same time, the government proposed increasing some taxes which have 
proved easier to collect, such as levies on gasoline, which would increase 
six-fold, and the sales tax on tobacco, which would double. The gas tax hike 
will cause a 30 percent hike in prices at the pump, the government said. 

It is also planning to compensate for the cut in tax rates by canceling 
numerous exemptions and privileges granted to companies. Economic experts 
have long urged the Cabinet to make the move, saying that such privileges sap 
the government's revenues and encourage corruption. 

The plan faces good prospects for approval in parliament, which is dominated 
by pro-Kremlin parties that have already voiced their support for the plan. 
Putin sent a letter to parliament earlier this week outlining the highlights 
of the proposal. 

The budget committee of the State Duma, or lower house, was to discuss the 
plan later today. 


Russian Growth Lures Investors; Now They Want Concrete Changes

London, May 24 (Bloomberg)
-- Elizabeth Harvatt already has 5 percent of her personal assets invested 
in Russia, and the London lawyer said she'll consider increasing her holdings 
if President Vladimir Putin takes the right steps to sustain economic growth. 

``I am a risk taker,'' said Harvatt, who said she ``loved'' Russia's 
estimated 7 percent economic growth in the first quarter. ``Still, I prefer 
to watch Putin first. Russia dented hopes badly in 1998, so I have to be 
careful now.'' 

Putin, elected in March, must persuade investors like Harvatt his government 
will protect their rights, fix the tax system and fight corruption to 
maintain a year-long economic expansion. So far, growth has been driven by 
the ruble's 70 percent fall against the dollar in 1998, which drove up import 
prices, helping domestic producers, and by higher oil, gas and metals prices, 
which lifted export earnings. Both those catalysts already are diminishing. 

After rising through most of last year, shares of Russia's biggest companies 
have been falling for most of the last two months, with the benchmark RTS 
stock index dropping more than 27 percent since its high for the year on 
March 24, just ahead of Putin's election. The first sign of recovery came 
today, as the RTS rose 6.2 percent after falling nine out of the last 10 
days. Now the RTS is at about the same level as on Dec. 31. 


``Will Russia move from a risk play to a fundamental equity play?'' asked Dan 
Lubash, managing director of European emerging markets at Merrill Lynch & 
Co., at a conference in London. ``Yes, if Putin establishes new fiscal 
policies and restructures industry. The question is whether he'll do it.'' 

The clock is ticking. The ruble has been steady at about 28 per dollar for 
months, while Brent crude now is about 12 percent below its nine-year peak, 
reached in March, and aluminum, of which Russia is the world's second-largest 
producer, has fallen 7 percent so far this year. 

Russia's new government is currently putting final touches on its economic 
program. Officials have said lowering the tax burden and enforcing laws to 
fight corruption and protect property rights would be its top priorities. 

``After an initial liberalization in 1992, the government has in fact created 
a hyper-regulated system, and instead of clear rules, businesses have faced 
huge transaction costs in dealing with bureaucrats,'' said Oleg Vyugin, 
executive vice president of Moscow- based Troika Dialog and former Russian 
deputy finance minister. 

Corporate Governance 

A poor record of corporate governance at Russian companies adds to risks. The 
latest concern of investors is a plan by RAO Unified Energy Systems, Russia's 
main electric utility, to spin off power generators from the company that 
handles the power grid. The plan has raised concern it could hurt 
shareholders' value. 

``For now, Putin has to exceed expectations rather than to meet them'' to 
attract new investment to Russia, said Bill Browder, manager of the $450 
million Hermitage Capital Management fund in Moscow. 

It's Russia's potential that makes investors stay. The market values Norilsk 
at $5.83 a ton of annual nickel sales, half the value of its Canadian rival 
Inco Ltd., and a barrel of Russia's largest oil company OAO Lukoil Holding's 
reserves is valued at just one-fourteenth of Total Fina Elf SA's barrel, 
based on the companies' share prices. 

``You acknowledge the risks but can't ignore the price,'' said Daniel 
Beharall, a portfolio manager at Henderson Investors, who manages about $18 
million in Russian assets. ``I'm trying to put in Russia as much as I can, at 
the expense of Latin America.'' 


May 24, 2000
Literaturnaya gazeta
Liliya Shevtsova, Political Conformism Bordering on Lackeydom
(interview by Armen Gasparyan)
[translation for personal use only]

Q: Liliya Fedorovna, don't you have the impression that all our government
institutions have been stricken all at once with the virus of servility? In
the government, everyone is busy manifesting their loyalty. The Duma grants
[Prime Minister] Kasyanov a record number or votes. Governors are eager to
accept the new administrative chain of command.
A: To your list, I would add the political class and society as a whole. As
for the institutions of government, they were sick with servility for a long
time - since 1993. Because the constitution itself and the structure of the
Yeltsin regime (which can be defined for our purposes as a constitutional
elective autocracy) did not leave room for initiatives on the part of the
parliament, or the government, or political parties. They were merely cogs
in the structure of the presidential autocracy.

Q: Still, where does this present-day unanimity come from?
A: I believe, the main reason is not political, but psychological. This
zealous and overzealous unanimity is caused not even by fear, but rather by
uncertainty. Like in Hitchcock movies, where fear and tension are determined
not by a present threat, but by lack of information. This servility is
caused by uncertainty about the limits which Putin may probe with his

Q: Let us turn to the political class.
A: All of a sudden, it has shown so much eagerness to be obedient, which,
under Russian conditions, takes horrendous forms of complete lackeydom. But
there is nothing new or surprising in all this. When one is not
self-sufficient nor independent from authorities, both financially and in
terms of vital necessities, where would political dignity and independence
come from? They can be acquired with the help of only two institutions -
independent judiciary and private property. But our courts are still in
embryonic stage, while private property is constantly under question. The
latter often depends upon the degree of political influence of the
(...) Our political class, along with the media, has shifted toward
self-censorship. Now one can survive only by adaptation to the environment.
Hence extreme, humiliating forms of survival. It is regrettable that not
just the political class, but also a large part of the intelligentsia took
the same, all too familiar path.
(...) In addition, we have become slaves of popularity ratings. Today, Putin
is supported by 77% of the population. Therefore, neither the ruling class,
nor even that part of the political class which calls itself opposition,
dare to move against the tide. (...) Society, intellectual elite and the
political class have imposed constraints upon themselves, out of the
preemptive fear of coercion, well in advance of being coerced to anything.
(...) Our political class is incapable of playing the opposition role. Our
opposition is domesticated and purely rhetorical.

Q: These are dark colors. Is there anything bright, anything positive in the
current situation?

A: I cannot find anything that would be comforting. There is some hope that
Putin, with his extreme pragmatism, will learn fast. He has no political
past, which is both good and bad. It cannot be ruled out that he will
graduate from the school of politics before he runs out of his political
Our autocracy has neither resources nor mechanisms for peaceful resolutions
of crisis situations. The problem is that the leader bears responsibility
for everything, including crises. When he understands his inability to
overcome a crisis, he tries to spread the responsibility, by firing and
hiring prime ministers and administration members. But this is usually not
enough: there is not enough time for him to shift all responsibility. He is
the leader, after all, or, in the words of Vitaly Tretyakov, "Putin is all
that we have". When Putin is all that we have, there is a threat that his
authority might collapse. Thus, the key issue will be how to spread the


Moscow Times
May 25, 2000 
POWER PLAY: Putin Trumps Society With State Might 
By Yevgenia Albats 

The state has won over society. Whether that victory is final or not - and 
whether it can be reversed - remains to be seen. But for now, the latest 
decisions made by the new administration look exactly like that. 

A long-needed and long-expected reform of the government has signaled the 
priorities of the new president. For the first time since the beginning of 
"reforms" nine years ago, institutional changes are coming first, leaving the 
economy behind. And that is good and rational: Part of the failure of those 
reforms should be attributed to a lack of concern about institutional changes 
in general, and a lack of attempts to change the system of governance and its 
key monster, the bureaucracy. 

However, the way in which the system of governance is to be transformed 
excites much less optimism. The major aim is to use an iron hand to throttle 
the institutions of civil society, replacing them with ones that report 
directly to the Kremlin and give lip service to the public. 

The first move in that direction was made by dividing the country into seven 
federal districts that were ostensibly to free the courts and law enforcement 
bodies from the power of the regional barons. But the fact that these 
districts are replicating former military districts suggests that the army - 
not the populace of those expanded districts - has been chosen as the base 
for the Kremlin. The selection of the president's appointees - of whom two 
are army generals; two, career KGB officers; and one, a representative of the 
police - leaves few illusions about whom the Kremlin has chosen as its allies 
in the regions. But unlike the current regional leaders, who are accountable 
to their constituencies at least every four years through elections, the 
Kremlin nominees are accountable to no one but the president. 

No doubt, President Vladimir Putin's statement that the "paternalistic state" 
is in the Russian genetic code will be fully reflected in the actions of the 
new governors-general. But, judging by history, that does not necessarily 
mean that widespread corruption and privatization of governmental duties will 
be cured. The current state of affairs in the army, Interior Ministry and 
Federal Security Service, or FSB, does not allow for such optimism. 

The next step in this general direction will be made after parliament passes 
new laws written from inside the Kremlin. Even though some amendments to 
existing legislation seem reasonable (e.g. depriving governors of their 
immunity, because governors accused of misconduct can only be brought to 
justice after their term has expired as matters now stand), other amendments 
such as abolishing the system of self-governance would lead to the 
reestablishment of Soviet-style nomenklatura rule. 

The formation of the new/old government demonstrates the same "give lip 
service to the public" approach. A move in the right direction, toward 
cutting the size of the state apparatus and the number of ministers, has 
meant cutting off such institutions as the Committee for the Environmental 
and Goskino, the Committee for Cinematography. The abolition of the 
environmental committee can be construed as revenge by the FSB for its loss 
in the case of Alexander Nikitin, and leaving Goskino on the cutting room 
floor was a decision made despite the objections of the professional 
filmmaking community and its repeated appeals to the president. 

Watching the first steps of the new administration, I cannot help but suspect 
that Putin is picking his methods out of the same toolbox once developed by 
Augusto Pinochet. It is true that the general helped create the basis for 
what is now known as the "Chilean economic miracle." But the human costs of 
that miracle are hard to appreciate. Will the price paid by our society be as 
high? And will it lead to a miracle? 

Yevgenia Albats is an independent journalist based in Moscow. 


Date: Wed, 24 May 2000 
From: (Dale Herspring)
Subject: Wither Putin?

I have had an opportunity to discuss Putin and what makes him 
tick with my good and respected friend Jake Kipp. I don't claim to 
speak ex cathedra on the subject, but discussing the issue with 
Jake has helped me clarify some of my own ideas. For what it is 
worth, I will throw out some suggestions. Keep in mind that I spent 
more than twenty years as a bureaucrat so I may come at the 
problem from a different perspective than some. With that in mind . 
. . 
--Putin is not a politician in the traditional sense. I have been re-
reading Yeltsin's bio (The Struggle for Russia), and the latter was 
very much a politician. He came up through the party apparatus 
and even when the USSR collapsed, he acted very much like a 
politician. While it may sound silly not to call Putin a politician 
(after all, he was elected President), his approach to problems 
seems to me to be much different. 

--Putin comes across to me as first and foremost a problem solver -
- but one who operates within the political and economic limits of 
the world as he sees it. His approach to Chechnya has that flavor 
(even though he has not only not solved the problem, but it may get 
worse). This is also very much a description of what he appears to 
be trying to do vis-a-vis the country's 89 regions. The problem is 
that Moscow's control is very limited and that it must be restored. 
How to do it? The answer: his new three point plan plus the 7 

--I do not want to suggest that Putin is amoral or that he does not 
care about human rights. At the present, we simply don't know. 
However, when it comes to governing, he seems more in the mould 
of Hans Morgenthau or Henry Kissinger. He is an advocate of 
"Realpolitik." Human rights are fine, unless they get in the way of 
what he considers more important things -- in terms of solving the 
problems he faces. He has been stuck in a position he never 
thought he would achieve, and now worries about getting the 
country back on its feet.

--This approach to power is what is familiar to a bureaucrat -- power 
and administration (as Jake put it to me). Democracy -- well 
perhaps, but what good is democracy if it leads to mobocracy -- or 
if the country and its institutions fall apart? It must be first well 
administered and power must be appropriately allocated. This 
appears to be the approach that Putin is taking. Create law and 
order (as he defines the terms), then we will worry about 

--As far as relations with the West are concerned, I suspect Putin 
will continue to be pragmatic. He is a problem solver more than an 
ideologue. If an agreement with the West will help solve the 
Russian military's problems, then why not? The same with trade or 
relations with NATO. This is why I agree wtih the Clinton 
Administration's comment that "we can do business with him." I 
have no doubt that is and will be the case when the President visits 
Moscow shortly. (Senator Jesse Helms is another matter).

--So what does this mean for Russia? I am not dumb enough to try 
and predict what will happen in this wonderful, yet beleaguered 

country. I can only say the following: (1) the West will always be 
on the periphery when it comes to influencing what will happen in 
Russia. We cannot walk in and make changes as some have 
suggested. This is a Russian show now run by a former 
bureaucrat from the security apparatus. (2) Russia will probably 
never be democratic as we in the US understand the term. In the 
short run, we could be heading for a Taiwanes, South Korean or 
Chilean form of government. (3) We can only hope the Putin is 
interested in creating a "real" democracy in Russia. I don't think 
anyone knows what his real, long-term motives are. 


Gorbachev registers new Russian party

MOSCOW, May 25 (Reuters) - Former Soviet President Mikhail Gorbachev 
officially registered his Russian Social Democratic Party on Thursday, saying 
he wanted to support liberal ideas and end extremism. 

Gorbachev, 69, formed the Social Democratic Party in the run-up to last 
December's parliamentary election although the party did not run. Its 
registration by the Justice Ministry as a national party paves the way for it 
to contest future polls. 

``Just the idea of social democracy will help deliver the country from 
extremes, integrating liberal values and taking the best of the past,'' 
Gorbachev told reporters. He said he wanted to create a large, popular and 
``very democratic'' party. 

Although popular abroad for his role in ending the Cold War a decade ago, 
Gorbachev has become a marginal figure at home. The death of his wife, Raisa, 
last September prompted a wave of sympathy from Russians, increasing his 
public profile. 

Last month he agreed to head a media monitoring group sponsored by commercial 
NTV after gun-toting police raided the headquarters of the station's parent 
company, Media-MOST. 

Many commentators saw the raid as a blow to press freedom, although the 
police said it was part of a bona fide criminal investigation. 

Gorbachev said the jury was still out on whether President Vladimir Putin, 
elected March 26, was endangering free speech. 

``It's still early, there's a lot we still do not know, although some steps 
allow us to raise questions...for example what's happened to the press,'' he 
told reporters. 

``If they try to control the press, it will be bad for the powers that be. On 
the other hand, if the new president orients himself to what the people who 
elected him want, then he can expect a free press,'' he said. 


Financial Times (UK)
May 25, 2000
[for personal use only]
Chicago goes to Moscow
Amity Shlaes uncovers an unexpected interest in free market economics in the 
Russian presidency
One of the biggest mysteries about Vladimir Putin is his view of economics. 
His past as a Kremlin enforcer, after all, hardly prepares him for the 
nuances of leading the Russian economy. And while he has said, in a speech 
earlier this year, that he would "fight poverty" and that "the stronger 
state, the freer the individual," he has yet to lay out the minutiae of his 
positions on pension privatisation, the price-rule in monetary discussions, 
or the importance of marginal tax rates. 

So it is interesting to learn that the Kremlin recently played host to not 
one but two sets of the most eminent economists from the supply-side, free 
market school. 

Plans for the visit were reportedly laid by Andre Illarionov, a pro-market 
Western style economist who has spent time at Harvard and is now Mr Putin's 
economic adviser. Mr Illarionov approached the US embassy in Moscow, which in 
turn contacted the US economists. So it came to pass that the economists were 
able to make the pitch for classic supply-side measures - radical tax cuts, 
and personal savings accounts for pensions - over a sturgeon lunch on Good 
Friday with the President. 

The five guests dining at the Kremlin were Richard K. Vedder, an expert on 
employment, growth and school vouchers at the University of Ohio; James 
Gwartney, a leader in the school of economics known as public choice theory 
and chief economist at Congress's Joint Economic Committee; Arnold Harberger, 
one of the famous "Chicago Boys" who convinced Augusto Pinochet to radically 
restructure the Chilean economy and open Chile's markets; James Carter, Joint 
Economic Committee staff economist; and Carlos Bologna, former finance 
minister of Peru. 

"We made the case for marginal tax cuts," says Mr Gwartney. The economists 
report they also discussed the heavy burden of Russia's 41 per cent payroll 
taxes (social insurance taxes), which they told the Russians were "way too 
high". Another hot topic was depreciation: "In Russia, it takes 250 years to 
write off a building; a computer is depreciated over ten," says Mr Carter. 
"We said we saw this as a problem." Chile was among the models much discussed 
by the lunchtime group, as was Mr Bologna's slashing of taxes in Peru. 

The guests report that Mr Putin seemed receptive. "He seemed very sincere in 
his desire to move in this direction. It's just a matter of what he can do 
politically," reports Mr Carter. 

The following week a second round of free marketeers travelled to Russia, 
meeting Mr Illarionov at the Gref Centre for Economic and Strategic Studies, 
a think tank that has been asked to research and plan economic reform. This 
time the experts included Sir Roger Douglas, New Zealand's legendary free 
market finance minister, as well as Graham Scott, his fellow countryman and 
reformer; and Jose Pinera, the father of Social Security privatisation in 
Chile. Also travelling was Laurence Kotlikoff, a pension reform specialist 
from Boston University and scholar of the Russian economy. Invited, but 
unable to attend, was Prof. Robert Barro of Harvard and Stanford's Hoover 

Before the trip all the arrivals were told not to report their trip to the 
media; afterwards two of the scholars, Mr Kotlikoff and Mr Gwartney, wrote 
pieces in the Financial Times, but neither laid out the details of their 

There remains the question of what impact, if any, all the distinguished 
tutelage will yield. A round of reform plans is expected come June. 


Boston Globe
25 May 2000
[for personal use only]
Chechen war leaves air of hatred, mistrust in village 
By David Filipov

MEKENSKAYA, Russia - The makeshift cemetery in a field of wildflowers in 
northern Chechnya looks unremarkable enough, just another place of death in a 
republic where sudden and violent death is everywhere.

But the ethnic Russians who live in the village of Mekenskaya say the 40 
graves are a stark reminder of why there can never be peace with Chechens, 
even now, with the Russian military's claims of victory over separatist rebel 

The people buried here died in October, when Russian warplanes were 
conducting daily raids on Chechen rebel positions. During a break in the 
bombing, Akhmad Ibragimov, a Chechen bus driver, snapped. He took his rifle 
and went door to door, calling Russians out into the street and gunning them 
down. The only people he spared were Chechens.

Ibragimov was later apprehended by the rebels and handed over to the victims' 
families, who beat him to death with metal rods. But that brutal act of 
retribution did not cool the atmosphere of hatred and mistrust.

For Russians in Chechnya, Ibragimov's shooting spree has symbolized the 
hardships they suffered after separatists declared independence from Moscow 
in 1991. And although Moscow's forces control most of Chechnya now, ethnic 
Russians are worried about their future if the army ever leaves.

''How can we ever live together after what the Chechens did to us here?'' 
said Valentina Furman, standing near the graves. ''The Chechens tell us, 
`Don't get too happy with things the way they are now. If the army goes away, 
we'll show you.'''

This part of Chechnya is supposed to be the success story of Russia's 
campaign to restore control over the rebellious republic. Mekenskaya, 30 
miles northwest of the capital, Grozny, is in the heart of the region along 
the Terek River. People here never supported the radical Islamic militias 
that make up a large part of rebel forces still fighting in the mountains 
south of Grozny. If there were ever a place where Russians and Chechens could 
coexist, it was here.

But if the Russian military's presence has brought a shaky peace, it has not 
brought peace of mind to the hundreds of ethnic Russians whose families have 
lived here for generations.

Their point of view sheds light on a part of the Chechen campaign that Moscow 
charges has received little attention in the West, where most reports focus 
on looting, killing, and indiscriminate bombing by Russian forces.

The Kremlin's military offensive has certainly caused considerable suffering 
among ordinary Chechens and Russians. But Russians here say they suffered no 
less under the rebels: everyone among Russian families here has a relative 
who was forced to leave his apartment, or robbed, or kidnapped and held for 
ransom, or murdered. Though few of the crimes have been solved, Russians 
blame the Chechens.

Most Russians have fled. In the Naur district where Mekenskaya is located, 
ethnic Russians in 1991 made up 40 percent of the population. Now only 3,000, 
or 10 percent, are left.

Some Russians tried to leave but could not find refuge outside of Chechnya. 
Last October, Galina Grebtsova, whose husband was killed during fighting in 
Grozny in 1995, tried to flee with her 24-year-old daughter, Sveta, to a 
neighboring Russian province. But no one there wanted to give refuge to 
people who were born in Chechnya, whether they were Russians or not. The 
Grebtsovas gave up and returned to Grozny in December. Sveta was killed when 
a Russian bomb hit their shelter as Galina was out searching for firewood.

Now, Grebtsova and several other Russian women live in the ruins of Grozny's 
only Russian Orthodox Church, whose walls were destroyed by Russian bombs and 
whose priest was kidnapped and murdered by a Chechen gang. Grebtsova says not 
all Chechens treated her badly, and she says there was a big difference 
between the regular rebel units and Chechen outlaw gangs who thrived during 
the chaos of war. But not everyone makes that distinction.

Another family that stayed in Mekenskaya, with nowhere else to go, was 
Tatyana Kukushina's. Last October, her brother, Fyodor Minayev disappeared. 
He was not found until the Russian troops came in. His body was headless, his 
torso had been mutilated, his hands had been bound behind his back. His head 
was found later. The murderers were never found, although Kukushina suspects 
they were her next-door neighbors.

''The only reason they did this was because my brother was Russian,'' she 

Russian forces withdrew from Chechnya in 1996 after a failed two-year war 
against the rebels that killed tens of thousands and turned many Chechens 
against Moscow forever. But when the Russian troops returned to Chechnya last 
fall, ethnic Russians saw them as saviors.

''It was as though we had been delivered from occupation,'' said Maria 
Anasenko, 76. ''Living under the Chechens was like living under Hitler.''

For Chechens who live in Naur, such attitudes cause concern.

''Don't tell them we are all murderers!'' one Chechen woman passing through 
the graveyard shouted at Kukushina and a few reporters. ''They'll write about 
it and the soldiers will take it out on us.''

The atmosphere has dampened Moscow's efforts to bring life to normal in Naur 
by restoring utilities and reopening schools and factories. Edik 
Dzhemalidinov, the Chechen head of the Naur branch of Russia's State Savings 
Bank, said 94 businesses had reopened under the Russians. ''People are 
happier now, because they are getting paid,'' he said.

The Soviet Russia winery has reopened, recovering after the still unsolved 
brutal killing last year of its director. The winery's chief agronomist, 
Makhmat Sulayev, served a sample of its light, white wine and raised a toast 
to peace.

But peace has been fragile in Russian-controlled Chechnya.

Rebel forces have attacked Chechen civilians who sought to negotiate with the 
Russian military to prevent the fighting from harming their villages, 
according to reports collected by the New York-based Human Rights Watch. Last 
month, a pro-Moscow administration official in southern Chechnya was pulled 
out of his car and killed.

Nina Vasilyeva, the ethnic Russian mayor of Mekenskaya, said signs of tension 
were everywhere. Her Chechen driver has refused to work anymore because he 
had been threatened. Someone set fire to the wreaths villagers hung on the 
graves of World War II veterans.

Moscow says rebels are posing as civilians and waiting for a chance to 
attack. ''Even the Chechens who say they are for Moscow are often secretly 
against us,'' said Colonel Alexei Salyshev, an officer at Russian police 
headquarters in Naur.

Vasilyeva has asked for an increased police presence for Mekenskaya, where 
375 ethnic Russians live among 2,000 Chechens, but she was told there were 
not enough men to go around.

Instead, patrols occasionally drive by. Some Chechens clearly see them as an 
occupying army, such as the woman at a market in Naur who said: ''Things were 
better before the Russians came, and they will be good again as soon as the 
military leaves.''


Russia ministry sees no reprimands over Yugo visit
By Gareth Jones

MOSCOW, May 25 (Reuters) - Russia's Defence Ministry said on Thursday it had 
no plans to reprimand any officers over a controversial visit to Moscow by 
Yugoslav Defence Minister Dragoljub Ojdanic, an indicted war criminal. 

Ojdanic's five-day visit to Moscow earlier this month sparked outrage in 
Western capitals, which regard bringing Balkan war criminals to justice a key 
plank of the strategy to stabilise the region. 

On Wednesday, Foreign Minister Igor Ivanov apologised for the visit during a 
meeting with his NATO counterparts in the Italian city of Florence. In 
private, he also said senior military officers had been disciplined but gave 
no names or details. 

``We won't be punishing anybody (over the Ojdanic visit),'' a Defence 
Ministry spokesman told Reuters. ``Our minister has said nothing, no official 
statements have been made.'' 

He also dismissed suggestions that the ministry had made a mistake by 
inviting Ojdanic. ``There has been no blunder. Everything is going to plan,'' 
he said. 

Unofficial Russian sources in Florence said on Wednesday those disciplined 
may have included Colonel-General Leonid Ivashov, chief of the Defence 
Ministry international relations department and noted for fierce anti-Western 

A senior Defence Ministry source told Reuters Ivashov had accompanied Defence 
Minister Igor Sergeyev on a trip to Yemen earlier this week, implying the 
general was not out of favour. 


The source said Ivashov had since caught a cold and was not at work on 
Thursday. He added this was not a ``political'' cold. 

He also said he did not expect disciplinary measures to be taken against 

Asked who had invited Ojdanic to Moscow, the source said: ``We've been trying 
to find out but we have not found out yet. There are many possibilities.'' 

Ojdanic was indicted by the U.N. tribunal for ex-Yugoslavia for alleged 
crimes when he led Yugoslav forces during the repression of Kosovo Albanians. 
He was received with full military honours in Moscow, where he met Sergeyev 
and other top military brass. 

A spokesman for the Foreign Ministry in Moscow said he had no information on 
the Ojdanic affair. ``We don't even have the text of what the minister 
(Ivanov) said,'' he added. Ivanov was still in Florence on Thursday. 

The incident has revived talk of a split between Russia's foreign and defence 

Western diplomats said Ivanov's comments about ``an internal, technical 
hitch'' between the foreign and defence ministries were worrying and recalled 
a decision by the Russian military to occupy Pristina airport in Kosovo last 
June, apparently without top-level authorisation. 

A Russian column's bid to outmanoeuvre NATO forces then being deployed in 
Kosovo almost triggered an armed confrontation. 


Russia has not ruled out Afghan strikes - Ivanov

MOSCOW, May 25 (Reuters) - Russia's Foreign Minister Igor Ivanov signalled on 
Thursday that Moscow reserved the right to launch strikes against Afghanistan 
despite having earlier given assurances to the United States that it had no 
such plans. 

Interfax news agency quoted Ivanov as saying in the Italian city of Florence 
that Russia had ruled out no options. 

``Terror acts and other actions which could damage the interests of Russia 
and its partners in Central Asia are being prepared on the territory of 
Afghanistan,'' Interfax quoted Ivanov as telling Russian reporters. 

``Therefore, naturally, various scenarios are possible and we shall act 
according to how the situation develops,'' he said, adding: ``I think it 
hardly expedient to go further.'' 

A senior U.S. official said on Wednesday that Ivanov had assured U.S. 
Secretary of State Madeleine Albright during a private meeting that no 
strikes were planned. 

``Foreign Minister Ivanov assured her that no such actions were being 
contemplated...He implied that there had been a misunderstanding of the 
statements made by Mr (Sergei) Yastrzhembsky,'' the U.S. official said. 

Yastrzhembsky, the Kremlin's Chechnya spokesman, on Monday accused the 
Taleban, who rule most of Afghanistan, of harbouring Chechen rebels and said 
Russia might launch preventive strikes. 

Ivanov and Defence Minister Igor Sergeyev backed up his threats on Wednesday, 
just before Ivanov flew to Italy for talks with NATO foreign ministers. 

The United States itself bombed bases in Afghanistan in 1998 in the belief 
that they were used by Saudi-born Islamist militant Osama bin Laden, blamed 
for bomb attacks on U.S. embassies in east Africa which killed thousands. 

But U.S. officials said Washington doubted that Russian air strikes would 
have their intended effect. Russia also suspects bin Laden of backing the 
rebel fighters in Chechnya. 


Source: `Segodnya', Moscow, in Russian 24 May 00 

A Russian newspaper has warned the Kremlin against carrying out its threat
to launch preventive strikes on "terrorist camps" in Afghanistan. In an
article published on 24th May, 'Segodnya' cautioned that Russia could find
itself bogged down in an Afghan conflict while failing to end the Chechen
operation properly and added that a strike on Afghan territory could end up
uniting the Taleban "on an anti-Russian basis". Instead, 'Segodnya' said
the Kremlin should follow the US example and seek partners among the
Taleban. The following are excerpts from the article: 

[Russian presidential spokesman on Chechnya] Sergey Yastrzhembskiy's
statement regarding the possibility of a strike against terrorist camps on
Afghan territory controlled by the Taleban has split the Russian political
elite into hawks and doves. [Liberal Democratic Party of Russia leader]
Vladimir Zhirinovskiy and [former commander of the joint group of Russian
forces in the North Caucasus] Viktor Kazantsev, the new presidential
"viceroy" [presidential representative] for the North Caucasus, found
themselves in the front ranks of the hawks. A number of prominent
parliamentarians figured among the doves. Thus, State Duma Chairman
Gennadiy Seleznev called Yastrzhembskiy's words "lacking in control" while
the deputy chairman, Vladimir Lukin, suggested that the president's acting
aide had in mind a retaliatory strike against the Taleban if the latter
attack any of Russia's allies in Central Asia - Tajikistan, for instance. 

Yesterday Yastrzhembskiy spoke again on the Afghan issue. He said that, to
defend the interests of Russia and its allies in Central Asia, "it is not
compulsory to embark on close-quarters fighting" with the Taleban - strikes
using technical means are enough. In addition, Yastrzhembskiy advised his
critics to familiarize themselves with Russia's new military doctrine,
which provides for the possibility of delivering preventive strikes - not
only conventional, but nuclear... Yastrzhembskiy dropped a very transparent
hint that his words reflect Vladimir Putin's view - indeed, few doubted
this latter point. 

Thus, the talk of a preventive strike appears to be serious. But it looks
as though, in elaborating a plan in the style of the American movie Patriot
Games or Reagan's real-life attack on Libya in 1986, the Russian
strategists are failing to consider several important elements. First,
Russia could get bogged down in an Afghan conflict while failing to end the
Chechen "counterterrorist operation" properly. Even the Americans cannot
afford to fight [Iraqi President] Saddam Husayn and Slobodan Milosevic at
the same time. 

Second, a strike against the Taleban consolidates the Taleban leadership on
an anti-Russian basis. After all, the Taleban movement appears homogenous
only from the outside - in actual fact, it includes various groupings:
Islamist fundamentalists who in the past fought on the side of Golboddin
Hekmatyar, Yunis Khalis and other leaders of the mojahedin; monarchists
(supporters of former King Zahir Shah); former Communists (like Shahnawaz
Tanai, who used to be defence minister under Najibollah); and outright
Pakistani agents. According to some reports, some of the Taleban leaders
support Usamah Bin-Ladin and other terrorists - the rest have quite enough
to do controlling their own country. According to the same reports the
Americans are already "working" with the Taleban with the aid of the
Pakistani special services while at the same time roundly cursing
international terrorism. Russia, instead of sabre-rattling, could also seek
partners among the leaders of the movement, which controls up to 90 per
cent of the country's territory... 


Financial Times (UK)
25 May 2000
[for personal use only]
Putin strengthens his levers of power: Russia's young leader has stamped on
some enemies, but the country's new culture of pluralism is already well-i:
John Thornhill

Once again demonstrators are gathering in Pushkin Square in the heart of
Moscow. Scores of protestors are milling around the statue of Russia's
greatest poet, the historic focal point of Russian dissent, to fight for
the freedom of the press. 

Alexander Solzhenitsyn, the 81-year-old, Nobel prize-winning writer, has
also resurfaced to denounce the authorities and thunder against their plans
to recentralise power. "We can only build something strong and healthy from
the bottom up, as all things grow in nature," he said in a lecture at the
Lenin library. 

The airwaves are full of more obsequious cultural figures heaping praise on
Russia's youthful new leader, President Vladimir Putin. There are regular
denunciations of American imperialism and official talk of bombing
Afghanistan. Close your eyes and you could imagine you were back in the USSR. 

Just over two weeks into Mr Putin's presidency, the outlines of his
administration are beginning to emerge. In many respects, they look
alarmingly like the policies of the past. Mr Putin's first goal appears to
be to neutralise rival centres of political influence - the opposition
media, the country's 89 governors, and the upper house of parliament - and
to recreate what he calls the "vertical of power". 

He also seems intent on turning the tame pro-presidential Unity movement,
which came a surprise second in December's parliamentary elections, into a
real party of power, complete with membership cards and a youth wing. To
many, Unity looks suspiciously like a modern version of the Communist Party
of the Soviet Union. More than one media commentator has compared Mr Putin
with Joseph Stalin, that "grey blur" who consolidated his power and
ruthlessly eliminated his rivals before emerging as a dictator. 

Mr Putin has already targeted some enemies. Within days of his
inauguration, armed and hooded tax police and security agents raided the
headquarters of Media Most, Russia's biggest commercial media group, headed
by Vladimir Gusinsky. The company's television, radio, and newspaper
outlets have been sympathetic to some of the Kremlin's opponents and highly
critical of the war in Chechnya. 

At one level, the raid does appear to be an assault on the freedom of the
press, which explains why the crowds flocked to Pushkin Square. On another
level, however, it resembles a classic case of Russian "clan" politics in
which one powerful financial-industrial group exploits agents of the state
to bite a chunk out of a rival. 

The political gossip is that similar attacks are likely against the media
and commercial empire of Yuri Luzhkov, Moscow's mayor and one-time
presidential aspirant. The licence for TV-Tsentr, the pro-Luzhkov
television channel, has already been put up for tender. Bankers suggest
that the Kremlin is beginning to squeeze Sistema, the vast Moscow holding
company, and is demanding a share of the equity. Mr Putin seems determined
to trim the powers of the other governors by appointing seven
governor-generals across Russia to ensure federal laws are enforced
throughout the regions. He has issued decrees demanding that the
Bashkortostan, Ingushetia, and Amur regions bring their laws into line with
federal legislation, and has said he wants the right to fire incompetent
governors. In a television address, Mr Putin hinted that he wanted to strip
the governors of their automatic right to sit in the Federation Council,
the upper house of parliament, which occasionally obstructed President
Boris Yeltsin. 

But, as the saying goes, Russia is never as strong or as weak as it
sometimes seems. The same could be said about Mr Putin. The president may
already project an image of strength but Russia still boasts a
rough-and-ready culture of pluralism. Mr Putin was unable to oust his
arch-enemy, Vladimir Yakovlev, in the elections in Mr Putin's home town of
St Petersburg. Moreover, Moscow is abuzz with rumours that Alexander
Voloshin, head of the presidential administration, blocked the appointment
of Mr Putin's nominee for the post of procurator-general, the nation's top
law official, because he might have threatened some of the oligarchs'
interests. In spite of his rhetoric about creating equal conditions for all
big business in the economy, Mr Putin has stood on the sidelines as
powerful financial- industrial groups have grabbed control of Transneft,
the state-owned oil pipeline company, and carved up the aluminium industry
between them. 

Dmitry Volkov, a political commentator on the Vremya Novosti newspaper,
argues that Mr Putin is concentrating all his initial efforts on
strengthening the levers of power and is likely to leave the economic field
clear for the oligarchs, at least for the time being. "If he succeeds in
stabilising the economy and monopolising politics, then he may start to get
rid of the thieves as well. But they are not his top priority while they
have their political uses," he says. 

There also appears to be a certain amount of pluralism within Mr Putin's
administration, with three distinct groups of influence emerging. The
first, and seemingly most powerful, is the "family" of advisers and
businessmen that Mr Putin inherited from Mr Yeltsin. This grouping appears
to have succeeded in having their man, Mikhail Kasyanov, appointed as prime
minister, while securing other important cabinet posts. 

But Mr Putin has also introduced his own men into the corridors of power,
many of them from the former security services, such as Sergei Ivanov, head
of the Security Council. Their influence is partly offset by a group of St
Petersburg liberals, who appear to have considerable input into the policy
debate, particularly in the economic field. 

Yegor Gaidar, the former prime minister, says Mr Putin will find it
difficult to re-establish a monopoly of power even if that is his aim. He
argues that the experience of the previous two leaders has shown political
outcomes can diverge greatly from intentions. 

"Who would have thought that an orthodox Communist party boss from
Stavropol (Mikhail Gorbachev) would have ended up destroying Communism? Who
knows what will be the ultimate consequences of Mr Putin's actions?" 


Putin gives boost to new Russian regional envoys

MOSCOW, May 25 (Reuters) - President Vladimir Putin said on Thursday he would 
promote his new envoys to Russia's regions to the influential Security 
Council advisory body, putting them on a par with his top ministers. 

The envoys, named on May 18, are to be Putin's eyes, ears and voice in seven 
huge administrative zones, bringing the power of the Kremlin to bear on 
governors and local administrations. 

``I will meet regularly with my representatives to the regions and intend 
this week to prepare and sign a decree to bring them into the Security 
Council,'' Putin said in televised comments as he presented one of the new 
envoys to officials. 

The appointment of the envoys, who include generals and a former prime 
minister, has been seen as a move by Putin to gain control over governors, 
who are also to be deprived of the right to sit in the upper house of 

The envoys' inclusion in the Security Council further boosts their status and 
puts them alongside key figures such as the foreign and defence ministers. 

Many of the heads of Russia's 89 regions have enjoyed wide powers to act 
independently of Moscow since the collapse of the former Soviet Union. 
Although many governors have welcomed Putin's plans, political analysts have 
seen the moves as a direct assault on the governors' status and privileges. 

Their removal from the Federation Council upper house in particular has been 
seen as a way to reduce their influence on national politics and make them 
concentrate on local issues. 

Russian news agencies quoted Putin as saying his plans had been worked out in 
consultation with the governors and that his new envoys were another channel 
of communication with the Kremlin rather than a barrier. 

The envoys include General Viktor Kazantsev, who will work in the North 
Caucasus, where until recently he led Russia's offensive against Chechen 
rebels. Former Prime Minister Sergei Kiriyenko is to work in the Volga 
region, which includes the Moslem province of Tatarstan and the car-making 
town Samara. 

Russian Human Rights in Retreat Under Putin's Watch, Witnesses Testify

WASHINGTON, May 24 /PRNewswire/ -- Human rights in Russia are definitely in 
retreat under the leadership of President Vladimir Putin, according to 
witnesses who testified Tuesday in a hearing before the U.S. Commission on 
Security and Cooperation in Europe. 

CSCE Chairman Christopher H. Smith (R-NJ) and other members of the Commission 
heard testimony from Igor Malashenko, First Deputy Chairman of the Board of 
Directors of Media-Most and President of NTV in Moscow. 

Malashenko's offices were the subject of the Russian Government raid, 
following an attack by armed government security agents on the Media-Most 
headquarters in Moscow. The raid sparked questions about Putin's commitment 
to protecting human rights, in particular the right of free speech in a 
country struggling to build a democratic system. 

"They carted away documents, tapes, computer discs and equipment. Russian 
officials issued contradictory and unsatisfactory justifications for this 
raid. Whatever the rationale, however, it is clear that the forces involved 
in the operation were clearly disproportionate to any declared purpose," 
according to Malashenko's testimony. 

Chairman Smith expressed alarm over the Media-Most raid, suggesting the move 
is an indication that human rights in Russia are in retreat under Putin's 

"There is growing concern, however, that Russia's development in the area of 
human rights is taking a turn for the worse under recently-elected President 
Vladimir Putin," Smith said. 

CSCE Co-Chairman Senator Ben Nighthorse Campbell (R-CO) expressed grave 
concern with recent actions taken by the authorities against independent 
media as well as the conduct of Russian forces in the ongoing war in 

Turning to the economic dimension, Campbell noted that remedy of Russia's 
ailing economy will require President Putin to quickly get a handle on 
rampant corruption and continuing capital flight. "Following such a path, 
however, would put the Russian President on a collision course with Russia's 
modern day robber barons, including some of the individuals instrumental in 
his rise to power," said Campbell. 

"When I was in Russia last year as the Co-Chairman of the U.S. delegation to 
the OSCE Parliamentary Assembly, I met with American companies and heard 
first hand about the problems they were facing with corruption, crime and 
bureaucracy," Campbell added. "Russia's new leadership needs to address these 
problems to foster a more conducive climate for foreign investment." 

Ranking Member Rep. Steny Hoyer (D-MD) expressed outrage that the Russian 
defense minister had hosted the Serbian Defense Minister, recently indicted 
for war crimes by the United Nations War Crimes Tribunal. 

Helsinki Commission Member Senator Tim Hutchinson (R-AR) also participated in 
the hearing expressing interest in the alleged human rights abuses under 
Putin's watch. 

Rep. Matt Salmon (R-AZ) called the raid against Media-Most, Corporation "a 
step in the wrong direction and seriously jeopardize the hope of democracy in 

Former National Security Agency Director Lt. General (Ret.) William E. Odom 
also testified before the Commission in Tuesday's hearing. Odom said the 
United States should not treat Russia as a major power, nor should the U.S. 
try to solve Russia's problems through "ventriloquism." 

Rep. Tom Lantos (D-CA) also was on hand to deliver a statement before the 
Commission, stressing the critical role of a free press in a truly democratic 

On Thursday, May 11, armed government security agents attacked the 
headquarters of Media-Most corporation and it's subsidiary, the NTV 
television station, seizing what a security service spokesman claimed were 
illegally acquired tapes and transcripts of private conversations. NTV had 
criticized some members of Russian President Vladimir Putin's administration, 
as well as the government's conduct in the continuing war in Chechnya. 

As a result of his reporting from besieged Grozny last year, Radio Liberty 
journalist Andrei Babitsky remains in Moscow under investigation for 
allegedly "participating in an armed formation." Babitsky was recently 
awarded the OSCE Parliamentary Assembly's journalism prize for journalism. 

Tufts University Assistant Professor of International Politics Dr. Sarah 
Mendelson also testified before the Commission. Mendelson said the treatment 
of Andrei Babitsky and the FSB raid on Media-Most should be seen as "part of 
a larger pattern of harassment that has grown steadily worse over the last 
year and a half." 

Northwestern University Sociology Professor Georgi Derluguian testified that 
Putin faces an "uphill battle" to refurbish Russia's status as a world power. 

"The political change in Russia since Putin's appointment last August amounts 
to a successful coup carried out by formally constitutional means," 
Derluguian said. "In the spirit of KGB culture, Putin gives every signal of 
being pragmatic and professionally loyal to the idea of the Russian state 
rather than any ideology. He now faces the uphill battle to consolidate the 
new regime and use its levers to restore Russia as a respectable world 

Human Rights Watch Deputy Director Rachel Denber testified that in Grozny, 
"the graffiti on the walls reads 'Welcome to Hell: Part Two.' The bombing 
campaign has turned many parts of Chechnya to a wasteland even the most 
experienced war reporters we have spoken to told us they have never seen 
anything in their careers like the destruction of the capital Grozny." 

Denber also described summary executions of civilians, including the death of 
three generations of one family shot to death in the yard of their own home. 

In written testimony submitted to the Commission, Babitsky said Chechens are 
often refused their civil rights because of their ethnicity. 

"On the entire territory of Russia, the Chechens today are deprived of their 
civil rights simply because of their ethnic membership," Babitsky said. "No 
serious positive changes in this situation can take place as long as the 
authorities and public opinion conceive the Chechen nation as a threat to the 
existence of Russia." 

The full prepared statements of each witness may be read on the Commission's 
web site 

SOURCE Commission on Security and Cooperation in Europe 


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