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Johnson's Russia List


June 16, 2000    
This Date's Issues: 4370

Johnson's Russia List
16 June 2000

[Note from David Johnson:
1. AP: Lawyer Pushes For Gusinsky's Release.
2. New York Times editorial: Mr. Putin and the Plutocrats.
An Interview With General Director of the Institute of 
Regional Research Maxim DIANOV.
4. Radio Ekho Moskvy: Interview with Grigory YAVLINSKY.
5. Paul Kindlon: 14 theories on Gusinsky's arrest.
6. Paul Backer: 2 Cents' worth on Putinshina and Gusinsky (a modest rant).
7. Ray Smith: Gusinsky Arrest, Kremlin Politics, Western Response.
8. Nathan Stowell: Gusinsky's Lawyer.
9. Segodnya: Ivan Trefilov, THE GOVERNMENT HAS NO PROGRAMME.
It only has dreams and the departments' wishes. 


Lawyer Pushes For Gusinsky's Release

MOSCOW (AP) - Prosecutors should listen to President Vladimir Putin and free 
media tycoon Vladimir Gusinsky from jail while corruption allegations are 
investigated, his attorney said Friday.

Putin said Thursday during a trip to Germany that he believed arresting 
Gusinsky was excessive, and that prosecutors could have accepted a promise 
not to leave Moscow until the case was resolved.

``Today we will see that final act of this tragedy, or rather this 
tragi-farce,'' attorney Pavel Astakhov said on NTV television. ``The 
prosecutor-general's office has nothing else they can do. Otherwise, they are 
not listening to the opinion of the president.''

International pressure is increasing for the release of Gusinsky, who was 
arrested Tuesday and who says he is in jail because the government fears a 
free press. Putin denies that, and prosecutors say Gusinsky is suspected of 
taking part in the theft of $10 million in state funds in a privatization 

Gusinsky spent his third night in Moscow's dismal, overcrowded Butyrskaya 
jail awaiting a visit from prosecutors who were to formally present him with 
the charges against him.

But Astakhov said he had ``no doubt'' Gusinsky would be released after the 

``They will beg Vladimir Alexandrovich Gusinsky to leave,'' he said.

Gusinsky heads Media-Most, whose news organizations - including NTV - have 
offered critical coverage of the war in Chechnya and alleged Kremlin 
corruption and intrigue.

Igor Malashenko, Media-Most vice chairman, said Friday the arrest was meant 
to intimidate NTV and the holding's other media outlets.

``I returned to Moscow to ensure the normal work of Media-Most and its 
media,'' he told reporters at Moscow's Vnukovo airport after returning from 
Germany. ``So I want to emphasize that the organizers of Gusinsky's arrest 
have failed in their immediate goal, which is to frighten us and force us to 
stop our normal work.''

But the investigator in charge of the case, Valery Nikolayev, told Russian 
state television that there were no ``political motives'' and that it was ``a 
common criminal case.''

``I personally made the decision to arrest suspect Gusinsky on the basis of 
the materials we had,'' Nikolayev said. ``I would like to officially state 
that no one has exerted any pressure on me.''

The arrest has set off an avalanche of criticism both within and outside 
Russia. It upstaged Putin during a trip to Spain and Germany, forcing him to 
answer questions about why a leading media and business figure was in jail.

A group of prominent American CEOs, led by former Ambassador Robert Strauss, 
announced that because of Gusinsky's arrest, it would postpone its trip to 
Russia, which had been scheduled to begin Tuesday. The group, representing 
the U.S.-Russian Business Council, was to have met with Putin.

In Moscow, U.S. Ambassador James Collins met with Russian officials and urged 
that Gusinsky be guaranteed due process and protection of his rights, an 
embassy official said.

The fact that Gusinsky heads a major Russian Jewish organization has added 
fuel to the fire, with Israeli Prime Minister Ehud Barak calling on Russian 
officials to reconsider the arrest.


New York Times
June 16, 2000
Mr. Putin and the Plutocrats

The shape of Vladimir Putin's presidency could well be determined by the 
unfolding clash between the Russian leader and the small group of business 
titans who control much of their nation's wealth. Certainly, Mr. Putin faces 
no more difficult task than determining how to curb their political and 
economic influence without trampling on Russia's newly found freedoms. His 
government has not made a promising start by arresting Vladimir Gusinsky, an 
oligarch who owns Russia's only independent television network and some of 
its most fearless newspapers and magazines. Mr. Putin seemed to acknowledge 
as much yesterday when he called the arrest "excessive." 

There is good reason to be alarmed by the raw power often exercised by the 
tycoons. Like the moguls who built corporate empires in the United States in 
the first decades of industrialization, the Russian business barons have 
taken advantage of an unregulated economy to gain control of banks, 
transportation systems and natural resources like oil and gas. With a hand 
from government officials, they bought valuable state enterprises for a 
pittance when the Kremlin privatized Russia's industrial assets after the 
collapse of the Soviet Union. 

They have used their wealth to manipulate Russian politics to protect their 
financial interests. Sometimes those interests have dovetailed with reform, 
as when the oligarchs supported Boris Yeltsin for re-election in 1996 against 
a Communist opponent. But that is not always so. The tycoons, for example, 
have opposed effective banking regulation and an overhaul of Russia's broken 
tax system. 

Russian democracy will remain stunted as long as the oligarchs retain a 
stranglehold on the economy and the Kremlin. But the problem cannot be solved 
overnight, nor can it be remedied by arresting the businessmen or misusing 
prosecutorial powers to intimidate them, which seems to be the case with Mr. 
Gusinsky. Rather than reverting to the practices of a police state, Mr. Putin 
must begin the hard but essential work of creating a system of law and 
regulation that over time diminishes the power of the magnates and insures a 
more equitable distribution of economic assets as Russia develops its 
free-market economy. 

Because Mr. Gusinsky and some of the other moguls like Boris Berezovsky, 
Vladimir Potanin and Mikhail Khodorkovsky own large news organizations, any 
government move against the oligarchs inevitably raises sensitive free-press 
issues. The arrest of Mr. Gusinsky this week was especially unsettling 
because his media companies have carried the most critical coverage of Mr. 
Putin and the war in Chechnya. The growth of a robust and inquisitive free 
press in Russia has been one of the most encouraging developments since the 
demise of Communism, and should not become a casualty of conflicts between 
the government and the oligarchs. Mr. Putin must find a way to challenge the 
power of the tycoons that does not eviscerate the liberties Russians so 
recently won. 


Novaya Gazeta
No. 23
[translation from RIA Novosti for personal use only]
An Interview With General Director of the Institute of 
Regional Research Maxim DIANOV

Question: The president's initiatives on Russia's 
federative setup are anything but unexpected. Yet nobody has 
expected them to see the light of day this fast and in this 
shape. What do you think is the reason for such haste? Does the 
Kremlin fear that the popular support for Putin may soon taper 
Answer: The president's rating is bound to go down. This 
reason [for haste] is self-evident. I think the Kremlin is 
readying for more serious trouble to come. The previous Russian 
experience indicates that the country not only can live with a 
zero-rating president - he can be reelected for a second term 
in office. 

Question: What kind of trouble do you mean?
Answer: Russia is inevitably heading for an economic 
crisis, for its economic system has for years been trying to 
combine two irreconcilable phenomena - rough lobbying, on the 
one hand, and a purely market ideology, on the other hand. The 
market will fail in these conditions and a crisis will be 
inevitable. I don't know whether is should be compared to the 
August 1998 crisis, because everything may be even more 
catastrophic. It may be a full-scale emergency. 

Question: Do you think a general crisis may start with an 
energy crisis? Experts say that the country could survive on 
coal and furnace fuel, even if there were no electricity.
Answer: A real, full-scale energy crisis in Russia can 
only be artificial. Everybody is used to the chain - energy 
crisis-transportation crisis-food crisis. Why cannot a general 
crisis begin with a food crisis?
Specialists have long been talking of threats to the food 
security. A country importing over 30% of its food is beyond 
the line of food security. This country is importing more than 
30% of its food. Moreover, one cannot exclude a situation where 
the West may introduce economic sanctions to protest against 
the war in Chechnya. 
Thus far, the above is purely hypothetical, but a crisis 
needs not to be provoked in a country where the economy has 
been undergoing all sorts of crazy experiments for a decade. 
These days, armed people are used to seize one factory after 
another in Central Russia. Do you think an order to seize power 
plants or food depots, rather than post and telegraph offices, 
is that impossible?
A keen watch of the forms and rates of reforms in the 
country is apt to conclude that the Kremlin is awaiting an 
emergency situation - very soon, judging by its haste. 

Question: Do you think the authorities are poised to use 
armed force somewhere else apart from Chechnya?
Answer: I don't. But to keep down angry reactions in this 
or that sector and to strictly control the distribution of 
resources between the regions, they may have to use force, or 
at least demonstrate it. 
Russia's new military doctrine has lowered the threshold 
of using nuclear weapons. This does not mean we are ready to 
use them under whatever pretext, but the nuclear weapons is a 
lever of containment, and the new doctrine is largely a 
doctrine of containment. The presidential initiatives, were 
they to be adopted as they are, would build a 'federalism of 
Question: Do you view them positively?
Answer: It is hard to negate the need of a reform of the 
state setup. But one gets the impression that this is being 
done instead of, rather than in parallel with, the effort to 
prevent the crisis that may result in a social catastrophe.
Transcript by Indira DUNAYEVA.


June 15, 2000
Radio Ekho Moskvy
Interview with Grigory YAVLINSKY
by Aleksei Venediktov
[excerpts in translation for personal use only]

Q: In the past two days, all political forces are studying the consequences
and the meaning of the arrest of Vladimir Gusinsky. Your comments?

A: It is obvious for me that this is an act directed towards the liquidation
of independent press in Russia. This is an attempt to liquidate independent
sources of information and to untie the hands of security services. This is
a signal for the entire country. I want to emphasize that this is just an
episode that became known to all, but there is a larger offensive underway
against democratic rights and freedoms. Actions of this sort have being
practiced for the last several weeks, it's just the arrest that attracted
everybody's attention.

(...) Q: To what extent today's Russia is seen by Western politicians as a
reliable partner?

A: There is a general answer to all your questions: a government under which
independent mass media are being persecuted for political reasons cannot be
a reliable partner in anything. This is a government that is afraid of its
own citizens, which means that the country is ruled by a clique, not by its
citizens. No one makes any deals with such countries. This is a path toward
degradation. A struggle against its own citizens turns a country into a
pariah state.

Q: You mentioned that Gusinsky's arrest is an important element but only a
part of the new system that is shaping up in Russia. Do you have any other
indicators showing the nature of this system?

A: (...) Gusinsky's arrest is only the top of an iceberg. This is just a
signal that now anything goes. But I know that over the past several weeks
independent newspapers ceased to exist in a number of regions, I also have
the information about the newly launched FSB recruitment of students in
institutions of higher education. Students are being forced to sign
agreements of cooperation with special services, their relatives are being
threatened, some are being expelled from school for declining to cooperate
or for not agreeing that fast...

Q: Do you have any facts in mind?

A: Yes, and I sent a formal letter of inquiry to the FSB Director and to the
Prosecutor-General. One example is Dmitry Barkovsky, a student from
St.Petersburg, who worked in the electoral campaigns for the Duma, the
presidency and the governorship. He was summoned to dean's office, there
were FSB operatives, and they demanded that he give a secret letter of
consent to cooperate. They assigned him an agent's nickname, and ordered him
to provide information on Yabloko's activities.
There are also other examples as well. Some people were told, that if you
don't provide us the information we need, then we might send you to fight in

Q: It turns out that, for FSB, being a soldier in Chechnya is not an honor,
but rather a way of intimidation.

A: True, this is the way that security services see what is going on in
Checnya. To sum up, there are large-scale developments going on, in many
regions, with regard to many individuals with an independent voice.

Q: It is hard to explain this by referring to president Putin's provenance
from the KGB. Do you think that the nation as a whole is prepared for such a

A: You know my views: this stems from the way the reforms were conducted,
which only froze repressive mechanisms but did not destroy them. What we see
now is a takeover of new positions for yet another repartition of property,
for the transfer of access to money and resources from some monopoly groups
to other such groups.

Q: Why should someone be put behind the bars if he can simply be driven to

A: Well, this is an act of intimidation. The reforms were conducted in such
a way that they produced 3% of extremely rich and 97% of extremely poor
people. These people don't see any of this as something they should care
about. Why is it possible that in St.Petersburg there is one businessman
murdered every other day, but governor is reelected? Because people believe
that this is all the settling of scores between the rich.
(...) Those people who are not indifferent to the future of their country
must establish a firm style of dialogue with the authorities. One should
become a real democratic opposition, and to defend one's Constitution and
the laws.


From: "Paul Kindlon" <>
Subject: 14 theories on Gusinsky's arrest
Date: Fri, 16 Jun 2000 

Over the past few days there have been no less than 14 theories floating
around Moscow suggested by pundits, journalists and others suggesting
reasons for Gusinsky' arrest. Here is a summary. The very latest theory is
listed last ( # 14). 
1) He's being used an an example to show other oligarchs that Putin is
a) Gusinsky is a non essential oligarch and therefore not an "untouchable".
2) He's being used to show the public that Putin is THE BOSS and an
opponent of
rich businessmen/ criminals. See point 1 a. above

3) It's only the beginning of a sweeping anti-corruption campaign.
4) It's a natural consequence of the " fact" that the KGB ( sorry FSB)
and military
pulled off a silent coup back in the winter of 1999. Yeltsin was forced
to resign and
nominate Putin who along with others inm the KGB are determined to turn
back the
5) It's the beginning of an anti-semitic campaign orchestrated by
powerful elements in the KGB.
6) It's a favor to Berezovsky who hates Gusinsky with a passion.
7) It was done on orders of Berezovsky who is actually a shadow member (
# 2) in the current
8) It was done to extract money from Gusinsky's Media fortune. He is - if
you will- being held
hostage until his lawyers hand over a huge amount to free him. Gusinsky
owes alot of money.
9) It was done on orders of Putin because Gusinsky refused to get rid of
the Putin
puppet on Kukly.
10) It was done as revenge for Gusinky's trick of having Clinton do a
live call-in
show on the radio station Echo Moskvy ( owned by Gusinsky)
11) It is another step in the direction of eventually shutting down the
TV station NTV because the Putin government is planning an all out final
assault on Chechen
rebels in the near future and does not want any news about very high
casuality figures among
Russian soldiers being communicated to the public.
12) It is another step in the direction of shutting down an independent
TV station because the Putin
government is planning some economic changes that will hit the average
Russian very hard
( utility rate hikes etc.) and it does not want any critical voices
stirring up trouble by showing coverage of suffering and/or outraged
citizens on the nightly news.
13) It was an intrigue orchestrated by Voloshin and family members to
punish Putin and embarrass him on the world stage. Putin has lately
been keeping company with family enemies Yuri Luzhkov ( the mayor of
Moscow) and Yevgeny Primakov, the former PM. 14) It is part of a
struggle between the current FSB and former KGB officers who are now
involved in various security operations for powerful businessmen and who
themselves have formed a powerful unofficial security/intelligence
organ in competition with the FSB. 
Dr. Paul Kindlon Moscow Linguistic University 


From: "Paul Backer, Esq." <>
Subject: 2 Cents' worth on Putinshina and Gusinsky (a modest rant)
Date: Thu, 15 Jun 2000 

As much as I enjoy comparing U.S. and RF, in re Gusinsky and the proud dawn
of Putinshina, it's a morally bankrupt argument.

It's a fantastic disservice to the truth to pretend that RF is something
resembling a democratic market economy, and seek to explain or justify their
conduct. Treating a thugocracy like a real country only confuses the thugs.

It is however, vaguely, amusing to see Putinshina stealing page after page
from Tov. Korzhakov, word for word, act for act.
1. Strong calls for centralized government, to do away from messiness of
2. Sending armed thugs to take over a media company.

It does the heart good to see a "democratically elected" head of a nation of
150 million persons, following the proud Russian tradition of rounding up
Jews. Another minority whose back he can ride in search of popularity.
Turns out Putin is more of a Russian traditionalist than a democrat, an
apparatchik or a communist, after all "Zhidi i chernie" is a far prouder
Russian tradition than anything as foreign and recent as "Rule of Law". In
fact it's a recipe to popularity that owes a lot more to Ohranka than the
selfless and tireless work of hordes of EBRD, IMF, World Bank, US AID,
Tacis, Eurasia consultants (some of whom can actually say "Thank you" and
"Good bye" in Russian, and have been known (by rumor) to set foot on Russian
soil outside of their digs in Slavjanskaya, National and Lufthansa Hotels),
and who struggle on at paltry $300 to $400 or so a day. Imagine the boon to
Russia if any of these groups actually paid their taxes in Russia, but hey
... they are too busy helping, and I digress ...

Putnishina, should do wonders for Russia's phony stock market valuation
(stocks up or down by up to 30% in a day without ANY sales), capital flight
problem, now that Putinshina has shown its commitment to rule of law and
protection of private enterprise, should REALLY promote investment and
re-investment. A person would have to be modestly insane to consider
putting a penny into Russia.

Let's hope that the new President of the U.S. will not follow the same
playbook, and dump billions more in U.S. taxpayer money into this
kleptocracy. Unless, it's friend Gore, who has already proven his
commitment to cutting multi-million dollar checks through the GCC et al to
Russia's criminalized elites. A particular laugh riot was a "law"
conference that dumped $1.5 million directly into the lap of RF's
unregenrate communists and criminal elements, an amusing aside is that a
substantial portion of that budget was "black" funds through Los Alamos, an
institution with proven unique problems adjusting to democracy.

Oh well, as they say ... live and NOT learn.

On the other hand watching CNN, NYT and the other usual suspects perform
peregrinations to justify this one, after all ... Gusinsky was involved in
improprieties, and after all Talbott, US AID, IMF, WBank and others, MUST
have taught the Russians something. And hey aren't the oligarchs all Jews?
After all billions of U.S. taxpayer funds couldn't have been just simply
wasted and enriched no one other than Western Hotels, Jazz Cafe and Delta

Isn't it about time, we cut these thieving deadbeats off from the public
trough? Haven't we had enough of $5,000 a minute "dog and cat" cartoons (no
it's not a joke, it was an actual Rule of Law project) to teach the poor
backward Russians how to live?

If we don't cut off these deadbeat (forfeited on sovereign debt) thugs (ski
masked goons raiding newspapers) who achieved political success by
scapegoating Jews and other minorities, this will continue getting uglier.
Further, appeasing Russian kleptocrats has a very proven record.

I don't mind the financial success of our myriad selfless consultants just
b/c they can't point to ANY tangible results for billions spent, I just feel
bad for the thousands of Russian college graduates who can't get jobs even
at $200 a month, b/c no one will dump money into a thugocracy.

PS. I cheerfully welcome rebuttals from said selfless consultants,
particularly if any of them are accompanied by tax records on rental
payments for russian office space, Russian staff and telecommunications
services. Any takers? Thought not.


Date: Thu, 15 Jun 2000 
From: (Ray Smith) 
Subject: Gusinsky Arrest, Kremlin Politics, Western Response

There are only two alternatives. Either Putin knew beforehand and approved
Gusinsky's arrest, or he did not. Nothing beyond those straightforward
alternatives is simple, however, since the next step leads into the murky
cesspool of Russian domestic politics, where 'neglasnost' still prevails. 
If Putin knew, we must conclude that he does not intend to allow freedom of
the press in Russia. Charges of tax evasion and illegal financial dealings
could be brought against any of Russia's robber barons, as they have
themselves recognized. An argument could be made that if Putin is to bring
corruption in Russia down to a "normal" (for Russia) level, he will have to
bring one of the oligarchs to trial as an example. Gusinsky does not stand
out as appreciably more or less corrupt than the others. He does, however,
stand out as head of a media conglomerate that has been critical of the
Kremlin and the "family". If he has been chosen by Putin, it is not to end
his corruption, but to silence his media voice.

If Putin did not know in advance, his opponents (presumably Voloshin, et al)
ordered the arrest while he was abroad with a view to embarrassing him and
demonstrating/reinforcing his political weakness relative to that of the
"family". The limited information available leads me toward that view,
although, I must admit, without great conviction. We know that the
Procurator General was not Putin's first choice and appears to have been
pushed on him by Voloshin. Putin has attempted to broaden his political
base and demonstrate his independence recently by the very public act of
inviting Primakov and Luzhkov to accompany him on trips abroad. Luzhkov, a
long-time ally of Gusinsky, was also out of the country with Putin at the
time of Gusinskiy's arrest. It strains credulity too much to think that
Putin would have approved the arrest without providing guidelines on the
timing. Those who attribute the timing to Putin's desire for plausible
deniability are, I believe, thinking too much in Western terms. In Russian
terms (Russian JRL readers, correct me if I am wrong on this), the timing
more likely indicates that others are powerful enough to take such a highly
visible step without concern for Putin's view. Where, then, does the "real"
power lie?

In either case, freedom of the press is clearly under attack in Russia. 
Gorbachev's glasnost recognized that in an information age, the Soviet Union
could not but fall ever farther behind the developed world if it attempted
to restrict information flow. That remains true. Denial of press freedom
will lead to a Russia that is increasingly irrelevant to the world economy;
it will lead also toward a closed, autarkic, but nuclear-armed society that
will once again be seen as a major threat. The stakes on this issue are the
highest, both for the future of Russia itself, and for the prospects of
creating a more stable international order. The Western response should be
clear and unequivocal. We must support, and be seen to support, not an
individual leader, clan, or faction, but a principle, freedom of the press. 
We should stand with those in Russia who support press freedom and against

those who do not, whoever they may be. That means not simply pious words,
but practical decisions on matters like aid, credits, investment. 


From: "Nathan Stowell" <>
Subject: Gusinsky's Lawyer
Date: Thu, 15 Jun 2000 

Perhaps mistakenly, I seem to recall that when Primakov had issued a warrant
for Berezyovsky's arrest, Berezyovsky was in Paris, and held a press
conference with a lawyer, whom I though was Genry Reznik. This happens to
be one of Gusinsky's lawyers mentioned in the Moscow Times article you
included in JRL 4368.

Can anyone from the list confirm or disprove this ? If I'm not mistaken,
would it not be strange for two rival oligarchs to share one lawyer ? If
I'm mistaken, please pardon my sieve-like memory.


June 15, 2000
[translation from RIA Novosti for personal use only]
It only has dreams and the departments' wishes 

Politicians have already made their forecasts of the 
government's expected actions. In particular, Sergei Glazyev, 
chairman of the Duma committee on economic policy, told this 
newspaper that the programme drafted by the Centre of Strategic 
Studies would be seriously amended to add "common sense." You 
surely understand what this means for a member of the Communist 
Party faction. 
Meanwhile, the indeterminate plans of the Russian cabinet 
actually encourage the West to push Moscow towards more 
energetic reforms. This is why the speech of Charles Frank, 
acting president of the European Bank for Reconstruction and 
Development, about structural reforms in Russia sounded very 
harsh against this background. According to him, progress is 
indistinct in the banking sector and insolvent banks continue 
working. Besides, the crawling pace of the reform of natural 
monopolies seriously worries Frank. As he put it, the split of 
RAO UES should be effected very soon, and he would like to see 
similar proposals concerning Gazprom. 
The acting president hopes the action programme of the 
Russian government would not repeat the fate of its 
predecessors, which remained on paper. It appears that the 
Russian cabinet is entertaining the same hope. Yet it is not in 
a hurry to start acting. 
Judging by the so-called protocol of discontent, meaning a 
list of departmental wishes and amendments to Gref's programme, 
it will be very difficult to start acting. 
The departments are lobbying their interests, which is 
natural. For example, the customs committee cannot accept the 
planned simplification of the registration of legal entities, 
which would reduce the procedure to notification. The committee 
thinks the procedure should be left as it is and has no ear for 
deliberations about "opening entry into Russia," as the 
programme authors say. 
The Central Bank disagrees with a number of programme 
provisions, in particular the one saying that "the situation in 
the bank system is hindering investments." The bank infers that 
the situation is quite satisfactory, despite certain problems, 
and that no radical reforms, which the Western advisers 
suggest, are necessary. 
The Defence Ministry is outraged that defence spending was 
not put on the list of priorities of the budget policy in 
The Interior Ministry demands more freedom for instituting 
criminal proceedings, in particular "criminal responsibility 
for repeated failure to fulfil contractual obligations, for the 
residents' neglect to repatriate illegally removed foreign 
currency." Moreover, the ministry wants to establish "criminal 
responsibility for certain crimes whose apprehension would 
serve as the preventive measures warning against more grave 
crimes." Judging by everything, we will not have an action 
programme until the government finds a compromise between the 



Anchor: Gherman Gref is the man who is thought to be the
author of the President's economic program. 

Q: For how long will the flat income tax of 13 percent hold?
Because after a while the rate can suddenly be lifted to 20, 30 or
50 percent. The people will have been identified, they will have
come into the open.
Gref: First of all, under the draft Tax Code nothing can be
introduced all of a sudden. The reason we are in a hurry to have
these drafts adopted at the spring session is that under Part One
of the Tax Code all the new laws dealing with taxation should be
announced a six months before they are introduced. So, it is
impossible to introduce them suddenly. 
Secondly, we expect that the policy worked out today and
backed by the Duma has a future. The first gain is stability. If we
stop cheating not only the ordinary people who weren't paid
pensions and wages and will now be paid, but if we stop cheating
businessmen, we will gain far more. One must be honest and say that
a flat 13 percent tax rate which is the same for everybody, cannot
last indefinitely. After some time, perhaps in ten years time, it
will have to change, and this is generally understood. But at the
first phase of the reform it is a well-considered and correct move.

Q: Excise is going up. You introduce higher excise, that will
send petrol prices up. Is it another way of spreading among all
what you take from the rich?
A: To being with, a major part of excise is a tax on the rich.
It is applied to activities where there are super profits.
Indirectly and partly, excise is shouldered by the end consumer
too. But to take your example, excise on gasoline increases by six
times, and the end price of gasoline will go up by 20-25 percent.
The decision is not final yet. A team of experts and officials is
working on instructions of the President and the prime minister to
see if the ultimate load on the consumer can be lowered. 
Over the next weeks we will try to find a way out of this
situation so as to increase excise without making end consumer

Q: The most confusing topic that the government has been
discussing since, I think, February is the program. And for some
time now the government's program is directly associated with your
name. Allegedly, you were preparing it and you have prepared it and
submitted it to the government and it has provided the basis of the
government program. But this week Kasyanov tells Volsky that it is
nothing of the kind. Is it a sign of your conflict with Kasyanov?
Is it true that your program can on no account be regarded as the
government's program or part of it? Could you shed light on it? 
A: It has a lot to do with the interest on the part of the
mass media. First, it was unclear what the program was all about
because nobody had seen its texts. Everybody was eager to get hold
of the text. Now interest has shifted a little bit. Now the most
intriguing part is that a) it is not a government program, but that
was clear from the start. It was a program prepared on instructions
of the President at a center working under the government. It is
not a commercial organization. Yes, it is closely linked with the
government and the government was very much involved in this work.
But it is not a government program. It is a suggestion of the
Strategic Studies Institute to the government on the reform
Now, on the Prime Minister's instruction, all the federal
ministries are working on this program. And at this very moment
various economic parts of the program are being discussed in a
meeting at Vice-Premier Kudrin's office where about 30 or 40 people
from all the ministries are gathered and I have just stepped out of
this meeting to join your program. And they are polishing
individual parts of the program.

Q: So, the final program will be quite different? 
A: No, it won't be different because there is no conflict
between Kasyanov, Gref, or Kudrin inside the government. We are all
people who share the same ideology, that is why all these people
are gathered together. The conflict is an invention. One can
understand it because the media need intrigue. But in practice
there is no such thing. 

Q: Thank you for joining our program. 


Source: `Nezavisimaya Gazeta', Moscow, in Russian 15 Jun 00 

According to the Russian newspaper 'Nezavisimaya Gazeta', the arrest of head 
of the Media-Most holding Vladimir Gusinskiy was a mistake the Kremlin could 
have avoided. "The consequences are already there," the paper says, 
describing the arrest as an "unprecedented" event. The following are excerpts 
from the article, published on 15th June. The subheadings are the newspaper's 

Vladimir Gusinskiy's arrest has raised many questions. In the hours since the 
moment of the arrest answers to them have been fired out constantly and most 
often categorically by various people. The leitmotif of the majority of these 
noisy replies is unequivocal: The authorities are in the wrong about 
everything and Gusinskiy is in the right in every respect. 

Anyone who ventures to say the opposite (I have heard almost no-one so far in 
that category) or even tries simply to use the words "possible" or "we must 
look into it" is either ostracized or ridiculed. At best as a simpleton. At 
worst (and this is more widespread) as an accomplice of the special services, 
a persecutor of freedom of the press and, in general, almost as one of those 
to blame for the fact that Vladimir Gusinskiy is behind bars... 

The truth (even if it is not the truth) will be on the side of those who win 
the legal, political and propaganda struggle. Winners are not put on trial - 
that is in the instance of the "Gusinskiy case". And of the "Putin case" 
which arose at the same time. 

It is an unprecedented instance in Russian history of the past decade. 
Unprecedented in all its parameters. Because even in the "Kremlin corruption 
case", which was similar in terms of the scandal it created, with all its 
ramifications and no less scandalous protagonists, no-one was arrested... 

If Media-Most's employees (some of them) can be forgiven what are in this 
situation an understandable one-sidedness ... one would like to hear 
something more intelligible than incantations from those who by virtue of 
their professional or political status could in this instance explain to the 
public and indeed to themselves the thrust of what is happening. Ultimately 
that is their social mission. 

I shall not swear love for Vladimir Gusinskiy, still less swear an oath of 
hatred toward him. Because today both (if only outwardly) hinder objectivity. 
We can speak of love and hatred at some time later - when Vladimir 
Aleksandrovich [Gusinskiy] is free. 

Actually, that is what I wish him today more than anything. That is, not only 
that he leave the detention centre (or prison, as ordinary people call it) as 
soon as possible but also that he prove his complete innocence. And what I 
wish for his colleagues, employees and subordinates at Media-Most is that 
they should not lose their self-control in these days and that later they 
should not lose the right to say and write what they themselves think. 

But right now, nonetheless, let us try to analyse the thrust of what is 
happening. From various sides, even if we do not manage to do it from every 
angle. But at any rate from more than one angle. 

Brief history (of struggle) 

I have already had occasion to assert (generating the corresponding adverse 
reaction in the relevant narrow circles) that the history of the struggle 
(and at certain stages perhaps even the war) between Gusinskiy's empire, 
which I have called an oligopoly (or one of them) and the Kremlin is not the 
history of repression by an authoritarian power against a group of 
publications opposing that power exclusively through the force of freedom of 
speech, and of repression aimed at confusing the free mass media or forcing 
them to fall completely silent. Especially since according to this scheme 
publicized by the Gusinskiy and [Moscow mayor Yuriy] Luzhkov mass media 
themselves there is already no free press left in Russia if you leave out 1), 
the mass media of the Most group and, 2), the Moscow city mass media (Centre 
TV, 'Moskovskiy Komsomolets', and others). 

No, this is the story of the struggle (developing into war) between the 
Kremlin oligarchic grouping and the Most oligarchic grouping. Both groupings 
have been joined by others but the Kremlin grouping has differed from them 
all in that it has largely coincided with the top section of the state 
apparatus, which has at least the outward signs of legitimate state power. 

In this story there have been several stages when the aims of the struggle 
were substantially different and the objects around which the struggle was 
waged were changing. Although the thrust of the confrontation remained 

In general it all began with [ex-Prime Ministers Viktor] Chernomyrdin's 
dismissal and particularly with [Sergey] Kiriyenko's dismissal but we shall 
pass over a number of early stages. 

Spring and summer of 1999. The struggle for and against the promotion of the 
[Yevgeniy] Primakov-Luzhkov tandem to the chief role in a state with a 
Yeltsin who was reigning but not ruling, with Luzhkov's gradual ousting of 
Primakov. Outwardly the struggle was developing mainly around Yeltsin's 
impeachment and the figure of [then Prosecutor-General Yuriy] Skuratov. The 
Kremlin and its allies won and Most lost. 

Autumn of 1999. The struggle for victory at the parliamentary election 
between the blocs put forward by the two controlling groupings - on the one 
hand the Primakov-Luzhkov Fatherland-All Russia [Fatherland-All Russia] bloc 
and its right-wing alternative, Yabloko, and on the other the Unity bloc and 
its right-wing alternative, the Union of Right Forces [SPS]. 

It was a tough and in many ways dishonest struggle but an outwardly legal one 
because it was waged during an election campaign. 

In parallel another struggle was under way: over the federal troops' actions 
in Chechnya. 

And a third struggle was beginning - around the figure of [Vladimir] Putin, a 
man chosen by the Kremlin for the role of the new president (with his 
legitimization in that capacity through elections). Here it is important that 
Putin, being (in reality) already a presidential candidate, was also in fact 
acting commander-in-chief of the Russian armed forces, that is he bore all 
responsibility for the actions in Chechnya. But if a struggle against a 
presidential candidate is permissible a struggle against the 
commander-in-chief during a war is seen by the authorities as an antistate 

And the Kremlin won this stage of the struggle on all three salients - the 
Duma election, the nomination of its candidate at the presidential elections 
and in Chechnya. Most lost but in the case of Chechnya it substantially 
spoilt what had been for the authorities the positive background of the 
federal forces' victories on that territory. 

January-March 2000. The struggle over the presidential election did not work 
out because the defeat of all three main candidates from the Most grouping 
opposing the Kremlin at the parliamentary election left them no chances of 
victory on 26th March. 

But the struggle over the course of the Chechen campaign is continuing 
(particularly clearly in the "Babitskiy case" [when Radio Liberty journalist 
Andrey Babitskiy was kidnapped in Chechnya]. To this is added the struggle 
over "corruption in the Kremlin", launched back in 1999 and the "stooge of 
the Family" topic, extremely offensive to Putin personally [since it makes 
him the puppet of the Kremlin insiders, known as the "Family"]. All this 
posed no threat to Putin's victory at the election but it substantially and 
dangerously undermined the possibility of the first-round victory he wanted. 

And the Kremlin grouping won that stage of the struggle while the Gusinskiy 
grouping lost it. The legal struggle for power thus ended in what seemed to 
be a complete victory for the Kremlin... 

April 2000. The Kremlin and Putin begin to form a new policy, team and 
ideology for their actions. On all these points Media-Most tries to use 
propaganda to impose its own rules of the game on Putin. It demands that 
Putin, 1) free the Kremlin of "the Family's stooges and members"; 2) expose 
"the Family's corruption"; 3) restrict the influx of "people from the FSS" 
[Federal Security Service] to the power structures; 4) avoid pursuing a 
"tough line" with regard to the West; and 5) halt the fighting in Chechnya. 

Once again rightly or wrongly the Kremlin felt that the Media-Most holding 
company and Vladimir Gusinskiy personally, having lost the election struggle 
allowed by the rules, had not ceased their actions as a Russian political 
player, that is that the holding company was behaving as what I call an 
oligopoly - a group disputing the very right to power with the central 

This history of the struggle or, if you like, the Cold War, between 
Media-Most and the Kremlin - even if I am describing it solely and 
exclusively as it was seen from behind the Kremlin walls - inevitably had to 
lead to a heated denouement. 

The economic, behind the scenes and other attempts to reason with Media-Most 
had no effect. Especially since with the aid of that holding company's mass 
media they were all immediately interpreted as an attack on democracy and 
freedom of speech, which was constantly spoiling the image of Russia in 
general and of the new Kremlin team and the new president in particular. 
Although broadly (and not so broadly) speaking the Kremlin had introduced no 
restrictions on freedom of speech or freedom of the press in general or 
against the Media-Most mass media in particular... 

Hot Stage (May-June) 

In May a strong action was taken against a number of Media- Most's nonmedia 
structures. Either it was sloppily planned or it was carried out in a 
deliberately crude manner. 

Media-Most responded with a defensive wave of propaganda (permissible) and 
lawsuits (permissible). But it did not confine itself to that... 

The next round of the struggle, which developed into open war on both sides, 
became inevitable... 

That round ended on 13th June, with the arrest of Vladimir Gusinskiy. 

Could the Kremlin lose this round? It could if it fails to provide very 
persuasive evidence of Gusinskiy's guilt. What should follow that defeat? 

At the very least Putin will have to dismiss all those involved in 
Gusinskiy's arrest. Whatever posts they hold. That is already a lot. 

The Kremlin will have to apologize. And that is still not the most terrible 
thing. The Kremlin will have to admit its defeat publicly. And with that 
Putin will go to Okinawa. To face the bright eyes of the G7. 

The Kremlin cannot allow that. 

And the Kremlin is right not to want it and not to be able to allow it. 

The question is whether the General Prosecutor's Office has legal methods and 
high-quality evidence to make it possible to prevent it. 

I do not know, of course. 

Imprisoning an oligarch 

Putting an oligarch in prison has been an almost universal dream. Why? In 
order to show that a struggle against corruption has begun in the country. 
Very many people expected the implementation of that dream from Putin. And 
many were in fact demanding it. While some were directly indicating which 
oligarch should be imprisoned... 

It is easy to put an oligarch in prison (in the sense of arresting him) just 
as it is easy to imprison almost anyone. But the most difficult part comes 
next. The longer an ordinary person spends in prison, the more he is 

The longer an oligarch spends in prison the more problems there are for those 
who put him there (or who indirectly agreed to it). An oligarch is not 
forgotten, especially when he has mass media over which he has direct 
control. Especially if that oligarch is a very well known figure and (de 
facto) a very influential Russian politician, the leader of one of the 
world's most influential international organizations. 

Of course this is a political case, not a criminal one. Even if its basis, 
whether real or fabricated, it is of no importance, is a purely criminal one. 

You cannot close the mouths of the Media-Most mass media because you will 
prove what they want to prove: That you are against freedom of speech... 

And you certainly cannot close the mouths of US Congress or the World Jewish 

If the calculation was that the majority of journalists did not support the 
Media-Most mass media's protests over the 11th May events then this was 
because those events did indeed affect neither NTV nor 'Segodnya' nor Ekho 
Moskvy. If they had affected them, then all Moscow's journalists would have 
taken to the streets. The Kremlin could not believe in the self-serving and 
unseemly chorusing of some demonstrators about how fear had overcome the 
others. I shall not go to a meeting for the Media-Most holding company but I 
shall go to a meeting for Ekho Moskvy and for NTV's right to say what it is 

Nor could the Kremlin believe that the oligarchs would come to terms with 
Gusinskiy's arrest simply because the Media-Most mass media dropped more 
frequent hints than the others about who should actually be arrested. 

Normal, natural corporate ethics, the self-protection instinct, in fact. No 
one can get rid of them. 

Many oligarchs disapproved of Gusinskiy's conduct and politics. But it was 
possible to arrest Gusinskiy only when and if everyone was openly and 
instantly shown indisputable (utterly indisputable) proof of his guilt... 

In addition the Kremlin has caused its enemies to close ranks. Without so far 
strengthening its support among the masses, it has drastically weakened its 
base among the elite. 

In brief, the "Putin case" has emerged among the elite. 

Rise, the Court Is in Session! 

I shall sum up the interim results (because we will have to return to this 
subject again). 

To present the Media-Most holding company and Vladimir Gusinskiy personally 
as a group of dissidents fighting for freedom of speech against a perfidious 
authority is simply ridiculous. Most, its media, and Gusinskiy itself are 
business and big-league politics which, in the Kremlin's opinion, are 
dangerously at odds with Russia's national interests: Chechnya, the 
discrediting of President Putin, pressure on the Kremlin with the aid of 
foreign and international institutions... 

Is there already a threat to the freedom of the mass media in Russia? In my 
view, as before, not yet, but the authorities have come close to the 
dangerous borderline beyond which such a threat does exist. Especially if 
Gusinskiy's guilt is not proven. After all, something will have to be done 
then. But what? 

So right now many people perceive this threat as a real one... 

In such situations people think in simple terms (and that is natural). No one 
thinks: I am not like Gusinskiy and so they can't arrest me. Contrary to 
legal logic but according to everyday logic people think differently: I am 
not like Gusinskiy so there is even more likelihood that I will be arrested. 
And that does indeed give rise to fear in society. A vile and dangerous 

Finally you cannot fight everyone at the same time. You cannot fight the 
governors and the oligarchs. Even if the fight is a noble one... 

Right now there is practically no need to prove that this is not a struggle 
"against the free mass media" and that Gusinskiy has been chosen because he 
is "the worst oligarch" and not because he is "criticizing the Kremlin". 

A big mistake leads to big adverse consequences. The consequences are already 
there. That means there was a mistake. 

Why did Putin make this mistake, or why did someone make it for him? 

The "Gusinskiy case" and the "Putin case" are being heard at the same time 
and in public. 

Outwardly Putin is in a more comfortable situation. But in some respects it 
is even harder for him to defend himself than it is for Gusinskiy. First, 
Putin does not look like a victim, the way Gusinskiy does. Second, 
Gusinskiy's built must be proved only legally, while Putin's guilt will be 
proved politically and through propaganda. And that is far easier. 

The trial has opened.... Rise, the court is in session! 


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