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

Johnson's Russia List
#4337
31 May 2000
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Russia Seizes Human Rights Report.
2. Trud: For the forthcoming summit meeting of Vladimir Putin and Bill Clinton in Moscow IS IT GOING TO BE "MR. CLINTON" OR "BILL OLD BUDDY"? (Interview with Yuri USHAKOV, the Russian ambassador in the United States)
3. Washington Times: Vladimir Lukin, The U.S.-Russian divide.
4. Judith Shapiro: Re:4335-Feshbach/Life Expectancy.
5. New York Times: Zbigniew Brzezinski, Indulging Russia Is Risky Business.
6. Anne Nivat: Book about Chechnya/Visit to US.
7. Bloomberg: Russia's Berezovsky on Putin's 7 New Federal Districts.
8. RFE/RL: Donald Jensen, Putin and Constitutional Reform.
9. Reuters: Sebastian Alison, Russia's Putin makes Caspian a priority.
10. THE JAMESTOWN FOUNDATION PRISM: Andrei Kolganov, ECONOMIC RECOVERY IN RUSSIA.

*******

#1
Russia Seizes Human Rights Report
May 31, 2000

MOSCOW (AP) - Russian customs officials have seized an Amnesty International 
report detailing allegations of human rights abuses by Russian forces in 
Chechnya, the rights group said Wednesday.

The confiscation of the report at Moscow's Sheremetyevo airport Sunday ``sets 
a dangerous precedent which brings to mind old Soviet practices,'' Amnesty 
International said in a statement.

Officials at Sheremetyevo could not immediately be reached.

Amnesty said researcher Marina Katzarova had arrived in Russia and was on her 
way to a human rights conference in Vladikavkaz at the invitation of the 
Russian government. The conference is being cosponsored by the Council of 
Europe.

Two cardboard boxes containing copies of the report, which were to have been 
distributed at the conference, were halted by customs officers. They said the 
reports appeared to be ``anti-Russian government propaganda'' and that the 
rights group might use the report for commercial purposes, Amnesty 
International said.

Human rights groups have accused Russian forces fighting separatist rebels in 
Chechnya of widespread human rights violations against the civilian 
population, including looting and summary execution.

The Kremlin denies allegations of systematic human rights abuses and insists 
that the heavy bombing and shelling of Chechnya, in which many civilians have 
died, was needed to wipe out secessionist rebels.

*******

#2
Trud
May 31, 2000
[translation from RIA Novosti for personal use only]
For the forthcoming summit meeting of Vladimir Putin and 
Bill Clinton in Moscow 
IS IT GOING TO BE "MR. CLINTON" OR "BILL OLD BUDDY"?

Vissarion SISNEV, Trud's staff correspondent, and 
Andrei SHITOV, ITAR-TASS correspondent, in Washington, have 
talked to Yuri USHAKOV, the Russian ambassador in the United 
States 

Question: The agenda of the Moscow summit meeting will 
certainly rivet on a third phase of the strategic offensive 
arms limitation on which the sides cannot agree: Russia would 
like to keep the number of warheads to 1,500 under START-2, and 
the US insists on the preliminary formula agreed in Helsinki 
three years ago - 2,000-2,500 warheads. Do you visualize a 
compromise solution?
Answer: Preserving and strengthening international 
security and strategic stability are at the heart of the 
Russian-American foreign-policy dialogue, and have been all 
these past years and decades. The topic is really "hot" these 
days. The reason is the US Administration's intention to build 
a national ABM system.
Clearly, this plan jeopardizes the ABM treaty that has been the 
basis for strategic stability for nearly 30 years now. Without 
the ABM treaty, there will be no way to implement the existing 
strategic arms limitation accords or to conclude new ones. This 
interrelationship has to be appreciated. Strategic arms 
reduction talks and ABM are inseparable. 
The START-2 treaty's ratification by the Federal Assembly 
clearly points out to Russia's desire to continue and 
accelerate a constructive dialogue in this field. Vladimir 
Putin said after the START-2 treaty had been ratified that 
Russia was ready to reduce its strategic offensive weapons - 
reciprocally with the US, naturally - down to a lower level 
than that agreed at the Russian-American meeting in Helsinki in 
1997, down to 1,500 warheads instead of 2,000-2,500. 
It is only natural that further progress in the direction 
of START-3, i.e. more in-depth incisions into the strategic 
nuclear arsenals, is only possible if and when both sides are 
ready - it takes two to tango. And we are telling the Americans 
that this is the needed result, for we are positive that it 
would be in the interests of both countries, and those of 
global stability. Let me repeat: provided the ABM treaty is 
intact.

Question: Many people believe the forthcoming summit 
meeting will be one of the most painful ones, because the two 
presidents are bound to touch upon the 1972 ABM treaty, inter 
alia.
Twenty-five Senators with Republican majority leader Trent Lott 
have sent a letter to warn Clinton that the Senate would not 
approve of any compromise solution reached at the expense of 
plans to build a nuclear shield for the US. It is an open 
secret that the plan by far exceeds the limitations built into 
the basic ABM treaty. Your commentary?
Answer: The Americans say that they need national missile 
defense (NMD) to ward off a growing missile threat emanating 
from third countries. Some members of both houses would want 
the Administration to go beyond the current plans or at least 
not to hamstring its successors. 
We know - and we never tire of telling this to our 
American partners at all levels - that a limited, and even more 
so un-limited, NMD would mark the end of arms control and would 
thus provoke a natural and rash reaction on the part of Russia 
and a number of other countries, including those possessing a 
nuclear missile capability. 
Alas, many House members are hostages to their own dogmas.
They clearly reject Russia's realistic and constructive 
alternative which incorporates several elements: start talks on 
a START-3 treaty; cooperate in building a non-strategic ABM 
that may provide an adequate response to new potential missile 
threats; buttress the non-proliferation regime, including by 
way of building a global system to monitor missile 
technologies; and accelerate coordinated political and 
diplomatic efforts against problem states. 
This alternative is realistic and logical. It is much more 
efficient than an American NMD in warding off nuclear missile 
threats. It provides a response to new, unconventional threats 
- something that worries the US sick - but it is not a "bullet 
in a china shop" breaking everything achieved to date in the 
arms reduction sphere.

Question: What is your vision of the current and future 
bilateral relations? Many Russians are asking: does it depend 
on whether the November elections will bring to the White House 
another Democratic Administration or the Republicans?
Answer: Relations with the US are still a priority for 
Russia. The two states bear special responsibility for 
maintaining international stability. Bilateral interaction is 
instrumental to the global community's efficiency in combating 
the new challenges of the 21st century. 
It is an open secret that last year was marked by a series 
of crises: NATO's operation in Yugoslavia, scandalous 
speculations in the US about Russian corruption and organized 
crime, and other issues seriously marred bilateral relations. 
The situation is now improving. As far as political contacts, 
parliamentary contacts included, are concerned, the past five 
months in bilateral relations have been unprecedentedly packed. 
An unheard-of number of Russian MPs flocked to the US in 
late April and early May, a clear indication to the mood of the 
newly elected Duma. 
A reciprocal impulse from the American legislators will 
certainly improve the political climate in bilateral relations, 
for a lot of things depend on parliaments in this context. The 
number of meetings on the supreme and high levels planned until 
the end of the year makes one optimistic. 
I want to stress: the dialogue and bilateral interaction 
have been largely influenced by the outcome of the presidential 
and parliamentary elections in Russia, something that helps 
build up the constructive potentiality of bilateral relations. 
The basic objective of the forthcoming summit meeting is 
to add to this potentiality, help realize it, and to speed up 
bilateral relations in order to overcome the negative aftermath 
of the past. 
It is a reality of our bilateral relations that they 
objectively incorporate elements of cooperation and a conflict 
of national interests. While concentrating on Russia's national 
security interests, we are endeavoring to expand the sphere of 
coincident interests with a view to acting jointly with the US 
in tackling global and regional problems of the third 
millennium from environmental protection to drug trafficking to 
international terrorism. These challenges cannot be dealt with 
on one's own. 
But back to the Moscow summit meeting: in effect, it opens 
a series of meetings on the highest level. We hope that this is 
the way to smoothly switch over to Vladimir Putin's contacts 
with a new US president in 2001.

*******

#3
Washington Times
May 31, 2000
The U.S.-Russian divide
By Vladimir Lukin
Vladimir Lukin is vice chairman of the Russian State Duma and former Russian 
ambassador to the United States. 

Not confrontation but cooperation — that must be the logic of relations 
between Russia and NATO. Both sides have a stake in a constant, constructive 
dialogue. Moscow needs it because today NATO is the most powerful 
military-political organization of the Western world, a reality that cannot 
be ignored. At the same time, the North Atlantic alliance also has to engage 
in a negotiating process with Russia because, evading it, NATO turns into a 
force which causes fears even among some members of this organization.
The main avenues of cooperation are already clear now. One of them is 
first of all settlement of the Kosovo conflict. At the present time the 
situation in Kosovo is rousing well-warranted concern in Moscow, since the 
ousting of the Serbs from the province continues, and since Kosovo has been 
actually taken out of Yugoslavia's jurisdiction. But if U.N. Security Council 
Resolution 1244, which formalizes the Former Republic of Yugoslavia's 
territorial integrity, is implemented in Kosovo, cooperation of Russia and 
NATO will doubtless prove to be fruitful and will allow the situation to be 
put under control and to stop the negative processes.
Nuclear disarmament is a broad field of cooperation. Russia recently 
made an important step on this road — the State Duma ratified the Strategic 
Arms Reduction Treaty (START II). Now much depends on the political will of 
NATO leaders, primarily those in Washington.
Regrettably, much of what the United States does is now determined not 
by long-term but by time-serving interests dictated by the internal political 
situation — by the nearing presidential elections. Hence the task of removing 
the questions of strategic security from under the influence of the American 
election campaign. This concerns first of all the talks on the Russian-U.S. 
Anti-Ballistic Missile Defense (ABM) Treaty of 1972. The U.S. intention to 
build a national ABM system which is prohibited by the treaty jeopardizes 
Washington's allies in NATO because the national ABM system will protect only 
the American continent, leaving the European partners of the United States 
unprotected. For the first time in NATO's history, a situation wherein 
different members of the alliance will have different guarantees of security 
will emerge, and this cannot but worry Great Britain, Germany, France and 
other allies of the United States.
As for the problem of extension of NATO and of its enlargement 
eastwards, which for Russia is very painful, it seems that after the 
admission of Hungary, Poland and the Czech Republic to the alliance the 
leadership of the North Atlantic bloc decided to make a pause, though 
officially nothing has been said about this. If the pause were really made or 
even prolonged, this would certainly help strengthen confidence between 
Moscow and Brussels and make for better understanding.
The developments in Chechnya — a North Caucasian republic where Moscow 
has been carrying out an anti-terroristic operation — have also aggravated 
relations between Russia and NATO to a certain extent. The leaders of a 
number of countries participating in the alliance have strongly criticized 
Moscow's actions, forgetting that the Chechen conflict is an internal affair 
of Russia, and it is entitled to resolve the problem in the way it deems it 
proper. At the same time, Moscow agrees that Chechnya is also a field for 
international cooperation. The Russian leadership does not object to an 
international system of observation of the developments in the North 
Caucasus, but it will not allow anybody to call into question the territorial 
integrity of Russia, nor the inviolability of its borders.
Russia stands for equal and constructive partnership with NATO. This is 
quite possible to achieve. Now it is safe to say that the contacts between 
Moscow and the North Atlantic bloc, discontinued because of the NATO 
aggression against Yugoslavia, are being re-established. The visit of NATO 
Secretary General George Robertson to Moscow in February 2000 was the first 
step on the road of these relations getting warmer. His talks with the 
current president of the Russian Federation, Vladimir Putin, and ministers of 
defense and foreign affairs, Igor Sergeyev and Igor Ivanov respectively, were 
successful enough and meant, in essence, normalization of relations.
To be sure, not only politicians but also generals should meet. A step 
has already been made in this direction, and new moves have been made on this 
ground — including participation by the chief of the general staff of the 
armed forces of the Russian Federation, General of the Army Anatoly Kvashnin, 
in a meeting of the Russia-NATO Joint Permanent Military Committee, and his 
talks devoted to discussing military doctrines and to prospects for military 
cooperation. These talks are extremely important for establishing genuine 
relations of confidence.
All this proves that Moscow is open for a dialogue with NATO. As it was 
stated in Mr. Putin's interview with well-known British analyst David Frost, 
the Kremlin does not rule out even a possibility of Russia's entry into NATO 
"if its interests are taken into consideration, if it is an equal partner." 
But, in my view, this is a purely academic prospect for the time being. There 
are no practical conditions for its translation into reality yet. Mr. Putin 
certainly did not mean the present day or the immediate future. He simply 
implied that Russia and NATO can reach an agreement on conditions of full 
respect for their mutual interests. And for this purpose it is necessary that 
the negotiating process does not stop.

*******

#4
Date: Wed, 31 May 2000 
From: Judith.Shapiro@unece.org (Judith Shapiro)
Subject: Re:4335-Feshbach/Life Expectancy

Dear David,

I don't often get the chance to agree with Murray Feshbach, so I'd like to seize
the opportunity. It is certainly the case that Russian life expectancy at birth
will turn out to be notably worse in 1999 than 1998, and preliminary data
indicate that.

There was a slow but steady improvement from 1994 (the worst year) all the way
through 1998. Monthly data on crude death rates by cause of death give no reason
to believe that the August crisis had an impact in that year. 1999 was
different, and we have not had a turnaround yet in 2000. Yet the mechanisms are
not well understood, and it is too easy to jump to conclusions about "the
crisis", or the fall in real wages, both of which happened. How did they kill,
however? On this we don't really have evidence.

Goskomstat publishes crude death rate figures monthly, including breakdowns by
broad causes of death. Until you know the age and sex specific breakdown of
those who died, you can only do very rough calculations of life expectancy. The
preliminary results have traditionally been announced in the spring, as Murray
Feshbach notes about the Voprosy Statisiki No. 4 article. There may be a change
when the final results come out in the autumn. 

However, when there is a sharp change in crude death rates, you can figure that
something must have happened. When the population is getting older on average,
as in Russia, there is some perfectly natural tendency for increase in the crude
death rate, unless health is improving. This is so even when the "force of
mortality" on any one age group is no worse than before. To give an intuitive
understanding of this: if you have a group of friends who are thirty something
American friends, you are very stunned when one dies. When the same group of
friends gets to be seventy something, sadly it becomes less surprising. If the
rise in the crude death rate is more than 3 or 4 per cent in Russia, however,
then life expectancy is almost certainly deteriorating. 

There is a widespread and mistaken impression that life expectancy has just been
getting worse and wrose in Russia. That is one reason, I think, that almost no
attention was paid to the disturbing trend in 1999, which was visible in
Goskomstat publications. Another reason is that demographers in Russia, as
elsewhere are very cautious about jumping on preliminary figures. It is part of
their training to be cautious, as Murray Feshbaach was in his health warning at
the top of his note. They also to look mostly at the long durée, again as he
did. My instinct, as an economist, is a little more interventionist and
short-term. Both approaches are needed.

Using only the monthly data which is presently available, 1999 seems to have
been composed, to me, very, very tentatively, of two time periods. The earlier
one was dominated by an increase in respiratory disease deaths, and
accompanying cardio-vascular disease deaths, but without a repeat of the rise in
deaths due to accidents, including alcohol. This was most likely an
influenza-related spike, and I would note that many other east European
countries had such spikes in that quarter, and excess deaths from influenza were
also reported in, at least, the UK and Germany. Now that we have had the really
bad epidemic of first quarter 2000 in western Europe, people finally understand
that influenza is, as one book called it, "the last great plague". 

The difference with the other countries who showed an influenza rise is that
there was a "catch-up" survival later in the year in the crude death rate (we
still have to wait for life expectancy figures). Thus, on average, the
prematurity of the deaths was in months, not years. This is individually always
tragic, but it is not a widespread crisis, though probably there was a good deal
of prevention possible everywhere, which we don't do adequately either. 

After this first spike, more importantly, the pattern for 1999 changes. In the
latter part of the year: once again we have something that, to the eye, at the
moment, looks like a repeat of the 1992-1994 pattern: deaths due to external
causes up, including directly alcohol-caused, and an accompanying rise in
cardio-vascular deaths, in which some mixture of alcohol and stress and lack of
medical care can all have played a role, but we cannot apportion this without
really careful, serious and objective study, and in which actual micro-level
data would be very important for serious epidemiology. 

Another important observation is that all "subjects of the federation" were
affected, though I haven't tried to look more at this until cause of death data
and age-specific death rates are ready, so we can separate out the natural
ageing process from an increase in actual mortality at a given age. Moscow city
alone did not seem to suffer from a rise in mortality during that first quarter,
but this wasn't true later..

None of this information is privileged: it all comes from Goskmostat's monthly
Sotsial'no-ekonomicheskoe polohezhenie Rossii, and readers can check there. 

It will also be valuable to look at other countries, if we are trying to
understand what is happening, and not simply do population projections. 

I have not said anything here about the birth rate, also mentioned by Murray
Feshbach. Here I just want to slip in something which readers of JRL might not
know: virtually no European country has a "period total fertility rate"
(projection of how many children a woman now entering her childbearing years
will have during her life time) at the replacement level. Many European 
countries populations will fall, if not for immigration or changes in existing
patterns. In the southern European countries whose birth rates were the last to
fall, Italy, Spain and Greece are entirely comparable with Russia. There was an
official report that the Spanish rate had fallen to 1.07 children in 1999, this
is not yet confirmed, but is plausible, though some of it is artefactual.

But that is another debate. I hope that all those interested, in all countries,
will at least make the attempt to carry out this debate with a little more care
than the last round. I note that Murray Feshbach was doing that, and I hope that
this is the tone which will continue, even, or especially, when we disagree.

Judith.Shapiro@unece.org
(personal opinion only, not that of my organization, of course.)

*******

#5
New York Times
May 31, 2000
[for personal use only]
Indulging Russia Is Risky Business
By ZBIGNIEW BRZEZINSKI
Zbigniew Brzezinski was national security adviser in the Carter 
administration. 

WASHINGTON -- With Air Force One scheduled to land in Moscow later this week, 
President Clinton still has not faced the fact that his policy of 
"engagement" with Russia has become a colossal disappointment. But in his 
visit to Moscow, he will encounter that reality face to face, when he is 
greeted by President Vladimir Putin, a former colonel in the K.G.B., the son 
of a party apparatchik as well of the grandson of a trusted member of Lenin's 
and then Stalin's personal detail. 

Let it be said that in the area of relations with Russia, Mr. Clinton 
deserves some credit. The denuclearization of Ukraine and Belarus and the 
reductions of strategic forces by both the United States and Russia were 
negotiated with persistence and success. Ukraine's independence has been 
strongly supported. The United States expanded its relations with independent 
states in the southern Caucasus and Central Asia. Most important, under Mr. 
Clinton's leadership, NATO was enlarged eastward, and the administration has 
pledged to continue that expansion, including the Baltic states. 

Unfortunately, however, the policy of "engagement" with Russia has 
deteriorated into a one-sided courtship. No longer is the Clinton 
administration striking a balance between positive inducements and negative 
pressures. The administration not only endorsed Boris Yeltsin's bombardment 
of the Russian parliament in 1993, but persisted in hailing Mr. Yeltsin as a 
tested democrat, even though his erratic presidency was a mixture of anarchy 
and authoritarianism. Sadly, doing so discredited the very meaning of the 
word democracy in the eyes of many Russians. 

The policy of engagement hit a low with Mr. Putin. Though his election in 
March was precipitated by an arrangement whereby Mr. Yeltsin resigned the 
presidency and Mr. Putin became acting president, and no real alternative 
candidate was available to the Russian people, the White House praised the 
election, hailing it as the country's first democratic transfer of power in 
Russia's nearly 1,000-year existence. It even hailed Mr. Putin himself as a 
"reformer," despite some justifiable concern about his background. Mr. 
Putin's prompt appointment of five secret police and military officials -- 
one is widely known as a specialist in suppressing dissent -- as 
supergovernors was quietly ignored. 

In the years leading up to this "election," the Clinton administration 
financially supported and promoted economic reforms in Russia that enriched 
only a few, including some top Russian leaders. The resulting pervasive 
corruption was simply ignored until Western and Russian news media exposed it 
-- and even then, the administration did not alter its policy. 

The Clinton administration excused and even justified two Russian wars 
against the Chechen people. President Clinton compared the Russian campaign 
to Lincoln's efforts to preserve American unity and proclaimed, to widespread 
criticism, that the war's objective was "to liberate Grozny." 

The summit this weekend, if not handled properly, poses new risks. First, 
President Clinton, in his eagerness to embrace a "democratic" Russia, could 
reach a hastily contrived agreement regarding missile defense that may 
undermine stable strategic deterrence while prompting allied disunity. Such a 
quick deal -- designed as a defense against North Korea -- could precipitate 
China's efforts to upgrade its nuclear forces and ignite allied fears that 
the United States is seeking security for itself alone. 

Second, Mr. Putin could seek to enlist the United States in his effort to 
assume the role of protector of the Central Asian regimes against 
fundamentalist pressures emanating from Afghanistan. He would like support 
for a Russian-sponsored anti-Islamic coalition that would regain a dominant 
role for Russia in that region. 

Mr. Clinton must not once again be so hasty in extolling the new Russian 
president as a democratic reformer. A dose of dignified restraint, based on a 
realistic assessment of where Russia is headed, could help redeem a policy of 
"engagement" that has gradually lost its way. It is not too late.

******

#6
Date: Wed, 31 May 2000 
Subject: Book about Chechnya/Visit to US
From: "Anne Nivat" <anivat@glasnet.ru>

I am writing from Paris, where I am for the promotion of my book about Chechnya, "Chienne de guerre", published in France by FAYARD.

An English translation will be published quite soon in the US and in the UK.

At this occasion, I am coming to the US from June 17th to July 15th and would like to ask JRL recipents if they would be interested by some talks I could give about my experience in the Chechen war and the current situation in Chechnya. 

I was in Chechnya from the end of September 1999 to mid-February 2000, when the Russian secret services obliged me to return to Moscow. 

I plan to visit New York City, Washington and Boston.

For those interested, my e-mail is
anivat@glasnet.ru

Thanks in advance, and thanks to David for the List!

Anne Nivat
Correspondent for Liberation in Moscow

*******

#7
Russia's Berezovsky on Putin's 7 New Federal Districts: Comment

Moscow, May 31 (Bloomberg)
-- Following are extracts from an open letter to President Vladimir Putin, 
written by Boris Berezovsky, a business tycoon and deputy in the Duma, the 
lower house of parliament. Berezovsky comments on Putin's decree calling for 
seven new federal districts and calls on Putin to revise bills aimed at 
increasing federal control over regional governors and setting up a new 
structure for the Federation Council, the upper chamber of parliament. 

The letter was published in daily Kommersant. 

``The bills will fail and do more harm than good. The decree and the bill 
would radically change the state structure of Russia. In a democratic country 
such decisions are unthinkable without public debate and a referendum. The 
bill violates principles of independence, election, representation and 
accountability to voters. The bill also widens presidential authority in 
violation of the Constitution. It will weaken the role of the Federation 
Council as an independent body, since the non-elected upper chamber will be 
no more considered as a full-fledged member of the political process. 

``As a result of the proposed steps the heads of regions will try to 
compensate weakening of their positions on the federal level by consolidating 
their powers on the regional level, using the new law, enabling them to hire 
heads of local administrations. This will lead to emergence of closed, 
corrupt, local bureaucracies. And it will be much more difficult to carry out 
federal functions in such monolith formations. 

``The bills would consolidate the powers of those at the top but weaken the 
feedback through curbing the powers of the local authorities and their 
representation in the center. As a result, the tighter supervision would 
entail lesser effectiveness of management. 

``The concentration of federal functions in six centers in addition to Moscow 
would lead to the emergence of de facto inter- regional capital centers. This 
would inevitably result in inequitable distribution of federal resources, 
division if regional leaders into first and second class and, in the long 
term, may encourage disintegration of Russia through the formation of 
powerful, economically and politically integrated, inter- regional 
associations. 

``The proposed legislation would make the presidential headquarters keep a 
nearly complete track on local events, taking, if necessary, punitive actions 
and involve it deeply in issues of appointments the way the former ruling 
(communist) party was. 

``The federal authority would govern regions through two hierarchies, one 
departmental and the other presidential. One can easily predict that this 
arrangement will lead to confusion, conflicts and incompetent management. 

``The bills' provisions include flagrant offenses against legal principles 
such as presumption of innocence and the law not being retroactive. 

``The president should not be in a hurry in tackling matters of historic 
proportion in a vast and gravely sick country.'' 

*******

#8
Subject: Putin and Constitutional Reform
From: JensenD@rferl.org (Donald Jensen)
Date: Wed, 31 May 2000 

Putin and Constitutional Reform
By Donald Jensen
Radio Free Europe/Radio Liberty

In a provocative article in the May 11 issue of the newspaper Sovetskaya Rossiya, legal scholar Georgy Shakhnazarov offers a set of proposals for constitutional reform that deserve serious debate as President Putin seeks to rework the Russian political system. Shakhnazarov, currently with the Gorbachev Foundation and formerly an advisor to the former Soviet President, has in the past argued that the Russian constitution should be amended to reduce the strong powers the president enjoys.

Now he turns that argument on its head. Russia's problem, he argues, is not that the president is too powerful. The country needs such a chief executive and the voters support it. Unfortunately, a vigorous parliament and judiciary do not balance this strong presidency and there is consequently no real system of checks and balances. Shakhnazarov proposes expanding Article 80, paragraph 3, under which the president "defines the basic guidelines for the state's domestic and foreign policy," to include the Federal Assembly. The government, which under Yeltsin was often overshadowed by the presidential apparatus, would be made more accountable to the legislature. The role of the bloated Presidential Administration, in recent years a powerful political force, would be curtailed. The only direct constitutional reduction of the president's powers Shakhnazarov proposes would involve amendments that would simplify the process of impeachment, virtually impossible under the current system. Such changes, he believes, would help Putin restore the "normal legal order" for which Russian society is yearning. They also would help the new president achieve the policy goals he has established. 

Shakhnazarov's proposed amendments are unlikely to get much of a hearing in the Kremlin. Having inherited a flawed constitution designed to codify the personal authority of his predecessor, who used it erratically, Putin has preferred to revise that document by stealth--through decrees and "ordinary" legislation--rather than by the complicated amendment process. In most constitutional systems, Putin's ambitious plans--to alter the composition of the Federation Council, reorganize the country into seven superregions administered by presidential appointees, and streamline the mechanism for removing local governors--would be fundamental enough to require constitutional amendment and months of national debate. The Putin Administration correctly, but too literally and unwisely, argues that in Russia this restructuring does not require constitutional amendment. 

The changes, however, would drastically shift the balance of power between the center and the regions. If they are ordered from above, rather than the product of changing the constitution or popular referendum, they are far more likely not to work as intended, if they take hold at all. This, such an approach further diminishes the rule of law in a country that desperately needs it. 

An additional problem is that Putin's "perestroyka" seems to reflect a vertical view of political power that routinely relies on strong--sometimes coercive--executive authority to attain its goals. This orientation, as social scientist Virginie Coulloudon has recently pointed out, is shared by many Russian elites, from the new president to Anatoli Chubais. Even if its goals, such as a free market, are laudable, this view is suspicious of political pluralism, the separation of powers (which would be strengthened by Shakhnazarov's proposals) and the resolution of conflicts through negotation and consensus. In this regard one of the most interesting aspects of Putin's proposals to bring the regional governors to heel has been the extent to which it has been welcomed by so-called "democrats" in the Moscow establishment. While many regional governors are indeed corrupt, as these supporters of centralization point out, they probably are less so than numerous officials in Moscow, where the temptations are far greater. Moreover, if the goal of the federal reorganization is to improve local governance, subordinating the governors to the Kremlin is likely to be less effective than make the regional leaders more accountable to their local constituencies. 

The current Russian constitution, like many basic laws elsewhere, seeks to balance liberty and order. Thus, the government embodies the principles of popular consent, the separation of powers, and federalism. Popular consent was expressed by the direct election of the Duma. The sharing of political authority by three branches of the federal government was intended to reduce the prospects for tyranny. Federalism gave both national and regional governments independent authority. In such systems, political conflict was intended to be and is usually healthy. 

These principles have never had deep roots in Russia. The many flaws in the current constitution--including the imbalances that Shakhnazarov discusses--have further discredited these values, but make adherence to them now even more important. On May 24, Sergey Medvedev, Putin's First Deputy Chief of Staff, stated his high regard for the country's constitution and added that the "political regime in Russia was and is democratic." At the same time, he urged the Duma to pass the president's package of bills to stabilize the situation in the country and restore the vertical hierarchy of power. The problem for Putin is that stability is not usually ensured by centralizing power, nor, even where the constitution is deeply flawed, does doing so make it more legitimate or effective. 

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#9
ANALYSIS-Russia's Putin makes Caspian a priority
By Sebastian Alison

MOSCOW, May 31 (Reuters) - Russian President Vladimir Putin has been in office for less than a month, but he has already shown that reasserting Russia's authority in Caspian energy politics is one of his top priorities. 

On Wednesday he appointed Viktor Kalyuzhny, removed as Fuel and Energy Minister last week, as Deputy Foreign Minister with special responsibility for Caspian affairs. 

This is a new post, and Kalyuzhny's appointment is seen as evidence that Putin takes the region, which has enormous oil and gas reserves and great geopolitical significance, seriously. It is not the first such sign. 

Even before his Prime Minister, Mikhail Kasyanov, had formed a government, Putin visited the Caspian republic of Turkmenistan and signed a deal to buy vast volumes of gas for years to come. 

As well as tying the countries closer together, the move effectively scuppered, at least for now, a planned gas pipeline from Turkmenistan to Turkey, as Russia has bought all the gas. 

Shortly after Putin's return to Moscow, Russia's three largest energy companies, gas giant Gazprom <GAZP.MO><GAZPq.L> and oil companies LUKOIL <LKOH.RTS> and YUKOS <YUKO.RTS>, said they would set up a joint venture to explore the Russian sector of the Caspian. 

And Kalyuzhny's replacement as energy minister, Alexander Gavrin, said in an interview published on Tuesday that he too wants to see more cooperation between Caspian producers. 

"The idea is very interesting. Historically...the economies of our states have been very closely connected, so this question must be examined very deeply," he said. 

All the former Soviet republics bordering the Caspian, Turkmenistan, Kazakhstan and Azerbaijan as well as Russia, want to exploit the huge reserves and have a say over how they are exported. 

But while no one doubts that there are reserves there, Russia has been slow to join the race to develop them. 

RUSSIA ONCE PRODUCED HALF THE WORLD'S OIL 

A century ago, the Russian empire produced half the world's oil from the giant fields of Baku, now in Azerbaijan. 

But the industry's centre shifted in the 1930s when oil was discovered in Baskhortostan in the southern Urals and in the Volga region of Tatarstan. 

It then moved decisively in the 1960s when the huge deposits of Western Siberia were discovered. By comparison with these fields, the Caspian basin, then part of the Soviet Union, was difficult to develop, and was largely left alone. 

Interest returned only after the break up of the Soviet Union at the end of 1991, when the region's newly independent countries saw oil and gas as their routes to prosperity, and lost no time in seeking foreign investment. 

Azerbaijan and Kazakhstan were quickest off the mark, with giant oil companies such as Chevron Corp <CHV.N> and British Petroleum -- now BP Amoco <BPA.L> -- making large investments. 

Chevron operates Kazakhstan's huge Tengiz field, and BP Amoco is operator of Azerbaijan's flagship AIOC consortium. 

Another large international consortium is exploring a field offshore Kazakhstan with reserves initially put at some four billion tonnes, or 30 billion barrels, making it one of the world's largest exploration plays. 

LIMITED SUCCESS FOR RUSSIA 

Russia has dragged its feet in comparison. Its only success in the region came in March this year, when LUKOIL announced it had found at least 300 million tonnes (2.2 billion barrels) of crude at its Severny field in the nothern Caspian. 

The planned joint venture between Russia's three richest energy firms could greatly advance this field's development. 

But for Putin the Caspian matters not just because of the oil it contains, but because whoever controls the export routes for the oil has huge sway over the regions's politics. 

The United States knows this and has put immense diplomatic effort into trying to ensure that new oil flows from the Caspian reach world markets through NATO ally Turkey. 

To this end it has already appointed a special presidential adviser on Caspian energy issues to lobby for U.S. interests, and it is possible that Kalyuzhny's new role will mirror this. 

Analyst Vladimir Nosov of Flemings UCB in Moscow said it was clear that Putin wanted a greater role in the Caspian, adding that he was motivated by political rather than economic interests. "He is frightened of losing influence," he said. 

Stephen O'Sullivan of United Financial Group said Putin was reversing the policy of former President Boris Yeltsin, who put relatively little effort into relations with Caspian states, and under whose leadership Russian influence there had diminished. 

"Putin has made a decision that the Caspian is important and is doing something about it, as opposed to Yeltsin, who acknowledged that it was important but didn't do anything." 

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#10
THE JAMESTOWN FOUNDATION
PRISM
A MONTHLY ON THE POST-SOVIET STATES
MAY 2000 Volume VI, Issue 5 Part 4

ECONOMIC RECOVERY IN RUSSIA
Russia's economy is sunny, but are storm clouds just over the 
horizon?
By A.I. Kolganov
Andrei Kolganov is a doctor of economics and a senior research fellow at 
Moscow State University.

THE COMPONENTS OF THE FAVORABLE CLIMATE

For more than two years now, Russia has seen growth in all the major 
economic indicators. Most analysts ascribe this to two factors. The first 
is the increase in world prices for the goods which Russia traditionally 
exports--particularly oil, but also metals, wood, chemical and 
petrochemical products. The second is the import substitution process on 
the domestic market which began after the ruble devaluation crisis in 
August-September 1998.

This second factor may serve as a long-term stimulant to growth, as long as 
the growth in production in those sectors which provide import substitution 
(the food, chemical and light industries) has a sufficient knock-on effect 
in other sectors, increasing demand for their products. Additionally, this 
growth brings with it an increase in workers' incomes, resulting in a 
growth in demand on the domestic market.

The first factor is much less stable and predictable. A fall in world oil 
prices is already imminent, due to the increase in the production quota 
announced by OPEC countries. Meanwhile, the favorable conditions on the 
international raw materials and energy markets form the basis of the 
financial policy currently being pursued in Russia. The high earnings in 
export-oriented sectors are the main source of the increase in tax 
contributions to the budget and offer the hope that Russia may be able to 
meet its obligations in servicing its foreign debt. Meanwhile, the decree 
passed by Yevgeny Primakov's government requiring exporters to sell their 
hard currency proceeds on the currency market ensures that there is a 
sufficient supply of hard currency for the domestic market and slows down 
the decline in the ruble exchange rate. The Central Bank is able to augment 
its currency reserves and maintain a policy of moderate inflationary 
funding for industrial growth.

THE START OF AN ECONOMIC RECOVERY?

A number of economists are now quite optimistic about the current economic 
growth. They are forecasting the start of a long-term economic recovery in 
Russia. This viewpoint enjoys particular currency among keen supporters of 
the reform strategy which the Yeltsin administration pursued. They believe 
that for all the mistakes and costs which accompanied the reform program, 
it has at last begun to bear fruit, and the market economy in Russia has 
begun functioning properly.

The main arguments adduced by these optimists go like this: First, it is 
not the oil and gas industries which are driving the current economic 
growth in Russia, because the volume of production in these sectors is 
growing more slowly than in most other sectors. Second, the economic growth 
has affected not just the primary products and processing industries, but 
also the engineering industry. Third, for the first time since the reforms 
in Russia began, investment in production has begun rising--by 6 percent in 
1999. And, fourth and finally, Russia has significant potential for 

economic growth in the shape of its huge excess production capacity. 
According to research by the McKinsey Global Institute, which received wide 
publicity last year, Russia has enough excess capacity to support stable 
economic growth of 8 percent per annum.

These favorable opportunities are matched by equally favorable 
macroeconomic trends. Inflation last year was 24 percent; this year it is 
not expected to exceed 16-18 percent. The budget deficit has been virtually 
wiped out. The volume of tax collection has increased. The level of mutual 
debts between companies has significantly decreased, as has the proportion 
of non-monetary transactions between them.

This optimism is given further confirmation by the impressive growth in 
Russian industry at the start of the current year. The volume of industrial 
production in February 2000 increased by 14 percent on February 1999.

SHORT-TERM OPTIMISM AND LONG-TERM PROBLEMS

Despite such impressive successes, many Russian analysts are nevertheless 
cautiously skeptical, and some point to worrying long-term factors which 
may threaten this fledgling recovery. Moreover, they are not persuaded by 
the arguments of the optimists. Although the fuel and energy industry is 
not the leading sector in terms of rate of economic growth, it is this 
sector which, relying on high oil prices, has until now provided the lion's 
share of export revenue and also ensured the increase in tax contributions 
to the budget. Other sectors which have seen a marked recovery either also 
form part of the primary products complex, or are involved in the 
processing of primary products, or produce consumer goods, relying on the 
effect of import substitution for their growth. However, neither the 
advantageous conditions on the world primary products and energy markets 
nor the import substitution effect can last forever.

The growth in production of investment goods (engineering products and 
building materials), just like the growth in investments, is not 
significant enough to form a stable basis for industrial recovery. The 
previous fall in investment and decline in production in the investment 
complex were extremely grave (over the reform period investment in basic 
capital fell more than fourfold, and the actual commissioning of new 
production capacity fell even more significantly). Thus this new growth in 
investments is not yet enough even to allow for obsolete and useless 
equipment just to be replaced.

The growth in industrial production in February is hardly a serious 
argument. No self-respecting economist would draw far-reaching conclusions 
on the basis of economic behavior over one month. Particularly in view of 
the fact that production in February increased by a mere 1.3 percent 
compared with January 2000.

Agriculture is still in a catastrophic state. The small growth in supplies 
of agricultural equipment does not provide grounds for optimism, given that 
the bulk of agricultural enterprises remain insolvent. If this situation 
does not improve dramatically in the next few years--in other words if 
there is no growth (at least twofold or threefold annually) in supplies of 

agricultural machinery, equipment, mineral fertilizer, chemicals to protect 
plants and so on--then by 2005 Russian agriculture will be forced to 
significantly reduce the area of cultivated farmland.

As regards the considerable volume of excess production capacity, 
qualitatively this capacity may indeed be enough to provide economic growth 
of 8 percent for the next four or five years. However, the quality of the 
idle capacity completely rules out such a possibility. It should not be 
forgotten that the crisis in the Soviet economic system was in many ways 
linked to the USSR's technological backwardness compared with the developed 
countries of the West. The vast majority of production capacity in Soviet 
enterprises was incapable of producing competitive (by world standards) 
goods. This situation has not improved over the years of radical market 
reform. In fact, it has dramatically worsened.

During the privatization and "market restructuring" of Russian enterprises, 
a transition was made to more primitive technologies and the production of 
less sophisticated products. As a result, much of the more up-to-date 
industrial equipment was dismantled and sold at scrap-metal prices. Very 
often the equipment was left to the mercy of fate and became useless. The 
better-qualified workers, engineers and researchers abandoned Russia's 
industrial enterprises.

Even in those enterprises which tried to maintain their technological 
standard and even attempted a partial modernization of production, the 
situation is not a whole lot better. The dire lack of investment in the 
1990s meant that the entire stock of Russian industrial equipment quickly 
became obsolete. Now some of it is simply doesn't work, and the rest, while 
still operational, is unable to produce goods which meet the necessary 
technical requirements.

For example, Russia's motor industry has significant volumes of excess 
capacity. But this capacity cannot produce cars that can compete on the 
world markets, and their competitiveness on the domestic market is only 
maintained through high protective duties. Russia still boasts a major 
research and development potential, but even the most promising designs, 
which far surpass world standards, have no prospect of being produced in 
Russia: There is no investment and no equipment capable of producing 
world-class products.

THE PROSPECTS FOR ECONOMIC RECOVERY

The worst thing that Russia's leaders could do now would be to let 
themselves be distracted by the optimistic forecasts for economic recovery 
and fail to ensure that a truly firm basis for this recovery is put in 
place. Unfortunately, the signs at the moment are that the economic 
advisers brought in by Vladimir Putin's new administration are continuing 
to nourish the illusion that continuing the previous economic strategy will 
be enough to ensure Russia's economic well-being. This is a grave error.

The fall in oil prices will affect the economic situation in Russia this 
year. It is also unlikely that today's favorable climate on the primary 
products market will hold for more than a year. The opportunities for 

import substitution, relying on exploiting excess production capacity, will 
probably be exhausted within the next two years. By 2005 Russia will begin 
to see a serious deficit in production capacity in a number of key 
industries--electricity generation, oil production and transportation, 
agriculture, and possibly a number of other sectors. In a different 
economic climate, in five years it might have been possible to avoid such 
dangers by modernizing these industries on a massive scale. However, the 
economic system established in Russia today lacks the practical economic 
tools to mobilize the required volume of investments. Those investments 
that have resulted from the current economic growth are not nearly enough 
to cope with the problems caused by the protracted degeneration of Russia's 
production potential.

It would be tragic if the need for a change in economic policy is only 
realized when Russia's economy encounters long-term problems head on. If 
this happens, the price of the enforced economic maneuvering may be a very 
high one, and the social and political costs could be very grim.

*******