June 1, 2000    
This Date's Issues: 4338 •4339 • 4340


Johnson's Russia List
#4340
1 June 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Reuters: Russia, US to open new chapter at summit - Talbott.
2. Washington Post editorial: Yes, Meddle in Russian Affairs.
3. BBC MONITORING: RUSSIAN RIGHT POLITICIAN ON PRESIDENT PUTIN'S POWER REFORM. (Nemtsov)
4. Reuters: David Chance, Putin latest leader to rein in regional spending.
5. Reuters: Russian 2001 budget draft main parameters.
6. Segodnya: Avtandil TSULADZE, POWER OF PERSONALITY RESPECTED IN RUSSIA. Vladimir Putin Builds His 'Own' Country.
7. New York Times: Thomas Graham, Clinton's Best Deal Would Be No Deal.
8. Bloomberg: Russia's Foreign Ministry's Urnov on Caspian Policy.
9. The Guardian (UK): Ian Traynor, DEFIANT PUTIN LIFTS CURBS ON RUSSIAN NUCLEAR EXPORTS.
10. Kenneth Weisbrode: export controls.
11. Washington Post: David Hoffman, Russia 'Blind' To Attack by U.S. Missiles.
12. Moscow Times: Yevgenia Albats, Bureaucracy Lurks Behind 'Civil' Society.]


*******


#1
Russia, US to open new chapter at summit - Talbott
By Peter Graff

MOSCOW, June 1 (Reuters) - U.S. Deputy Secretary of State Strobe Talbott said 
on Thursday the goal at this weekend's U.S.-Russia summit would be to open a 
chapter -- not to close a deal. 


U.S. officials have acknowledged this week that there is unlikely to be a 
breakthrough on the headline arms control issues when President Bill Clinton 
meets Vladimir Putin for the first time since the ex-KGB spy took power in 
the Kremlin. 


But they are holding out hope of headway before Clinton steps down in 
January. 


``This meeting, as important as it is this weekend, is the beginning of a new 
phase in the relationship. It's the opening of a new chapter in the 
relationship between both Mr Clinton and Mr Putin,'' Talbott told reporters 
on his arrival in Moscow to prepare the ground for the talks. 


``They're going to be meeting at least four times this year...so we see this 
meeting as part of a process and part of a continuity.'' 


With Clinton poised to make a decision on deploying a new high tech Star-Wars 
style missile defence shield, a 28-year-old arms control pact has overtaken 
Chechnya, Kosovo and Iraq as the main issue placing strain on U.S.-Russian 
ties. 


RUSSIA NOT BUDGING 


Talbott acknowledged that Russia had yet to budge on its opposition to 
proposed changes to the 1972 Anti-Ballistic Missile treaty aimed at letting 
Washington deploy the shield. 


``It is unmistakably clear to us that Russia opposes changes to the ABM 
treaty of the kind that we're proposing,'' he said. ``We will certainly make 
progress. We make progress every time we meet. But that doesn't mean we will 
make definitive progress.'' 


Russia regards the ABM treaty as the cornerstone of three decades of arms 
control negotiations, and says changes could spark a costly and dangerous new 
global arms race. 


Under the treaty, the United States and the Soviet Union agreed to limit 
defences so that they could cut their stockpiles of missiles without worrying 
about making their deterrent capability ineffective. 


But Washington says it now needs a missile defence shield to protect it from 
what it calls ``rogue states,'' such as Iran and North Korea, that may soon 
develop long range missiles. 


The model has proven a tough sell. 


Clinton said this week the United States was prepared to share the new 
technology with its European NATO allies. A White House spokesman said it was 
premature to say whether it might also be shared with Russia. 


THREAT EXAGGERATED? 


But Russia, along with many European countries, says the threat from ``rogue 
states'' does not require costly new space age defences, and even many U.S. 
experts say the administration may be exaggerating the threat. 


An article in the Washington Post this week quoted experts as saying that 
even if Iran or North Korea obtained long range missiles, they would not use 
them against the United States for the same reason the Soviet Union never did 
during the Cold War: the absolute certainty of an annihilating response. 


But Talbott said the spread of missile technology would still destabilise the 
world, and a defence shield had to be one of the responses that the 
international community considered. 


``It is conceivable that you could have a state which believed, because it 
was wielding a certain threat, that other countries would stay back, they 
wouldn't enter a conflict, they wouldn't come to the aid of their allies,'' 
he said. 


``I think the key challenge, which President Clinton reaffirmed in Europe 
today, is for countries like Russia, the United States and major countries in 
Western Europe to work together, to argue less and cooperate more, in dealing 
with what is unmistakably a new set of threats.'' 


*******


#2
Washington Post
June 1, 2000
Editorial
Yes, Meddle in Russian Affairs


PRESIDENT CLINTON travels to Moscow this week for what, out of lazy habit, we 
still call a summit meeting with Russia's head of state. Russia no longer 
bestrides any summits, and Mr. Clinton's session with President Vladimir 
Putin will not decide the fate of the world, nor for that matter of Russia. 
But it is important nonetheless. 


The Clinton administration initially hoped this final Kremlin visit would 
center on arms control. Mr. Clinton favors a package deal in which the 
Russians would acquiesce in U.S. construction of a limited missile defense 
while the United States would join Russia in scrapping more nuclear weapons. 
White House officials now say they expect no breakthrough, due to Russian 
opposition, and we hope they mean it--that they are not just seeking to 
manage expectations. The chief selling point that Mr. Clinton could offer the 
Russians for this grand bargain is that George W. Bush, if elected, would 
offer them less. That strikes us as an inappropriate basis for lame-duck 
diplomacy.


So arms control may not be the chief subject. Neither, thankfully, will aid 
and International Monetary Fund credits dominate the conversation, as they so 
often have in past years. What, then, should the leaders talk about? Advisers 
to Mr. Bush make a case that U.S.-Russia relations should focus exclusively 
on foreign-policy and defense issues: plutonium safety, Iran's place in the 
world, proliferation concerns. Mr. Clinton has erred, this argument goes, by 
focusing on domestic Russian concerns and on his personal relationship with 
Russian leaders. He failed to positively influence Russia and succeeded only 
in darkening America's reputation among ordinary Russians, it is said.


This argument is both ahistorical and wrong. Past presidents, including Mr. 
Bush's father, worked just as hard to establish personal relationships with 
Soviet dictators as Mr. Clinton did with Russia's first elected president, 
Boris Yeltsin. Past administrations also paid attention to internal matters: 
encouraging "moderates" within the Soviet regime, pressing for human rights, 
urging freedom to emigrate. Mr. Clinton's tactics may have misfired, but his 
mistake did not lie in caring too much about Russia's internal development. 
Whether democracy progresses in Russia greatly affects U.S. national security.


Nothing Mr. Clinton does this weekend, nor even his longer-term policies, 
will be decisive in that regard. Russians will decide Russia's future. But 
the United States has some influence. Mr. Putin wants acceptance in the West. 
He seems to understand the importance of economic investment and integration. 
And Mr. Clinton reaches Moscow while Mr. Putin is still defining himself and 
his administration.


So Mr. Clinton should stress the importance of religious and press freedom, 
toward which Mr. Putin has adopted a cavalier attitude. With Mr. Putin 
talking about firing elected governors and subordinating them to appointed 
viceroys with secret-police and military connections, Mr. Clinton should 
reaffirm the value of electoral democracy. He should welcome economic reforms 
such as Mr. Putin's proposed tax simplification but stress that no reforms 
will succeed if unaccompanied by an independent judiciary, shareholder 
rights, contract enforcement and other signs of respect for law. He should 
take care not to bless--as he has seemed to in the past--Russia's brutal 
methods in Chechnya.


Democracy has not failed in Russia; it is incomplete. Many brave reporters, 
young business people, independent judges, environmental activists and others 
are still fighting to institutionalize their gains. Mr. Clinton cannot fight 
their fight, but he can help them if he speaks out in their behalf. That 
would be more than a trifling contribution, and perhaps is as much 
accomplishment as can be expected from his visit.


*******


#3
BBC MONITORING 
RUSSIAN RIGHT POLITICIAN ON PRESIDENT PUTIN'S POWER REFORM
Source: Ekho Moskvy radio, Moscow, in Russian 1337 gmt 31 May 00 


Russian Ekho Moskvy radio carried a live interview with Boris Nemtsov, a
leader of the Union of Right Forces (SPS), at 1337 gmt on 31st May. In
response to questions, Nemtsov spoke about the draft law on reforms in the
power structure proposed by President Putin, the president's political
views, and speculated on whether regional representatives appointed by
Putin will be able to bring laws of Russia's constituent entities in line
with the federal legislation. He also voiced support for the government's
fiscal policy. 


On the draft law, Nemtsov said: "Unfortunately, the draft law proposed by
the president is flawed in that it smacks of political
adventurism...Namely, the point at issue is that the president can suspend
a governor if criminal proceedings have been instituted against him. Our
experience shows that it is not difficult at all to institute criminal
proceedings against any citizen including a governor. And if there appears
a governor who does not suit the president, then an immediate resignation
awaits him simply because of this procedure... 


The president is, in fact, proposing to eliminate local government, one
cannot put it otherwise. He is proposing to abolish elections of heads of
local government in cities with population of over 50,000 people. This
means over 100m Russian nationals will be deprived of the right to elect
their own administration...I think this is obviously a step that will not
do the president any credit since many people supported him and he is now
trying to deprive people of the right to elect their local government.
There is one more quite concrete cicumstance, I would say: if those in
power are appointed, they will not be accountable to people and will gain
favour with its superiors and eventually some mundane problems, such as the
absence of heating in winter or heat in apartments in summer, absence of
hot water and so on, all these issues will most probably be decided on the
Red Square. Because where else can one seek justice?..." 


On the president's regional representatives, he said: "If the president's
representatives are able to bring governors to their senses and make them
live by laws and not by their own notions of the law, then their mission
will be fulfilled. But there is another danger: there is a danger that this
will be a new bureaucracy which will try to struggle for some property and
financial powers and will redistribute resources to their advantage. And
this will only lead to a more cumbersome apparatus and additional problems
in the form of corruption. So, the main thing, in my opinion, is that the
main idea of fulfilling Russian laws and constitution be implemented...The
main thing is that there should be laws which would clearly define the
status of these governor-generals [a slightly tongue-in-cheek reference to
Tsarist administration] because there will be arbitrary rule if there are
no laws..." 


On the government tax and budget initiatives, Nemtsov said: "We fully
support them: they are the programme of the Union of Right Forces embodied
in the government initiative." 


On Putin's political views affecting his domestic policy, Nemtsov said: "In
my opinion, he [Putin] has now understood that economic freedom is
impossible without political freedom...I think, the president will
gradually understand that protecting freedom, including the freedom of the
press, is his statutory duty. The thing is that he took an oath during the
president's inauguration ceremony. The words of his oath are very
important. He said I swear to protect human and civic rights and freedoms.
And so, freedom of speech is an inalienable right of every citizen. I hope
he has not forgotten his oath." 


*******


#4
ANALYSIS-Putin latest leader to rein in regional spending
By David Chance

LONDON, June 1 (Reuters) - Russian President Vladimir Putin is following a 
path trodden by countries such as Argentina, Brazil and Mexico in seeking to 
rein in tax and spending powers of the unruly regions in his sprawling 
country, analysts say. 


Putin received approval from the parliament on Wednesday for a first reading 
of three laws which will give him vast new powers over the Russian 
Federation's 89 regions and republics. 


Some commentators say Putin's new powers are another sign of his 
authoritarian tendencies, but financial analysts believe lack of reform in 
the regions and republics would imperil Russia's plans to restructure 
government financing. 


They also note that a continued inability to push through regional reform in 
other countries has had severe impacts. 


``In federal countries such as Brazil, Mexico and Argentina, the fiscal 
relationships between the different tiers, including revenue allocation, 
expenditure responsibilities, inter-governmental transfers and local 
borrowing authority are often core factors affecting overall macroeconomic 
performance,'' said ABN AMRO economist Goohoon Kwon. 


While it is relatively easy to measure finances in unitary states such as 
Hungary, Poland and Turkey, Russia's fiscal system has three levels: federal, 
regional and local, all of which make budget targets hard to implement. 


RUSSIAN PROBLEM IS BIGGER 


The problems of the Russian Federation stem in large part from the rule of 
former President Boris Yeltsin, himself once a regional Communist Party 
leader, who encouraged the regions to grab power in an effort to balance a 
hostile parliament. 


When all of Russia's regional and sub-regional budget accounts and 
extra-budgetary funds are added up, revenues have reached 25 percent of gross 
domestic product since 1994, according to a recent World Bank study. 


This compares with federally collected revenues of 10-14 percent of GDP, 
according to the Bank. 


In Brazil, the power of the regions was such they collected 10.5 percent of 
GDP in in 1995, while in Mexico the figure was 5.4 percent in 1994 and 4.1 
percent in Argentina in 1995. 


ABN's Kwon said Argentina's federal structure was a major cause of failed 
stabilisation plans in 1974, 1983 and 1985-87. 


Argentina is again trying, with limited success, to take on the regions in an 
effort to stimulate growth in a country whose economy has stagnated for 
almost two years. 


One of the triggers for Brazil's forced currency devaluation in 1999 was the 
prospect of default on a bond issued by one of its states, Minas Gerais, and 
the row between the state and central government is continuing, this time 
over the privatisation of key companies. 


CENTRALISING INSTINCT 


Putin has already divided Russia into seven federal districts, embracing 
several regions each, and sent out envoys with strong powers. 


He has said he did this because of ``the need for uniform understanding of 
laws at all points across the Russian Federation.'' 


Putin's advisors, headed by German Greff, have proposed eliminating sources 
of regional revenues such as the road fund, consolidating a series of 
separate payroll taxes into one social tax and introducing a single flat rate 
income tax of 13 percent, which will leave less room for tax evasion and 
corruption. 


Although Russia's finances are currently strongly in the black due to heady 
$30 a barrel oil prices, lessons from countries such as Argentina show Putin 
would be well-advised to act now rather than wait to curb the powers of the 
regions, analysts said. 


``Experience in other countries shows that sub-national governments increase 
spending during a positive economic cycle and tend to refuse adjustments in 
the downturn, leaving most of the adjustment burden to the federal 
government,'' Kwon said. 


********


#5
FACTBOX-Russian 2001 budget draft main parameters

MOSCOW, June 1 (Reuters) - Russia's government discussed proposals for the 
country's first balanced budget on Thursday, with 2001 revenues seen matching 
spending if parliament approves planned tax reforms. 


Finance Minister Alexei Kudrin said the main parameters would be revised 
before the government presented the draft budget to the State Duma lower 
house of parliament on August 1. 


Following are details of the 2001 draft budget, with a 2000 comparison: 


2001 DRAFT 2000 BUDGET 


GDP (trln rbls) 6.8 5.35+ 


Total revenues (bln rbls/pct GDP) 


- with existing taxes 1,053.9/15.5 797.2/14.9 


- with tax reform 1,154.9/16.98 - 


Total spending (bln rbls/pct GDP) 1,154.9/16.98 855.1 


Deficit nil 57.9 


Primary Surplus n/a 3.0 


Financing for deficit (bln rbls) 


-Internal n/a 39.92 


-External n/a 18.75 


Foreign credits n/a $5.96 bln 


Foreign debt 


servicing (pct of spending) 23.1 24.3 


C.bank credits 


(included in external financing) n/a $1.0 bln 


Foreign debt payment ($bln) $11.6 $10.2 


Inflation (pct) 11 18 


Average rouble rate 32 32++ 


The government has revised its 2000 GDP forecast to 5.5-5.9 trillion roubles. 


A Finance Ministry official said the average annual rouble rate should be no 
weaker than 29.50 per dollar in 2000. 


********


#6
Segodnya
June 1, 2000
[translation from RIA Novosti for personal use only]
POWER OF PERSONALITY RESPECTED IN RUSSIA
Vladimir Putin Builds His 'Own' Country
By Avtandil TSULADZE

How independent is Vladimir Putin? How strong is the 
influence of the so-called Family, a narrow circle of Kremlin 
insiders? What is the objective of the current reform of the 
institutes of power?
In Russia, every ruler traditionally conditions the 
political system to fit his tastes, preferences and ways.
We are now witnessing a situation where the struggle for 
power between Putin and the Family will inevitably enter the 
phase of an open conflict. The loser will leave the political 
arena, never to return. 
The reform of power is carried out under the slogan of 
strengthening law and order in the country. But Putin's main, 
if tacit, objective is to build props for his personal power. 
Putin has two 'instruments' at his disposal: public support and 
the opportunity to reform the state machinery. 
Thus far, the president has to draw from the source of 
personnel that the Family is also using. The creation of new 
federal structures enables Putin to broaden his personnel 
potentialities by way of creating new 'jobs'. The end result 
will be the concentration of all personnel decisions in Putin's 
hands.
What are the impediments? The bulk of property is 
privately owned. The first thing that comes to mind if one 
wants to 'domesticize' oligarchs is to strengthen the 'power 
structures', i.e. the law enforcement, defense and security 
agencies. A series of searches of offices spoke volumes about 
Putin's intentions.
They also served to show that raw force is a blunt weapon. 
Another resource is all sorts of legal gimmicks that may 
be used to instill some fear of God in oligarchs - up to and 
including instituting criminal proceedings against them. But 
this tactic calls for a firm foundation. Putin has enlarged the 
lineup of the Security Council by way of inviting the heads of 
the seven federal districts whom he fully controls, to join the 
SC. He has thereby managed to weaken the influence of Family 
proxies and to consolidate the power functions in his own 
hands. 
The aluminum deal that had been hurriedly and quietly 
pulled off even before Putin's election indicates that 
oligarchs are well aware of the threat overhanging them and 
rush to buttress their standing. Thus far, they are succeeding. 
The question is:
What kind of safeguards do they possess to enable them to 
retain and strengthen their economic standing?
High rating is a potent drug and oligarchs are the ones to 
have helped Putin get 'hooked' on it. If and when the rating 
drops, a political 'withdrawal' will be inevitable. 
Furthermore, oligarchs controlling Russian businesses can 
venture to blackmail Putin with threats of yet another plunge 
the ruble may take, something that the people would never 
forgive Putin for. 
The threat of escalating ethnic conflicts is anything but 
illusory. What with the growing pressure of the federal center 
on the provinces and especially on the ethnic republics, this 
card may well be played in the immediate future. 
Relations with the West is yet another unpleasant element.
Putin is trying to reach a compromise with the West: a liberal 
economic policy and the rejection of great-power ambitions in 
foreign policy in exchange for the West's lenient vision of the 
possible tapering of political freedoms in the country. 
Western politicians might agree to this bargain - Russia's 
'special' position on a number of international issues 
irritates them like hell. The problem is pacifying the Western 
public opinion that is more liberal that Western governments 
are. Putin may be requested to swear allegiance to democratic 
ideals. To prevent domestic Fronda, attempts have been made to 
subjugate the media not dependent on the authorities. But thus 
far Putin has failed at it. 
Putin's initial attempt to take all power in his hands has 
flopped. He feels a clear deficit of strong allies. Even those 
governors who have been all for him before the elections, are 
now starting to grumble. It is true that not all of Putin's 
resources have been exhausted here. Some governors are viewing 
the effort to tighten federal control in the country quite 
positively, for they have suffered at the hands of their own 
oligarchs and would rather share power with the federal center 
than with financial and industrial groups that often reek of 
crime. 
So what will be the outcome of the conflict between the 
Family and the new president? Both sides are hell bent on 
fighting until the last man standing. Restructuring the 
political system is now the only way to the power of a 
personality and Putin has taken to this rocky road. The period 
of interregnum will be short.
One thing is clear: the prospects of forming a stable 
political system in Russia capable of reviving itself, whoever 
might be the head of state, are becoming indefinitely remote 
again. There will be no political stability in the next fifty 
years. But life will be anything but boring.


*******


#7
New York Times
June 1, 2000
[for personal use only]
Clinton's Best Deal Would Be No Deal
By THOMAS GRAHAM
Thomas Graham, a senior associate at the Carnegie Endowment for International 
Peace, was the chief political analyst at the United States Embassy in Moscow 
from 1994 to 1997. 


WASHINGTON -- Barring a sudden change of heart, President Vladimir Putin of 
Russia will do the United States a great service when he sits down with 
President Clinton this weekend and refuses to modify the Antiballistic 
Missile Treaty to allow the United States to deploy a limited missile 
defense. 


Why does Russian opposition work in America's interest? We are still in the 
early stages of a serious debate over a national defense against missile 
attacks and, more broadly, over our nuclear strategy in the new century. 
Without a consensus on these important points, it is simply wrong to cut a 
deal with Moscow, either now or in the remaining months of the Clinton 
presidency. 


The Clinton administration, of course, does not see it that way. Mr. Clinton 
does not want to be the first president in decades to fail to sign a 
significant arms control agreement with the Russians. When the summit meeting 
was announced several weeks ago, officials hoped to make an arms-control 
agreement its centerpiece, and saw reasons for optimism. 


In April, Mr. Putin pushed the long-delayed ratification of the second 
strategic arms reduction treaty, known as Start II, through the Russian 
Parliament. The Clinton administration took this as a sign that he was 
prepared to deal. American officials were also encouraged that Sergei Ivanov, 
director of Russia's national security council and a close Putin confidant, 
had not flatly opposed amending the ABM treaty, which bans missile defense 
systems, during a visit to Washington in February. 


Subsequent discussions, however, have shattered the administration's 
optimism, and it has since tried to lower expectations. Last week, Samuel 
Berger, the White House national security adviser, stated that he did not 
expect arms control issues to be resolved this weekend. Rather, he said, the 
summit would be "a good opportunity for us to explain our view of the 
problem, and for President Putin to express his view of the problem." 


The administration still hopes to cut a deal before Mr. Clinton leaves 
office, but that remains wishful thinking. The Russians have little incentive 
to negotiate. The debate in the United States over the reliability of the 
missile-defense technology and the scope of the system we should build is 
growing. Our European allies are becoming more concerned, and China is 
adamantly opposed to missile defense systems. This only encourages Mr. Putin 
to stand his ground. 


The Russians are also concerned that an American missile defense could 
eventually undermine the effectiveness of their own nuclear arsenal, arguably 
their last remaining claim to great power status. The problem is not the 
limited system the Clinton administration wants to deploy against the threat 
of missile attacks from North Korea. 


The Russians know that the White House's proposed system would pose no 
defense against their arsenal. But over the next decade, as the technology 
improves, they fear that without the ABM treaty's controls, a more effective 
system could be built. 


Also worrying the Russians are the economic constraints that will force them 
to reduce their nuclear arsenal, as weapons can no be longer be maintained or 
replaced, to below 1,500 warheads, regardless of what the United States does. 
The last thing they can afford is a new high-tech arms race. 


To overcome Moscow's resistance, the Clinton administration could be tempted 
to sweeten the pot further in its last months by promising to reduce the 
capabilities of a national defense system. That would be the wrong approach 
at this time. 


As Gov. George W. Bush and others have noted, there is a new world out there: 
the nuclear equation has changed radically. The challenge has expanded beyond 
maintaining stability between two nuclear-armed superpowers. Arsenals in 
Russia and the United States may be reduced, but others, notably in China, 
will increase. Nuclear-weapons and ballistic-missile technology will almost 
inevitably continue to spread to rogue states. 


While it would be folly to lightly discard the strategic arms treaties that 
have maintained stability for the last 30 years, it would be equal folly not 
to reassess these treaties in light of the changes over the past decade. 


In this environment, we do not need a quick decision on whether to deploy a 
national missile defense system. Instead, we need to forge a domestic 
consensus about anything we might build, and we must persuade our allies in 
Europe and East Asia to endorse whatever path we choose. 


Yes, we should be talking all along to the Russians to assess their views and 
reactions. But until we have done our work at home and with our allies, we 
should be wary of signing any treaty with Moscow. 


Logically, only the next administration can conclude this debate. And that is 
why, if events unfold as expected, Americans should be prepared to thank 
Vladimir Putin for looking out for their interests by saying no to President 
Clinton on missile defense. 


*******


#8
Russia's Foreign Ministry's Urnov on Caspian Policy: Comment

Moscow, June 1 (Bloomberg)
-- Russian Ministry of Foreign Affairs' Andrei Urnov, who is director of 
the Caspian group, commented on Russia's policy in the Caspian region. 


On regional oil pipeline projects: 


``We are interested in the use of existing pipelines. We already have an 
infrastructure in place. We constructed a stretch bypassing (Chechnya) of the 
(Baku-Novorossisk) northern route pipeline through Dagestan and extended it 
to (the port of) Makhachkala. It can work now. But to our disappointment it's 
not fully loaded, as Azerbaijan does not fulfill its agreement on shipments. 
Therefore we are attracting oil from Kazakhstan and Turkmenistan. 


``The second pipeline we have is Atyrau-Samara, which currently ships about 
10 million tons (of oil per year). 


``We also support the Caspian Pipeline Consortium, which we consider a good 
example of international cooperation including between the U.S. and Russia. 
Chevron Corp. is a leader of this project. 


``These are the three pipelines we fully support. 


``We do not oppose the Baku-Ceyhan (pipeline). Our position is: if the 
project operators find funds and (oil) resources to use it then it's fine. We 
have doubts about the economy of this project. The operators are also 
lobbying to secure Kazakhstan (oil) volumes, as they do not have (big) enough 
reserves. But Kazakhstan has all its oil assigned to the pipelines and will 
ship only extra crude to Ceyhan. 


``We are not worried about the Southern route through Iran. We aren't 
allergic to Iran like U.S. We are not against any pipelines in the region. 


``The new by-pass stretch is around Chechnya now and we can be sure that its 
safety will be guaranteed. All the necessary safety measures are taken.'' 


On the Trans-Caspian gas pipeline: 


``It has to be economic and ecologically safe. We have to resolve the 
political status of the Caspian Sea. Now it's regulated only with two 
agreements between Iran and the Soviet Union from 1921 and 1940. These pacts 
do not identify the use of minerals resources of Caspian Sea. 


``On the environmental concern there is no mechanism that lays the groundwork 
for liabilities and compensations and monitoring of the situation.'' 


On Russia's position on the Caspian Sea's political status: 


``We propose splitting the sea bed and its resources and keep the water 
resources in common use by all the (Caspian) states.'' 


On operation of Offshore Kazakhstan International Oil Co., led by Exxon Mobil 
Corp., Royal Dutch/Shell Group and BG Group Plc, and OAO Lukoil, Russia's No 
1 oil producer, in the north of the Caspian Sea: 


``It's not possible to speak about the status of the sea territory now and 
which company operates at which territory, as a modified line between Russia 
and Kazakhstan has not been approved. 


``The decision will be made in consensus, which would fit each country. If 
someone already operates somewhere and have already invested cash then that 
company should have a priority for the area with the involvement of the other 
side. In the case of Lukoil, it may attract Kazakhstan in the project over 
the dispute area. 


``OKIOC will not be a problem for the middle line as it operates close to 
Kazakhstan territory. 


``There is another potential (oil field) Kurman-Gazy, which lies in the 
disputable area.'' 


On Turkey and the Bosporus: 


``Turkey will not close the straits. It raises the question of increasing 
danger and the environmental concerns. We have to agree on additional safety 
measures. We are against any unilateral moves. There is no certain evaluation 
of the transport capability of the straits. The estimates differ between 90 
million and 120 million tons of crude per year, depending on the traffic 
organization.'' 


*******


#9
The Guardian (UK)
June 1, 2000
[for personal use only]
DEFIANT PUTIN LIFTS CURBS ON RUSSIAN NUCLEAR EXPORTS
By Ian Traynor


Russia has relaxed its curbs on exporting sensitive nuclear equipment in a
unilateral break with the international consensus that arms control experts
say is a blow to non-proliferation efforts. 


Breaking with the international practice of banning exports of nuclear
materials to countries whose nuclear power programmes are not subject to
the full scrutiny of the Vienna-based International Atomic Energy Agency
(IAEA), President Vladimir Putin has decreed that it is up to Russia to
decide who may buy its nuclear power products. 


'This is a step against the mainstream of the non-proliferation treaty,'
said an inter national official dealing with nuclear energy. 'Putin's
decree makes exports possible without guarantees of fullscope safeguards.' 


Mr Putin's decision, the latest evidence of his resolve to pursue a more
robust foreign and economic policy regardless of western reservations,
ditches commitments by his predecessor, Boris Yeltsin, pulling Russia into
line with the west in its nuclear exports policy. 


In theory, Mr Putin's decree will leave Russia free to supply maverick
states such as India, Pakistan, North Korea, Israel, Iran, Iraq, Cuba and
Yugoslavia with nuclear materials, whereas Mr Yeltsin made this impossible
in 1992. 


Under a Yeltsin decree eight years ago, Russia signed up for the directives
of the nuclear suppliers' group which proscribe nuclear exports to
countries which either had declined to sign the nuclear non-proliferation
treaty or refused full IAEA access to their civilian nuclear projects. 


India, Pakistan, Israel, and Cuba have not signed the treaty while North
Korea, a signatory, is generally considered to be in breach of the agreement. 


Analysts saw the go-it-alone move as a mockery of the recent pledge from
the big nuclear powers, including Russia, to work towards the full
elimination of nuclear weapons and of the talk of progress at the recent
non-proliferation review conference in New York. 


'This is a softening of Rus sia's non-proliferation policy,' said Annette
Schaper, an international arms control expert at the Peace Research
Foundation in Frankfurt, Germany. 'It's a big problem that Russia has
unilaterally decided to break with the prevailing consensus.' 


Igor Farofontov, of Greenpeace in Moscow, said: 'This is a completely
stupid move. We could end up with economic sanctions against us.' 


The decision, however, which is in line with Mr Putin's determination to
assert Russia's clout on the international stage, reflects the influence on
him of the powerful nuclear energy lobby, and also shows his eagerness to
cash in on what little of Russia's economic assets remains. 


In March, Mr Putin made a highly publicised visit to the formerly top
secret nuclear research city of Snezhinsk and pledged to reinvigorate the
nuclear industry. He has also just abolished the main state agency
responsible for environmental protection, a habitual critic of the nuclear
lobby. 


The Putin decree, the international official said, was 'political, a
re-interpretation of Russia's commitments under the non-proliferation
treaty.' 


The Yeltsin decree of 1992 stated that Russia could only export nuclear
equipment and materials to countries 'which do not possess nuclear weapons
and whose entire nuclear activities are under the guarantees of the IAEA.' 


The Putin decree revises this. The Russian government 'in exceptional
circum stances' can decide to export nuclear materials to a country which
has no nuclear weapons but which has not placed all its nuclear activity
under IAEA safeguards. 


The client government has to give assurances that the equipment will not be
diverted for nuclear weapons purposes. 


'This is a revolutionary change in Russia's position on non-proliferation,'
commented the Moscow newspaper, Novye Izvestiya. 


Nikolai Ryzhov, the deputy minister for atomic energy, said the nuclear
exports would proceed if they 'do not contradict Russia's international
agreements and if the governments of the countries concerned promise that
they will not be used to build nuclear weapons.' 


******


#10
From: Kenneth Weisbrode <weisbrode@iiss.org.uk>
Subject: export controls
Date: Thu, 1 Jun 2000 


Dear David, 
I am curious to know why Putin's recent renunciation of Russia's ban on
nuclear exports to non-IAEA members has not received more attention. Do
people assume it was mere pandering to an important domestic constituency
or mere pre-summit rhetoric ? In other words, how significant is this
announcement and does it have any specific, near-term implications? I'm
eager to know the views of your subscribers. Attached are two related
stories. 
Sincerely,
Ken Weisbrode 
IISS, London 


* RUSSIA TO BOOST EXPORTS OF NUCLEAR TECHNOLOGY. A spokesman
for the Atomic Energy Ministry's foreign trade department 
announced at a press conference on 29 May that President 
Putin has reversed a 1992 decision to ban exports of nuclear 
material, technologies, and equipment to organizations that 
do not belong to the International Atomic Energy Agency 
(IAEA), AFP reported. Such exports will be made if they "do 
not contradict Russia's international agreements and if the 
governments of the countries concerned assure that they will 
not be used to build nuclear weapons," the spokesman said, 
adding that Cuba, Israel, India, North Korea, and Pakistan 
all have civilian nuclear organizations outside the control 
of the IAEA. 


May 29, 2000 <<...>> 
WSJE: Russia Envisions Dozens Of New Atomic Reactors 
By JEANNE WHALEN Staff Reporter MOSCOW 
* The Russian government gave preliminary approval to a plan to construct
up to 38 new nuclear reactors by 2020, a prohibitively costly program that
is highly unlikely to be fulfilled but which might reflect Russia's growing
concerns over meeting its power needs. The Ministry of Atomic Energy often
puts forward big plans for the construction of dozens of reactors, and
twice this decade - in 1992 and 1993 - the blueprints were endorsed by the
government. Despite this, not a single new reactor has been built in Russia
since the collapse of the Soviet Union because construction is too costly.
Lingering memories of the fatal 1986 meltdown of a reactor in Chernobyl,
Ukraine, also have curbed interest in atomic power. But declining
investment in gas production and threats of breakdowns at Russia's outdated
gas and coal-fired generating stations may be prompting Russia to
reconsider nuclear power. In recent months, power monopoly RAO Unified
Energy Systems threatened to cut off electricity throughout Russia for lack
of gas supplies. The reactors detailed in the plan would cost $32 billion
(34.34 billion euros) - 50% more than this year's federal budget - to
build. The government's true commitment to the proposal is unclear. A
government press release said the atomic plan "was approved" but that a
host of ministries and federal agencies were asked to draft more specific
proposals by Aug. 1. An official government decree would be needed to
implement a new atomic strategy. Vladimir Slivyak, an environmental
activist with the Ecodefense organization in Moscow, said the most
disturbing aspect of the plan is the atomic ministry's desire to pay for
the new reactors in part by increasing imports of nuclear waste for
reprocessing in Russia. The law prohibits the import of nuclear waste for
storage on Russian territory. It allows waste to be imported for
reprocessing but says waste associated with the reprocessing must be
re-exported. A copy of the atomic ministry's plan, provided by Ecodefense,
recommends that the government remove these restrictions. Igor Forofontov,
an atomic energy expert with Greenpeace in Moscow, said he doubts the
legislature would agree to change the law. Russia's 29 existing nuclear
reactors produced 14% of the nation's energy needs last year. According to
the atomic ministry's report, Russia already has begun to lean more on
nuclear energy: 90% of last year's growth in energy use was provided by
atomic power. The report argues that Russia would be better off diverting
more of its gas reserves for highly profitable export while using more
atomic energy to supply domestic power needs. Less Expensive Running an
atomic power station is significantly less expensive than fueling a
gas-fired one, but atomic power stations demand big investment to build and
decommission, energy analysts said. The ministry's report notes that 13 of
the reactors currently working must be taken offline by 2020. Russia has
enough proven gas in the ground to last another century, but some analysts
say monopoly RAO Gazprom isn't investing enough to keep gas flowing at
current levels of roughly 550 billion cubic meters per year. Gazprom deputy
chairman Pyotr Rodionov this month said insufficient investment would cause
a production drop of 20 billion cubic meters this year. Gazprom earns big
money on its exports to Europe, but in the domestic market, low gas charges
set by the government and widespread nonpayment of bills leave the monopoly
unable to cover its production costs. Meanwhile, UES, which controls 70
regional gas and coal-fired power stations and coast-to-coast power lines,
has warned that the decades-old network needs $40 billion to $75 billion in
investment over the next 10 years for Russia to avoid blackouts.


*******


#11
Washington Post
June 1, 2000
[for personal use only]
Russia 'Blind' To Attack by U.S. Missiles
By David Hoffman


MOSCOW. To understand Russia's anxiety over the national missile defense 
system being proposed by the United States, consider the lonely wanderings of 
a military satellite named Cosmos-2224. 


Cosmos-2224 is the last working model of a generation of Russian satellites 
that were parked over one spot on the globe, in so-called geostationary 
orbits, to watch for U.S. missile launches. But according to a source, the 
latest data available, for February, located Cosmos-2224 outside the eight 
points of space reserved by Russia for these satellites.


Although it is believed to be functioning, Cosmos-2224 is no longer part of 
the "operational constellation" that keeps an eye out for missile launches, 
the source said. Russia's only other geostationary satellite, Cosmos-2345, 
apparently failed sometime last year or late in 1998.


Moreover, Russia also has difficulties with another part of its early warning 
network. The satellites that move in what are called high-elliptical orbits 
and scan for launches of U.S. land-based missiles but cannot see those 
launched at sea, now number four on duty instead of the nine originally 
planned.


The deterioration of Russia's satellite network has contributed to "blind 
spots" in its early warning system against missile attacks, specialists say, 
especially in detecting possible ocean launches from super-accurate U.S. 
Trident submarines.


Such gaps, at least in theory, could make Russia feel more vulnerable in a 
time of crisis to a possible first strike from the United States. Russia's 
concern is that this erosion of its capabilities, combined with a U.S. 
proposal to deploy an expanded missile defense and enhanced early warning 
system, could mean that Russia is growing more vulnerable while the United 
States grows more secure.


"Currently, Russia is totally blind to a Trident attack from the Atlantic and 
Pacific, and, for all practical purposes, it is equally blind to a Minuteman 
or MX [missile] attack from the continental United States," concluded three 
specialists, writing recently in Spectrum, the bulletin of the Institute of 
Electrical and Electronics Engineers.


The authors noted that the Congressional Budget Office has estimated that the 
Russian satellites can monitor U.S. missile fields no more than 17 hours a 
day, and perhaps less, although estimates vary. They also reported that 
Russia has built but never launched seven satellites, apparently because of a 
lack of resources. The article was written by Geoffrey Forden, a national 
security specialist at the Congressional Budget Office; Theodore A. Postol, a 
professor at the Massachusetts Institute of Technology; and Pavel Podvig, a 
researcher at the Center for Arms Control, Energy and Environmental Studies 
at the Moscow Institute of Physics and Technology.


Both the United States and Russia seek to maintain viable early warning 
systems because they rely on the doctrine of mutual assured destruction, a 
Cold War formula under which each side is held in check by the threat of 
annihilation by the other. To make that threat credible, both countries 
remain on hair-trigger alert.


Out of concern about the possibility of an accident, perhaps resulting from a 
false report of a nuclear launch, President Clinton and then-President Boris 
Yeltsin agreed in September 1998 to establish a joint, permanent center to 
share early warning information and reduce the risk of miscalculation. Later, 
though, talks were disrupted by Russian anger over the Kosovo conflict. A 
temporary prototype was created in the United States to deal with the year 
2000 computer problem, but a permanent center was not established. The 
countries are now negotiating the details, and sources said Clinton and 
President Vladimir Putin may announce an agreement at their summit in Moscow 
this weekend.


The Americans hoped earlier this year that the summit might also yield 
significant progress toward an agreement to amend the 1972 Anti-Ballistic 
Missile Treaty to permit the United States to expand its missile defense 
system. The Russians have opposed the proposal under review in Washington to 
build a missile defense system, partly because Moscow fears imbalances 
between the world's two principal nuclear powers could result.


Russian officials have said they believe the U.S. system will not be limited 
to the 100 interceptors that the Clinton administration has suggested 
deploying in Alaska, but that it could be expanded relatively quickly to give 
the United States a national defense, and a possible first-strike capability, 
using enhanced radars and early warning systems as well.


Adding to Russian concerns has been the deployment of a radar code-named HAVE 
STARE in Vardoe, Norway, near the Russian border. The radar's ostensible 
purpose is to track space "junk," but experts say it will provide highly 
detailed information on Russian missile tests. The Russians have expressed 
concern that it could eventually be used for a missile defense system. 
According to Postol, "the Vardoe radar can provide critical information for a 
national missile defense system aimed specifically at Russia."


Moreover, the radar is being built at a time when Russia's early warning 
system is weaker and its strategic forces have been undergoing an inexorable 
decline due to obsolescence and a lack of money to build new submarines, 
airplanes and missiles as fast as the old ones are ready to be retired. 
Russia is expected to have fewer than 1,000 warheads later this decade, fewer 
than even a prospective START III treaty envisions, while the United States 
can afford a larger arsenal and a standby reserve of warheads.


The U.S. argument is that a "limited" missile defense system is not aimed at 
Russia, and that it would be so small as to be ineffective against a major 
Russian missile attack. In talking points prepared for the Russians in 
January and later published in the Bulletin of Atomic Scientists, a top 
Pentagon official said the planned U.S. system could, "in the best case," 
knock out 20 to 25 warheads among the hundreds he said Russia has the 
capability to fire.


Russia also has countermeasures that it has only hinted at in public--the use 
of decoys and other tricks developed in the 1980s to foil President Ronald 
Reagan's proposed missile defense shield. Russian officials have boasted that 
the new single-warhead Topol-M intercontinental ballistic missile could 
defeat missile defenses, apparently by releasing space-based decoys as well 
as using a highly maneuverable warhead and low trajectory. Russia has, 
however, deployed only 20 of the new missiles so far.


Russia has also faced problems in other aspects of its early warning system. 
It was forced to close an early warning radar station in Latvia. While 
testing of a long-planned radar has begun at Baranovichi, in Belarus, and is 
expected to become operational by the end of the year, it is not clear 
whether it will be able to replace the northern coverage of the Latvian 
radar. Russia has also experienced difficulties in maintaining other radars, 
some now outside its borders.


Podvig, of the Moscow arms control center, said: "I am convinced that so far 
everything shows the Russian military is trying very hard to keep the system 
operational. It looks like they have been successful so far, given very 
difficult circumstances."


He said the Soviet and Russian mechanism for nuclear decision-making is 
"geared to crisis scenarios" and added: "I really think the possibility of 
miscalculation in peacetime is close to zero. In a crisis, we could be in 
very big trouble--that's the reason to stay out of a crisis."


*******


#12
Moscow Times
June 1, 2000 
POWER PLAY: Bureaucracy Lurks Behind 'Civil' Society 
By Yevgenia Albats 


In the name of "reform," the new administration is rapidly creating an 
omnipotent government, a bureaucratic state. Surely none of those running the 
Kremlin now ever read the books of Ludwig Von Mises, whose writings against 
such methods are a timely warning that omnipotent governments are 
consistently ineffective in the long run. 


At least three countries know that better than any others: Russia, Germany, 
Italy. The latter two have learned their lessons from history and now 
prosper. But our country always seeks its own way. 


Now the Kremlin administration has developed a phrase for that old/new way: 
"manageable democracy." Read: Democratic institutions - whether parliament or 
civil associations - should be preserved, but their essence should be 
carefully selected, so that those assumed to be representatives of society 
will be de facto representatives of the state: obedient, indebted to those 
who chose them. 


The latest Kremlin neologism is "nedogovorosposobny," one with whom it is 
impossible to make a deal. The inventor is Alexander Voloshin, the 
reappointed chief of staff. Those nedogovorosposobnye unwilling to cut deals 
with the Kremlin are enemies who should be treated as such. The list of 
nedogovorosposobnye is not short. It includes politicians, newspapers, TV 
stations, human rights groups and other organizations of civil society. The 
policy for dealing with them is unimaginative, but no less efficient. Some 
have been stripped of access to countrywide TV channels. Others who can still 
express their views will be replaced by associations the Kremlin has selected 
or will select. 


One organization that has been left out in the cold is the Russian Jewish 
Congress, a charitable foundation that spent over $6 million last year to 
support the educational, cultural, religious and other needs of a community 
that lived through centuries of state-run oppression. But RJC's most 
invaluable contribution - as a longtime volunteer, I should know - is that 
many members of the community see it as a source of protection if things get 
ugly. RJC is an umbrella organization for some 60 other Jewish organizations. 
That makes it dangerous for the bureaucratic state, all the more so since the 
RJC president is Vladimir Gusinsky, whose Media-MOST is at now odds with the 
Kremlin. 


Now, in the secrecy of the Kremlin and through the invisible hand of Boris 
Berezovsky and Roman Abramovich, another organization - the Federation of 
Jewish communities - has been developed, which will be loyal to its creators 
and pronounced as the only representative of the community, thus 
marginalizing RJC and others. In a more startling development, Adolf 
Shayevich, the chief rabbi of Russia and a member of the presidium of the 
RJC, got a call Wednesday from the Kremlin administration, asking him to 
resign. 


Never mind that most who hide behind this Kremlin creation never gave a cent 
to the needy. Never mind that their cynicism (what is good for my pocket is 
good for the country) is the source of a growing anti-Semitism. Substance 
doesn't matter. 


Dogovorosposobnost matters. Quasi-civic organizations are the only ones a 
bureaucratic state can tolerate. Once again, the ends justify the means. The 
problem is that the ends for the Kremlin and for the rest of the nation are 
different. 


Yevgenia Albats is an independent journalist based in Moscow. 


******



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