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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

May 31, 2000    
This Date's Issues: 4335 4336 4337

 

Johnson's Russia List
#4336
31 May 2000
davidjohnson@erols.com

[Note from David Johnson:
1. BBC MONITORING: NORTH RUSSIAN CITY SEVERODVINSK IS NUCLEAR POWDER KEG.
2. Christian Science Monitor: Fred Weir, Chechen children seek solace through art.
3. International Herald Tribune, William C. Potter and Nikolai Sokov, Nuclear Weapons That People Forget.
4. Gordon Hahn: Putin and Berezovskii.
5. International Herald Tribune: David Hoffman, Russia Kingmaker Assails Putin Plan.
6. APN: Vladislav SHURYGIN, Chechen fighters` secret sponsors. General Aushev and other Russian commanders.
7. gazeta.ru: Gas Struggle No Laughing Matter. (Gazprom's board)
8. Newsweek International: Steve LeVine and Owen Matthews, Shopping for Enemies. Moscow talks tough about punishing Chechnya's allies. Is Putin picking a fight with Afghanistan? 
9. Moscow Times: Gerashchenko: If I Tell You All, You'll Cry. (Yelena Berezanskaya interviews Central Bank Chairman Viktor Gerashchenko)]

*******

#1
BBC MONITORING
NORTH RUSSIAN CITY SEVERODVINSK IS NUCLEAR POWDER KEG

Text of report by Russian Public TV on 30th May 

[Presenter] Today we received a report from Archangel Region. A catastrophic 
situation is taking shape there. The reason is radio-active wastes. 

[Correspondent] Forty-five kilometres from Archangel there is the 
300,000-strong town of Severodvinsk. This is a powerful nuclear shipbuilding 
centre, but now this town is a gigantic radio-active dump. Both liquid and 
solid wastes, spent nuclear fuel, have accumulated in the bay in the very 
centre of the town over a period of 13 years. The ecological situation is 
extremely complicated. The town is literally living on a powder keg. At any 
moment, an emergency situation can occur. Experts assert that this will be a 
second Chernobyl, but there is a way out of this situation. A tragedy can be 
avoided. 

[Chairman of the ecology committee of Archangel Region, Anatoliy Menyayev] In 
principle, the technology exists which will allow the radio-active wastes to 
be removed from Severodvinsk. They just need to be removed, loaded onto a 
special train and sent to Mayak [processing plant] in the Urals for 
processing. The schedule for this which has been agreed is not being met. 

[Correspondent] The train which is supposed to transport this dangerous cargo 
away does not make more than two journeys per year, although the timetable 
indicates that it should make three times more than that. Only then, can the 
ecological situation in the area be considered safe for people. The main 
problem is that this special train is the only one in Russia. It serves the 
needs of the Northern and Pacific fleets, as well as the atomic ice-breakers 
of the Murmansk steamship line. It is by no means sufficient to take away the 
nuclear wastes in the summer time. For the moment 300,000 Severodvinsk is 
making ready to deal with an accident situation and is living according to a 
regime which envisages constant readiness to evacuate the population. 

******

#2
Christian Science Monitor
31 May 2000
Chechen children seek solace through art
By Fred Weir, Special to The Christian Science Monitor

A pencil-and-crayon drawing tells the story in startling detail: A fighter 
plane with a bright red star on its fuselage spews rockets toward a 
multistoried apartment that's already aflame. On the ground below, a group of 
terrified figures are fleeing. 

"That's my house," says the artist, 11-year-old Milana Sulipa, a slight 
Chechen girl whose dark hair is sternly gathered into a bun. Her mood seems 
to be wound just as tightly. 

"That's my mother and me," she adds, pointing to a large and a small figure 
at the bottom of the picture. 

Milana, a refugee from the devastated Chechen capital, Grozny, is one of 
hundreds of children who each day visit this makeshift schoolroom at the edge 
of the Sputnik refugee camp in eastern Ingushetia. Sitting at small folding 
tables, with sunlight streaming through the tent's canvas windows, a 
volunteer encourages the kids to use painting as a means to reflect on their 
nightmarish experiences. The sessions are called art therapy. 

"I couldn't draw a helicopter gunship to save my life, but most of these 
children can represent one perfectly, down to the smallest detail," says 
psychologist Tamara Khaduyeva. Herself a refugee from Grozny, she works for a 
private British charity, the Center for Peacemaking and Community 
Development. "They put their experiences onto paper, over and over again." 

Over 200,000 Chechens have fled into neighboring Ingushetia since Russia 
launched a military operation last October to crush Chechnya's decade-old 
independence drive. About 80 percent of the refugees are women and children, 
and a majority of them are from Grozny. 

All of the volunteers working with refugees are either Chechen or Ingush, 
because the entire region is still deemed unsafe for foreign nationals. After 
the 1994-96 Chechen war, armed gangs ran rampant in Ingushetia, and kidnapped 
hundreds of people, including many foreign aid workers. Though there have 
been no kidnappings for several months, UN monitors, journalists and 
international humanitarian workers only make brief visits to the camps, 
always accompanied by heavily-armed guards. 

The Sputnik camp, just a mile from the Chechen border, is an overcrowded tent 
city of about 10,000 sitting on a bleak plain, virtually in the shadow of the 
high, snow-capped Caucasus Mountains. Administrators here say the threat of 
cold and hunger that stalked the camp last winter has receded with the coming 
of spring and greater quantities of international aid. 

"Still, there is nothing resembling normal conditions here, especially for 
the children," says Murat Sarapalov, an Ingush volunteer for the United 
Nations. "There is a crushing need to address not only the physical survival 
of these kids, but also the spiritual pain and hopelessness they are 
feeling." 

A handful of volunteers, funded by donations from Western governments and 
charity groups, are trying to come to grips with the post-traumatic stress 
disorders they say afflict most Chechen children. 

"All that violence has influenced their minds," says Fatima Abdoulkhadjeyeva, 
a refugee from Grozny who works with the Agency for Rehabilitation and 
Development, a Dutch-funded charity. "Gradually they start to hate the 
Russians. A new generation of rebel fighters is growing up here in the 
camps." 

Mahmoud Gidayev, a 10-year old with close-cropped brown hair, illustrates 
that point. His drawing also shows a helicopter pounding an apartment 
building with rockets and bombs. But his explanation is different. "That's a 
Chechen helicopter," he says grimly. "That's a Russian house." 

The Kremlin's forces, which have occupied most of the separatist republic of 
Chechnya after eight months of bitter fighting, insist they have conducted 
the war with due regard for the lives of civilians. 

But human rights experts and other observers say the Russian Army advanced 
through Chechnya behind a screen of heavy weapons fire that devastated 
everything in its path. 

The volunteers working with Chechen kids in the Sputnik camp say the 
frightening images they keep putting down on paper are drawn from life. 

"If someone wants to say that these children are making things up, then let 
them," says Ms. Khaduyeva. "I don't want to argue about that. My purpose here 
is to help the kids face their experiences and hopefully to heal their 
minds." 

She shows a series of drawings done by nine-year-old Zareta. In the early 
drawings the girl's home, a village farmhouse, is a charred wreck and several 
family members are lying dead outside. But by the 10th version the girl has 
drawn an underground bomb shelter, and her family is depicted as safely 
hiding inside. 

"That's a huge victory," says Khaduyeva. "However horrible the things she has 
gone through, she has worked them out. She has allowed herself to hope." 

Grozny, once a city of 250,000, is today a near-deserted ruin. Most of its 
population is dispersed among refugee camps, a situation experts say will 
probably take a long time to redeem, if ever. Moscow has shown no sign of 
being ready, or willing, to commit the resources to rebuild the city. 
Officials have even mused about moving Chechnya's capital to Gudermes, the 
republic's second largest town, which is still largely intact. 

"We have to consider the scenario in which most of these refugees remain 
homeless and displaced for many years," says Fritz Lherisson, a UNICEF 
representative. "All wars are in some sense against children, but this war 
has shown no mercy to them. There is a desperate need to reach them in those 
camps, to provide them not only with material assistance but also with a 
chance to believe in the future." 

*******

#3
International Herald Tribune
May 31, 2000
[for personal use only]
Nuclear Weapons That People Forget
By William C. Potter and Nikolai Sokov
Mr. Potter is director of the Monterey Institute's Center for 
Nonproliferation Studies. Mr. Sokov, a former Russian arms control 
negotiator, is a senior associate at the center. They contributed this 
comment to the International Herald Tribune.

MONTEREY, California - Nuclear arms control issues will be on the agenda at 
the first summit meeting this weekend between President Bill Clinton and his 
Russian counterpart, Vladimir Putin. Neither side, however, appears eager to 
address the sensitive problem of tactical nuclear weapons, the most 
destabilizing category of nuclear arms and the one least regulated by arms 
control agreements.

Tactical nuclear weapons are relatively small, short-range systems designed 
for use in battlefield or theater-level operations. Because of their size and 
forward basing, they are especially vulnerable to theft and unauthorized use. 
They have been unaffected by negotiated arms control agreements and are only 
subject to the non-binding unilateral, parallel declarations made by George 
Bush and Mikhail Gorbachev in the autumn of 1991. 

These initiatives, along with a related pledge by Mr. Putin's predecessor, 
Boris Yeltsin, in January 1992, provided for the elimination of thousands of 
tactical nuclear warheads and the transfer of most other stocks to central 
storage facilities.

Although these unilateral declarations appear to have been largely observed 
to date, their future is precarious. They are not legally binding, do not 
provide for data exchanges, lack a verification mechanism and can be 
terminated by either side without prior notification. As such, they are 
poorly equipped to withstand the challenges of any further deterioration in 
the U.S.-Russian political relationship, the renewed interest in tactical 
nuclear weapons in Russia as its conventional forces deteriorate and the 
possible U.S. withdrawal from the Anti-Ballistic Missile Treaty.

The new Russian military doctrine poses special risks to the 1991 unilateral 
declarations because it provides for the early use of nuclear weapons in 
regional conflicts. This approach is reflected in the increased integration 
of tactical nuclear weapons into war planning, as was evident in the ''West 
99'' military exercises last summer. In short, nuclear weapons in general and 
tactical nuclear weapons in particular are enjoying a renaissance in Russia 
where they are perceived as a poor man's substitute for advanced conventional 
arms.

Given these challenges, the informal tactical nuclear weapons control regime 
must be reinforced, and a retaining wall must be erected to prevent its 
erosion and collapse. Among the most important steps that should be taken are 
reaffirmation by the United States and Russia in a joint statement by the two 
presidents of their continued commitment to the 1991 parallel statements, or 
preferably the signing of an executive agreement to that effect. 

Ideally, action of this sort should be taken at the summit meeting between 
Mr. Clinton and Mr. Putin in Moscow on Sunday and Monday, before Russia 
commits to new production or deployments of tactical nuclear weapons.

It would also be highly desirable for both presidents to direct their 
governments to begin negotiations on a legally binding treaty that codified 
the 1991 statements. Such a treaty should include provisions for data 
exchange and verification measures. Although these negotiations could 
conceivably be held within the framework of the talks to finalize the third 
Strategic Arms Reduction Treaty, this forum is already burdened by other 
issues. It would probably be best to address tactical nuclear weapons in a 
separate, dedicated negotiation.

Although efforts should continue to be directed toward reducing arsenals of 
long-range strategic nuclear arms, it is increasingly urgent to reinvigorate 
the process of eliminating tactical nuclear weapons. Failure to do so would 
undo earlier accomplishments and open the door to a new and destabilizing 
arms race.

*******

#4
Date: Tue, 30 May 2000 
From: Gordon Hahn <hahn@hoover.stanford.edu>
Subject: Hahn on Putin and Berezovskii

How are we to interperet the recent signs of a rift or at least the
apparent Berezovskii attacks on Putin. Should they be seen as a real rift
between the two driven by an imminent crackdown against the notorious
oligarch. Here the recent raid of Media Most is of interest. Was the
Kremlin after incriminating info on Berezovskii taped by and held at Most
or its security service? Recall that transcripts of alleged taped
conversations of Berezovskii's, including with Chechen guerillas apparently
in cahoots with him in arranging the Dagestan incursion, have been
published in the press and that some of those behind the raid of Most said
that telephone surveillence and other eavesdropping equipment and tapes wer
found in the raid.

Berezovskii may be wary of an impending crackdown fearing this and see the
effort to rein in the regions and take over control of financial controls
as an effort to break his newly developing ties with governors in an effort
to gain more propoerty holdings. This would explain Kommersant's (partially
funded by Berezovskii) reprinting of the Le Monde piece suggesting Putin's
ties to money-lanudering and even the mafia as well as B's critique of
Putin's new federal policy.

Or are these apparent attacks a smoke screen designed to negate Voloshin's
reappointment on Sunday. The point of the attacks would be to make it look
like Berezovskii and Putin really have differences and are not that close.
So how can anyone say that Voloshin's re-appointment is evidence of
Berezovskii's continued influence in the Kremlin or of having an 'in' in
the Kremlin?

Time will tell which is the correct interpretation.

********

#5
International Herald Tribune
May 31, 2000
[for personal use only]
Russia Kingmaker Assails Putin Plan
Centralization 'Cheats' Voters
By David Hoffman Washington Post Service

MOSCOW - Boris Berezovsky, the influential tycoon who helped bring President 
Vladimir Putin to power, broke ranks Tuesday, sharply criticizing Mr. Putin's 
attempt to reign in the regional governors and saying it would undermine 
Russia's fragile democracy.

Mr. Putin ''is demolishing some democratic institutions,'' would ''cheat'' 
Russia's voters and is ''destroying'' the new political elite, Mr. Berezovsky 
said in an interview with The Washington Post on the eve of a planned first 
vote Wednesday on the Putin plan in the State Duma, the lower house of 
Parliament. Mr. Berezovsky is a member of the Duma.

Mr. Putin recently proposed the most far-reaching restructuring of Russia's 
political system since adoption of the 1993 constitution. He created by 
decree seven super-administrative districts to oversee the 89 Russian regions 
and proposed legislation to permit the Kremlin to fire governors and to 
remove them from their seats in the upper chamber of Parliament, the 
Federation Council.

Mr. Berezovsky's criticism is important as a signal that rough waters may lie 
ahead for Mr. Putin's proposals, his first major initiative since his 
inauguration May 7. Some governors had kept silent on Mr. Putin's plan but 
may now follow Mr. Berezovsky in speaking out.

Mr. Berezovsky has also pointedly raised the issue of Mr. Putin's commitment 
to democracy, which has been gaining increasing attention lately.

Moreover, Mr. Berezovsky was a key player in the small group of Kremlin aides 
and financiers who helped bring Mr. Putin to power. His decision to speak out 
against the plan may indicate a deeper power struggle around the president. 
Mr. Putin recently denounced those who criticize his plan as ''provocateurs.''

Mr. Berezovsky said he did not question Mr. Putin's intention to bolster the 
Kremlin's weakened authority. But he said the plan's specifics were 
undemocratic. ''Mr. Putin suggested that governors who get out of line - or 
who insist on creating their own laws which violate Russian law and the 
constitution - could be dismissed by the Kremlin,'' he said. If a governor is 
removed, ''this means that as a voter I have been simply cheated.''

Mr. Putin has also proposed that governors be able to dismiss locally elected 
officials. But Mr. Berezovsky said that local balloting had created a 
progressive new generation of elected officials and that pro-market 
entrepreneurs were part of this new wave. ''Putin is destroying this elite,'' 
he said. ''He is telling dozens of thousands of politicians of the upper 
echelon, 'I will be able to dismiss you.' This is utterly unacceptable.''

Asked about governors who have brazenly taken the law and economy of their 
regions into their own hands, such as Yevgeni Nazdratenko of Primorsky Krai 
in the Far East, Mr. Berezovsky said, ''You know, even in this case I don't 
think it's bad.'' He added: ''Our democracy is still in the process of 
growing. That is why there are many mistakes and many problems.'' 

Mr. Berezovsky also objected to the seven new super-districts Mr. Putin 
created. Five are to be headed by veterans of the military and security 
agencies.

Mr. Berezovsky said the plan was a ''time bomb against Russia's territorial 
integrity,'' which would usurp the existing 89 regions and create seven new 
states with ambiguous legal foundation.

In a letter to Mr. Putin, which Mr. Berezovsky sent Tuesday, he called for a 
referendum on Mr. Putin's proposals.

''You cannot make such hasty decisions in a large country like Russia, a 
country which is seriously ill,'' he said.

Girding for a fight, Mr. Putin tried to reassure governors that he was not 
attempting to take away their power. He said the point of the new system was 
to produce ''uniform understanding of the laws'' across the Russian 
Federation.

''The activity of the presidential representatives is not aimed at replacing 
the powers of the local authorities,'' he said, adding that the seven new 
chiefs would serve on the Kremlin security council and so could be a conduit 
for taking the governors' problems ''to the very highest political level.'' 

*******

#6
APN
30 May, 2000, 16:02
Chechen fighters` secret sponsors
General Aushev and other Russian commanders
By Vladislav SHURYGIN

Agency of Political News publishes our war observer Vladislav SHURYGIN`s 
outlook on antiterrorist operation in Chechnya. We share not all Shurygin`s 
arguments and conclusions. However on the whole, we consider it interesting 
to familiarize with the professional's point of view and argumentation.
APN editors

Long May`s holidays have passed. Inauguration's flourish has ceased, hockey 
fan`s fifes stopped whistling. Now Russia has a new president, new government 
and new rank in hockey hierarchy. Only the Chechen war still persists. The 
fights go on and our soldiers continue to die.

The situation in Chechnya at the moment can be described as extremely 
complicated. In fact, it is a question of who will win? Either the militants 
after summoning up their strength and having a rest make a corridor into 
Georgia and Dagestan, replenish their scanty arsenals and professional 
hirelings and launch a full-scale diversionary guerrilla warfare or the 
Russian army contains Chechen troops` attack and bars them from preparation 
to an autumn and winter period, holds the border, not allowing new hirelings 
and caravans with arms to force through and join shabby troops and, by 
October, makes fighters` position dramatic.

At the moment, according to our source within General Intelligence Department 
at General Staff of the Armed Forces of Russia, there are over two thousand 
of Chechen militants who returned from Turkish and Azerbaijan hospitals and 
hirelings from Afganistan, Kosovo and Syria disposed in Georgia at the 
bounder with Chechnya.

Georgian frontier guards, in fact, openly reconnoitre in favor of Chechen 
rebels and shelter their actions.

According to the sources, almost every day trucks with arms, ammunitions, 
food and medicines come from Azerbaijan and Turkey to the storehouses located 
at the border with Russia. A Russian troop dislocated in Georgia, according 
to former head of Georgia`s security service Igor Georgadze, is actively 
involved in arms traffic. A coming withdrawal of our troops and an uncertain 
situation with military equipment which Georgia wants to possess provoke a 
mess. On the expectation of the mess to result in an entire chaos high 
ranking Russian commanders got engaged in arms traffic. In particularly, our 
sources mentioned a large deal on ammunition for grenade cup discharges and 
antitank guided missiles allegedly to be closed by Chechen suppliers with 
Georgians as mediators in mid-April. The commanders of one of the Russian 
troops sold several hundreds of shells for light grenade cup discharges and 
over hundred of shells for antitank guided missiles. Investigation in the 
case will make it clear whether it is true or not. It`s better to make a 
full-scale examination of our force in Georgia.

Dagestan is a further way the hirelings penetrate into Chechnya. Separate 
forces trickle in through its territory. However the fighters fail so far to 
make a safe corridor to bring columns and caravans through. That`s why the 
decision was taken at the meeting held by Aslan Maskhadov to send mixed 
Chechen and Dagestan diversion bands in the Dagestan borderland to arrange a 
guerrilla warfare. Part of these bands are on their way to famous Karamakhi 
settlement where, according to Chechens, the Vakhkhabbits smashed last autumn 
revive again.

Ingushetia remains the only functioning «gap» for militants. Refugee camps 
have been converted into terminal stations to supply the terrorists with 
everything required. They buy food, medicines, ammunition in the wholesale 
markets and bring all these things as civil goods and humanitarian assistance 
to Chechnya to sell to militants. Such goods are convoyed by Ingush Internal 
officers and accompanied with covering letters issued by the republican 
government bodies.

The militants whose families were brought out as far as last autumn undergo 
treatment and have a rest in the camps, according to a FSB source. Several 
signal office and control centers are deployed there.

In fact, a full-scale war against Russian forces has been launched on the 
territory of Ingushetia. Recently a Russian Internal Affairs, or MVD, column 
was ambushed and shot down near Arshty settlement, almost every night posts 
are fired on, servicemen are strongly forbidden to move around settlements on 
their own and move along the roads outside columns.

Altogether more than forty times Russian troops were shot and attacked by 
militants for these months in Ingushetia. Republican head Rusalan Aushev 
maintains regular contact with rebel leaders and time and again tries to 
arrange separate talks with Chechen leaders as a mediator.

In Chechnya itself the hostilities have transformed into guerrilla warfare 
and diversions. When the trees became green the fighters dividing into small 
groups began the first stage of the guerrilla warfare –war on the roads. 
Information on minining and ambushes emerges almost every day. However it`s 
too early to speak about the fighters to seize the initiative. Chechen troops 
suffer the lack of ammunition and arms, especially grenade cup discharges, 
shells and antitank means. Therefore only small Russian columns which have no 
safe cover are attacked. The militants don`t dare act against large columns 
and all the more to cut off and block communications. Besides, Russian 
special forces effectively act against these troops and fighters die in their 
ambushes and under fire of guided artillery and aviation almost every day.

However Russian military men have no reasons to rest on their laurels. Severe 
drawbacks have been revealed during this time. First of all, the servicemen 
and Ministry of Internal Affairs, or MVD, failed to put a real control over 
many Chechen settlements, especially in submountain and mountain areas of 
Chechnya. In fact, the dual power has been set up there: Russian commandants 
and MVD rule in the day time, and the fighters - at nights. All this leads to 
the fact that local population fears to support the Russian authorities and 
prefer to keep neutrality. In this situation the militants are always 
assisted and supported by the residents who fear them much more than federal 
military men. These settlements are real oases for fighters to legalize and 
arrange effective underground work and reconnaissance. The whole set-up leads 
to so-called contractual» settlements to be emerged where some of 
commandants openly contact with fighters and even divide their power on 
certain terms, more often they exchange militants` security for cessation in 
this area. The last Chechen war showed what this practice results in. At that 
time the fighters with first-class reconnaissance data at their disposal 
beneficially used the contradictions and the lack of coordinated action in 
Russian troops.

Apart of this, our troops` strategic activity leaves much to be desired. 
Crash of a SU-24 reconnaissance plane which was missed before May holidays 
and found only several days ago is a glaring example. During the war it was 
only once that a catapulting pilot was rescued. In the rest cases a pilot (or 
his remains) was captured by militants. It`s a shame that the military can 
not arrange an effective system to rescue crashed crews. I`d like to remind 
it was only twice that Soviet pilots were captured by Dushmans during the 
Afgan war notwithstanding vast distances and strong Afgan anti-aircraft 
defense… War analysts estimate that shortly militants` efforts to break down 
a border blockade from the side of Georgia and direct their steps to Dagestan 
may become more often. Our sources insist that for the sake of this target 
the terrorists may seek for a demonstrative attack against one of the 
Chechnya`s district centers to draw away Russian forces from the boundary 
districts and attack through the border.

The fighters succeeded in sending the number of their troops up to five-six 
thousand people by now. However, half of them are recruits who need in being 
trained. In addition, the fighters are badly in need of experienced 
specialists. First of all in shot-firers, specialists in complex kinds of 
arms: antitank guided missiles, mobile antiaircraft missile complex, aircraft 
guns, mechanic-signalmen, combat engineers. That hinders their movement but 
they are short of time. If they have not prepared to the autumn-winter period 
by the end of August their resistance will be smashed already by next spring.

*******

#7
gazeta.ru
May 30, 2000
Gas Struggle No Laughing Matter

The government has named its candidates for seats on Gazprom's board. The 
list accurately reflects the political clans in the White House. The main 
sensation is that Viktor Kaliuzhny, recently sacked from the post of the 
Minister for Fuel and Energy, is on the list. 

The post of governmental representative on the Gazprom board is no 
less prestigious than being a member of the government. Gazprom provides over 
20% of Russia's total budget revenues, thus in economic terms the company is 
more powerful than some of the newly created federal districts. 

The government's candidates for the post of director on Gazprom's board are 
the deputy Prime Minister Viktor Khristenko, the Minister for Economy German 
Gref, the Minister for Anti-monopoly Policy Ilya Yuzhanov, the Property 
Minister Farit Gazizullin and the Head of Government Staff Igor Shuvalov. 

The former minister for fuel and energy Viktor Kaliuzhny, Chairman of the 
board Viktor Chernomyrdin, executive chairman Rem Vyakhirev, the 
representatives of German concerns Ruhrgaz and Mannesman Burkhard Bergmann 
and Pyotr Golitzyn are also on the list. The latter is, incidentally, a 
Russian prince. 

The fact is Vladimir Putin took control of Gazprom long before the 
presidential elections by replacing the head of Gasprom's security department 
with his comrade from the St.Petersburg department of the FSB when Putin, 
then PM, visited Gazprom's 30 floor headquarters. It is worth noting that it 
was Vladimir Putin who went to meet Gazrprom's directorate and not vice 
versa. 

After a FSB man had been installed in the concern's management, another goal 
emerged: to secure governmental representation on Gazprom's board of 
directors. Judging by the given list, three candidates represent the 
so-called "St.Petersburg" clan led by Anatoly Chubais, and the other three 
are the prot?g?s Boris Berezovsky's "Moscow" clan. 

The first clan has put forward Yuzhanov and Gref, and the second clan is 
represented by Gazizullin and Shuvalov. As for Khristenko, who was born in 
Chelyabinsk, it is not quite clear where he belongs. The main sensation is 
the candidacy of Viktor Kaliuzhny, the former head of the Ministry for Fuel 
and Energy and the present presidential envoy for Caspian fuel and energy 
projects with the title of Deputy Foreign Minister, on the list of 
candidates. 

Kaliuzhny's enemies were obviously too quick to rejoice over his dismissal 
from the ministerial post. It is worth noting that when Kaliuzhny was 
minister, he insisted that the head of the Ministry for Fuel and Energy be a 
member of the Gazprom board ex officio. However, the newly appointed Minister 
for Fuel and Energy Alexander Gavrin is not on the list but Kaliuzhny is not 
in the least bit indignant, quite on the contrary. Kaliuzhin himself aspires 
to the director's position… 

The matter will be solved at the meeting of Gazrpom shareholders scheduled 
for June 30th. The state holds a 40% stake in Gazprom, consequently, in 
compliance with regulations, the state cannot claim over five seats in the 
board of directors (the exact quota is 4.7). That means at least one of the 
candidates will not make it onto the board. The tension mounts. 

Pyotr Ivanov 

*******

#8
Newsweek International
June5, 2000
[for personal use only]
EUROPE 
Shopping for Enemies 
Moscow talks tough about punishing Chechnya's allies. Is Putin picking a 
fight with Afghanistan? 
By Steve LeVine and Owen Matthews

Vladimir Putin's war in Chechnya is just eight months old, and for Russia it 
has already taken on a grimly familiar pattern. Its troops cling tenuously to 
occupied positions all over the breakaway region, but are now subject to 
repeated—and lethally successful—raids by Chechen fighters. And in the 
mountains south of the capital Grozny, rebel units still roam with relative 
freedom, confident that they will again eventually drive the Russians back 
across the border. But if President Putin's new government is to be believed, 
not only has Moscow just begun to fight against what it calls Chechen 
terrorists, it may actually consider widening the war against their alleged 
accomplices—specifically, radical Islamic groups based in northern 
Afghanistan.

Just days after Putin returned from a trip to two former Soviet republics 
that border Afghanistan, members of his government made it sound as if Russia 
now seeks a rematch in the place where the Big Red Machine (the former Soviet 
Army) was humiliated in the 1980s. Last week a Russian government spokesman, 
Sergei Yastrzhembsky, raised the possibility that Moscow may bomb bases in 
Afghanistan training Islamic fighters destined for combat in Chechnya. The 
Taliban, the hard-line Islamic group that rules Afghanistan, openly supports 
the rebel fighters in the breakaway region of Russia. Yastrzhembsky's 
statement—"We would not exclude the possibility of preventive strikes if 
there is a real threat to Russia's national interests"—came shortly after 
Putin's visit to Uzbekistan, the large former Soviet republic that borders 
Afghanistan. There, much to the Russian military's delight, the new president 
signed a series of security agreements. By the end of last week Putin's 
Defense and Foreign ministers echoed the idea that Moscow may strike from the 
air against terrorists beyond Chechnya.

Having restarted, and gotten bogged down again, in Chechnya (the last war 
Russia lost), the notion of an attack on Afghanistan seems quixotic at best. 
Moscow's humiliated troops pulled out of there in 1989, a defeat that 
accelerated the demise of the Soviet Union. Bombing again, many analysts 
believe, might only fan the anti-Russian sentiment in the Islamic world that 
Moscow so worries about. "All the fundamentalists will begin blowing up 
Russian Embassies instead of U.S. Embassies," says Andrei Piontkowsky, a 
political analyst at the Moscow Center for Strategic Studies.

The rhetorical blast last week probably has more to do with Putin's 
diplomatic agenda than with a desire to refight the Afghan war. That one of 
his earliest trips as president was to Uzbekistan and Turkmenistan plainly 
shows Putin's determination to reassert Russian authority in the former 
Soviet republics, particularly those on its southern flank. Since the 
collapse of the Soviet Union, the United States has steadily campaigned to 
lift the republics—particularly those, like Kazakhstan and Azerbaijan, which 
possess rich oil and gas reserves—out from under Russian influence. It has 
established military cooperation programs through the so-called Partnership 
for Peace Program with many of the 14 republics.

This has infuriated Moscow's military, which looks to Putin to re-establish 
its prestige, authority and budget. One of the ways Putin is responding is to 
set things right in Moscow's backyard. One Western diplomatic source believes 
the Russian high command is euphoric after signing a series of military pacts 
with CIS Central Asian states. "It's like a fairy tale for them, the old 
Soviet Union coming back together bit by bit." The brass is 100 percent 
behind the idea of a more aggressive role in Afghanistan in order to "show 
the region who's boss," the diplomat adds. They are so enthusiastic, 
according to this source, that he does not rule out the possibility of some 
sort of military action in Afghanistan. The Russian senior military command 
"have been pushing to try this kind of stunt for a while... ever since the 
United States bombed Afghanistan and Yugoslavia. They want to get even with 
the United States, even if there's no obvious military advantage to be 
gained."

The Russians also implied last week that they would have as much 
justification as the United States did in hitting Afghanistan. Bill Clinton 
went after suspected hideouts of Osama bin Laden following U.S. Embassy 
bombings in Tanzania and Kenya in the summer of 1998. And recently, the State 
Department officially cited both Afghanistan and Pakistan as sources of 
state-sponsored global terrorism.

The Russians concur. Moscow points out that Afghanistan and Pakistan have 
trained thousands of Islamic militants. Up to a few thousand of them still 
live in Afghanistan, including bin Laden, the alleged sponsor of global 
terror. And in interviews with NEWSWEEK, Taliban officials acknowledge that 
the so-called Islamic Movement, led by suspected terrorist Juma Namangani, is 
allowed to maintain an office in Kabul. Why? "We allow them to stay because 
they have helped in the jihad against the Russians," Mullah A. Khaksaar, the 
Taliban's deputy Interior minister, said.

Putin will talk up the need for Russia and the West to cooperate in fighting 
Islamic terrorism when Bill Clinton arrives this week. It's a clever enough 
diplomatic tack. Should the day ever come that Russia does decide to strike, 
there's not a lot the West could say in response. Still, most diplomats in 
Moscow believe cooler heads are likely to prevail. For all the noise Putin 
and Islam Karimov, the strongman who rules Uzbekistan, make together about 
combating the Islamic threat to their countries, the Uzbek leader may 
actually be among the last people who'd like to see a Russian strike against 
supposed redoubts in Afghanistan. Militarily, Uzbekistan is the most powerful 
country in central Asia, and Karimov has never hesitated to use force against 
the Uzbek Islamic opposition. But bombing could conceivably trigger an 
organized terror campaign far more potent than anything he has yet had to 
deal with.

Karimov has spent much of the last few years violently suppressing real and 
perceived opponents. In February 1999, five bombs exploded in Tashkent, the 
capital city, killing 16 people. He responded with a ferocious campaign of 
arrests, torture and show trials that ran into an estimated several thousand 
of alleged Islamic radicals. Several prisoners died of apparent torture while 
in custody, according to reports by Human Rights Watch. And his enemies have, 
in fact, found succor in Afghanistan. NEWSWEEK recently visited the Kabul 
office of Karimov's main armed opposition, a group called the Islamic 
Movement of Uzbekistan; as many as 2,000 fighters from the group also have 
received sanctuary just over the Uzbek border in the northern Afghanistan 
city of Mazar-i-Sharif, Afghan sources say. At their recent meeting in 
Tashkent, Putin no doubt told Karimov that he knows how he feels. Taliban 
leader Mullah Mohammed Omar has permitted the Chechen opposition to open an 
embassy in Kabul, and Kashmiri rebels who operate from bases in Afghanistan 
have donated cash and fighters to the Chechens.

But diplomatic sources in the region insist that Karimov, like Putin, has 
focused on the alleged Islamic threat for domestic political reasons as much 
as anything else. They say the Islamic Movement is too small and disorganized 
to be a mortal threat to Karimov, given Uzbekistan's still formidable Army. 
If it were anything else, why would the approach to "Friendship Bridge"—which 
links Afghanistan to the Uzbek city of Termez—be free of fighters and armor? 
When the Taliban first captured Mazar in 1996, a panicked Uzbekistan placed 
concrete blocks backed by tanks and men on the approach. Last week no such 
obstacles were in sight. Talking about—and exaggerating—the threat, 
Karimov's critics say, enables the president to maintain his tight control 
over what remains essentially a police state. "The warning that these men are 
ready to come over the hills any moment is a pretext to crack down on 
opponents," said Acacia Shields, Human Rights Watch's representative in 
Tashkent.

Whether that's true or not, Karimov knows well enough that any Russian 
intervention across his border would pose serious risks. "It would escalate 
tensions in the area and could blow up the whole of Central Asia," says 
Aleksandr Pikayev, a military analyst at Moscow's Carnegie Center. Russia's 
military doesn't have the hardware to hit northern Afghanistan from its own 
territory. (When the United States bombed, it used sea-fired long-range 
cruise missiles launched from off the coast of Pakistan.) Military sources in 
Moscow say that Russian cruise-missile attacks would most likely have to come 
from Uzbek air space. And the Taliban leadership made clear last week that it 
would consider that very unneighborly behavior. Karimov was apparently 
getting the message. In an interview published Friday in the Moscow newspaper 
Kommersant Daily, the Uzbek president said of all the bombing talk: "Nobody 
yet takes it seriously."

Putin, officials in Moscow say, most likely feels the same way. A strike 
would no doubt only increase the commitment of the Taliban, as well as others 
in the Islamic world, to aiding Russia's enemies in Chechnya. For all these 
reasons, the hawkish talk is likely a bluff—albeit a reasonably useful one. 
It projects an image of a reinvigorated Russia asserting its regional 
authority and helps keep the West off Putin's back about Chechnya. But the 
most immediate and pressing reason for the sudden championing of the 
airstrikes in Moscow, says one NATO source, may simply be "to cover up the 
fact that Chechnya is going nowhere." And no amount of rhetoric in Moscow is 
going to change that familiar fact on the ground for the Russian troops stuck 
in their country's latest quagmire.

With Bill Powell in Moscow

******* 

#9
Moscow Times
May 30, 2000 
Gerashchenko: If I Tell You All, You'll Cry 
By Yelena Berezanskaya
VEDOMOSTI

The new federal government has sparred recently with the Central Bank over 
monetary and fiscal policy, as well as over the best methods for 
restructuring the banking sector. Yelena Berezanskaya of Vedomosti newspaper 
caught up with Central Bank Chairman Viktor Gerashchenko last week at the 
European Bank for Reconstruction and Development's annual meeting in Riga, 
Latvia. 

Q: 
What do you think of the bank restructuring plan section of the program 
developed by Economic Development Minister German Gref's Center for Strategic 
Research? 

A: 
I haven't read it. I don't want to talk about that. They brought in who knows 
who ... and tried to invent something. That's all it was. They won't be able 
to come up with anything new. I don't get into other people's business, 
although I find it very painful and offensive. 

Q: 
How long is the Central Bank planning to continue its program to strengthen 
the ruble? 

A: 
We aren't strengthening it. There has been a wave of careless and untimely 
statements made by a number of officials and irresponsible individuals. If we 
didn't buy hard currency, it would grow even stronger. By purchasing hard 
currency, we are increasing our hard-currency reserves, which is important 
for any economy. It's a kind of insurance policy against unfavorable economic 
developments or sharply falling prices. This is necessary even though none of 
the above is expected. ... We're sometimes told: "You buy more [hard currency 
than necessary]." But how can we buy more unless people are willing to sell 
it? We just do what it takes to prevent sharp fluctuations in the ruble. 
We're not doing anything artificial. 

Q: 
What are Vneshtorgbank bonds? Are they commercial bonds or state papers? 

A: 
These are bonds for commercial organizations. According to legislation that 
has been in existence since 1990, the Central Bank is not supposed to own 
stock in commercial structures. Sooner or later, we have to take back our 
investments in Vneshtorgbank, and we have no regrets about this. 
Vneshtorgbank was set up in 1990 by the Russian government when it was still 
part of the Soviet Union. Naturally, they had no money in their budget, so 
the Central Bank was forced to break the law and invest money in 
Vneshtorgbank. 

Q: 
Sooner or later? When will that be? Vneshtorgbank bonds are valid for two 
years. 

A: 
These bonds were issued to improve the bank's liquidity base and to enable 
Vneshtorgbank to make loans to companies that ask for credits. If, with time, 
investors with ready cash see that these are regular bonds, that they pay 
interest, and if the bank begins to increase its capital and starts selling 
securities, then investors will, of course, move from the bonds to 
securities. It's logical. 

Q: 
Is the Central Bank preparing to resume issuing its own bonds, known as OBRs? 

A: 
The Central Bank began issuing OBRs after the August 1998 [financial crisis] 
to reduce tension for banks because the interbank market had crashed and no 
one was giving money to anyone, even those who had funds available. In order 
to prevent those funds from moving to the hard-currency market, we kept 
pressure off the ruble rate and started issuing OBRs. For various reasons, 
including personal ones - the rivalry between Federal Securities Commission 
chairman Dmitry Vasiliyev and Central Bank Deputy Chairman Alexei Kozkov - 
our glorious FSC began to protest that the law on the Central Bank was 
unclear about whether we could issue these papers. However, if read normally 
and without nit-picking, the law allows us to issue them. In 1998, we stopped 
issuing them by order of the Prosecutor General's Office and the Supreme 
Court. No point arguing with fools. Then it became obvious to us that no 
banks would buy federal government treasury bills, or GKOs, so we started to 
develop loans in the form of deposits, although we didn't need any loans from 
the market. ... But in order to again reduce tension, as well as reduce 
pressure on the ruble rate, we began to assert our right to issue OBRs. 
However, we felt that the Finance Ministry and its lending instruments should 
take precedence on the financial markets, and we decided to wait. It's not 
something we need to do right now. 

Q: 
There is talk that the Central Bank has interfered in the EBRD's attempt to 
grant a subordinated loan to Raiffeisenbank's Russian subsidiary. 

A: 
That's not possible. We can't forbid any bank operating in Russia from 
receiving loans from another bank, and not just a subordinated credit from a 
parent bank. This isn't allowed in an any law. I don't know where all the 
intrigue came from. 

Q: 
How do you feel about Western banks strengthening their positions in Russia? 

A: 
It's not an issue of strengthening positions. Because part of the country's 
savings are in the form of foreign currency, any bank could use them. The 
country's banking system is in a state of crisis, and the bank drawing the 
most savings from the country's population is Sberbank, which naturally has 
no desire to pay ruinous interest rates. Because of this, foreign banks could 
become competitive in this area. This is especially true with regard to 
foreign-currency accounts. Foreign banks offer, among other things, the 
opportunity to obtain credit cards. Because their parent banks are located 
abroad and have branch networks in many other countries, a person can be 
confident that he could withdraw at any time any money he puts into those 
banks - something he can be sure of even if some of the stupid scenarios 
being circulated by some mass media about possible changes or prohibitions 
come to pass. This is all foolishness, because a law on forbidding 
hard-currency circulation on Russian territory can be passed only by 
parliament, and such a thing could never be adopted quietly. 

Q: 
Is the Central Bank going to limit nonresident ownership in the banking 
system? 

A: 
Let parliament decide that. 

Q: 
The government's share in the banking sector is constantly increasing. What 
do you think of this? 

A: 
I wouldn't say the government's share is increasing. First, the government 
doesn't have any banks. We own 57 percent of Sberbank. The rest are private 
shareholders. We own nearly 100 percent of Vneshtorgbank. But again, we're 
not the government. The fact that the government has always had the wrong 
people working on its 10-year-old dream of creating a bank for reconstruction 
and development is the government's problem. No such bank has ever been 
created. So what's the point of talking about setting up 10 or 20 such banks? 

Q: 
In 1998, the Central Bank gave MOST-Bank a stabilization loan. Now a 
temporary administration has been introduced at MOST. Is the Central Bank 
going to help MOST, since it owns 75 percent of the bank? 

A: 
MOST-Bank isn't the worst bank in the system. In 1998, we gave it a 
stabilization credit subsequent to the Moscow government's agreement to offer 
certain guarantees. The Moscow government's decision to concentrate its 
accounts in the Bank of Moscow pulled the rug out from under MOST and created 
a number of problems for that institution. MOST has a great retail branch 
network, and it's payment system is one of the best in the country. So the 
question isn't about saving MOST or its management, it's about taking 
something for free. 

Q: 
Is there any likelihood that MOST-Bank will be sold to Vneshtorgbank? 

A: 
If Vneshtorgbank shows an interest in the bank and its retail network, why 
not? As you know, Vneshtorgbank once worked very actively with private 
individuals who worked abroad and had hard currency. Then they got out of 
that business. But we think there is enough privately held hard currency that 
we ought to have a network that could attract those funds into circulation, 
so they aren't just kept under a mattress. 

Q: 
What happened with Noga [a Swiss-based trading company that has had Russian 
state bank accounts in France frozen in pursuit of a $63 million claim over 
debts]? We ran and ran from this but it has still caught up with us. 

A: 
I don't know who ran away. It was whoever signed a contract with them and 
then didn't think things through. The Stockholm [arbitration] court's 
decision was handed down in 1997. Why didn't the government do anything then? 
It tied us up the entire time to make things uncomfortable. We showed in the 
Luxembourg and Swedish courts that we had nothing to do with the government's 
debt. Noga's move was somewhat unexpected and connected with the fact that 
Noga's creditors are moving to bankrupt it. Noga proposed a number of plans 
for recovery, including a demand for Russia to give ita sum large enough to 
pay off its creditors. 

Q: 
Why did the Central Bank give bankrupt Imperial Bank the opportunity to 
resume operations? 

A: 
This is Imperial's story. There was an appeals court decision, and that's 
all. Our courts are on the take. The judge decided that our decision to 
revoke its license in 1998 was illegal. But it was legal. The bank had 
entered into a hard-currency deal. They received hard currency from us, but 
never delivered the rubles. [Imperial director Sergei] Rodionov went on the 
lam, and now he's in Luxembourg for the most part, where he is director of 
East-West United bank. But in June of last year, Imperial's four primary 
shareholders - the Fuel and Energy Ministry, LUKoil, Gazprom and Zarubezhneft 
- signed a letter indicating that they wanted to save the bank and invest 
funds in it. I spoke with [then-Fuel and Energy Minister Viktor] Kalyuzhny, 
and he confirmed that the shareholders were serious. We usually allow 
shareholders to restore a bank if they want to restore it. We issued an order 
to suspend revocation of the bank's license. A temporary administration was 
named, and the shareholders then started to protest. They said the bank has 
assets that can be sold off, and all of our temporary administrators are 
swindlers. Now we're trying to do something about this. According to the new 
law, they have to receive licensing from us as well as the Federal Bankruptcy 
Service. But they're also throwing accusations at us, saying: "You license 
only your own people, or you sell them for money." It's the country and times 
we live in. 

Q: 
What do you think of the Agency for Restructuring Credit Organizations, or 
ARKO? Why can't the agency do anything with SBS-Agro? There is talk that the 
bank's management won't allow ARKO access to its financial documents. 

A: 
Anything's impossible in our country. For example, a memorandum was written 
to the heads of the Federal Security Service and the Interior Ministry asking 
them to guarantee that the documents be handed over. What did they do? 
Nothing. 

Q: 
And what happened with Mezhkombank? At first, the Central Bank promised to 
restore its license and the bank began negotiating with Western creditors. 
But now, they're getting ready to bankrupt it anyway. 

A: 
It's just one sad tale. After the International Monetary Fund and the World 
Bank conducted an analysis of 18 banks, we were told that we had to revoke 
six banks' licenses. Why six? Why not seven or eight? And in the end, which 
licenses to revoke? Promstroibank was sent back to ARKO. Mezhkombank also, 
although it had nearly come to an agreement with American Express. What was 
more important: to gain the Fund's approval so that we could negotiate with 
the London Club, or to disregard their demands? 

Q: 
Is Promstroibank's license going to be restored? 

A: 
If I start to tell you everything, you'll cry. 

*******

 

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