This Date's Issues: 4362 • 4363
Johnson's Russia List
12 June 2000
[Note from David Johnson:
1. AP: Rival Jewish Groups Trade Barbs.
2. Reuters: Russia's strategic rocket chief against ABM shield.
3. Chicago Tribune: Michael McGuire, FOR PUTIN, THE WORLD'S A STAGE,
BUT WHAT'S HIS ROLE? HE'S SHOWING UP ALL OVER THE PLACE, BUT NO ONE'S
4. The Independent (UK): Hilary Smith, Mystery of raid on Catholics
by Russian police.
5. Novaya Gazeta: Yevgenia Albats, Operation Strong Hands. My Advice
to the President. (re the Chilean model)
6. Ekonomika i Zhizn: Yuri Petrov, ECONOMIC RECOVERY: AT WHOSE EXPENSE AND IN WHOSE INTERESTS?
7. The Philadelphia Inquirer: A son's assessment of Nikita Khrushchev.
Walter Uhler reviews Nikita Khrushchev and the Creation of
a Superpower by Sergei N. Khrushchev.]
Rival Jewish Groups Trade Barbs
June 11, 2000
By NICK WADHAMS
MOSCOW (AP) - An angry dispute has broken out between two rival Jewish
groups, with one alleging that the Kremlin is meddling in the community's
politics - a rollback to the Soviet era, when the Communist leadership kept
religious groups on a short leash.
The rift between followers of Russia's chief rabbi, Adolf Shayevich, and a
group led by the ultra-Orthodox Chabad Lubavich movement became public last
month after Shayevich wrote President Vladimir Putin a letter about it.
In the letter, Shayevich claimed the Kremlin had snubbed him by initially not
inviting him to Putin's inauguration or the anniversary celebration of the
end of World War II. He said representatives of the Lubavich movement - a
group he said represents less than 5 percent of Russian Jews - had been
invited from the start.
Shayevich was referring to the Federation of Jewish Communities, a group
formed in November under the leadership of the Lubavich movement. The
Lubavichers, led in Russia by Rabbi Berl Lazar, have actively sought to bring
the nation's traditionally unobservant Jews into the religious fold by
founding synagogues, schools and community centers and distributing food and
The 62-year-old Shayevich also wrote that ``official sources'' had told him
that the Federation of Jewish Communities was trying to replace him with its
own rabbi and push him to resign - and that the federation's plan had the
Both Kremlin officials and leaders of the federation have denied Shayevich's
``We don't have such plans,'' Lazar said this week. ``Where he got that
information, I don't know.''
But Shayevich's accusations have raised fears that Putin's administration was
choosing favorites in the religious community, a return to the Soviet era,
when unofficial anti-Semitism was rampant.
Federation and Kremlin leaders also suggest that the Jewish community is
caught in the middle of a political conflict between Russian Jewish tycoon
Vladimir Gusinsky, head of the Russian Jewish Congress - the secular partner
of Shayevich's Congress of Jewish Religious Communities and Organizations -
and the Kremlin.
Gusinsky's holding company, Media-MOST, was raided by government tax police
last month. He called the raid an attempt to threaten his various media
holdings, which have been critical of Putin.
Shayevich supporters say that the campaign against Gusinsky had extended to
the Jewish organization he heads.
``There are circles around the president putting pressure on the Jewish
community in Russia,'' said Pavel Feldblum, executive vice president of the
Moscow Jewish Community.
Shayevich has been chief rabbi of Russia since the early 1980s, during the
Soviet era, when one unified organization represented Russian Jewry. Now the
Jewish community has fractured into several branches, and Lazar's movement
has emerged as a strong rival for members, funding and influence.
Lazar said he saw no evidence that the government was trying to gain greater
control over the country's Jewish community. But he and other Federation
leaders said they enjoyed very good relations with the government.
Lazar praised Putin's government, saying that anti-Semitism in Russia was on
the decline. In recent years, synagogues have been bombed, Jewish cemeteries
vandalized and a Jewish leader stabbed, but he said Jews today felt much
freer in Russia.
Shayevich, who was traveling abroad, could not be reached for comment.
Mikhail Gluz, the president of the Federation, said Shayevich's letter could
lead to a split in the Jewish community in Russia. He called for a meeting of
top rabbis to settle the issue.
``We have to gather all rabbis and talk and look at each other and ask who is
who, who's doing what, and ask if there is meddling by the government and if
there is, that's unacceptable,'' Gluz said.
Russia's strategic rocket chief against ABM shield
MOSCOW, June 11 (Reuters) - The commander of Russia's strategic missile
forces said on Sunday that proposed new anti-missile defence shields could
lead to ``nuclear anarchy,'' but acknowledged a system could be built with
Washington if both sides agreed.
A senior defence ministry official, meanwhile, was quoted as saying that if
Russia developed such a system it would not cover all of Europe or the United
States and would be subject to conditions.
Strategic missile commander Colonel-General Vladimir Yakovlev said proposals
to develop such systems, regulated by the 1972 Anti-Ballistic Missile (ABM)
Treaty, could only destabilise the international situation.
``Ideally, we would not like to develop an ABM system. Such a system incites
other countries to develop their arsenals or try to circumvent the system,''
Yakovlev told RTR state television.
``This provides no stability for the world. On the contrary, it destabilises
the situation and leads to nuclear anarchy.''
Russian opposes U.S. plans to alter the ABM treaty and build a new
anti-missile system which Washington says is aimed at ``rogue states'' like
But U.S. President Bill Clinton and his Russian counterpart Vladimir Putin
agreed at summit talks last week to pursue contacts on the issue. Putin has
proposed an alternative system, in concert with western Europe or NATO, to
knock down missiles immediately after launch.
Yakovlev said Russia had the technological potential to proceed with its own
anti-missile system, but its aims had to be clear and a political decision
``We could work out the outlines of a system for a joint anti-missile system
if such a political decision is taken,'' he said. ``But it must be directed
only against a specific potential threat to either the territory of Russia or
He said Russia recognised a threat from five to eight states ``on the brink''
-- meaning they were not far from acquiring nuclear capability -- but he
declined to name them.
Colonel-General Leonid Ivashov, head of the Defence Ministry's international
relations department, said development of an anti-missile system would be
time consuming and would not cover the entire territory of Russia or the rest
He told RIA news agency that future consultations with NATO or other bodies
had to assess the threats posed and which contributions to a joint system
could be made by each partner.
``Radar systems could be completed on the basis of Western European or even
U.S. technology and anti-aircraft systems linked with them could be Russian,
even with some NATO components,'' he told RIA.
Such systems, he said, could cover peacekeeping missions and both civil and
military sites, particularly if their destruction would cause harm to
Ivashov said China, which also opposes the U.S. plan, had nothing to fear
from Putin's proposal.
``Our Chinese friends have no reason to fear that ideas advanced by Russia
for a European ABM system could pose a threat to them and that Moscow is
acting behind their backs,'' he said.
June 11, 2000
[for personal use only]
FOR PUTIN, THE WORLD'S A STAGE, BUT WHAT'S HIS ROLE?
HE'S SHOWING UP ALL OVER THE PLACE, BUT NO ONE'S SURE WHY
By Michael McGuire
Tribune Staff Writer
MOSCOW -- Russian President Vladimir Putin is a man on a mission.
Last week the Russian leader visited Italy, the Vatican and Japan. This week
he takes off for Spain and Germany, and then he's off for the former Soviet
republic of Moldova. Next month he's got China and Okinawa on his schedule,
and sometime in between, he's off on a trip, unprecedented for a Russian
leader, to North Korea.
Meanwhile, Russia and the world have replaced the now familiar "Who is
Putin?" with a new question, "What makes Vladimir run?"
"He's the first Russian leader since Peter the Great to spend more than a few
weeks outside the country," said Russian expert Marshall Goldman of Wellesley
College, referring during a visit to Moscow to Putin's service abroad with
"I think he has the real ambition to try to make Russia more a part of the
Such an aim is especially crucial for the Kremlin as Russia's role in the
outside world since the fall of communism seems little more than that of an
outsider trying to get in. Ignored by other powers in major world decisions,
ridiculed over the virtual impotence of its shattered army and bombarded with
allegations of inhumanity in Chechnya, the word Moscow today seems more
associated with criminal gangs than a powerful world giant.
A number of experts and scholars interviewed here believe that Putin, while
hardly a charmer when it comes to diplomacy and champagne receptions, wants
to change all that.
Alan E. Rousso, director of the Carnegie Moscow Center, thinks that while
Putin has no illusion about reasserting Russian power, he wants to reassert
"He feels it's essential to spend time dealing with Western leaders," said
Rousso. "Most important is that he feels it's essential to do so if some of
his economic ideas are going to succeed. He also needs support from the
[global] financial institutions [like the IMF and World Bank] and the member
countries that help make those decisions."
Some analysts believe that the fledgling president needs to launch a selling
campaign abroad following the appointment of former KGB colleagues to his
inner circle and his plan to curb the power of Russia's regional governors.
Both developments have raised domestic and international concern over his
administration's long-term commitment to democracy and an open society.
Putin also hopes to garner European support in opposing the U.S. attempt to
revise the Anti-Ballistic Missile Treaty in order to create an effective
defense against attack by so-called rogue states.
His announced trip at an undisclosed time to North Korea, identified by
Washington as one of the rogue states, prompted speculation that he hopes to
dissuade North Korean leader Kim Jong Il from building nuclear warheads and
the means of delivering them.
Edward A. Ivanian, editor of the monthly USA-Canada: Economics, Politics,
Culture, said he does not buy that connection, but believes Putin's trip may
be an effort to carve a role for Russia in efforts toward reconciliation
between the two Koreas.
"The North Koreans have already consulted the Chinese about this, and
possibly Putin wants to know what this was all about and wants to step in and
play a role in the diplomacy," Ivanian said.
"He doesn't want our country to be held on the sidelines when such important
questions are being decided."
Rousso feels that Putin's flurry of international travel is related in large
part to an inclination to hit the road following his effort toward the
implementation of major domestic changes, such as tax reform and plans to
impose Moscow's control over Russia's regional governments.
"Now that he has laid that all out, he has decided to hit the road rather
than be here while those issues are being considered by parliament and by the
federation council," Rousso said.
"He opened a chapter, and now he has decided to skip out of town and leave
the dirty work to others in terms of getting these things [through
legislation] and dealing with regional leaders. Now he can hit the road and
tackle some other things he wants to take on during the first couple of
months in power."
Richard Pipes, a noted Russia scholar and professor of history at Harvard
University, said he believed Putin's heavy travel schedule was related to
establish his status as a world figure.
"I don't think there's any further strategy here," he said. "Russians like
the prestige." Historian Edvard Radzinsky said average Russians couldn't care
less about their traveling leader.
"In [former Soviet Party Chairman Leonid] Brezhnev's time, it was
extraordinary," said Radzinsky. "Wow! Our Soviet leader is traveling to the
"Before when [former President Boris] Yeltsin would go on trips to the U.S.,
Italy and so on, the country would watch to see whether he would be drunk, or
who helped him to stand up. It was a good show, entertainment.
"Now nobody cares. The only people who take an interest are those who have
planes to catch, and they are concerned over whether Putin's landing or
takeoff will delay flights of their own."
The Independent (UK)
11 June 2000
[for personal use only]
Mystery of raid on Catholics by Russian police
By Hilary Smith in Moscow
Last month's commando raid on the headquarters of Media-Most, Russia's
leading independent media empire, was seen as a terrible omen for the fate of
press freedom under newly inaugurated President Vladimir Putin.
Yet the raid had striking parallels with a similar event on the same day in
Siberia which was practically ignored by the press but has deeply alarmed
campaigners for religious freedom in post-Soviet Russia.
On 11 May, gun-toting tax police wearing ski masks streamed into the
Jesuit-run Inigo Centre in Novosibirsk, seizing documents, videos and
computer equipment. The Jesuits, who use the centre's television studio to
make religious programmes, were kept in a room for four hours while police
searched the premises.
So far, none of the confiscated material has been returned, and no
explanation given for the raid.
Tax police often carry out high-profile attacks on Russian companies
suspected of tax-dodging or ties to the criminal underworld. But raids on
foreign religious organisations are rare. Under Russian law, tax police do
not even have the right to enter their premises.
Observers say that the Novosibirsk incident is proof that, nearly 1,000 years
after the Great Schism which first split the Christian world into its Eastern
and Western branches, Russia and the Catholic Church remain at daggers drawn.
Hopes that the rift might be healed rose last week when President Putin held
an audience with Pope John Paul as part of an official trip to Italy. The
visit raised speculation that the Pope might finally visit Russia, 11 years
after the Soviet leader Mikhail Gorbachev invited him.
But commentators say that hatred of the Holy See is so intense among powerful
conservatives in the Russian Orthodox Church that John Paul II will remain
persona non grata in Russia.
The row between the world's two biggest churches centres on Russian
accusations that the Catholic Church is expansionist, poaching believers by
proselytising on traditional Orthodox territory.
"We see their missionary activity here as an unfriendly act," says Maxim
Kozlov, professor of the Moscow Theological Academy and an expert on
Orthodox-Catholic relations. "Russia is not just some tabula rasa where rival
religions can compete for believers. Orthodoxy is the religion of the vast
majority, the religion which is most closely bound up with our history, our
mentality, our traditions, and that should be respected."
June 5, 2000
"Operation Strong Hands"
My Advice to the President
By Yevgenia Albats (firstname.lastname@example.org)
[translation for personal use only]
The author is an independent journalist and a doctoral student in the
government department of Harvard University.
For a politician, the illusion of having simple solutions to problems is the
most dangerous aberration.
This is especially so when a politician has all the levers of power in his
hand, while the life of millions of citizens depends on the decisions that
he takes (the quality of their implementation being the intervening
One of those simple solutions that is being stubbornly offered today, in
public as well as behind the curtain, has a fancy envelope and is labeled
"the Chilean economic miracle", while general Augusto Pinochet, a co-author
of this miracle, is being imposed as a role model for the new Russian
The gist is as follows: democracy and structural economic reforms required
to lead the country out of the crisis are incompatible with each other. For
this reason, what is needed is a bit of strangulation for the democratic
institutions, the establishment of an authoritarian rule, and then, with
reliance upon the support of the armed agencies, primarily secret services
and the army, one would be able to lay the groundwork for the Russian
Let us leave aside for a while the assertion that "democracy and structural
reforms are incompatible", as well the issue of why the oligarchs are the
most ardent lobbyists of this idea.
Let us turn to the role model itself - to the general Pinochet regime.
The General Pinochet Regime
The military took power in Chile in 1973. As for the steady economic
growth - a little more than 6% yearly average - began only sixteen years
later, in 1989, while the flourishing of the Chilean economy occurred under
the Christian Democratic government of Patricio Aulwin (in 1992, there was
10,3% growth, under minimal unemployment and relatively low inflation).
Meanwhile, the first four years of the military rule were marked by the
collapse of the banking system and extreme immiseration of the populace:
about 60 percent of the country's population fell below the level of
poverty. Beside the almost complete freezing of foreign investment (which
flowed into Chile only under president Aulwin) and heavy social costs,
authoritarianism was paid for with most brutal political repression.
According to various estimates, 3 to 5 thousand people were killed and more
than 100,000 were arrested or disappeared. One percent of Chilean the
population underwent persecution. Let me remind that for us 1% amounts to
1.5 million people.
The Pinochet model is right on the president's table, at least judging by
the initial steps of the new Russian administration: the idea of the
parliament transfer from Moscow, along the lines of Pinochet's sending the
Chilean parliament away from the capital city of Santiago; the new
administrative division of the country along the borders of the military
districts, to ensure the support of the army; the establishment of the
institution of General-Governors, with five out of seven in military uniform
(Pinochet created a council including representatives of the four army
services, which controlled all civilian institutions of power); pressure
upon opposition media, etc. Yet while equipping himself with the Pinochet
model, Vladimir Putin ought to be aware that (1) authoritarianism does not
bring any quick or miraculous results; and that (2) social and political
costs will be so large that in four years elections will have to be ruled
out completely - it was not by accident that the regime of one-man rule by
general Pinochet lasted for 15 years. And, finally, (3) Russia's return to
the democratic track would be incommensurably more difficult than Chile's.
It is hard to imagine countries that would be more incompatible, by a range
of criteria, than Chile and Russia. Chile is a monoethnic and
monoconfessional country, with 90% of the population being Catholics. The
country has a high level of concentration and urbanization of the populace:
40% of the population lives in the capital, and the total of two thirds of
Chileans live in cities. In other words, Pinochet had incommensurably fewer
problems, and thus, fewer expenses in the process of establishing
authoritarian rule (or, as we would elegantly call it, "the consolidation of
power"). We have national autonomies with formidable religious traditions at
the heart of the country, ethnically explosive areas on our periphery
(Chechnya is just the most extreme example), and the country spans across
eleven time zones. This is already sufficient to rule out the transfer of
the Chilean model to our native soil. At the very least, additional costs
would be so high that they would swallow all the present and future economic
Likewise, political conditions which created demand for a tough
authoritarian regime in Chile are beyond comparison with the Russian scene.
Strictly speaking, the military coup staged by general Pinochet and
subsequent repressions were a retaliatory violence. The three years of
Salvador Allende's socialist rule were the years of a rather violent
redistribution of property. Allende pursued the task of building state
socialism in a fairly capitalist country. Moreover, Allende came to power
not because the nation all of a sudden demanded socialism, but because of
the inadequacy of Chile's electoral system at the time: he was voted into
office by a minority (36% of the vote), and, in spite of his populist
measures like the nationalization of American companies, three years later
socialists were unable to win majority in parliamentary elections. But the
military coup endorsed by leading capitalist countries happened not even
because of Allende, but because of the Cuban example: behind Allende, Soviet
Union and the threat of communization of the rest of Latin America were
Finally, in Chile, there was the institutionalized opposition to the
Pinochet reforms: strong unions and left-wing parties, that would only laugh
at comrade Zyuganov. In other words, the situation in Chile - of course, in
a reversed form - was the same as in Russia in 1991-92, when the
establishment of an authoritarian regime could have had an objective
rationale. There is no such rationale in 2000 Russia.
Speaking of the real situation, there is yet another precondition that is
lacking in order to take - at least in abstract - the Pinochet regime as a
Objectively speaking, Vladimir Putin has no required institutional base for
that, like the army was under Pinochet.
It is clear that, in priniciple, the creation of federal districts
coinciding with the military ones is geared precisely toward building up the
military chain of command in support of Putin.
But intentions in themselves are not enough. Unlike Russia, the military in
Latin America were almost always a political force. There, the army existed
and continues to exist along the lines of a corporation claiming political
leadership. The rigidity of intra-army relations is ensured by traditions,
including religious ones. The Chilean army is not just a well-trained and
disciplined institution but also the bearer of the Catholic idea as the
unifying idea of the country. Today, there is nothing like that in the
Russian army: it is divided by caste, ethnic and religious barriers. Not to
mention the fact that over the entire Soviet period even the possibility of
the army's transformation into a political force was suppressed at the
embryonic stage: some, like Tukhachevsky, were accused of cospiracy and
shot, others, like Zhukov, were sent into a more or less honorable exile. It
is not by accident that the army, its General Staff and the Ministry of
Defense were under the unremitting control of the KGB.
Lastly, it is no news that the Russian army (just as the security services)
is subject to all the general societal illnesses, including large-scale
corruption. It would be naive to think that the army would have been
transformed by a year of a successful military campaign in Chechnya (which
is far from completion and has uncertain prospects).
Also, one should not forget that the governability and - at least at the
initial stage - the unfailing subordination of the Chilean army to general
Pinochet were based upon the unquestioned confidence in the general. In the
history of Latin American and other military regimes, Pinochet was an
exceptional case, being marked by an absolute personal honesty. Indeed, the
minimal level of corruption was one of the peculiar features of Chile's
16-year long military rule. But this was, indeed, the unique case, just as
Pinochet himself was unique. The history of all other military regimes in
Latin America demonstrated just the opposite: inordinate levels of
Thus, Russia has neither objective causes which would require an
authoritarian regime, nor any base that would allow for such a regime to
stabilize. Meanwhile, in case of any serious attempt at its imposition, its
implications would range from inter-ethnic and civil wars to palace and
But even if threats of this kind were to be avoided (though it's not clear
how it would be possible except by transforming the regime into a
totalitarian one), the president who makes this choice ought to be aware
that he would be burying that small thing that Russians succeeded in
creating: that is, democracy, with all its downsides.
It is true that in 1990, after seventeen years of one-man rule, general
Pinochet transferred power after the elections to the victorious Patricio
Aulwin (in spite of the considerable efforts by the general's supporters to
prevent such an outcome). But in Chile, the republican tradition exists
since no later than the year 1818, while for forty years before Pinochet's
military coup Chile had a multi-party democratic regime along Western model.
That is, Chile had a civil society, a middle class, and a tradition of
democratic rule. Of these three, in Russia, the first virtually does not
exist, the second is in its infancy, and all traditions count only nine
years. With the exception of these nine years, all of the Russian history is
a history of autocratic rule and suppression of civil and human rights.
Thus, the idea that today democracy should be postponed in the name of some
loftier goals, and then, under appropriate economic conditions, it could
resume, is not just naive but completely irresponsible with regard to the
country where only nine years ago the people were ready to lay under the
tanks to prevent the suppression of the fledgling democracy.
Whence does the current demand for the Pinochet model come from? There can
be at least two answers to this question. The simple answer is, as usual,
from the field of conspiracy theories: the new Kremlin inhabitants are
taking revenge for their defeat in August 1991 and are striving to restore
the political system that existed in the Soviet Union. The complex answer
assumes the presence of risks and dangers which the new Russian
administration tries to minimize in the process of setting the ground for
structural economic reforms. However, it is a big question whether these
threats actually exist in reality.
There are three major myths which are exploited to intimidate Russia's past
and present authorities and which they believe to be true.
Myth # 1: Russia is falling apart.
Myth # 2: Russia is threatened by Pugachev-style revolts.
Myth # 3: the Russian people are sick with inferiority complex because of the
country's loss of its superpower status.
Some believe that the "strong hand" is required precisely in order to avert
the first two of these threats and to fill the hearts with the feeling of
pride for the great power.
(...) Speaking of the myth about Russia's falling apart, some people forget
the difference between the Russia of the prerevolutionary years which
disintegrated, and the present-day Russia. The former was an agrarian
country, in which the Center and the periphery were linked by purely
administrative ties. On the contrary, the post-Soviet Russia is an
industrial country, which inherited an economy built along the principle of
interdependent monopolies, where all the widgets of one type were produced
in one place, and every single gadget for them was produced elsewhere. Not
to speak of the gas, oil and other pipelines linking the country together.
The disintegration of the Soviet Union is an exception that only confirms
the rule: the Union fell apart because of a strong political will to this
effect. (...) The regions are dependent both from each other and from the
Center, as the major distribution hub in the country. Out of the 89
federation units, either 71 or altogether 83 (by different counts) live off
trasfers from the Center - which makes it plain ridiculous to speak about
the disintegration of the country.
(...) Why was it that the previous authorities were unable to tame the
governors? Because the Kremlin was preoccupied not with the managing of the
country but rather with personal survival. Because of the operation of a
market where top government jobs were for sale (up to 70 million dollars for
the post of a deputy prime minister with an opportunity for further
advancement, and with a simultaneous preservation of control over an
economic monopoly; up to 27 million dollars for a ministerial position with
rich opportunities for the distribution of goods; and one million dollars
for the chairmanship of a governmental committee responsible for the
issuance of licences). There is corruption everywhere. The danger arises
when the problem of personal enrichment becomes an issue for the top
government officials: therein stems the weakness of authority and the
deficit of will. Then some, including governors, are able to blackmail the
authorities, while others intimidate the authorities by hinting that the
governors are about to split the country apart. Chechnya is the only example
of a real secessionism, which, in addition, was 90% the creation of the
central authorities. Objectively speaking, the problem of the country's
disintegration does not exist.
A second mythical threat is the threat of "a Russian revolt, senseless and
merciless", to use Pushkin's words. Let us recall that this threat emerged a
number of times in our media and in the speeches of politicians that were
not among the most stupid: this was in 1992, when inflation broke the
ceiling of 1,000%; in 1994, when rouble collapsed for the first time;
in1998, on the eve of the financial crisis. But somehow this threat never
(...) Statistical data - coming from the most diverse sociological
institutes, associated with different political clans - show the following:
(a) the number of those who have adapted to the new market conditions is
growing and comes close to 60%; (b) in those groups that would be
potentially active (age group below 29) people prepared to take part in
protest actions are least numerous, as compared to other groups; (c) even in
those locations where tension is growing (small towns, state enterprises
with predominantly low-quality employees) the absolute majority of people
(more than 80%) is not ready to take part in any forms of social protest.
(...) Lastly, there is the idea that over the past ten years the Russian
people became disillusioned with democracy and dreams about nothing else but
a strong hand. The analisys of sociological surveys shows that this is not
true either. People support Chechnya war is not out of longing for a strong
hand, but rather out of fear for their own life. In reality, there is
complete disorder in people's heads as regards preferred types of political
organization in Russia. (...)
(...) The obvious question is: who would profit from the establishment of a
Pinochet-type strong hand in Russia? Authoritarian ideas have their
supporters among a number of economists, as well as businessmen and
oligarchs (to whom authoritarian rule would help by reducing the field of
competitors), not to speak of law enforcement agencies and the military.
It is important to understand that there will be no quick results in the
process of reforming the country, no matter whether Russia will succumb to
an authoritarian regime or whether its democratic development will continue.
But there is a fairly big risk of destroying whatever has been so painfully
achieved, without compensating for it with any other success. (...)
Every one among us, no matter what his political views and electoral
sympathies may be, sincerely wishes success to the new Russian
administration. First, because this is our country. Secondly, because
failures (which are, regrettably, inevitable on certain directions) may turn
into a catastrophy for great many citizens. The reason is that the advocates
of simple solutions, which would fail quickly to fulfill their expectations,
will start looking for someone to blame. It is easy to predict that
institutions of civil society, human right activists, the media that would
fall out of favor, and various minorities will be the first candidates to
the list of enemies.
For all of us, the authorities' success in their endeavors is indispensable.
This is exactly why it is so dangerous if the authorities embark on a
mistaken path. (...)
Ekonomika i Zhizn
[translation from RIA Novosti for personal use only]
ECONOMIC RECOVERY: AT WHOSE EXPENSE AND IN WHOSE INTERESTS?
By Yuri PETROV, head of the department for credit and
financial mechanisms at the Central Economic and Mathematical
Institute of the Russian Academy of Sciences
Last year industrial output rose by 8.1% and the gross
domestic product by 3.2%. For the first time over the
decade-long crisis, a possibility of switching to economic
recovery has appeared. If the state supports the positive
trends, Russia's economic revival will begin. However, if it
continues to be a passive observer, it will face a new
aggravation of the crisis. The top priority task of the
country's leadership must be the formulation of the revival
strategy. In elaborating and assessing economic policy
measures, it is necessary to avoid illusions and mistakes
typical of the previous years when authorities assured the
population that they kept the situation under control. Today,
there are also problems with the making of forecasts on the
country's social and economic development and the assessment of
its results. To what degree does the government understand the
specifics, reasons and consequences of economic development? Is
the government's current economic policy adequate to the tasks
of maintaining the above positive trends? What are the
prospects of exiting the crisis? And the main question: at
whose expense and in whose interests is the economic recovery
being effected? To answer these questions, let us analyse the
specified forecast on the social and economic development of
the Russian Federation for 2000 and the specified parameters of
the forecast for the period until 2002 (hereinafter, the
forecast) prepared by the Economics Ministry in February 2000.
Under the forecast of the Economics Ministry for
2000-2002, the country's population will shrink by another 1%.
the gross domestic product will rise by 9-10%, industrial
output by 15-16%, agricultural output by 10% and investments in
fixed assets by 15-22.5%. However, this year the Economics
Ministry forecasts ... a slow-down of economic growth.
Industrial output will rise by 4% against 8.1% in 1999; the GDP
will grow by 1.5-3% against 3.2% in 1999.
The volume of paid services rendered to the population
will increase by 2.5% in 2000 as compared to 1997 and in 2002
will exceed the 1997 level by 10.5%. Retail trade turnover in
2002 will not reach the 1997 level. Real disposable incomes of
the population dropped by 18% in 1998 and by another 15% in
1999 (as compared to 1997, they fell by one-third). However,
they are expected to grow by 2-4% in 2000, 5.2% in 2001 and 6%
in 2002. In 2002 their level will constitute 80% of the 1997
level at best. The share of the population with money incomes
below the subsistence minimum, which increased from 20.9% in
1997 to 29.9% in 1999, will amount to 30% in 2002.
This year the average monthly pay will rise by 29%, with
the average annual growth of consumer prices by 22%. In nominal
terms, it rose by 10.6% in 1998 (with the growth of prices by
27.7%) and by 42.7% in 1999 (with the growth of prices by 86%).
In 2000 the real average monthly pay will constitute only 70%
of the 1997 level.
Therefore, the thesis by the authors of the forecast that
"the economic possibilities growing as a result of the stronger
influence of positive factors and trends make it possible to
commence the implementation of the main goal of Russia's
economic development - to ensure a real and stable growth of
the population's living standards" is not backed up by the
It is impossible to assess unambiguously the situation in
the economy as recovery. Judging from industrial dynamics, the
situation is favourable. However, of greater importance is the
dynamics of the volume of resources produced and used by the
country for the purposes of consumption and accumulation. So
far, the GDP volume has not yet reached the intermediate
At Whose Expense Production Grows
The most alarming thing in the post-default economic
development is a new fall of incomes and wages of the
population which has been registered. Once again, the
population has to pay for the blunders of the country's
A real reduction of state expenditures has been a major
reason for the decline of incomes of the population. The state
has sacrificed its revenues to smooth over the crisis which it
generated. The government did not index excise duties and
restrained prices for the products of natural monopolies. At
the same time, it presents as its achievement the fact that it
has actually been able to freeze prices for energy products.
However, this has led to a considerable reduction of state
revenues received from the fuel and energy complex and, what's
more, in the period of the favourable foreign economic
situation! Apart from that, the government reduced the excise
duty on gas from 30 to 15%.
The government also forgave defaulters debts to the
federal budget worth $40 billion. In August 1998-July 1999 the
debts of large and medium enterprises and organisations of
Russia to the budget system (including extra-budgetary funds)
rose from 430 billion roubles to 568 billion roubles. In terms
of US dollars, the debts dropped from $69 billion to $23
billion, i.e. by three times. The debts were largely reduced in
October (from $58 billion to $29 billion), although
simultaneously they rose by 10 billion in terms of roubles.
Debts to the budget were depreciated by the rouble
devaluation. The soft tax discipline resulted in the loss of
state assets worth the sum exceeding Russia's debts to the
London club. The government could have avoided this by indexing
overdue payments to the budget.
The financial position of enterprises has improved thanks
to the growth of export prices, the depreciation of wages and
tax liabilities, and the freeze on the prices for energy
The forecast does not include pre-crisis indices of the
country's social and economic development. However, the volumes
of output of most sectors of the light and food industry,
machine-building and construction, and also production
investments in 1991-1999 dropped by many times; so, their
change by several percentage points today does not have any
considerable macro-economic significance. The increase of
production investments must ensure the transition from the
practice of eating up the production potential to its build-up
and not only in the field of oil and gas production.
It is evident that against the background of multi-fold
fall of the scope of investment activity, such insignificant
yearly changes do not have any noticeable effect on the
economy. The distribution of investments by production and
non-production facilities has been excluded since 1998 from
statistics. In 1991-1998 production capital investments dropped
by 5.7 times and non-production ones by three times.
In 2002 they will measure, respectively, about the 1/5th and
2/5th parts of their 1990 level.
It is necessary to increase the volume of production
investments by several times after elaborating the respective
Who Earns on Economic Recovery
So, the growth of consumption and accumulation has been
inconsiderable. But how do enterprises, their owners and
managers spend additional revenues? The answer to this question
is given by the statistics of the payment balance.
Although the importation of capital into Russia has shrunk
considerably and export has dropped from $103 billion in 1997
to $84 billion in 1999, capital flight continues. Net errors
and omissions measured - $9 billion (the payments balance
indicates with the minus the operations which increase the
requirements for foreign currency). Overall, capital flight,
including the increment of cash foreign currency, residents'
foreign assets, exportation of revenues from investments and
capital transfers, constituted $36 billion or 43% of exports in
If the capital brought out of the country in 1999 would
have been directed to production investments, they would have
tripled. Or this sum could have been used to double the wage
fund in material production (up to 1,174 billion roubles
instead of 600 billion roubles) and simultaneously increase by
220 billion roubles social deductions (and respectively, the
payments of pensions, allowances, spending on medicine, etc.)
and the receipt of the income tax by 70 billion roubles with
the respective growth of the wage fund in the budget-financed
sphere. However, the Russian economy continues to work for the
exportation of capital in the interests of the nouveau riche
and the shadow sector.
Unfortunately, the forecast prepared by the Economics
Ministry reveals a weak understanding of the reasons,
mechanisms and prospects of economic growth in Russia. It fails
to reflect such factors of economic growth as "the scale
effect" (the raising of the efficiency of production with the
growth of its scope as a result of cutting the share of
conventionally fixed costs in production expenses) and the
decrease of the internal/external energy price ratio.
The structure of internal prices has now turned out to
differ greater from world prices than in 1997. In particular,
the prices of gas are several times lower than the prices of
petroleum products (per unit of conventional fuel), although
they must be higher, taking into account the high consumer
properties of gas. Undervalued prices of energy products
(which, for example, make aluminium external tolling efficient)
mean the transfer of a part of natural rent to the consumers of
raw materials (to enterprises and the population).
But among this population there are quite well-to-do
people and citizens of other countries who live and engage in
entrepreneurial activities on the territory of Russia without
the payment of taxes to its budget. Undervalued prices of
energy products are the basis for the appropriation of natural
rent by numerous intermediaries, unscrupulous owners and the
heads of enterprises, and exportation abroad.
The Philadelphia Inquirer
11 June 2000
[for personal use only]
A son's assessment of Nikita Khrushchev
Trying to complete the rehabilitation of the Soviet leader's reputation.
Nikita Khrushchev and the Creation of a Superpower
By Sergei N. Khrushchev
Pennsylvania State University Press. 848 pp. $54.95
Reviewed by Walter C. Uhler
In early 1955, just two years after the death of the execrable Joseph Stalin,
Nikita S. Khrushchev (1894-1971) and his fellow members of the Presidium of
the Central Committee of the Communist Party concluded their deliberations
concerning a proposal to spend as much as a billion rubles to build a
world-class Soviet navy.Few Americans knew then, or know today, that the
Soviet leader they best remember for pounding his shoe at the United Nations,
predicting "We will bury you," and placing missiles in Cuba both carried the
fight and delivered the devastating blow against the ambitious naval
An irate Adm. Nikolai Kuznetsov, head of the Soviet navy, warned Khrushchev
in frustration: "You'll answer for this! History will never forgive you!"
For two decades, dating from Khrushchev's forced retirement in October 1964,
Kuznetsov's prediction remained plausible. But with the rise of Mikhail S.
Gorbachev and the rise to power of the "men of the 1960s," individuals who
came of age during the relatively permissive Khrushchev era, Khrushchev's
Sergei N. Khrushchev's fascinating and provocative book about his father,
Nikita Khrushchev and the Creation of a Superpower, constitutes a powerful
attempt to complete it.
The son persuasively demonstrates that, during the elder Khrushchev's years
in power (1953-64), "Father" transformed the Soviet Union into a nuclear
superpower while simultaneously cutting back on defense spending. Believing
that missiles rendered bombers, tanks, artillery and the surface fleet
obsolete, Khrushchev oversaw their retirement (as well as that of half the
troops who manned them) while subjecting new programs for such weapons to
Sergei Khrushchev was in a position to know. In 1958, at the age of 23, he
began 10 years of work as a control systems engineer at the Soviet missile
design bureau. Complementing his knowledge of the bureau's efforts to equip
submarines with missiles was the information he gathered while accompanying
his father to other design bureaus or meetings at which designers and
military leaders discussed Soviet weaponry.
Sergei Khrushchev also was privy to his father's views concerning
international politics, which they discussed during long after-dinner walks.
The younger Khrushchev has supplemented this direct knowledge with the work
of other scholars.
Nikita Khrushchev felt genuine outrage every time a U-2 spy plane
"insolently" penetrated Soviet airspace. Angered by what he perceived to be
America's arrogance and hypocrisy (the United States would never have
tolerated such flights over its territory), Khrushchev also feared that
intelligence data would reveal that his nuclear arsenal was actually quite
small. In his mind, once the Americans knew, it was a near certainty that
they would launch a preemptive nuclear attack.
Khrushchev's obsession about downing the U-2 resulted in one pilot's
receiving an order to ram the intruder, even if it cost him his life (the
pilot's aircraft was unarmed). The chaotic, frenzied and uncoordinated
responses that ultimately destroyed Gary Powers' U-2 also led to the downing
of a Soviet pilot.
In Khrushchev's view, nuclear missiles were the great equalizer. He was
delighted to learn that merely five such missiles could destroy England. Not
that he intended to use them. Sobering firsthand experience in the mutual
carnage with the Nazis extinguished any desire for war. England simply would
curb its imperialistic impulses as soon as it knew what he knew about his
missiles. And the development of a sufficient number of intercontinental
ballistic missiles - neither parity nor superiority was necessary - would
similarly deter the Americans.
If bluff or bravado could inflate the threat, so much the better.
Thus, an exaggerated nuclear deterrence became the cornerstone of an
essentially defensive military doctrine, which permitted massive reductions
in military manpower and conventional weapons, thereby emancipating rubles
for domestic programs.
Consequently, after one discounts the hotheads and those whose duty it was to
theorize or plan to fight a nuclear war - the Soviet counterparts of U.S. Air
Force Gen. Curtis LeMay, among others - it becomes clear that some respected,
vocal and predictably conservative American scholars got it quite wrong when
claiming that Soviet military expansion was relentless (William Odom) or that
the Soviet Union thought it could fight and win a nuclear war (Richard Pipes).
Nevertheless, Khrushchev's fears about an impending American invasion of Cuba
prompted him to deploy the great equalizer there. But it was precisely in
Cuba, in late October 1962 , where the Americans called his bluff by
compelling him to remove the missiles.
Or did they?
Contrary to the early conventional wisdom in both the United States and the
Soviet Union, Sergei Khrushchev asserts that the international humiliation
associated with removing the missiles masked important Soviet victories.
Not only did the United States agree not to invade Cuba, but it also agreed
to remove its missiles from Turkey.
Most significant, Sergei Khrushchev writes, "as a result of the Cuban Missile
Crisis, Father achieved what he was striving for all those years: American de
jure recognition that the Soviet Union was its equal in destructive power."
Nuclear annihilation scared the wits out of the American people, leaving "a
permanent mark on the nation's historical memory," the younger Khrushchev
Sergei Khrushchev's determined effort to present matters from his father's
perspective, combined with a son's sympathies, yield obvious, if minor,
exaggerations, distortions and omissions throughout the book.
Nevertheless, Sergei Khrushchev is quite aware of the significant historical
irony that must logically follow from his account. Not only was his father
the leader who directed the Soviet Union's transformation into a superpower,
but he also was responsible for creating the conditions that led to the
demise of the superpower.
In the son's words, after Nikita Khrushchev's repudiation of Stalin's use of
terror, the party apparatus, "obedient only yesterday, stopped carrying out -
or simply ignored - any of Father's orders it didn't like."
Khrushchev's failure to reform the Soviet economy provoked Leonid I.
Brezhnev's quasi-Stalinist reaction (including a significant increase in both
conventional and nuclear weapons production), which ultimately cried out for
Gorbachev's (failed) attempts at perestroika.
The rest is recent history.
Walter C. Uhler writes on Russian and military history for various
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