June 7, 2000    
This Date's Issues: 4351 • 4352

Johnson's Russia List
#4352
7 June 2000
davidjohnson@erols.com


[Note from David Johnson:
1. RFE/RL: K.P. Foley, Chechnya: Top Official Offers Peace Plan With Russia.
2. Reuters: Russia's Putin tastes first parliament opposition.
3. Los Angeles Times: Jim Mann, U.S. Turns a Blind Eye to Beijing but a Jaundiced One to Moscow.
4. Baltimore Sun editorial: Clinton in Russia. No breakthroughs: 
Putin starts his own presidential task of cementing Moscow's place 
in Europe.
5. Kommersant: RUSSIAN-US RELATIONS: OUTLOOK UNCERTAIN. (Interviews
with Andrei Kokoshin, Dmitry Rogozin, and Andrei Kozyrev)
6. The Guardian (UK): Isobel Montgomery, Sviatoslav Fyodorov. 
Russian surgeon unable to translate medical success into politics.
7. Reuters: New Orthodox-Catholic talks this year -report.
8. Mocow Times: Igor Semenenko, Chubais Tries to Calm Investors
9. BBC MONITORING: NTV, RUSSIA'S LEBED DISCUSSES CHECHNYA, AFGHANISTAN AND DOMESTIC AFFAIRS.]


******


#1
Chechnya: Top Official Offers Peace Plan With Russia
By K.P. Foley


A top Chechen official has visited Washington, telling reporters that the 
breakaway republic wants peace with Russia. The official said the war is 
hurting both sides. RFE/RL's K.P. Foley reports. 


Washington, 6 June (RFE/RL) - A Chechen official says leaders of the 
breakaway Russian republic are offering a peace proposal that includes 
internationally mediated talks.


Ilyas Akhmadov, who describes himself as the foreign minister of the Chechen 
republic, made a return visit to Washington on Monday, telling reporters the 
separatists want to end what he called "this useless war" with Russia. He 
said: 


"This useless war takes with it the lives not only of the Chechen people but 
of Russian people, too. And it has a tendency to grow and to spill over into 
the neighboring regions of the Chechen Republic of Ichkeria, and not only the 
Russian regions, but they're trying to connect somehow Central Asia, Central 
Asian republics with this conflict. "


Akhmadov said the peace plan is simple. He said:


"And basically, they consist of two main parts: The first one is terminating 
of the hostilities; and the second is peaceful resolving of the conflict."


Information provided by Akhmadov said the first part of the plan seeks a 
truce to be monitored by the Organization for Security and Cooperation in 
Europe (OSCE), the Council of Europe, the United Nations, and the 
Commonwealth of Independent States. A temporary executive committee made up 
of Chechen, Russian, and European officials would also be established.


The second part of the plan calls for Russia and the Chechen separatists to 
restrict themselves to zones and submit to peace talks mediated by the OSCE 
and the Council of Europe.


The Chechens also seek an international inquiry into alleged war crimes 
committed in the current conflict and during the 1994-96 war.


The U.S. State Department said it will not mediate the Russian-Chechen 
conflict. An official who did not want his name used said, the two sides "do 
need to have a dialogue and resolve this peacefully, not by military means."


Akhmadov was in Washington in January and had a meeting -- outside the State 
Department headquarters -- with an officer from the department's Russian 
Desk. The Russian government complained about the meeting, but the U.S. made 
it clear that it's position has not changed.


The U.S. has condemned Russian military action, but it has also repeatedly 
stated that the U.S. supports the territorial integrity of Russia.


******


#2
Russia's Putin tastes first parliament opposition
By Patrick Lannin

MOSCOW, June 7 (Reuters) - President Vladimir Putin faced his first serious 
parliamentary opposition on Wednesday over plans for a shake-up of Russia's 
regions and reform of the tax system. 


Putin, fresh from talks this week with U.S. President Bill Clinton and a 
visit to Italy, was forced to ask the lower house of parliament to delay 
again a debate on a controversial new system of paying social charges, part 
of his tax bill. 


Meanwhile, the upper house held highly charged debates on Putin's plans to 
gain the power to sack governors and deprive them of the right to form the 
upper chamber, the Federation Council. 


``We should express our total lack of agreement with this law. This is a 
process of destruction of the state,'' said Vitaly Kotov, head of the 
regional assembly of Vladimir region. 


The governors decided to appeal to Putin to get him to withdraw his bill, 
already passed in a first reading by the lower house, the State Duma, and 
discussed other amendments. 


The regional shake-up is the most radical administrative change since then 
President Boris Yeltsin rewrote the constitution in 1993 after putting down a 
parliamentary revolt. 


Alexander Rutskoi, head of the Kursk region and one of the leaders of the 
1993 uprising, said Putin's proposals would render regional heads powerless. 


``That means we will be responsible for winter heating, for sowing and 
harvesting and social welfare but there will be people above us giving 
valuable advice...but carrying absolutely no responsibility for the situation 
in the regions,'' Rutskoi told Russian television. 


Putin's plans for the regions and his reforms of the tax system are his two 
key legislative initiatives since winning a March 26 election, but the 
parliamentary opposition is a novelty for the Kremlin leader. 


The Duma, which often gave Yeltsin a tough time, has so far easily approved 
two nuclear arms control pacts and Putin's choice as prime minister, Mikhail 
Kasyanov. 


TAX REFORM PLAN HITS HITCH 


The upper house debates took place as the government asked the Duma to 
postpone discussion of a new social tax, which has aroused strong union and 
left-wing opposition. 


Union members picketed the White House government headquarters and Deputy 
Prime Minister Valentina Matviyenko was to meet union leaders before the 
rescheduled debate on Friday. 


Unions fear the social charge change, combining payments to various bodies 
into one levy and channelling all the money through the Tax Ministry, will 
undermine social benefits. 


Trade unions say the new rule would allow the government to cut resources 
available to the pension fund and reduce benefits, such as cheap holidays at 
health farms run by trade unions. 


Putin's representative in the Duma, Alexander Kotenkov, said he was sure the 
new social tax bill would be passed after the government sent amendments to 
parliament on Tuesday. 


``I think that on Friday all doubts will be removed. The government simply 
decided to take no risks with this law,'' Kotenkov said in televised 
comments. 


The Duma was to go ahead and consider another part of the tax law, a new 13 
percent flat income tax rate, on Wednesday. It was expected to be approved 
despite the left-wing opposition. 


Amendments discussed by the governors in the regional shake-up would allow 
them to nominate their own envoys to the upper house, rather than having them 
approved by local assemblies. 


They also want sitting governors deprived of the right to be a senator still 
to enjoy immunity from prosecution. 


The head of the North Caucasus region of Ingushetia, next door to 
war-shattered Chechnya, said on Tuesday that people would not he happy if 
their elected regional leaders were simply sacked. 


``What may this lead to? Not to armed unrest of course. But this may lead to 
some discontent, maybe rallies. This will be an insult to people,'' Ruslan 
Aushev told a news conference. 


******


#3
Los Angeles Times
June 7, 2000
[for personal use only]
U.S. Turns a Blind Eye to Beijing but a Jaundiced One to Moscow 
By JIM MANN


WASHINGTON--If you want to see a questionable double standard at work, 
look at the widely disparate American attitudes toward Russia's new 
president, Vladimir V. Putin, and Chinese President Jiang Zemin. 
In the United States these days, and particularly among foreign policy 
elites, Putin is darkly portrayed as the vintage apparatchik, the mysterious 
ex-KGB man who threatens Russian liberties. Meanwhile, Jiang is often 
depicted as a closet reformer who may some day slowly move China in the right 
direction. 
President Clinton has managed to capture this dichotomy perfectly. 
Before and during the Moscow summit that has just ended, he conveyed, 
politely but unmistakably, Washington's considerable unease and suspicions 
about Putin. 
People in the West "do not yet know if Russia's hard-won democratic 
freedoms will endure," observed Clinton on Friday. At a Sunday news 
conference, Clinton said he thought Putin was "fully capable" of preserving 
freedom and pluralism--a deft phraseology that left open the question of 
whether Putin would in fact do so. 
That was quite a contrast to Clinton's much warmer judgment after his 
visit to China two years ago, when he was effusive in his praise for Jiang. 
At a press conference in Hong Kong, the American president said he believed 
that China had "the right leadership at the right time." 
The issue here is not necessarily Clinton--who is, I believe, merely 
giving voice to the views widely held by the officials and experts who shape 
U.S. foreign policy. 
Before the Moscow summit, America's newspapers were full of op-ed pieces 
urging Clinton to be even more wary of Putin than he was last weekend. 
"Indulging Russia Is Risky Business" was the headline on an article Zbigniew 
Brzezinski wrote in the New York Times. 
Rather, the question is whether these hidden U.S. assumptions about the 
Russian and Chinese leaders make sense or whether they lack a broader 
perspective. Let's look at the comparative records. 
Leaders' backgrounds. Yes, Putin was a KGB veteran, and, yes, that's 
reason for suspicion. Yes, he rose to power only after former Russian 
President Boris N. Yeltsin plucked him from obscurity. But Putin was at least 
elected to office by the Russian people, and so was Yeltsin, who groomed him. 
By contrast, Jiang has been a Communist Party official throughout his 
career. He has never faced any popular election at any level of government. 
He rose to power in 1989, in the immediate aftermath of the Tiananmen Square 
crackdown, when Chinese leader Deng Xiaoping and other unelected party elders 
needed to find a loyal Communist Party secretary, one who would not push for 
political change as Jiang's two predecessors had. 
Performance in office. Putin has been in power only for five months. 
During that time, a handful of incidents has touched off some jitters about 
the future of political, press and religious freedom in Russia. 
The Russian tax police have raided the offices of Media-Most, the 
country's largest independent media company. Russian Jewish leaders have said 
Putin's government is trying to divide them. Such actions are indeed 
worrisome. 
But again, consider the larger perspective. Jiang has been China's most 
powerful leader since the mid-1990s. He has never shown the slightest 
willingness to tolerate even the tiniest sign of political dissent--much less 
the organized opposition and the legislative checks and balances that Putin 
faces every day. 
Despite the Media-Most raid, Russian news outlets can and do regularly 
criticize the Russian government far more than any Chinese publication would 
dare. In the field of religion, whatever Putin has done is mild when compared 
with China's continuing repression in the Jiang era of Tibetan Buddhism, 
underground churches and Falun Gong. 
Why, in the face of these realities, are Americans so prematurely 
hostile to Putin and so vastly more tolerant in their judgments about Jiang? 
One factor is certainly the leftover geopolitics of the last two decades 
of the Cold War. 
During that period, China was a tacit ally and the Soviet Union the 
archenemy. American policymakers were always eager to denounce Moscow, while 
they tended to gloss over the darker aspects of the Chinese leadership. And 
one can detect a revival of such reflexive attitudes today. 
Another factor is that Americans seem to judge Asian leaders by 
different standards from European leaders. 
Putin is evaluated by the standards of Western democracies, as he should 
be. Yet with Jiang, the underlying assumption seems to be that Asians don't 
care so much about freedom and democracy--even though the recent history of 
the Philippines, South Korea, Taiwan and Indonesia shows that this stereotype 
isn't true. 
Earlier this year, Clinton was asked at a press conference whether he 
still believes that Jiang is the right leader at the right time for China. 
Clinton said yes, "given the available alternatives." 
Those words say volumes about America's limited expectations, hopes and 
horizons for political change in China. 
With Jiang, Washington often tends to conclude that no matter how bad 
things seem in China, they could always be worse. We don't measure Putin by 
such an extravagantly lenient yardstick. 


*******


#4
Baltimore Sun
June 7, 2000
Editorial
Clinton in Russia
No breakthroughs: Putin starts his own presidential task of cementing 
Moscow's place in Europe.


PRESIDENT Clinton's whirlwind visit to Russia was not his farewell as world 
statesman so much as President Vladimir Putin's debut. Nothing of importance 
was resolved; much was introduced. 


Mr. Clinton was at his best speaking on talk-radio to ordinary Russians, 
addressing the Duma and talking straight on the common interests and 
differences between the two countries. It was a way of engaging the Russians 
that went far beyond the usual constraints of a state visit. 


But while this was what Mr. Clinton does best, the visit lacked agreement on 
policy. Mr. Putin has not spent a career in foreign intelligence for nothing. 
He knows that Mr. Clinton is, as the Americans say, a lame duck. As such, 
there's no way Democrat Clinton could get an agreement through a Republican 
Congress in the short time before the fall election. 


So the difficult negotiations over a limited U.S. anti-missile defense -- 
which flouts the 1972 anti-ballistic missile treaty with Moscow -- remain a 
disagreement. Mr. Clinton's suggestion of making such a system available to 
established nuclear powers remains, in effect, on the table for future 
discussion by any party. 


The overwhelming likelihood is that President Clinton has failed to complete 
a major arms control understanding with Russia because Russia did not have 
decisive leadership in place until late in Mr. Clinton's second term. 


Gov. George W. Bush's proposal for a more ambitious missile defense system 
than Mr. Clinton has in mind, combined with unilateral destruction of nuclear 
warheads greater than current U.S. law allows, puts weapons development and 
arms control squarely in the presidential campaign. 


The question will greet the next U.S. president the day after inauguration. 


As for Mr. Putin, after seeing Mr. Clinton off, he flew to Italy to seek 
support for his opposition to the U.S. plan. He found sympathetic ears, for 
U.S. allies worry that Washington's plan foments a weapons race without 
bringing security. 


While in Italy, Mr. Putin encouraged industrialists to invest in Russia and 
met Pope John Paul II, although the insecurities of Russia's Orthodox Church 
prevented him from inviting the pope to Moscow. There's little doubt Mr. 
Putin wants to bring Russia further into Europe and will drive any wedge 
between Washington and its European allies that he can. 


Mr. Putin is no lame duck. 


*******


#5
Kommersant
June 6, 2000
[translation from RIA Novosti for personal use only]
RUSSIAN-US RELATIONS: OUTLOOK UNCERTAIN
The Russian-US summit has ended the other day, what with 
Vladimir Putin and Bill Clinton attaching priority to the 
modification of the 1972 ABM Treaty. Most experts, who were 
interviewed by Commersant correspondents Mikhail KOZYREV and 
Suzanna FARIZOVA, think that a new arms race seems inevitable 
at this stage.

* * *

Andrei KOKOSHIN, member of the Russian Federation's State 
Duma; director, Institute of International Security Problems: 

Question: Has the situation around the ABM Treaty changed?
Answer: The joint statement dealing with the principles of 
strategic stability recognizes the ABM Treaty as the 
corner-stone of strategic stability. This is very important, 
indeed. The US delegation opposed this provision, which was, 
nonetheless, included in the statement. Consequently, the 
United States is not ready to unilaterally violate the ABM 
Treaty. On the other hand, though, the document reminds that, 
according to some of the ABM Treaty's provisions, this treaty 
can be revised, in case the strategic situation changes. This 
means that the treaty can be amended. But, most importantly, we 
have gained time, with both sides also averting an all-out 
conflict.

Q.: But the United States has apparently decided 
everything.
A.: What makes you think so? The US public is now becoming 
more critical of the national ABM-system concept.
Nonetheless, such criticism is a far cry from the 1980s when we 
and US researchers had fought against Reagan's SDI (Strategic 
Defense Initiative).
As I see it, the North Korean problem can be solved by 
establishing a special Russian-Chinese-US commission, which 
would actively negotiate with Pyongyang for the sake of scaling 
down its nuclear and missile programs. We've got to join hands, 
while facing the Koreans, all the more so as a report, which 
has been submitted to US Congress, states expressly that Korean 
missiles can penetrate the projected ABM system. Surely enough, 
such work, which is more difficult from the psychological point 
of view, would, nonetheless, cost much less than the ABM 
system's deployment.

Q.: What is your opinion of the proposed 
Russian-US-European ABM system?
A.: I'm not very happy about this idea. The US Government 
restricts hi-tech transfers. Five years ago, the United States, 
Germany, Great Britain, France and Italy had signed an 
agreement on developing an ABM system for the European theater 
of war. However, this agreement, which involves America's 
closest allies, is not being translated into life.

Q.: And what if the United States decides to abrogate the 
ABM Treaty? Will this entail yet another arms race?
A.: Well, such unpleasant consequences seem distinctly 
possible. As of today, Russia boasts Topol-M ICBM-s, which can 
penetrate ABM defenses. Therefore one can say that we don't 
perceive this issue as something really topical. However, China 
has already increased its warhead modernization and delivery 
means modernization appropriations. The naval component of 
China's nuclear forces, which has the greatest chances of 
avoiding missile interceptors, will also be expanded to a 
serious extent. Russia, too, would be forced to swell its 
defense budget.

* * * 

Dmitry ROGOZIN, chairman of the Russian State Duma's 
foreign affairs committee:

Question: What do you think about the results of the ABM 
Treaty's discussion?
Answer: Europe supports the Russian proposal, which is 
more productive than the rest. I've just negotiated with 
President Alexander Kwasniewski of Poland, returning from 
Warsaw only a short while ago. According to the Polish leader, 
the Russian initiative, which was voiced during the summit, has 
already been discussed in the course of his negotiations with 
German Chancellor Gerhard Schroeder.

Q.: But what if the United States decides to set up its 
own national ABM system?
A.: Russia has already finished ratifying all major 
nuclear disarmament agreements. However, such documents won't 
be enacted, unless the high contracting parties exchange their 
ratification instruments. Such ratification instruments can 
only be exchanged if the United States ratifies a protocol to 
the START-II treaty, a set of documents connected with the ABM 
Treaty, as well as the comprehensive test-ban treaty (CTBT).
Still one gets the impression that this won't happen.
Therefore Russia can freely study the possibility of 
streamlining its nuclear forces in line with specific domestic 
requirements. Should the United States withdraw from the ABM 
Treaty (this seems highly likely -- Ed.), in that case Russia 
could revise one particular provision of the START-II treaty 
that forbids Russia to deploy heavy-duty ground-based ICBM-s.
Russia can counterpose much cheaper technologies, which, 
nonetheless, call for additional appropriations. Still one 
should keep in mind that such appropriations would be much less 
impressive than the $60-billion sum being envisioned for the US 
national ABM system.

Q.: Will this entail a new arms race?
A.: This seems to be the main problem. However, we must 
stipulate a set of measures enabling us to breach even the most 
advanced ABM systems with 100-percent certainty. At the same 
time, we must not resort to yet another arms race; nor must we 
wreck the entire system of international agreements.

* * * 

Andrei KOZYREV, former Russian foreign minister, 
vice-president, ICN Pharmaceuticals: 

Question: What do you think about the summit's results?
Answer: Both sides retain freedom of action.

Q.: How feasible is the joint ABM concept?
A.: This is seen as the only correct and genuinely 
promising initiative, which can and must be translated into 
life. We perceive such an idea as the only reasonable way out 
of this situation.

Q.: And what if Russia and the United States prove unable 
to strike a deal?
A.: In that case, we would lose the only chance for 
attaining a compromise. Stubborn refusals seem to be the only 
alternative here. Consequently, we would reap the fruits of the 
current short-sighted foreign policy. Russia would once again 
assume a stance; however, this would benefit only those, who 
prefer such a stance, rather than the entire country.


******


#6
The Guardian (UK)
June 7, 2000
Sviatoslav Fyodorov 
Russian surgeon unable to translate medical success into politics
Isobel Montgomery 


Sviatoslav Fyodorov, who has died in a helicopter crash aged 72, was a rarity 
in the world of the new Russian business and political elite: a man who made 
his money through transparently legal means. 


A pioneering eye surgeon, who developed the technique of radial keratomy 
(making small incisions around the cornea) to cure short-sight, he was widely 
respected by Russians. His assembly-line operating theatres, and string of 
clinics, meant that there were few who did not know someone who had undergone 
the operation - and thrown away their spectacles for good. 


But he failed to translate this reputation into political success; when he 
stood against Boris Yeltsin in the 1996 presidential elections, his programme 
of "democratic capitalism" - or employee profit-sharing - failed to win the 
necessary 5% vote to avoid elimination after the first round of polling. 


Fyodorov's background is confused. He was born in the Ukraine, to a father he 
described as a Red Army commander who fell victim to Stalin's purges. But in 
one interview, he said his father, Nikolai, was a village blacksmith. His 
early career at the Rostov-on-Don flying academy ended after he had a leg 
amputated, following an accident, and he transferred to the medical 
institute. After post-graduate studies, he was appointed head of a regional 
eye institute. 


In 1960, he performed the first artificial lens implantation in the Soviet 
Union, and worked on the production of crystalline lenses. In 1967, he moved 
to Moscow as head of the artificial lens implantation laboratory, working on 
surgical treatments for glaucoma. 


By the early 1970s, Fyodorov had developed his surgical technique for 
correcting myopia, by making a series of small cuts into the cornea, which, 
when they heal, make the cornea contract and vision improve. His approach 
required less precision than similar operations performed in Japan in the 
1940s, and thus allowed surgeons to be more certain of the outcome. At first, 
the work was denounced as anti-physiological, but by 1980 it was recognised 
both in the Soviet Union and abroad, and Fyodorov was appointed director of 
the Moscow institute of eye micro-surgery. 


Unusually, he was allowed to keep the majority of his hard-currency earnings, 
using the money to buy hi-tech equipment from West Germany and develop a 
conveyor-belt technique for patients, who lay on operating tables which 
rotated from surgeon to surgeon - allowing the operation to be performed in 
little more than 15 minutes. 


By 1986, growing economic liberalism under Gorbachev made it possible for 
Fyodorov to open his own string of independent clinics and fit out a 
passenger ship as a mobile operating theatre. At first he was seen as a 
figurehead for what could be possible under perestroika, but two years later 
became a focus of attacks from hardline communists. 


Strange patients began turning up at his home, two of his surgeons were 
arrested on trumped-up bribery charges, and eventually a prominent Soviet 
politician demanded that he hand over 80% of his foreign currency earnings to 
the state. Fyodorov fought back, telling a pro-reform newspaper: "The fight 
for power is now the fight for property. If people get property, they will 
get power. If not, they will forever remain hired hands." 


In 1989, he was elected to the Congress of People's Deputies and, as an 
advocate of privatisation, was offered the post of prime minister by Yeltsin 
in 1991, which he declined. He left the pro-Yeltsin Democratic party of 
Russia and joined the Party of Economic Freedom. His ideas of economic 
liberalisation trod a third way between the communists and Yeltsin's 
full-scale adoption of free-market capitalism. 


What Fyodorov termed "democratic capitalism" or "popular socialism" was, he 
said, inspired by Deng Xiaoping in China and Ross Perot in the United States. 
In 1995, he formed the Party of Workers' Self Rule and was elected to the 
State Duma, remaining a deputy until his death. 


Fyodorov's failure in the 1996 presidential election was indicative of the 
way that liberal economic ideas have failed to capture Russian voters. He 
also attracted criticism for an incautious remark about Hitler having done 
much to restore German pride. He did, however, remain in the public arena, 
giving his employees a share of the profits from his clinics, which expanded 
overseas, and branching out as a sharp and able businessman in other areas. 


His last public statement reflected his aims as a surgeon and a politician. 
"We have one goal. To make it so that people live well, so that they see well 
. . . we are proving the potential of the Russian people, the potential of 
its talents, the potential of self-organisation, the potential of enterprises 
being self-sufficient, the potential of regions being self-sufficient." 


Fyodorov married three times, and is survived by his wife and four daughters. 


Sviatoslav Fyodorov, ophthalmologist, surgeon and politician, born August 8 
1927; died June 2 2000 
******


#7
New Orthodox-Catholic talks this year -report

MOSCOW, June 7 (Reuters) - Talks between the Russian Orthodox and Roman 
Catholic Churches will resume in the autumn, Interfax news agency said on 
Wednesday, possibly paving the way for Pope John Paul to make an historic 
trip to Russia. 


Interfax quoted a source at the Patriarch's office as saying no venue had yet 
been set for the talks. The last meeting between the churches took place in 
1998. 


The Pope is eager to visit Russia, which would make him the first Catholic 
Pontiff to do so since the Christian world split into Eastern and Western 
branches in the Great Schism of 1054. 


Russian President Vladimir Putin said in Rome on Tuesday that the pope could 
visit Russia ``one second'' after the two churches had resolved their 
differences. 


The differences include Orthodox anger at what it sees as Catholic attempts 
to convert its believers and take over property in Ukraine, where adherants 
of the Uniate Church practise an Eastern rite but pay allegiance to Rome. 


Interfax said meetings planned for March 1999 were cancelled because of NATO 
plans to launch air strikes on Orthodox state Yugoslavia, which Russia and 
its church strongly opposed. 


Putin, who met the Pope in Rome this week, failed to renew invitations to 
visit offered by his predecessors Boris Yeltsin and Mikhail Gorbachev. The 
Vatican sees the earlier invitations as still formally valid, but Putin's 
failure to renew them were seen by the Italian press as a slight. 


******


#8
Mocow Times
June 7, 2000 
Chubais Tries to Calm Investors 
By Igor Semenenko
Staff Writer


In an effort to pacify enraged minority shareholders, Anatoly Chubais, 
chairman of national power grid Unified Energy Systems, on Tuesday promised 
to address the concerns of opponents of his plan to break up the national 
monopoly. 


"We hope all minority shareholders will end up supporting the plan," Chubais 
said at a shareholders meeting near Moscow. "We know that to win their 
support we must go beyond mere formal compliance with the law." 


However, in a sign investors were not won over, UES led the stock market down 
Tuesday. UES fell 5.32 percent to 13.87 cents a share, down 36 percent since 
March 24, when the stock peaked at 21.1 cents. The Russian Trading System 
Index fell 3.06 percent Tuesday to 194.80. 


In addition, Federal Securities Commission head Igor Kostikov has called for 
significant changes to Chubais' plan in a letter to Prime Minister Mikhail 
Kasyanov, saying asset sales planned by UES would be at steep discounts to 
values of global competitors, news reports said. 


"It is clear that during a sale at such prices, the interests of 
shareholders, including the main shareholder, the government, would suffer," 
Kostikov said. 


UES intends to issue a second draft of its plan to divide its enterprises 
into generation and transmission businesses by June 30 and will tentatively 
manage additional share emissions at some regional subsidiaries in spring 
2001, company officials said. 


"Several of the drafts in circulation were released for discussion only," 
Chubais said. 


But he refused to release to journalists copies of any of the new drafts or 
the chapter dealing with minority shareholder rights, one of the most crucial 
amendments to the plan initially issued by the UES board in April. 


Company managers do not intend to bring up the restructuring for discussion 
at a shareholders meeting because UES can be broken up without the formal 
approval of shareholders. 


Under UES's charter, shareholders' approval is required only when assets 
exceeding 50 percent of the value of company shares are up for sale. 


Ten regional companies, five of which could be spun off to comply with terms 
of a World Bank Structural Adjustment Loan 3 agreement, are together worth 
about 5 percent of UES's assets. 


So, theoretically UES managers can dispose of the holding's stakes in 
subsidiary companies against shareholders' wishes, who rely on Chubais' team 
to ensure they get a fair deal. 


UES wants to raise capital to inject into regional companies by issuing more 
shares, effectively diluting the stakes owned by the government and by 
minority shareholders. 


The plan could be carried out at several companies as early as spring 2001 
after power tariffs are raised and local capital markets recover, but massive 
investments should not be expected within three to four years, Chubais said. 


"In the end, our idea is to attract private investors to the power sector." 


Despite Chubais' soothing rhetoric, minority shareholders remain divided on 
the restructuring plan. 


"Chubais stubbornly sticks to a plan that destroys the value of the 
shareholders," said Bill Browder, manager of the $450 million Hermitage Fund. 
"Liquidating the company to local investors is not a real restructuring." 


The plan is supported by investors who see no alternative to Chubais in 
restructuring the power sector. 


"I had some concerns over the original draft, but investors concerns have 
been taken very seriously," said Derek Weaving, senior utilities analyst with 
Deutsche Bank, in a telephone interview from London. "I see no alternative to 
Chubais' team." 


Vladimir Bryl, managing director with ABN Amro Equities Russia, also said he 
fully supports the plan. 


However, some companies that Chubais on Tuesday named as being among his 
supporters said his optimism was overstated. 


"Our buy recommendation does not imply we support the restructuring 
proposal," said Mikhail Seleznyov, analyst with United Financial Group 
brokerage. 


He added that UES's managers had misreported developments inside the company. 


Four members of UES's board opposed the original plan drafted by Chubais, but 
voted for a general statement that supported restructuring based on market 
principles and which was not an equivalent to the initial draft, Seleznyov 
said. 


However, Chubais insists only one board member voted against the 
restructuring proposal, and that the original proposal had been approved. 



******


#9
BBC MONITORING
RUSSIA'S LEBED DISCUSSES CHECHNYA, AFGHANISTAN AND DOMESTIC AFFAIRS
Source: NTV International, Moscow in Russian 1535 gmt 5 Jun 00 


Governor of Krasnoyarsk Territory Aleksandr Lebed gave a rare interview to
Russian NTV International Television's "Hero of the Day" programme on 5th
June to commemorate his two years in office. Lebed appeared reluctant to be
drawn into comment on the current Chechen campaign, stressing his
commitment to his work as governor, but he did say he believed it possible
to find people in Chechnya with whom to hold talks on a settlement. He
condemned as "stupid" any notion of attacking Afghanistan, suggesting that
the Russians and the previous conflict there were to blame for the
deterioration in relations with a country that was a "good neighbour" for
many years. On domestic policies, he expressed concern at the number of
generals amongst President Putin's federal district representatives and
doubt that dividing the country into seven would resolve the problem of how
to govern it. He accepted there was a need for reform of the Federation
Council, the upper house of the Russian parliament, but opposed additional
powers to allow governors to dismiss mayors. He advocated finding a forum
in which the governors' collective political experience could be put to
good use. The following is an excerpt from the interview. Subheadings have
been inserted editorially. 


[Presenter] Hello. This is "Hero of the Day". Over the last few months I
would have liked my guest today to have appeared on more than one occasion
- there were plenty of good reasons - but he always stubbornly refused.
It's only today [5th June] that it's worked out when there is another good
reason - it's two years since he took office as governor of Krasnoyarsk
Territory and in the studio today I have with me Aleksandr Ivanovich Lebed. 


Hello, Aleksandr Ivanovich. 


[Lebed] Good evening. 


Brief comment from "busy" Lebed on Clinton's visit, Yugoslavia 


[Q] Right, well, first of all I'd like to ask why you've taken such a vow
of silence? 


[A] I've been working. I had undertaken to revive the Territory and that's
what I've been busy with. 


[Q] And particularly busy this past year, evidently, when you haven't given
any interviews. 


[A] Yes. It was a matter of principle. 


[Q] Okay. Congratulations on your two years in office. But let's start with
what's topical, today's events and [US President] Clinton's visit. He spoke
in the State Duma and many of your colleagues [in the Federation Council
upper house] were there. You weren't. Why not? 


[A] No-one asked me. I basically knew what Mr Clinton would say and that
was pretty much confirmed. There was one brilliant thing I did like about
this visit - that Mr Clinton went off and gave an interview to Ekho Moskvy.
That I did like. 


[Q] [laughing] Right. What do you think of [President] Vladimir Putin's
proposal to set up a joint defence system with the Americans within the
framework of the ABM Treaty? 


[A] It's being made as a response. It's a bit of a surprise but it's a
logical proposal. 


[Q] In other words, you think it's worth thinking about and doing something
towards it. 


[A] It's worth thinking about. 


[Q] A couple of years ago, to pacify those who were talking about NATO's
eastward expansion, you said word for word the following. "The well-fed and
well-off have never attacked the lean and hungry - it's always been the
other way round. That's the way the world's made." Since then there's been
the bombing of Yugoslavia. Has your view of how the world's made changed
since then? 


[A] Where's the contradiction? 


[Q] Well, you can't say the well-fed and well-off haven't meddled in the
affairs of the lean and not-so-well-off. 


[A] Well, to start with Yugoslavia's never been hungry and secondly it was
a matter of principle for the well-fed and well-off - a question of their
reputation. They sorted it out as best they could. As for what came of it
and may still come of it - 


Lebed believes Russia should hold talks to end the war in Chechnya 


[Q] Aleksandr Ivanovich, fine. On to our own internal affairs. I don't
think you'll be able to get away with silence or just a brief answer on
that. Last autumn, after the events in Dagestan, when the second Chechen
campaign really began, I very much wanted to ask you along and hear your
view of what was happening. At that time it was only lazy politicians who
weren't talking about the damage done by the Khasavyurt Accords, about your
role and the need for a new quick campaign in Chechnya. Why didn't you say
anything and what do you think about what is happening in Chechnya? 


[A] Only people who've done something wrong, seek to justify themselves. I
don't think I've done anything wrong. I'm doing my Christian duty. I have a
mission working in the North Caucasus. There are 153 people, real, live
people, whom no-one wanted anything to do with, who have been freed. I am
entirely the governor of Krasnoyarsk Territory and I'm far removed from the
process. There are people who are in the thick of it, this issue, and as a
matter of principle I believe it is unacceptable to offer recommendations
or advice from the sidelines. 


[Q] What about your experience of learning from mistakes? 


[A] What? 


[Q] Your experience could be required too. 


[A] Ah. If it ever is required, I'll share it with them but in confidence. 


[Q] Right. As for the topic of talks, everyone thinks there is no-one in
Chechnya with whom talks could be held. In your day, you held talks with
[Chechen President Aslan] Maskhadov. You found people to talk to and
reached agreements. If the question of who to talk to came up now would you
be able to find someone and do you think it's necessary to do so? 


[A] I would. 


[Q] Do you think it's necessary? 


[A]Of course, it is. And it's basically very simple: all wars, even if they
last a hundred years, come to an end the same way - in talks and peace.
There are no exceptions. Simply, the longer the war, the more are left
dead, orphaned and crippled. 


There are people in Chechnya "even now" with whom talks could be held 


[Q] And do you believe that even now people could be found in Chechnya with
whom talks could be held? 


[A] Yes. Don't ask for their names though - I'm the governor of Krasnoyarsk
Territory. 


[Q] Right, but do you know of people with whom - do you have those names,
without actually naming them? 


[A] Yes. 


Idea of strikes against terrorist camps in Afghanistan condemned as "stupid" 


[Q] And what do you think of the recently expressed idea of strikes against
terrorist bases in Afghanistan? 


[A] It was said by someone who's not very bright. It's stupid. 


[Q] Why? Reasons and explanations were given. 


[A] What reasons and explanations can there be for declaring war on a
neighbouring state we invaded 21 years ago. We fought there for 10 years,
killed one and a half million Afghans, ruined their country and gave rise
to the Taleban movement. It's been 11 years and the war's still going on.
We're reaping what we sowed. The evil's coming home to roost. Why are we
surprised the Taleban don't like us? Afghanistan was a good neighbour to
us. In 1918 it was the first to recognize Soviet Russia. The border was
peaceful for 60 years. Then we took them our system, our party committees. 


Plans for reform of federal system must keep within constitution 


[Q] Aleksandr Ivanovich, fine. Let's change the topic and move to something
that affects you more closely - our federal system and attempts to reform
it. What do you think of this division into seven federal districts and the
appointment of presidential representatives to these districts - Leonid
Drachevskiy is your representative - most of them, it's true, are generals.
Will it do any good, in your view? 


[A] You know, State Duma deputy Mr [Boris] Berezovskiy recently spoke
loudly and publicly about this. In my view it would be very rash to make
this too personal an issue, very rash. Mr Berezovskiy is a mathematician
but not a legal expert. Judging from the way the document is written, it
has been drawn up by highly professional people. Would you agree? 


[Q] Yes. 


[A] At present there are more questions than answers and Berezovskiy said
today what the whole country will be saying in a month's time if the
presidential administration does not provide clear, convincing and
intelligible answers to these, I stress, quite legitimate questions. 


[Q] About the issue as a whole, the entire reform, the draft laws that have
been submitted by the president, the lot? 


[A] I was trying to save us time but I can go into details and give two
examples. If we want to live in a law-governed state, we have to have a
constitutional law which clearly sets out how to begin impeachment
proceedings against the president or a governor or a deputy - how to
dissolve the Duma - get rid of a mayor, etc. It's a one-way channel: we
elect someone then sit and wait for four years to see how he gets on. If he
doesn't cope, so what? We'll hang on to the next elections. But it all
needs to be written down that it can only be done through impeachment.
There's no other way because unless it's enshrined in law it can easily be
turned into a mechanism for political repression. 


The second topic and I know, of course, that some people see it as a carrot
and others as a blessing, is giving the governors the chance to remove the
mayors. I am categorically opposed to this. Firstly, we have a
constitution. There may be people who don't like it but we do have one.
Let's write a more sensible one but for the moment we've got the one we
adopted seven years ago. This says that the bodies of local self-government
are not part of the system of state power. It is possible to put chalk and
cheese together but what would come of it? We'd get endless investigations,
one person planning to remove someone else. About 80 per cent of our
governors, I should think, are in conflict with the Moscow mayor's office
and the regional mayors. I'm the exception. I have no conflicts. So,
everyone will be removing everyone else from office. It'll be a complete
waste of energy if we create such a nonsense throughout the country.
Everyone will be in fits. 


The issue lies, therefore, in having clear answers to genuine and
legitimate questions. 


Creating seven federal districts will not make Russia easier to govern 


Where's the logic of having seven districts? How will Mr Drachevskiy govern
the Siberian [Federal] District? Krasnoyarsk Territory covers approximately
14 per cent of the country, it's around five times the size of France and,
the Kremlin, putting it crudely, has added another 15 Frances. Where's the
infrastructure? Where are the communications, the transport, how is it to
be governed? We know more or less how to run the regions but running a
country that was an empire for a thousand years which suddenly, on the spur
of the moment, on 22nd August 1991, became a democracy, no-one knows how to
govern that. And even if we have divided it into seven parts, it's still
not clear how these vast territories are to be governed. Let's act it out,
develop theories about it. Let's see where we're going and what we want,
particularly given that five of the seven are generals and the districts
mark an obvious move towards strengthening the power-wielding structures.
Is that what we need? 


[Q] Evidently, it is. 


[A] Pardon? 


[Q] Evidently, in the understanding of those who are doing this, it is. 


[A] Apparently. But I should like to make another comment here. I am very
well acquainted with the problem from both sides. I was in the military for
26 years. I left five years ago and found myself in another world. I very
quickly realized that that world had no need of all the knowledge and
skills I'd acquired in the past and I began to get rid of them one by one.
I haven't got rid of everything but, thank God, I had that transitional
period. Now they've taken people straight from the trenches and thrown them
into civilian government. It's a huge step. It's not important whether
they've moved up or down. What's important is a certain mindset. Before
you've taken off your helmet or set aside your still-warm machine-gun,
you're asked to be in charge. This evokes a degree of apprehension.
Personally, I'm thrilled that the Siberian Federal District is to be run by
a diplomat. 


Reform of the Federation Council must preserve links between federal and
regional legislation 


[Q] Aleksandr Ivanovich, what about the new procedure for forming the
Federation Council? What's your impression of this? 


[A] Despite it's numerical superiority and its proximity to the party of
power, the State Duma is not particularly bothered about the Federation
Council and is very well aware that the overall political weight of the
governors assembled there is greater than the political weight of the Duma.
It really is an upper house. And that's the hierarchy we have. If we now
take the governors out of it - well, actually, I'd agree to the governors
going because undoubtedly it's ridiculous when [changes tack] - Who am I at
home in Krasnoyarsk Territory? I am the executive authority but when I
cross the threshold of the Federation Council I become a legislator and
adopt those laws I have to implement. Of course, this situation has to be
defused. And the chairmen of the legislative assemblies simply can't be
taken out because that would undermine the hierarchy of links between
federal and regional legislation. In other words, we have to think how to
keep them there. I have no objection to going myself. 


Secondly, how can we apply the total political weight that undoubtedly
exists? Can it not be a back-up for the president? A political reserve, for
example. 


[Q] A state council has been suggested. 


Federation Council should not duplicate the State Duma 


[A] Whether it's a state council or a presidential council, it has to be
given some kind of shape. It's not a question of saving one's own skin as
some people are trying to say: "You're afraid." Personally, I'm not afraid
of anything, not a thing. I got over being frightened a long time ago. I
got fed up of it. It would no doubt be a great shame if under the scheme
that has been suggested, we were to endorse a legislative assembly and send
in governors' representatives. Someone would send their nephew, someone
would send their father-in-law, their friends and mates. We'd send people
in and then the State Duma would look at this assembly of 178 people and
say, "Who on earth are you?" 


[Q] Somebody's relatives. 


[A] "Why are you the upper house of parliament? On what grounds?" And
there'd be a battle between equals. The upper house would no longer exist. 


[Q] In other words, we should now be looking to see how this could best be
done. 


[A] Absolutely. And that's why [changes tack] No-one's objecting. There
have been no serious outright objections. Yes, there are masses of every
possible stupid feature and absurdity in the existing hierarchy of power.
No-one's disputing that and these should be done away with but the question
is how to do it. 


Lebed was never asked to head the new Siberian Federal District 


[Q] The question of questions. Aleksandr Ivanovich, something else, very
briefly. Were you asked to head the Siberian Federal District? There's been
a lot of talk about it. 


[A] No. Never. 


*******

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