June 11, 2000    
This Date's Issues: 4361 


Johnson's Russia List
#4361
11 June 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Newsweek: Bill Powell and Steve LeVine, 'Family' Funny Money. 
Exclusive: new questions about the Yeltsin finances.
2. Reuters: Putin warns against eastward expansion by NATO.
3. The Straits Times (Singapore): John Helmer, PUTIN EXPOSES CLINTON'S SECRET.
4. The Electric Telegraph (UK): Guy Chazan, Russian caviar threatened by Caspian oil find.
5. The Russia Journal: Otto Latis, Lessons for the government.
(re German Gref’s political will)
6. The Guardian (UK): Amelia Gentleman, Putin thirsts after the vodka empire. Moscow acts to end bootleggers' windfall.
7. Parlamentskaya gazeta: Interview with Yevgenii PRIMAKOV,
chairman of the Fatherland-All Russia (OVR) Duma faction.
8. IntellectualCapital.com: Nina Khrushcheva, A Telling Memoir. 
(review of First Person: An Astonishingly Frank Self-Portrait by 
Russia's President Vladimir Putin.]


*******


#1
Newsweek
June 19, 2000
[for personal use only]
RUSSIA 
'Family' Funny Money 
Exclusive: new questions about the Yeltsin finances 
By Bill Powell and Steve LeVine


Bill Clinton, on his recent visit to Moscow, paid former Russian president
Boris Yeltsin a private visit that carried with it a very public message:
though Yeltsin may have left political life, the man who brought democracy
to Russia is hardly forgotten. But as Vladimir Putin, Yeltsin's successor,
is about to find out in a painful way, there are other, less heroic ways in
which Yeltsin may be remembered. In his wake he left a tangle of alleged
corruption charges. They include allegations of malfeasance at the highest
levels of his Kremlin, and within his own family.


Those charges are not going away. NEWSWEEK has learned that law-enforcement
authorities in Switzerland will soon file formal complaints—what amount to
indictments in the Swiss legal system—implicating up to 14 people in the
so-called Mabetex affair. A Lugano-based construction company, Mabetex
allegedly paid kickbacks to senior Russian officials in return for
lucrative contracts to refurbish buildings in Moscow owned by the Kremlin.
According to two sources with knowledge of the investigation, among those
who will be charged with receiving bribes are Yeltsin's daughters: Tatyana
Dyachenko, his closest political adviser during his years in power, and
Yelena Okulova, his elder daughter. (Yelena's husband, businessman Valery
Okulov, had his $2.7 million Bank of New York account in the Cayman Islands
frozen last autumn, but he has not been charged with any wrongdoing.) The
Swiss authorities have already filed formal complaints against Pavel
Borodin, the former chief of the Kremlin property-management division and
the man who helped bring Vladimir Putin to Moscow from St. Petersburg. And
two weeks ago, authorities indicted Behgjet Pacolli, Mabetex's chief
executive. All of the people involved have adamantly denied any wrongdoing.


The formal complaint will revolve around allegations—well-known by now—that
Mabetex set up credit-card accounts for Dyachenko and her sister, Okulova,
in 1993, around the time the Kremlin contracts were awarded to the company.
Pacolli allegedly paid the credit-card bills. A knowledgeable source in
Moscow says the accounts were opened for the Yeltsin daughters "without
their consent, but they used them and spent quite a lot of money."


The same source says that in the context of Yeltsin-era corruption, the
amounts involved were not staggering—hundreds of thousands of dollars, not
millions. "Those were the days of tennis playing, lawlessness and
hyperinflation," this official says. "Everyone around was getting rich. You
also have to remember that [the Yeltsins] were people raised in a world of
kolbasa and two-room apartments. I can't pass judgment on them."


As long as they refrain from skiing or shopping in Switzerland, the
Russians who allegedly benefited financially from the scandal will be at
little risk legally. Still, Dyachenko has been deeply wounded by the
publicity surrounding the Mabetex affair. A source who knows her says the
possibility that charges might be brought one day has been discussed at the
highest levels in the Kremlin for at least a year. Even so, she and her
father will be devastated when the day arrives, sources say.


The complaints—when, precisely, they will come is not clear—will also
present Putin with a tricky problem. Putin worked for Borodin when he first
arrived in the Kremlin from St. Petersburg in 1996. The new president is
also thought to be loyal to the Yeltsins, who brought him up through the
ranks in part because of that loyalty. "My guess is that Putin won't
react," says one source who knows the president. "He'll try to stay out of
it, but he won't try to defend Tatyana." Loyalty, after all, may have its
limits.


With Owen Matthews in Moscow


*******


#2
Putin warns against eastward expansion by NATO
By Emma Thomasson

BERLIN, June 11 (Reuters) - Russian President Vladimir Putin warned in an 
interview with a German newspaper published on Sunday that the admission of 
the three Baltic states into NATO could threaten European security. 


``The eastward expansion of the organisation would not be favourable for 
European stability,'' Putin told the Welt am Sonntag newspaper in an 
interview. 


``The expansion of NATO behind the former Soviet borders would create a 
completely new situation for Russia and Europe. It would have extremely 
serious consequences for the whole security system of the continent.'' 


Russia has for years expressed concern about the expansion of the NATO 
alliance into the former Warsaw Pact allies in eastern Europe, especially 
those sharing a border with Russia. 


Putin said any eastward expansion by NATO would weaken the Organisation for 
Economic Cooperation and Development and which he said was supposed to strike 
a balance between the interests of all European states, including Russia. 


The former Soviet republics of Lithuania, Estonia and Latvia want to joint 
NATO when it considers new members in 2002. 


The three Baltic states have made NATO membership a key foreign policy goal 
since they regained independence in 1991, saying membership is the best way 
to guarantee they remain out of Russia's grasp. 


NATO expanded eastward in 1998 to include Poland, Hungary and the Czech 
Republic but shunned the Baltics. 


REPEATS WARNING OF U.S. MISSILE SHIELD PLAN 


The interview also contained comments already released by the paper on 
Saturday in which Putin repeated warnings that a U.S. plan for a national 
anti-missile defence shield could threaten disarmament pacts, urging instead 
a common system. 


Putin called the U.S. plan a bad strategic mistake which could ``undermine 
the strategic stability of the nuclear powers'' and threaten the foundation 
of existing disarmament treaties. 


Putin, who is due in Spain on Tuesday before flying to Germany on Wednesday 
for a three-day visit, said he would give more details of his plans for the 
development of a common anti-missile system during his trip. 


The United States wants to deploy a national anti-missile defence shield to 
intercept incoming rogue rockets. Putin, who opposes such a plan would rather 
place defences close to risky states to shoot down missiles as they are 
launched. 


Putin also stressed the importance of ties with Germany ahead of his first 
visit here as president next week, although between 1984 and 1990 he served 
in then-communist East Germany as a KGB intelligence officer, based in 
Dresden. 


``In many ways the shape of Europe in the 21st century will depend on 
cooperation between our two countries,'' he said. 


``Politicians in Moscow and Berlin are obliged to take history into 
consideration and promote the positive traditions in the Russian-German 
relationship,'' he said. 


The interview also included comments released on Friday in which Putin said 
foreign investors should soon begin to feel improvements in his country's 
business climate. 


``It seems that the most difficult phase of the economic crisis is really 
behind us,'' he said. 


``Now it is extremely important to maintain and strengthen the positive trend 
and support noticible economic growth.'' 


*******


#3
From: "John Helmer" <helmer@glasnet.ru>
Subject: PUTIN EXPOSES CLINTON'S SECRET
Date: Sat, 10 Jun 2000 


Coming this week in The Straits Times (Singapore)
PUTIN EXPOSES CLINTON'S SECRET
>From John Helmer in Moscow


If Russia's President Vladimir Putin is as politically weak and personally 
insecure as many in Russian politics believe him to be, what happened between 
him and US President Bill Clinton, in Moscow a week ago, to make Clinton so 
nervous, and so afraid?


The answer to that will become clearer to the world, as Putin visits several 
West European and East Asian states in the coming six weeks. By the time he 
returns from his next meeting with Clinton -- scheduled at the conference of 
the G-8 industrial nations in Japan in late July, the secret that unnerved 
Clinton will be out.


Television cameras at the Moscow summit recorded the public evidence, and 
the body language. Putin spoke freshly, fluently, without notes, his hands and
shoulders relaxed and open. Clinton, weary-looking and defensive, his arms 
stuck to his sides, was obliged to read from prepared scripts. 


Putin did all the talking the Russian side offered to sum up the results of 
the two-day session. Clinton sent his Deputy Secretary of State Strobe 
Talbott to give a protracted lecture, arguing the one point which Clinton 
had visibly failed to make -- that the US and Russia had made progress on the 
central issue in the presidents' debate, nuclear arms control.


There was one moment when Clinton recovered his verve and self-confidence.
That was when he went to meet the now retired ex-president Boris Yelsin.
Clinton smiled and joked warmly as he hugged the bloated, addled Yeltsin, who 
could manage almost nothing for words. According to Clinton, "it was like old 
times."


Indeed, it was. And for the first time in 38 years -- since John Kennedy
faced 
Nikita Khrushchev; and perhaps not even then -- an American president was 
forced to deal with a Russian counterpart, whose brains were intact; 
whose ministers and advisors were not receiving foreign payoffs to betray 
their side; and whose next move was unpredictable.


"We are against having a cure, which is worse than the disease," Putin said 
publicly of the proposals Clinton had argued over ten hours for deploying a 
"national missile defence." 


According to the text of their joint statement, Clinton insisted that 
proliferation of nuclear missile threats "represents a potentially 
significant change in the strategic situation". In reply, Putin reacted 
with pithy commonsense, most of it in private.


Regarding the American allegation that North Korea will soon be capable of 
attacking the US, Putin said the Russian intelligence assessment is that
this will not be any time soon. He then told Clinton he intended to visit 
North Korea shortly to find a negotiated way out of the risk, which, as 
Russians have been saying for years, is far closer and more threatening to 
Russian territory than to American. The visit, Clinton had to concede, is 
something he cannot do.


Next, Putin asked Clinton why, if a handful of North Korean missiles
become a threat to both Moscow and Washington, a joint deployment of Russian 
and US interceptors could not neutralize the problem -- at a fraction of the 
cost, and without any of the strategic risk the American proposals
would inflict?


What the Putin plan suggests is joint cooperation with the Americans, Asians, 
and Europeans, because it would involve deployment of short-range missile 
defences on many land borders, as well as similar systems at sea. Both types 
of defences are of the type that strike at rockets shortly after takeoff, 
during the boost phase. If the Americans truly believe what they say about 
North Korea, Putin asked, why not deploy American interceptors in the Sea of 
Japan, in combination with Russian interceptors near Vladivostok?


The problem for Clinton was that he dared not agree, for fear of doing what
no 
American president has risked since Franklin Roosevelt -- military
cooperation 
with the Kremlin against a common enemy. The immediate risk for Clinton was 
embarrassing his Vice President Albert Gore, and damaging his chances to 
defeat the missile-hawkish George Bush in the November presidential 
election.


To rub in that vulnerability, Putin told the press in front of Clinton 
something no Russian leader has dared say for decades. "We can do business 
with whomever wins the American presidential election", Putin said, reminding 
Americans they are the only ones who can vote to stop the stupidity
of abrogating the Anti-Ballistic Missile (ABM) Treaty, and starting a new race
to deploy missiles in Russia, the US, China, France, and Britain.
Clinton was visibly discomfited at the lack of support for Gore, however much 
the Kremlin would privately prefer him over Bush.


In private, Clinton had deeper reason for embarrassment. For that was when 
Putin told him Russia is far more threatened by "rogue state" nuclear 
attack than the US. Putin noted that, in addition to North Korea, China, 
India, Pakistan, Iran, and Israel -- not to mention France and Britain -- 
are all capable of nuclear attack; and geographically very much closer to 
Russia. 


Vladimir Yakovlev, the general in command of Russian rocket forces, 
said after the summit the threats facing Russia from its "southern 
underbelly in the Near and Middle East" are a higher security risk than 
anything the Americans are currently complaining of.


Again Putin asked Clinton why he would not support a combination of land and 
sea-based missile interceptors to protect the peace from those countries. 
And again, Clinton could not respond. Imagine the sensation in the 
US, if one of Clinton's officials leaked to the Israelis, as they are prone
to 
do, that the two presidents considered joint cooperation in mitigating 
Israel's missile threat. That would be the end of the Democrats' residence 
in the White House.


And finally, as Clinton retreated further into slogans, Putin asked him 
quietly what possible guarantee could Russia accept from Washington that the 
new American missile shield would not be expanded to upset the nuclear 
deterrent balance with Russia? Why, Putin asked just as his generals have 
been repeating, are the Americans deploying missile interception systems in 
Norway and elsewhere, capable of boost-phase attacks on Russian rockets?


The secret of the Moscow summit, which Clinton tried to hide, was that in the 
small man in the Kremlin, the American has met his match. What Asian and 
European leaders will have to ask themselves shortly is which of the two 
talks less threat, more commonsense.


******


#4
The Electric Telegraph (UK)
11 June 2000
[for personal use only]
Russian caviar threatened by Caspian oil find
By Guy Chazan in Astrakhan


RUSSIAN caviar supplies, already sharply reduced by poaching, are under 
threat of eradication by plans to develop large oilfields in the Caspian Sea.
Scientists say sturgeon stocks face extinction after the recent discovery by 
LUKoil, the main Russian oil company, of 2.2 billion barrels of hydrocarbons 
at Severny in the northern Caspian - the first big oil strike in the sea's 
Russian sector. "Sturgeon could disappear from the Caspian within 15 years if 
offshore oil drilling is allowed," said Anatoly Vlasenko, the deputy head of 
the Caspian Fishing Institute in Astrakhan. "It will have a catastrophic 
effect on the environment."


In an ominous sign of what may follow, thousands of dead seals have been 
washed ashore in the past two months, killed by a mysterious ailment that 
many attribute to pollution from oil drilling. Aerial photographs on Russian 
television showed floating islands of corpses. About 20,000 seals have died 
since the first bodies appeared in April, according to Akhmed Mungiyev, the 
director of the Centre of State Ecological Control in Makhachkala, a Russian 
port on the Caspian. Fishermen have been collecting the bodies in tipper 
trucks and burning them. 


"LUKoil is planning to extract oil from the sturgeons' traditional feeding 
grounds in the north Caspian," said Mr Vlasenko. "The fish feed on the bottom 
of the sea, which is exactly where all the toxic waste from oil drilling ends 
up." The Caspian is already filthy. A study showed that the sea - the world's 
biggest inland body of water - has unacceptably high levels of phenol and 
heavy metals. Only half the sturgeon examined in the study were found to be 
entirely healthy. The region's sturgeon stocks provide 90 per cent of the 
world's caviar.


LUKoil insists its Severny operation will be ecologically sound as waste will 
be collected on the drilling platform and transported in special containers 
to onshore reprocessing facilities. However, despite the company's 
assurances, scientists believe that Russian industry's poor environmental 
record and weak regulatory enforcement means that the sturgeons' feeding 
grounds will be destroyed.


Quintessentially Russian, the small jars of salted sturgeon roe have long 
been coveted by epicureans. However, soaring poaching since the break-up of 
the Soviet Union has left the Russian caviar industry in crisis. Russia 
caught only 630 tons of sturgeon in the Caspian last year, compared with 
15,000 tons in 1985. The scale of the crisis is clear in the Volga Delta, 
home to the once great sturgeon fisheries. In the village of Trudfront, a 
group of old fishermen sat by the riverbank, next to the rusting hull of a 
boat and a pile of frayed and rotting nets. The fishing season is over - two 
weeks ahead of schedule.


In the 26 years he has worked on the Volga, Sharim Jaralgasev has never seen 
anything like it. "There are no fish," he said. "It is the end of caviar, the 
end of sturgeon. The government cares much more about oil and gas than it 
does about fish. All the fish and seals are dying already and so far they've 
just been building exploratory wells."


Specialists say caviar could become as rare as it was in medieval times, when 
only kings and popes were allowed to eat "the royal fish". Between 1993 and 
1998, exports to Japan, Europe and the United States fell by a third to 257 
tons. Caviar House, an importer based in Geneva, says prices have risen by 70 
per cent over the past two years and it now buys most of its caviar from 
Iran, the other main producer. At Harrods, a pound of Beluga caviar costs 
£1,000.


Locals say that illegal fishing is also helping to drive the sturgeon to 
extinction. With the latest navigation equipment, Japanese motorboats and 
automatic weapons, the poachers can outstrip police. Local media say the 
trade is in the hands of organised criminal gangs that often have ties to 
corrupt politicians, especially in regions such as Dagestan. Scientists 
estimate that there were 110 million sturgeon in the Caspian in 1983, but the 
figure fell to 45 million last year. "We should extract oil and gas on land 
and leave the Caspian for the fish," said Mr Vlasenko. "The Caspian has 
always fed Russia and will continue to do so, but only if it's left alone."


******


#5
The Russia Journal
June 12-18, 2000
Lessons for the government
By Otto Latsis
Columnist Otto Latsis looks at German Gref’s “political will.”
When German Gref, the new hero of Russian politics, speaks publicly about
the government economic program drawn up under his direction, he repeats
like a mantra the same two words ­ "political will." 


These two words sum up a problem that has concerned Russians ever since a
political unknown ­ Vladimir Putin ­ was catapulted into the presidency.
The climate for pressing ahead with reform hasn’t been this good in a
decade. Parliament is ready to cooperate, and the economy continues to
grow. The financial situation looks unusually sound. 


But do the authorities have the political will to take advantage of the
situation? Many are asking themselves this question. Gref has an answer:
"Yes." And every day brings more signs that this will really exists.


Everyone, it seems, has forgotten the idea popular during the presidential
campaign ­ that Putin’s display of will was limited to military operations
in Chechnya. Whatever the assessment of Putin’s and his government’s
decisions in economics and politics, one thing is clear ­ they’re on the
offensive, and there’s not a day to be lost. 


Putin’s first economic measures, such as abolishing exemptions on mandatory
sale of hard-currency export earnings, were designed for impact rather than
for show. Now the government has broadened the front. The government is
still studying Gref’s program and hasn’t made it an official document, but
the Duma has already introduced amendments to the tax code, and the
government is examining the draft 2001 budget. Change to the tax system and
the first deficit-free budget since reforms began are great strides in the
direction that Gref proposes. 


So, it seems there is political will, and we can expect to see a recovery
in the economy. Officially adopting Gref’s program would confirm this. But
it is gradually emerging that removing the obstacles that held up reform
under Boris Yeltsin won’t be enough to prevent other, perhaps more serious,
problems. 


Only recently, it looked as though tax reform would be a piece of cake. The
thrust of proposed reform was to reduce the tax burden on the real sector
of the economy, and all parties in the Duma supported the idea. But when
the discussion came round in the Duma, the specter of confrontation between
the legislative and executive branches reappeared in the form of a
trade-union picket outside the Duma building. 


Deputy Prime Minister Valentina Matviyenko held negotiations with the
picketers, but to no avail. The government intends to push the law through.
Nonetheless, discussion in the Duma was postponed for two days. 


This isn’t yet a real conflict. Workers’ fundamental rights aren’t in
danger here, but the bureaucrats running the Federation of Independent
Trade Unions (FNPR) headed by Mikhail Shmakov are in danger. 


The government has proposed that instead of various payments to different
social funds, there will be a flat social tax, lower than the total of the
previous payments. Extra-budgetary social funds won’t suffer, but the trade
union bureaucracy will as it loses control of large and profitable
financial flows. 


Meanwhile, another offensive against the government’s plans is being
prepared. The Duma Communists’ chief economist and chairman of the economic
policy committee, Sergei Glazyev, organized a seminar on Gref’s economic
program ­ which hasn’t even been adopted yet. It’s unlikely the seminar
plans to support the program, when Glazyev is author of his own program
calling for increased state intervention in the economy. 


Soon the government will face more problems when it runs up against
resistance from the "social fabric." The opponent won’t be politicians, but
the problems themselves. It’s easy to make a case on paper for, say,
housing and utilities reform. We raise housing maintenance costs, for
example, and free the budget from the burden of subsidies. We pay targeted
compensation to low-income earners and break the monopoly in the housing
maintenance sector, thus reducing waste and expenses. Everyone gains. 


All well and good, but implementing these reforms will be the job of
millions of bureaucrats who manage an army of plumbers and janitors. The
risk is high that only one aspect of the program will be fulfilled ­ people
will have to pay more. There will be a muddle with compensation, plumbers
will continue drinking and housing maintenance office personnel will keep
thieving. 


It will all be like former Prime Minister Viktor Chernomyrdin’s famous line
that we wanted to do our best, but it all turned out like always. If this
is to be avoided, the government will have to learn a new skill. Not so
much that of political struggle as that of normal organization and more
effective running of the state apparatus. And this was never Russia’s
strong point.


*******


#6
The Guardian (UK)
11 June 2000
[for personal use only]
Putin thirsts after the vodka empire 
Moscow acts to end bootleggers' windfall 
Amelia Gentleman, Moscow 


A shake-up of Russia's alcohol industry is provoking fears among Moscow's 
vodka magnates that Vladimir Putin's government is determined to bring their 
empire back under state control. 


The new crackdown has taken its toll on the industry already. One of the most 
powerful vodka merchants is in hospital with a heart condition after he was 
ousted in a boardroom coup; threats to another vodka businessman made him 
spend two days in hiding; and a third faces criminal proceedings after his 
offices were raided by special economic crime police. 


Senior officials are already working on restructuring the vodka industry, 
concerned that a flourishing black market is costing millions of dollars in 
lost taxes. Last month the government set up a state watchdog to oversee the 
bulk of Russia's alcohol production. 


Rosspirtprom will give the government huge influence over any of the partly 
state-owned 'drunken enterprises' (the Russian term for alcohol businesses), 
which most of them are. Officials will be able to make key industry 
appointments and clamp down on manufacturers not making adequate profits. 


Boris Yeltsin considered such measures but was stopped by the fierce 
opposition of vested interests. Vladimir Putin's new regime is more confident 
and swiftly signed the decree last month. 


The benefits to the government are clear: the average Russian is estimated to 
drink between 50 and 90 half-litre bottles of vodka a year. There is a vast 
domestic market to be tapped, even before potential export profits are taken 
into account. 


Even with the bootleg industry accounting for 45 per cent of sales, liquor 
taxes bring the government almost as much in taxes each year as the oil 
industry. Annually the state receives about 24 billion roubles (£600 million) 
from alcohol profits, compared with 30bn roubles (£750m) from oil. If illegal 
sales were ended, the government's alcohol income would double. 


There is also a more high-minded motive. A recent, dramatic rise in the 
consumption of bootleg vodka - after prices on legal spirits rose when new 
duties were imposed in Janu ary - has resulted in a surge in deaths from 
alcohol poisoning. In the first two months of the year more than 6,000 people 
died after drinking cheap alcohol surrogates - everything from industrial 
cleaning fluid to nail varnish remover and very low quality vodka, priced at 
as little as 30p a bottle. The figure was an increase of 2,000 on the same 
period last year. 


Reactions to the creation of the industry watchdog are divided: some vodka 
industry leaders believe it a step back towards creating a state monopoly on 
vodka production, while others believe it is an attempt to recoup profits 
from alcohol bootleggers. 


Workers at the Cristall factory in eastern Moscow - Russia's largest vodka 
producer and manufacturers of Yeltsin's favourite tipple, Gzhelka - are still 
reeling from a management coup late last month. 


Last week they sent Putin an open letter, published in several Russian daily 
newspapers, pleading for the reinstatement of their director, Yury Ermilov, 
who is recovering in hospital from the shock of his forced dismissal. 


He was removed by the board - led by a powerful figure within the Moscow 
administration - for 'gross violation of financial practice' on 25 May, two 
days after the tax ministry awarded the company a prize for being Russia's 
best taxpayer (a significant accolade in Russia, where non-payment of taxes 
continues to cripple the economy). 


A government insider was brought in from the state-controlled oil business to 
replace Ermilov, but employees refused to let him in the building. When he 
returned with a team of private security guards, 200 workers still prevented 
him from entering. 


Earlier this month, the factory's deputy director, Vladimir Svirsky, received 
a number of threatening phone calls, warning that dreadful things would 
happen to him and the company if the new director was not allowed to start 
work. 'I spent two nights inside the factory office. I was frightened of what 
might happen if I left the premises,' he said. 


For the monent there is stalemate. Svirsky is still waiting for a response to 
his appeal to the President. 'It is a fight for control. Cristall is an 
extremely profitable business and there are a great many people who would 
like to see their man installed as director here,' he said. 


Another leading vodka enterprise in Moscow is shaking from a separate crisis 
- also prompted by the government's thirst for control. Government 
investigators have raided the offices of Soyuzplodimport, the vodka export 
company responsible for selling about 50 of Russia's most famous brands 
abroad, and searched for evidence of financial malpractice. 


The company is suspected of having illegally secured the rights to popular 
trademark brands at absurdly low rates, and of selling them on to companies 
abroad, thereby cheating the government of tax. Its directors deny any 
wrongdoing. 


*******


#7
June 8, 2000
Parlamentskaya gazeta
Interview with Yevgenii PRIMAKOV,
chairman of the Fatherland-All Russia (OVR) Duma faction
[translation for personal use only]


Q: Yevgenii Maksimovich, just before your visit to our newspaper you had a
meeting with the President. If this is not a secret, could you tell us about
your relations with the President?
A: In human terms, I have very good rapport with him. Don't think that I am
trying to adapt myself to the new authorities, this is not true. Let me give
you one example which shows Putin to be a decent man. When I was removed
from the position of prime minister, some of the ministers who only a week
before had fairly friendly relations with me cut off our contacts. At the
same time, Vladimir Vladimirovich phoned me in person and said: the FSB
collegium would like to have a meeting with you. I replied, OK, let us meet,
I'll go to you before long. In response, I heard: no, we will come to you
ourselves.
The entire collegium arrived, and we spent some time sitting and talking. I
think that Putin hardly asked anyone for a permission for such a visit to
me, a head of the government who had been removed. I am sure that he will
show his independence in the future. Of course, a lot will depend on whether
he will manage to be fully autonomous.


Q: Speaking about the presidency, last year you were the most realistic
candidate for this office. But finally you decided to become the head of the
Fatherland-All Russia electoral alliance. As a result of this decision, you
changed not just your political destiny, but the national political
landscape as well.
A: Believe me, in our world many things happen as if by the will of fate and
far from everything depends upon ourselves.
To restore the sequence of events, when I was at the helm of the government,
I didn't even think of the presidency. But in Yeltsin's environment, they
kept whispering in his ears that Primakov was preparing to run. Once Boris
Nikolaevich even asked me to state in public, before TV cameras, that I am n
ot planning to become president.
By the way, were I to decide to take part in the presidential race, I'd
hardly do things that would spoil my relations with the governors - which is
what I sometimes had to do. I am sure that one and the same person cannot
take part in presidential elections while at the same time carrying out the
duties of a chief of cabinet.
As for parliamentary elections, I had received proposals from some of the
political parties, including the Fatherland. I kept declining all of them.
To Yury Mikhailovich Luzhkov, I told that were there to emerge some serious
movement, I would consider joining it. Then, the Fatherland-All Russia
appeared, and I joined it. Do I have regrets? Let me tell you frankly - yes
and no. But even given all the disappointments, this is still life, the
struggle, the interest...


Q: Did you consider the option of taking part in the elections in an
alliance with the communists?
A: When I came in the government, I had good relations with the left. I met
Zyuganov, Kuptsov, Melnikov, and others. Regrettably, the left often limited
themselves with narrow partisan interests. For example, I was against
impeachment, because I saw it not just as fruitless, but as
counterproductive. It also began to hurt the cabinet, because all of its
enemies started exploiting it against us. They persuaded the president that
we were allegedly behind the impeachment campaign.
Once I even had to state to Boris Nikolaevich that anything of the sort was
just impossible. I mentioned, as evidence, that there were uniform rules of
conduct of the government and that they had nothing to do with partisan
sympathies. For example, Yury Maslyukov did not support impeachment and
publicly advocated the ratification of the START-2. Which was different from
the stand that was then taken by the Communist Party.
I also had to remind the President that he was the one to propose Maslyukov
to become chief of government, when Chernomyrdin's confirmation got into a
dead end, while I was still declining his proposal. Were Maslyukov to obey
the instructions of his Central Committee, he would have accepted the post
of the Prime Minister and would have become the person no.2 in the state
hierarchy. But he didn't do that, which showed that, being in the cabinet,
he was not subject to party influence.


Q: Today, we have Mikhail Kasyanov as head of the cabinet. In the West,
there have been many publications suggesting that this choice by the
President was far from optimal, because the new head of the cabinet has no
political experience and is obsessed with finance. What is your opinion of
Kasyanov?
A: My habit is to speak of what I know. I know, for example, that Kasyanov
is a good negotiator for meetings with representatives of financial
institutions.


Q: After Putin's victory in the presidential elections, positions of the
Unity faction and of the People's Deputy group became more robust. Should we
expect some revision of the early agreements on the distribution of jobs in
the lower house?
A: I think that there should be no reshuffles. The Duma structure has
already stabilized.
On my part, I can also say that I had been puzzled, for example, when
Foreign Affairs Committee was given to Dmitry Rogozin from the People's
Deputy. But, with the passage of time, I saw that he does his job in
professional and efficient way, and there is evidence to this effect. On the
other hand, I don't see anyone more suited for the job of the head of the
CIS committee than Boris Pastukhov [OVR member who may lose his position in
a reshuffle].
As for our faction, we agreed from the very first days that we will be
neither with the right nor with the left, but will take centrist stands. And
we are acting as the third force, having, with our supporters, 70 to 75
votes. (...) We define ourselves as statists. This is expressed also in our
belief in the necessity of government regulation of the economy, which
separates us in a radical way from the so-called young liberals who insist
upon government non-intervention in the economy. This was the model of the
country's development over the past years, based on the flow of raw
materials abroad in exchange for the import of finished goods. Holes in
social policies were patched with foreign loans, while privatization was
going on for its own sake.


Q: What is your assessment of its results?
A: Privatization was conducted out of fiscal consideration, to replenish the
treasury. Meanwhile, in the whole world its purpose is to make production
more efficient. For example, in Japan railroads were given to private owners
when it became clear that the railroad transportation could not compete with
automobiles and aviation, while government had not enough money to increase
its competitiveness.
In our case, nobody cared about efficiency. The results are plain to see. I
am sure that in a period of transition to the market it is up to the state
to do everything for the development of the real economy.
You also cannot escape the need to resolve social problems. In our cabinet,
we formulated the goal of paying off wage arrears to state employees, to the
army. And we managed to accomplish this task.
Many people don't understand, or don't want to understand that our country
has collossal opportunities that are not being used. By the way, we also
resolved debt problems without printing excess money. Liberal economists
tried to scare everyone by forecasting inflation and other consequences, but
nothing of this happened.
Government intervention is indispensable to create the level playing field
for all economic actors to compete. It is also essential in combating
corruption and crime that have overwhelmed our society. This requires
resolute struggle, and no one but the state can do it. (...)


Q: Speaking of the need for the state influence, what is your assessment of
the latest Putin's initiatives on strengthening the chain of authority? As
we know, presidental bills passed the first Duma hearing rather
successfully.
A: In conceptual terms, they must have been supported, which is what our
faction did. When I was head of the government, I spoke about the need for a
vertical chain of executive command, encompassing all the three levels -
that is the Center, the federation units, and local government.
For example, during the August 1998 crisis, some governors closed their
borders and took decisions to prevent food transportation out of their
regions. Or take the issue of financial transfers from the federal budget.
The Center transfers this money to pay wages to teachers and physicians, and
then a governor uses this money to buy shares of enterprises. And he says
that there is no law that would allow to verify the spending of this money.
(...)


Q: What then does not satisfy you in the presidential bills.
A: It is the definition of the new status of the Council of Federation
member that catches the eye. By Constitution, the upper house is authorized
to declare the state of emergency, to decide upon the use of our army
abroad, to appoint and remove Prosecutor-General, and so forth. Today, this
body is representative enough, but is it possible to leave all these
functions to the new body, which will be only a copy of the Duma? Of course,
not. This requires to amend the Constitution. But it was decided not to
change it for the time being.
Or, take the issue of removal of governors and heads of local government
bodies. This is not a football game. Such a removal can come in force only
after a ruling by the Supreme Court. Let's take the removal of a governor or
a mayor because of a criminal case that had been initiated against him. We
know that, regrettably, this is not so difficult to do, especially at a
local level. Later, the criminal case may blow up, but we are already beyond
the point of return.
I believe that the most acute debate will occur on the eve of the second
hearing, when amendments will be introduced. We hope that the bills' authors
will take them into account.


Q: Recently, Unity held its constituent congress, and was joined by
representatives of All Russia, a movement which was one of the founding
members of OVR electoral alliance. Does this mean that the end to the
faction that you are heading is drawing near?
A: From the very beginning, when we embarked on the electoral campaign, the
OVR movement was organizationally amorphous, and some leaders of All Russia
pursued their separate goals. By now, I am sure about the OVR faction which
is unified and mobile.
Following the ongoing process of party building, I come to the conclusion
that it will still go on for quite some time. But I am sure - Russia will
not accept a single major party without a social program.


Q: What is the outlook for the coming congress of the Fatherland movement?
A: Sorry, I cannot respond for it, because I am not a member of this
movement, although I am sympathetic to it.


Q: Do you maintain your relations with Yury Luzhkov, the leader of the
Fatherland?
A: We have excellent relations, and we always consult each other on a range
of issues.


Q: Were you offered to join the progovernmental Unity party?
A: I was offered to join their Observers' Council, designed for non-members.
But I declined the offer.


*******


#8
IntellectualCapital.com
June 8-15, 2000
Book Review: A Telling Memoir
by Nina Khrushcheva (nkhrushcheva@iews.org) 
Nina Khrushcheva is the director of special projects at the EastWest
Institute in New York. 


A review of First Person: An Astonishingly Frank Self-Portrait by Russia's
President Vladimir Putin
by Vladimir Putin (with Nataliya Gevorkyan, Natalya Timakova and Andrei
Kolesnikov)
Translated by Catherine A. Fitzpatrick
Public Affairs, 2000, 207 pages, $ 15


First, there was Pavlik Morozov, a Soviet folk child who so believed in the
bright future of communism that he enthusiastically informed on his father
for having more grain than was allowed to an average "builder of communism"
in a collectivized state. Then there was the Soviet children's classic hero
-- Timur [and His Team], an honest and endearing Pioneer (communist Boy
Scout) who in his romantic zeal to become a perfect communist devoted his
childhood to unmasking the imperfections of less enlightened and faithful
citizens.


Other books and movies throughout the Soviet history glorified those who
passionately confronted the supposed enemies from all sides seeking to
undermine the Soviet Union. In that same tradition, we now have
Conversations with Vladimir Putin -- or its English version, which bluntly
announces itself as An Astonishingly Frank Self-Portrait of Vladimir Putin).


The book is a collection of "interviews and monologues" about and with
Putin, his friends, former teachers, colleagues and family. It portrays a
"Hero of Our Time." As the early-socialism glorifications of Pavlik Morozov
or Timur were emblematic of the freshly established totalitarian regime,
Putin's memoir is an excellent piece of neo-Soviet, post-liberal propaganda.


A Soviet patriot born and bred


Released on the Web in Russian right before the Russian presidential
elections in March and published in English right after the presidential
inauguration in May, the memoirs acquaint the world with Russia's perfect
president, descendant of the brave, honest and devoted heroes of the Soviet
cultural canon. Putin himself tells us with proud shyness, "I was a pure
and utterly successful product of Soviet patriotic education."


First Person exhibits Russia's new leader as unbendable, tough, honest and
even romantic. Putin decided on his KGB career because of the stories of
the heroic deeds of Soviet detectives and intelligence officers, exactly as
they were portrayed in "The Sword and the Shield," his favorite movie.
"What amazed me most of all," he says, "was how one man's effort could
achieve what whole armies could not."


Putin wanted to serve his country so much that once, when in the ninth
grade, he went to the office of the KGB Directorate in Leningrad (now St.
Petersburg) "in order to find out how to become a spy." So forceful and
willful was Vladimir Putin that one might have trouble distinguishing him
from a young Vladimir Lenin.


However, the story has a softer, modern side, one without the harshness and
burning fanaticism of the early socialist years. In his memoirs Putin
appears as somewhat more human, less official. We almost immediately learn,
for example, that he "was a hooligan, not a Pioneer" -- an informal and
popular street leader.


Although he then continued as a good college student, he was neither a
Komsomol (Young Communist League) functionary, nor an active
obshchestvennik -- that is, he was not involved in any extracurricular
activities. The surprise here is to find out that the KGB was meritocratic,
that it was possible to be hired by the KGB on the basis of good college
grades alone. And although 75 years of Soviet experience suggest otherwise,
Putin's Self-Portrait seeks to restore the KGB to what it was portrayed as
being in Pavlik's times, a society within a society consisting of good and
devoted enthusiasts who "work for the interests of State."


Of course, in the late 20th century -- Putin joined KGB in the mid-1970s --
it was no longer necessary to report on one's parents to prove oneself
worthy of communism. "Developed socialism" by then developed more subtle
methods of influencing society and enforcing conformity. These means were,
as Putin puts it, "less coarse." Therefore, our hero is shown with informal
humanity, a "boy from our street," an "invisible" hero.


Image of a good man


Material for First Person is selected in such a way that Putin meets all
the necessary requirements for being a "good man" -- good neighbor, good
friend, good everything. When we read that Putin's family, for example,
shared a Leningrad communal apartment with an old Jewish couple and young
Vladimir befriended them, the message is clear: "[M]y best friends are Jews."


Putin sang songs of Vladimir Vysotsky, a semi-dissident bard whose words
became part of Russia's modern, Soviet-mocking folklore. He joined the judo
club while others were fashionably doing karate. He attended Leningrad
University, one of Russia's prestigious schools, but got there on his own
merit, with no connections, while the Soviet Union was thriving on privileges.


Putin had some early love troubles, but then he met his wife, Liudmila, and
they have lived happily ever after with two daughters and a toy poodle, the
book shows. Another family dog also makes an appearance, a Caucasian sheep
dog, but it died in an accident. All these details are meant to prepare us
for a president who can be sensitive, loving and kind, but also a man who
never backs down -- one who is just, honest and zealous for the truth.


Putin's personal "common man" qualities are well mixed with an
astonishingly idealistic, almost blind fondness for Soviet strength and
statehood. His zealous KGB drive was explained by the fact that during his
college years, he "didn't know much ... about Stalin's cult of personality.
... My friends and I didn't think about that. So I went to work for the
agencies with a romantic image of what they [the KGB] did."


It is even more astonishing that when grown up, Putin, already a KGB
officer, insists that although "there probably were some agents who engaged
in persecution of people. I didn't see it. I personally didn't see it."
Judging from the memoir, Vladimir Putin appeared to have lived and worked
in a different country than the rest of us.


At several points in the book, Putin does mention that after 10 years of
being at "the Organs" [of State Security], he was no longer a Soviet
romantic. But it was not until 1991 that his disillusionment in the system
became final: "Up until that time I didn't really understand the
transformation that was going on in Russia. ... But during the days of the
[August] coup, all the ideals, all the goals that I had had when I went to
work in the KGB, collapsed." 


Loyalty to the old ways


Even when finally disillusioned, Putin still can hardly admit that
communism was flawed. It was usually the people, not the system that was
flawed, he implies. Or even better, the people screwed up the system:
Mikhail Gorbachev who lost the Cold War too quickly, or the crowds who in
1989 attacked the German Ministry of State Security in Leipzig.


Putin says in the book that he has been disillusioned for almost 10 years,
even admitting at one point that the Soviet Union "didn't have a future."
But, in the few months of his presidency he has shown such a fond support
for the KGB and the Soviet system that it is difficult to distinguish him
from the romantic boy who wanted to serve his country's greatness. After
winning the presidential election, he addressed the Federal Bureau Service
(formerly the KGB) this way: "Officer Vladimir Putin reports that his
dispatch to the Kremlin has been completed successfully." For those who
"think and know" about Stalin-era purges, this is a tasteless, even cruel
joke.


But drawing on nostalgia for the cruel glory of the country's socialist
past, which forms a powerful contrast to the chaos and humiliation of the
post-communist years of reforms, Putin insists on presenting the KGB, the
cornerstone of the Soviet system, in a favorable light. Thus, he shrewdly
builds (in book and in life) his popularity campaign around a promise to
restore stability, with secret services helping to crack down on
corruption, crime and liberal disarray. Sensing that liberalism of the last
10 years left the population with a thirst for a strong leader capable of
imposing order, Putin has been carefully evoking Stalin's image as a
positive one: in speeches, on commemorative coins, on the memorial plaque
to the heroes of World War II. 


Stalin-like secret ways of influencing society obviously have attracted
Putin all along. In these memoirs, he admires the KGB techniques of
controlling society "covertly."


Putin the president recently introduced that same secretive style in a
policy document published in May by the Russian newspaper Kommersant. In
it, the new government suggests that as society now shows a strong devotion
to the democratic process, some necessary, although unpopular actions
(especially those dealing with media and opposition) should be handled
"covertly" via FBS-run presidential directorates.


Getting to know the real Putin


Putin's book encourages us not to worry. We also learn that qualities
necessary for a president are needed for a secret agent as well:
"organizational abilities, a certain degree of tact, and businesslike
manner." In fact, the book suggests that the "art of intelligence" requires
a great "ability to come into contact with people, the ability to select
the people you need, the ability to raise questions that are of interest to
our country and our leaders, the ability to be a psychologist, if you will."


In one of the "conversations," Putin calls himself "a specialist in human
relations." And as Putin's wife confirms, despite his "plain and dull"
appearance, it is Putin's "inner-strength ... quality that draws everybody
to him now."


So who is Vladimir Putin? According to First Person, he is Russia's perfect
president, a man for whom Timur and Pavlik once were role models but who
has now stepped from the pages of heroic children's stories to be a real
man ruling in the real Kremlin.


Only time will show whether this version of Putin is an invented character
for the book of power he is writing, nothing more than a patriotic
propaganda symbol, or if his worship of the KGB is real and that Putin is a
modernized, contemporary hero of neo-Soviet totalitarianism, the creator of
his own Putinism. 


*******

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http://www.cdi.org/russia