This Date's Issues: 4385 •
Johnson's Russia List
4 July 2000
[Note from David Johnson:
DJ: I'm back from a wonderful trip to Moscow with my wife
Lisa Cannon. We enjoyed meeting old friends and new acquaintances
and travelling outside of Moscow. My main regret is that I did not
see everyone I should have. I may report on my impressions but on the
other hand the fact is that a week in Russia yields no great insights.
Did you miss me?
1. Bloomberg: Pizza Hut, Kentucky Fried Chicken Return to Moscow,
2. BBC MONITORING: RUSSIAN SCIENTIST GIVES REASONS FOR NATIONAL
3. Moscow Times: Irina Glushchenko, Where We Go to While Away the
Summer. (dacha season)
4. The Russia Journal: Andrei Piontkovsky, It’s all in black and
white. (Overview of some new books by controversial Russian figures)
5. Edward Skidelsky: Russia on Russia. (a new quarterly journal)
6. THE GUARDIAN (UK): Ian Traynor, RUSSIA DYING OF DRINK AND
7. The Sunday Telegraph (UK): Guy Chazan, Putin's ex-KGB cronies
given power to run Russia.
8. Financial Times (UK): Andrew Jack, Russian reform plan strikes
liberals as too good to last.
9. Business Week: Paul Starobin, Open Season on Russia's
Oligarchs. Is Putin behind the drive to rein in the business elite?
10. Reuters: Russia's premier - Putin no authoritarian leader.
11. Boston Globe: David Filipov, Toll rises to 54 in Chechen
rebel suicide bombings.
12. Reuters: Mongolia ex-Communist chief faces power struggle.
13. THE JAMESTOWN FOUNDATION PRISM: Elena Dikun, THE FAMILY FORMS
Pizza Hut, Kentucky Fried Chicken Return to Moscow, Paper Says
Moscow, July 3 (Bloomberg)
-- Pizza Hut will return to Moscow next week when a 140-seat restaurant
opens, to be followed by another later this year, The Moscow Times reported.
The Pizza Hut restaurants will be opened by Rusryba, which bought the
franchise rights from the owner of Pizza Hut, Tricon Global Restaurants Inc.,
the world's largest restaurant owner. A 120-seat Kentucky Fried Chicken
restaurant will open Aug. 9; the franchise is held by a subsidiary of
Singapore-based Acma Ltd., the paper said.
Before leaving the Russian market Pizza Hut hired Mikhail Gorbachev, the last
president of the former Soviet Union, to appear in its advertisements.
RUSSIAN SCIENTIST GIVES REASONS FOR NATIONAL PROTEST
Source: NTV, Moscow, in Russian 0430 gmt 04 Jul 00
 [Presenter] Today, scientists are holding a protest in several
cities across Russia. We now talk live to a member of the Russian
coordinating committee of science unions and a leading employee of the Bakh
biochemistry institute, Doctor of Biological Sciences Aleksandr Malygin.
Hello Aleksandr Georgyevich.
[Q] What are the reasons for a protest of this size?
[A] Science is now in a very difficult situation. Due to new tax
legislation, science faces losing two-thirds of its real budget. Finance
Minister [Aleksey] Kudrin said the science budget has been set at R17.4bn.
Our specialists calculate that about R12bn could go on taxes. Taxes used to
account for a fraction of a billion because of various tax breaks - they
didn't take much of the budget - but now science could just disappear.
[Q] What needs to be done?
[A] The point is that there is money in the country now. The difference
between revenue from tax collection and spending is about R40bn. We have to
simply compensate science for the losses it will suffer due to the new
legislation. Also, it must be revived, so its real budget must be increased
by at least 50 per cent compared with last year.
[Q] As far as I understand, one of your demands is to give the state agency
that is realizing state science and technology policy the rank of a
ministry or state committee. Why do you think this needs to be done and why
aren't you happy with the current state of affairs?
[A] We need this agency, because science needs to be healed, which means we
need a doctor to do the healing. This special agency could be the doctor.
When science gets over its crisis we could return to the current state of
[Q] Thank you.
June 30, 2000
Where We Go to While Away the Summer
By Irina Glushchenko
Irina Glushchenko is a theater critic and freelance journalist. She
contributed this comment to The Moscow Times.
Despite the frequent grayness of the skies this June, the dacha season is in
full swing. During these summer months, hundreds of thousands of Muscovites
will shuttle back and forth from town to country, burdened with groceries,
plants and building materials. And they will get there by various means of
transportation. Some will bump along in buses and elektrichki, or suburban
trains; some will toodle along in their Ladas and Nivas; and some will ease
there in their Jeeps and Mercedes. And the destination for each traveler will
be different: from the village hut to the five-floor palace replete with
everything but a bridge over a moat.
Dacha culture has existed since the time of Anton Chekhov and Maxim Gorky,
and it has spawned a rich mythology. With the onset of summer, those people
who don't have a dacha but do have children are preoccupied with finding a
dacha to rent. Of course, things are different today, but in the old days you
could just go to any village and make a deal with a dacha owner to pay 100
rubles a month. You got a room with a yard, some kind of kitchen and
practically a total lack of conveniences. These days, you can enlist the help
of a property rental agency and choose from an enormous number of options: a
cottage for $3,000 per month or something for $300 for the season f
everything depends on the desire of the client and his budget.
During the Brezhnev period, we started seeing so-called tovarishchestva, or
dacha-building cooperatives, where representatives of a firm or enterprise
could receive an allotment (the famous six sotki, or 6/100 of a hectare) and
the right to build. The house couldn't be more than a single story with maybe
an attic, maximum. A second floor f announcing the high income of the owner f
immediately attracted attention and could get the owner in trouble.
But the real dacha boom started about 12 to 15 years ago, when laws became
more liberal. At that time, it happened that the Brazilian soap opera "The
Slave Isaura" was first shown on television, and the Soviet viewer first
heard that fateful word "hacienda." To this day, even the most modest hovel
is called a hacienda, as in the phrase, "I'm going to plant potatoes at my
And there's another trend: plants, or the mania of city dwellers to "work
with the earth." Dozens of publications have appeared devoted to agricultural
issues, specifically targeted at dachniki. A certain stereotype has emerged,
that a dacha isn't a place to go and relax, but a place where you go to work
f and not just on cultivating your plants, but on building, improving.
Today, suburban Moscow has changed dramatically; a new infrastructure has
grown up, and there is a huge influx of big money in the area. In regional
centers, there used to be only the village general store, swarming with
flies, where you could buy pirozhki, fish and furniture all in the same
place. But now there are supermarkets and minimarkets, cafes, banks, exchange
points. Recently, in the town of Nakhabino, I even visited an Internet cafe.
Also, it's easier to do things in the regions as opposed to Moscow. Goods
there are less expensive, and you can avoid the capital's taxes and red tape.
(Remember the opening of the IKEA store in Khimki, just outside the ring
road? The conflict between the Swedish store and the Moscow authorities is
still being discussed in the press.)
And, of course, there have long been jokes and legends about the dachas f
mansions f of the New Russians. At first, they built their dachas out of red
brick, mercantile solidity and gloominess. Now there's a lot more variety,
but the suburban Moscow landscape is still dominated by the preferred
Once, when I was returning to Moscow on a train from Finland, I found myself
in a compartment with an older Norwegian man who said he was a village
dweller himself. He looked out the window at the landscape speeding by and
was delighted at the sight of our rich-looking villages. He mistook the New
Russian communities for the villages of Russian peasants.
The Russia Journal
July 1-7. 2000
SEASON OF DISCONTENT: It’s all in black and white
By Andrei Piontkovski (email@example.com)
Columnist Andrei Piontkovsky gives his overview of some new books by
controversial Russian figures.
There are authors whose every word you believe once and for good. Take
Alexander Korzhakov, for example. His book "From Dawn to Dusk" is a
priceless testament to the Yeltsin era. Korzhakov has the intellect of a
3-year-old, and is therefore simply physically unable to lie. He just tells
what he saw, and the journalist writes it down. His book is full of
revelations about himself, too, but he doesn’t notice, and that wins the
I had a similar feeling when I read another book written down by
journalists – "Conversations with Vladimir Putin." The book is conceived as
a frank tale of the hero’s life, childhood, youth – what formed his inner
world. You expect to find out in a book like this what books the young
Putin read, what he thought about, what people or ideas had an influence on
The storyteller turns out to be very true-to-life and convincing, painting
a picture of a gray, intellectually impoverished man, who has read, it
seems, just one book in his while life – "The Sword and the Shield," a
popular story about Soviet intelligence officers. He grew up in blissful
ignorance of his country’s tragic history, from childhood dreamed of
joining the KGB and went on to make a very mediocre career there. After 10
years of mundane service in St. Petersburg, (he stood in KGB lines during
the Easter procession), he was finally sent to the least prestigious place
for a foreign intelligence officer – the GDR.
This is the only period that has given rise to some more colorful and
emotional episodes on the pages of this monotonous tale. To be more
precise, there are two events that obviously became highlights in this
young officer’s not especially eventful spiritual life – his acquaintance
with German beer, and a visit to an erotic show.
I tell anyone who still asks that now-famous question "Who is Mr. Putin?"
to turn to Mr. Putin’s book. And it’s best to read the original.
A third author, who I also highly recommend for a bit of reading at home,
is quite a different kettle of fish. Gleb Pavlovsky is the Kremlin’s guru
and political technologies specialist, the ideologue and designer of the
whole Putin project including the Chechen war, and two electoral campaigns.
He has read more books than hundreds of Korzhakovs and Putins put together.
He can turn up to his client’s inauguration wearing a dissident sweater and
stand in the first row of nomenklatura top dogs, demonstrating just what
contempt he holds for his client and for the other top dogs – these
interchangeable lumps of political clay in his projects. He is a character
stepped out of Dostoyevsky, one of the "Devils" of our time.
When he was young, he belonged to a left-socialist group. He didn’t like
the socialism of Brezhnev and Andropov. He wanted to return to the purity
of the founding fathers – Lenin and Dzerzhinsky. Andropov’s KGB didn’t
appreciate the ideological purity of the young romantic. He was arrested,
broke down in interrogations, was put on public trial, expressed his
remorse and gave evidence against his fellow accused.
All that happens now, when in his imagination, and in reality, too, he
appoints presidents, decides the fate of the country and composes the
prescription lists of enemies of Russia, is a gigantic psychological
compensation for the humiliation he suffered. It is the revenge of a
fanatically ambitious and self-opinionated man on Power, Russia, the World,
and maybe the Lord God Himself.
Lately, Pavlovsky has given many interviews in which he details in a
provocatively insolent, cynical and clinically frank manner the upcoming
plans of the power he nourishes to nip in the bud the slightest hint of
opposition to the regime and to build a corporate, semi-Nazi regime along
Latin American lines of 20 years ago.
And the wretched regime loyally wags its tail at its guru wracked and
tortured by personal complexes, and follows his recommendations in a manner
both extraordinarily disciplined and slapdash.
Read and study Alexander, Vladimir and Gleb. You will learn there all about
the recent past, the present and the immediate future of Russia.
(Andrei Piontkovsky is director of the Center of Strategic Research.)
From: "Edward Skidelsky" <firstname.lastname@example.org>
Subject: Russia on Russia
Date: Thu, 29 Jun 2000
"Russia on Russia" is a new quarterly journal on Russian politics and
society, jointly published by the Moscow School of Political Studies and the
Social Market Foundation. Its goal is to bring Russia’s brightest
politicians and commentators to the attention of the West. It aims to give
readers an insight into how Russians see themselves and their place in the
The second issue of "Russia on Russia", published June 30 2000, presents the
results of the most extensive survey of public opinion ever conducted in
Russia. Carried out by VCIOM, the largest research company in Russia, the
survey looks at how Russian attitudes to the state, the market, the West,
religion and morality have changed since the collapse of the Soviet Union.
To receive a copy of Russia on Russia, please contact Edward Skidelsky at
the Social Market Foundation on 0207 222 7060 or email@example.com
THE GUARDIAN (UK)
June 30, 2000
[for personal use only]
RUSSIA DYING OF DRINK AND DESPAIR. DRINK DRAINS THE LIFE FROM RUSSIA
BY IAN TRAYNOR IN ONEGA, NORTHERN RUSSIA
On a scorching June day by the seaside in northern Russia, the murky brown
waters and sandy beaches of the White Sea echo to the happy sound of
It is the best time of year in this decaying little port town that is a
centre of the Russian timber and paper industry. Here in the far north, the
sun never sets for much of June during the White Sea's 'White Nights'.
It's the outdoor party season. But if the paddling toddlers and flirting
teenagers are oblivious to the dangers of bathing in these heavily polluted
waters, the odds are stacked against half of them reaching the age of
retirement in a society in the throes of a full-blown demographic and
public health crisis.
Russia is sick. And President Vladimir Putin knows it. When he stands
before both houses of parliament in Moscow, probably next week, to unveil
for the first time his vision of where he wants to take his country, the
president will vow to 'resurrect the strong and prosperous Russian family",
according to leaks of his draft speech.
The 'resurrection' will take a while. Increasing numbers of Russian women
do not want to have babies. In the decade since communism collapsed, the
birth rate in Russia has halved. A quarter of women of child-bearing age
surveyed in an opinion poll said they had no intention of becoming mothers.
The medical journal, Meditsinskaya Gazeta, reported last month that only
one baby in 10 was born healthy in Russia.
'Pregnancy and child-bearing are about 10 times more dangerous for a
Russian mother than, for example, a woman in Germany," says Dr Mikko
Vienonen, head of the World Health Organisation in Russia.
While the birth rate slumps, mortality rates are soaring, particularly
among males who, according to Dr Vienonen, can now expect to live to the
age of 59, 14 years less than west European men.
'Russia is facing a demographic crisis unprecedented in a developed country
in peacetime," says Dr Vienonen. A male in his 30s is three times as likely
to die in Russia as in western Europe.
Among the reasons for the filth on the Onega beaches is the effluent
pouring into the sea from the town's factory which produces industrial
spirit. But output from the plant is also pilfered and sold at a fraction
of the price of the local vodka, leaving the men of the town blind-drunk
much of the time and killing them off by the hundred.
'The general drunkenness is a disaster, particularly in the villages where
there is no work," says an Onega policeman. 'The menfolk are drunk all day
every day. And it's spirit. The death rate is terrible."
If vodka is the bane of the Russian woman's existence, it is also the big
killer of Russian men, largely responsible for the shrinkage of the
population by more than three million in recent years.
Poisoning from alcohol was to blame for 7% of deaths last year among males
aged 20-55. In the first four months of this year, death from drink has
soared 43% over the same period last year, according to the state
A three-year study by the International Family Research Institute in Moscow
found that among male deaths in that age group, two-thirds died drunk.
Alcohol also plays a huge role in suicide, now the third biggest killer of
middle-aged men, in road accidents, heart disease, and violent deaths.
After a weekend of non-stop bingeing, the study found, deaths from
alcoholic poisoning climb on Mondays. 'As long as a bottle of vodka costs
as much as a kilo of apples, milk is more expensive than beer, and a packet
of cigarettes is cheaper than chewing gum, any country would have a
demographic crisis," says Dr Vienonen.
Data from the state statistics committee paint the grimmest picture of what
some say is a country in the grip of national psycho-social depression.
Deaths outstripped births by a factor of almost two-to-one in the first
four months of this year, cutting the population of 145.5m by almost 300,000.
On average there were 146 suicides a day. The murder rate, 108 a day, was
around four times the rate in the US and almost 20 times that in England
Such shocking figures illustrate the challenges confronting Mr Putin in his
promise to restore Russian dignity, 'greatness", and to nurse in Russian
children 'the spirit of victory that typifies our people". By contrast,
politicians and experts are muttering apocalyptically not about victory,
but about loss, defeat, and threats to Russia's very existence.
The former mayor of Moscow, Gavriil Popov, terms the demographic crisis a
'Russian holocaust". Alevtina Aparina, a member of the duma (parliament)
and social policy expert, describes government neglect of the issue as
'genocide against our own people". Alexander Solzhenitsyn, the writer, has
urged that 'saving the people" be the bottom line of a new Russian
On current trends - and all the experts say the trends cannot be reversed
in the short-term - Russia's population will shrink by one third to 100m by
2025. Birth rates are also low in the West, but there they are coupled with
expanding ageing populations, whereas Russia is seized by 'hypermortality".
'We've reached a watershed," said Nikolay Gerasimenko, chairman of
parliament's health committee. 'It is time to ask whether the Russian
nation will continue to exist. Even if the authorities were to begin to
implement policies beneficial to population growth, decline will continue
for another several years."
The Sunday Telegraph (UK)
2 July 2000
[for personal use only]
Putin's ex-KGB cronies given power to run Russia
By Guy Chazan in Moscow
A SHADOWY body staffed by military and police chiefs that advises President
Putin on security is to be given powers to run Russia under new state of
A Bill given preliminary approval by parliament says that in a state of
emergency, the day-to-day running of the country will pass to the Security
Council, an unelected cabinet dominated by Mr Putin's old KGB allies. The
council groups together army, police, foreign and domestic intelligence
chiefs as well as seven recently appointed governor generals endowed with
vast powers to run Russia's regions. Five of the governors have military or
The legislation adds to the impression that power is being concentrated in
the hands of a tight-knit group of intelligence veterans, colleagues of Mr
Putin from the security service in Leningrad, and raises the prospect of
Russia being run by a junta. It also comes amid a flurry of legislation to
rein in Russia's regions and centralise power in the Kremlin. Mr Putin has
said he needs a strong state to push through economic reforms.
The ex-spies are said to be gaining the upper hand in an intense battle for
influence over the president which pits them against the group of Yeltsin-era
advisers known as The Family. It is The Family, nominally headed by the
tycoon and Kremlin insider Boris Berezovsky, which is credited with plucking
Mr Putin from obscurity to become Mr Yeltsin's successor, and with
engineering his rise to power.
Dmitry Trenin, a military analyst at the Moscow Carnegie Centre, said: "It is
logical that Putin should rely on the Security Council. These people are
close to him and share his security-oriented vision of the world." There are
fears that Mr Putin may be pulled in different directions by the loyal ex-KGB
agents and the liberal economists he has entrusted with reforming Russia's
economy. Mr Trenin said: "If there is a schism, it's clear who the president
will side with - the national security people."
The legislation, passed by the Duma on Thursday, gives the president broad
powers to declare a state of emergency to deal with "political, criminal or
environmental" crises anywhere in the country. The Kremlin would have the
right to close down political parties and muzzle the media. Under the
legislation, Russia's rubber-stamp parliament must adopt the state of
emergency within 72 hours of it being declared by the president.
One clause says that if "urgent measures are required to save human lives"
the new regime could be imposed "immediately and without warning". Such
wording would have allowed the authorities to declare a state of emergency
after last year's apartment block explosions in Russian cities which killed
nearly 300 people and were blamed on Chechen terrorists. The government was
later rumoured to have been behind the bombings with a view to using them as
an excuse for its invasion of Chechnya.
The Bill marks the growing influence of the Security Council. Under Mr
Yeltsin it was a decorative advisory body. Under Mr Putin it has been
transformed into one of Russia's key policy-making agencies. The council, run
by Mr Putin before he was named prime minister, approved a new military
doctrine in April that broadened Russia's authority to use nuclear weapons.
Its confrontational tone was criticised by Nato.
Reports have suggested that Mr Putin's friends in the intelligence community
were behind the arrest earlier this month of Vladimir Gusinsky, owner of
Russia's biggest private media conglomerate, on fraud charges. Since coming
to power, the president has launched an offensive against some of Russia's
most entrenched vested interests, chief among them the powerful regional
governors, who he is trying to strip of their right to sit in parliament's
He has also singled out the oligarchs - the clique of rich businessmen who
amassed vast fortunes through rigged privatisation deals and political
favours during the Nineties. While on the campaign trail, Mr Putin said that
as president he would "eliminate the oligarchs as a class".
Financial Times (UK)
4 July 2000
[for personal use only]
Russian reform plan strikes liberals as too good to last
By Andrew Jack
A 20-page document doing the rounds of Moscow's corridors of power might
just herald the start of radical and long-awaited reforms to Russia's
It contains the outline of a government action programme for the next 18
months, distilled from a far weightier tome with even more ambitious
long-term goals, that was endorsed by the cabinet last week.
There are calls for a shake-up of the tax and customs regime; the break-up
of the country's gas and electricity monopolies and the introduction of
competition; the end of housing subsidies; and even a balanced federal
budget from 2001. They are recommendations that seem almost too good to be
true to many liberal economists.
"It's a wish-list of reforms," says Roland Nash, an analyst with
Renaissance Capital, the Moscow-based investment bank. "When you list them
it all sounds wonderful. It also sounds unrealistic. Russia has a fantastic
record of producing economic programmes but a hopeless record of
implementing them." The whole process by which the programme came into
being raised eyebrows from the start. As soon as he was named acting
president on New Year's Eve last year, Vladimir Putin announced the
creation of the Centre for Strategic Development, originally supposed to
develop a policy agenda for use in his election campaign in March.
Led by German Gref, a young assistant drawn from Mr Putin's native St
Petersburg, the centre took nearly six months to conclude its work, in a
process with a certain taste of Soviet-era planning, notably by citing
economic growth targets of about 5 per cent a year for the next decade.
The report's critique was potent, highlighting, for example, the problems
of a country in which 70 per cent of the population - defined through 236
different categories such as veterans and pensioners - was eligible for 156
types of social payment, most with little regard to their income level.
It took a swipe at the favours granted to the influential business
oligarchs, saying: "No economic agent should be subjected to discrimination
at the expense of others." And it called for the creation of a "subsidiary
state", in which an increasing proportion of medical and schooling
facilities and pensions would be provided by private-sector companies.
What it lacked was detailed policy recommendations or realism on how to
achieve its goals. "The current consensus-building mechanisms shall be
employed," it concludes simply, in one section on how to tackle the
politically explosive recommendation of decentralising budgets.
But over the past few weeks, since the inauguration of Mr Putin as
president, the 400-page report has been halved and a more practical
document developed for cabinet discussion.
Mr Gref has been appointed minister for economic development and trade, and
a group of liberal economists with reformist views have taken roles in
government, notably Alexei Kudrin and Valentin Ulukayev as ministers and
Andrei Illarionov as Mr Putin's special economic adviser.
Since the strong showing of the pro-Kremlin Unity party in parliamentary
elections last November, Mr Putin also has the benefit of a relatively
compliant Duma through which he can push his legislative proposals.
Alexei Zabotkine, an economist with the UFG investment bank, stresses the
importance of the tax reforms, including the introduction of a flat-rate
income tax of 12 per cent, with a further 1 per cent unified social tax
which would, he says, centralise previously off-budget funds.
But he also points out that policy recommendations have been dropped or
diluted, including bank restructuring, reform of the state and measures
against capital flight. He says that reflects the desire to avoid too much
conflict with vested interests.
In the meantime, with the final plan still not made public, the economy is
continuing to grow, largely on the back of high commodity prices and the
August 1998 rouble devaluation. Economists warn that the government has
only limited time to launch reform before these effects diminish.
July 10, 2000
[for personal use only]
Open Season on Russia's Oligarchs
Is Putin behind the drive to rein in the business elite?
By Paul Starobin, with Catherine Belton, in Moscow
Russian financier Vladimir O. Potanin is reeling. On June 20, a Moscow
prosecutor filed a lawsuit charging that the 1997 privatization of his giant
metals company, Norilsk Nickel, was illegal. The company's shares promptly
plunged 10% on the Russian stock market. Unhappy news for Potanin and Norilsk
investors--but few others are weeping.
Potanin is one of the infamous oligarchs--the oligarkhi, as Russians call
them--who amassed a fabulous pile of wealth after capitalism bumpily replaced
communism nearly 10 years ago. In a country where a decent salary for workers
is $200 per month and most folks make much less, an aggrieved public widely
reviles this band as greedy and undeserving. And the magnates well know it.
``I do not want people to hate me,'' Potanin told Business Week three days
after the lawsuit was filed. ``I do not want to be rich in a poor country.''
It's a bit late for such sentiments. Three months after his election, it's
starting to look like open season on oligarchs in President Vladimir V.
Putin's Russia. The upshot could be a new battle for wealth as vulnerable
barons scramble to protect their assets from the government, predatory
rivals, or workers.
CAMPAIGN RHETORIC. There is a lot at stake. A fair-size chunk of the $210
billion Russian economy is subject to control or manipulation by 20-odd
business titans, most of whom operate from fortress-like offices in Moscow,
protected by armed security guards. They control much of Russia's enormously
lucrative natural resources sector--oil and gas, aluminum, and other metals.
Norilsk is the world's largest nickel producer, with 1999 sales of $2.7
Putin set the tone for the crackdown with campaign rhetoric proclaiming
that Russia needed a strong state to eradicate corrupt business titans and
criminals. That's not only a winning populist appeal. It's also music to the
ears of law-enforcement officials, many of whom hail from Soviet times, when
there was no such thing as private property. ``Many people from the
government have the feeling that it's now their time,'' says Moscow
manufacturing baron Kakha Bendukidze, who is worried about threats to his own
The Norilsk lawsuit follows the arrest and detention of Vladimir A.
Gusinsky, who became a media baron after making a banking fortune in the
early 1990s. Meanwhile, the most notorious oligarch of them all, Boris A.
Berezovsky, could be ensnared by a recently reactivated investigation into
whether money from national airline Aeroflot was diverted offshore.
Berezovsky has in the past enjoyed tight relations with Aeroflot management.
In principle, a crackdown on oligarchs can be seen as long overdue, a
quest for justice. After all, most if not all of the oligarchs acquired the
bulk of their wealth through sweetheart deals with the government. The
trouble is, this crackdown looks more like Kremlin politics, spiced with
warfare between rival business clans, than principle. Gusinsky's NTV
television station is a frequent Kremlin critic. Potanin signed a letter
protesting Gusinky's detention. Moreover, his business deals have brought him
into frequent conflict with other powerful magnates, including Berezovsky.
There is a widespread perception, fair or not, that the Norilsk lawsuit is
inspired by a rival who got to the prosecutor. ``Nobody believes that the
Norilsk Nickel case is a real investigation,'' says liberal Duma deputy Boris
Nemtsov, a former Deputy Prime Minister. ``This is a dirty competition
Even those with links to Putin may end up targets, too. Berezovsky wielded
considerable influence in Boris Yeltsin's Kremlin and last year helped to
install Putin as Prime Minister. But now there's a chill. He is attacking as
authoritarian Putin's plan to consolidate power over Russia's regions. For
their part, Putin's allies in the security services have long despised
Berezovsky--they see him as a gangster with suspiciously close relations with
the Chechens--and hope to put him one day in jail. That won't be easy: As a
Duma deputy, Berezovsky has immunity from criminal prosecution that can be
stripped only by a majority vote. His assets, however, enjoy no such
Putin is playing a crafty game. Even as he sets the tone for the crackdown
on the oligarchs, he is not publicly orchestrating the attacks. He knows that
talk of deprivatization scares the Western investors he is trying to attract.
That's why the purge will go only so far. When the Putin government unveiled
its economic program on June 28, Prime Minister Mikhail M. Kasyanov said the
government opposed a wholesale undoing of past privatizations and does not
aim to be an active agent in the redistribution of property.
At the same time, Putin has not spoken out against the new legal threats
to oligarchs. A letter from Potanin, asking for the President's support, has
so far gone unanswered. Sensitive to the popular mood inside Russia, Putin
may not want to deplete his political capital by protecting such widely
disliked targets. Communist legislators, who have supported parts of his
program, certainly don't want to hear such a defense. ``For me, the words
oligarch and criminal are identical,'' says Communist deputy Anatoly
Lukyanov, jailed by Yeltsin for backing the 1991 putsch to keep the Soviet
Plenty of workers feel the same way. Bendukidze is combating an effort by
factory hands to give back to the government a controlling interest in Red
Sormovo, a defense shipbuilding plant in Nizhny Novgorod. Bendukidze acquired
a large block of shares after the plant was privatized in 1994. Sergei
Ivanov, Putin's security council chief, is siding with the workers on grounds
of national security.
RIVIERA ESTATES. The oligarchs have done plenty to stir resentment. Although
the market capitalization of many companies linked to oligarchs declined
after Russia's financial crisis in 1998, the revenue streams remain
considerable. Economists tend to see the oligarchs, with some exceptions, as
short-term cash-flow managers, rather than long-term stakeholders. The
leading oligarchs are undoubtedly responsible for a good-size portion of the
billions of dollars of capital outflow suffered by the economy in the last
decade. The money goes into everything from Spanish Riviera estates to
offshore banking accounts. Precious little seems to find its way back into
Without a red light from Putin, the empires of the oligarchs are likely to
face continued attacks from various quarters. Lawsuits aren't easy to
win--indeed, a Moscow court has already told the prosecutor that the Norilsk
filing is unacceptable in its current form. But such actions nonetheless can
stir up a hornet's nest of trouble, including unwanted attention, for the
Trouble for asset-stripping oligarchs may not be a bad thing. Yet even as
Putin preaches that business magnates should no longer gain special favors
from government, insider deals of the sort that spawned the first generation
of titans continue in his administration. A valuable mobile-telephone license
was recently awarded at a discount and without an auction to a close Putin
ally, Valery Yashin, general director of telecom giant Svyazinvest. Putin
installed Yashin as head of the company last year. The old crew of oligarchs
is sweating, but a new gang seems ready to take their place.
Russia's premier - Putin no authoritarian leader
By Elizabeth Piper
MOSCOW, July 1 (Reuters) - Russian Prime Minister Mikhail Kasyanov laughed
off suggestions on Saturday that President Vladimir Putin was an
authoritarian leader and said the country needs a strong government to
overcome its problems.
Putin's plans to tighten the Kremlin's grip on the world's largest country
and use of his favourite phrase ``the dictatorship of the law'' have been
taken by some commentators as a sign that the ex-KGB spy aims at taking on
Kasyanov, as Putin has done himself, denied such suggestions, saying Russia
would continue on a market-oriented, democratic path.
``There is no sign that authoritarianism prevails in our country,'' Kasyanov
told ORT public television.
``When we speak about strengthening power in the country, it is completely
different. Our life and the problems we have lived through show that the
(older) system of government should be improved.''
Putin, whose no-nonsense reputation for getting things done got him elected
earlier this year by a people sick of political deadlock and disorder, has
said he hopes only to improve the way the country is run.
One of Putin's main wishes has to be to cultivate accord between the two
houses of parliament and the Kremlin -- a policy threatened by a recent veto
by the upper house of his bill to radically change the way the country is
The bill, which would strip Russia's mighty governors of their seats in the
Federation Council, calls for the deepest changes to the way the country is
ruled since Boris Yeltsin enacted the current constitution in 1993.
Kasyanov shrugged off the veto in the Federation Council, saying cooperation
would no doubt continue.
``Today we live in a rather favourable situation when we find that we have a
constructive dialogue with the Duma and the Federation Council,'' Kasyanov
``This is political stability and an atmosphere of political trust. A mutual
desire to help each other exists and I want to hope that we will continue in
the same way.''
He said cooperation between the different decision-making bodies would also
help improve Russia's economy, which has been given a boost in recent months
from high prices for its commodities and oil exports.
``Only half of the positive changes (in Russia) are due to favourable
situation on the world market,'' Kasyanov, who presented a well-received new
economic programme to the government last week, said.
``The other half is linked to fundamental changes in the structure of our
economy...This growth will solve our deep problems.''
4 July 2000
[for personal use only]
Toll rises to 54 in Chechen rebel suicide bombings
By David Filipov
MOSCOW - The death toll rose to at least 54 in Chechnya yesterday from a
series of suicide truck bomb attacks that rocked the war-torn region anew and
shattered Russia's claim that its troops control the rebellious region.
The five nearly simultaneous bombings in four Chechen towns late Sunday,
evidently all part of the rebels' most organized and deadliest attack in
months, took place a week after Russia's senior commander in Chechnya
declared that organized Chechen rebel resistance had been crushed.
In each bombing, large trucks loaded with explosives plowed into buildings
that housed Russian troops. Officials said at least 37 Russian servicemen, 11
civilians and six rebels were killed. More than 100 people were wounded.
In what Russian officials called the deadliest blast, in the town of Argun,
at least 26 Russian servicemen were killed and 81 were wounded when a truck
blew apart a military dormitory.
It was not immediately clear how the large trucks got past the many Russian
checkpoints dotting roads in Chechnya, although Chechen drivers said the
police manning the posts will let anything through for a bribe.
Russian NTV television showed pictures of grim workers searching the wreckage
of a two-story building. The camera showed two beds fastened to one of the
few remaining walls, overlooking a huge debris-filled crater where the the
building had been.
It was the worst setback since early March for the Russian forces trying to
reestablish control over Chechnya, which had been effectively free of
Moscow's control since Russian troops withdrew after a 1994-96 war.
Russian media quoted a statement by the rebel leader, President Aslan
Maskhadov, saying the rebels' guerrilla tactics ''leave the Russian troops no
chance of establishing control in Chechnya.'' A Kremlin spokesman warned more
bomb attacks were likely, following a claim by the separatists that they have
established two battalions of suicide bombers.
As federal troops cordoned off major Chechen towns yesterday and security
troops began a region-wide hunt for rebels, Russia's senior military
commander in Chechnya suggested that part of the blame may lie with a lack of
preparedness among the forces he commands.
General Gennady Troshev said that he had asked federal forces to be
''vigilant, especially when it comes to letting big trucks through the
''Most of the commanders fulfilled this request, but unfortunately, not
everything was done well,'' Troshev said on state-owned ORT television.
It was Troshev who said just last week that the operation in Chechnya was all
but finished. But after more than nine months of fighting, the Russian
military's losses have remained high in recent weeks as a result of Chechen
At the same time, Russian Army troops have been pulling out of Chechnya,
gradually handing over control of cities and towns to Russian police and a
militia under the command of the loyalist Chechen leader Moscow appointed
last month, Akhmad Kadyrov.
The bombings underlined the predicament of the Russian troops. Russian
officers said rebel guerrillas take part in isolated operations, then return
to ''civilian'' life.
Some pro-Russian Chechen leaders suggested the time was right to start talks
with the rebels. But Troshev ruled that out. ''There is only one thing that
can be done: to find and destroy them,'' he said. ''Talks will not help.''
ANALYSIS-Mongolia ex-Communist chief faces power struggle
By Jeremy Page
ULAN BATOR, July 4 (Reuters) - The reformist leader of Mongolia's former
Communists faces a power struggle with leftist hardliners that will decide
the speed and scope of economic change following his party's election
The Mongolian People's Revolutionary Party (MPRP), which ruled for seven
decades under Soviet patronage, won 72 of 76 seats in Sunday's parliamentary
poll on a wave of anger at infighting in the ruling Democratic Union
coalition and IMF-backed economic reforms.
MPRP leader Nambariin Enkhbayar seeks to sideline the leftist old guard,
following the model of British Prime Minister Tony Blair's New Labour,
combining market economics with strong government and higher welfare
But unreformed Communist ideologues and apparatchiks with vested interests in
state industry could scupper his plans by installing a hardline prime
minister, halting crucial economic restructuring and even curbing press and
``The next two weeks will be key for him to rally the new against the old,''
said one Western diplomat. The Great Hural, or parliament, will reconvene in
two weeks and vote on nominations for the premiership.
HANDS TIED BY FOREIGN AID
If Enkhbayar succeeds in forming a new government, he has promised Mongolians
jobs, higher salaries, free education and a more cautious approach to market
``Mongolians are realising these magic words like privatisation don't bring a
better quality of life automatically,'' he said on Monday.
But the burly former translator and Minister of Culture has given few details
of how he intends to pay for such measures, other than by improving the tax
system and developing export-oriented industry.
He has also pledged to renegotiate the terms of financial aid to Mongolia
from the IMF, which has insisted on fiscal and monetary tightening to bring
down inflation and stabilise the currency, the togrog.
But in a country where foreign aid is equal to about 20 percent of gross
domestic product each year, analysts say Enkhbayar's hands are tied.
``The rules in this game are real, and Mongolia's no exception,'' said Bill
Bikales, an economist and adviser to the Mongolian government for the last
``Simply tripling salaries and giving free education without the money in
your budget to pay for it will bring nothing but high inflation,'' he said.
With no alternative sources of capital, Enkhbayar is likely to press ahead
cautiously with a plan to privatise key state firms, such as the national air
``I don't see any danger of a return to a command economy except in some
marginal areas,'' Bikales said.
RETURN TO CENTRAL PLANNING?
However, other analysts said they feared that hardliners would interpret the
MPRP victory as a mandate to revert to the days of central-planning and
oppressive autocratic rule.
The MPRP ruled for 75 years until it was swept from power by the Democratic
Union in the last election in 1996.
``This year's elections went too far to the extreme and could be a step back
in the development of parliament,'' said a commentary in the Zuuni Medee
daily. ``Any good government needs to have some checks and balances.''
Some newspapers suggested MPRP conservatives would nominate Otgonbileg, the
former head of the Erdenet copper mine which accounts for nearly 50 percent
of Mongolia's foreign currency earnings, to be premier.
Otgonbileg was sacked from his position at the mine amid allegations of
corruption and mismanagement. He has denied any wrongdoing.
``These sorts of people are definitely products of the old economic system,''
said one analyst who asked not to be identified. ``They are people for whom
being control freaks comes very easily.''
LIKELY NEW PREMIER
Most analysts said they were confident Enkhbayar would prevail in the power
struggle and be appointed prime minister.
But they said he would have to strike a delicate balance between social
issues and economic necessities.
And voters in what has become one of Asia's most vibrant democracies would
expect results fast.
``There are tough problems here and there'll always be unhappy people who
want to kick out the incumbents at election time,'' said Bikales.
``I think well see this pendulum effect for several years,'' he said.
``Mongolian politics is like Mongolian weather, it moves from one extreme to
THE JAMESTOWN FOUNDATION
A MONTHLY ON THE POST-SOVIET STATES
JUNE 2000 Volume VI, Issue 6 Part 1
THE FAMILY FORMS PUTIN'S GOVERNMENT
By Elena Dikun
Elena Dikun is a political columnist for Obshchaya gazeta.
As expected, the Russian government was formed without any revolutionary
changes of personnel, but the ideology behind the selection of individuals
was very highly charged. Essentially, the president was caught in the
cross-fire between two influential groups--the "Family" (represented by
Aleksandr Voloshin) and the right-wingers and "neutral" members of the St.
Petersburg government (represented by Anatoly Chubais). Both cliques were
fighting to secure important cabinet posts for their representatives. One
senior member of the Kremlin administration summed up the results this way:
"Vladimir Putin did not want to jeopardize his relations with either group,
so he sensibly acceded to the wishes of both."
The skirmish was perhaps most clearly evident in the struggle which
developed around Fuel and Energy Minister Viktor Kalyuzhny, whose job
prospects became a matter of principle for both groups. Public ultimatums
were issued. Sergei Kirienko (at the time still the leader of the Union of
Right Forces [SPS] in the Duma) announced that the Right would only support
Prime Minister Mikhail Kasyanov's government on condition that Kalyuzhny
was not in it. This ultimatum was not delivered to Kasyanov, of course,
because he had no say in the forming of his own government. The Right, just
like Kalyuzhny's defenders from the
Voloshin-Abramovich-Berezovsky-Dyachenko-Yumashev team, were putting the
pressure on Putin.
Deciding Kalyuzhny's fate would not have presented many problems for Putin,
however. When presented with a new candidate one has to make inquiries,
speak with the candidates's former colleagues, request reports from the
intelligence services and the Prosecutor General's Office. But Putin had
been working with Kalyuzhny since August of last year, and if he had not
been able to form an opinion about Kalyuzhny's professional suitability in
eight months, then a few days more would not shed any further light. The
longer the Kalyuzhny issue dragged on, the more it pointed to the fact that
Putin's decision depended on the outcome of a battle going on behind him.
But something occurred which made the "Kalyuzhny question" a matter of
honor for Putin.
This was the appointment of the prosecutor general. When Putin nominated
Yuri Ustinov instead of Dmitry Kozak, the former head of the government
apparatus who had been the declared candidate, any lingering doubts that
Putin was an unwilling captive of the Family were dispelled. If Putin had
overlooked a candidate from SPS such capitulation could have been passed
off as a sign of his independence and equal distance from the rival clans.
But Kozak was Putin's choice. On top of this, Putin wanted to use this
appointment to encourage the "new Petersburgers" group.
Curiously, Chubais played an active part in the intrigues surrounding the
prosecutor general. Some even think that he may instigated it. We are
reliably informed that on the eve of the Federation Council session at
which the question of the appointment was to be decided, Chubais asked his
trusted senators to support Kozak. Those in the know say that Putin had
even signed Kozak's nomination, but that the Family then intervened. Their
effort, which went late into the night, was to persuade Putin to back
Ustinov, because having a "friendly" prosecutor was an essential condition
for a "happy Family." Putin protested by saying that Kozak was also
"friendly," and that the question of confidence in the president's
candidate was a question of confidence in the president himself. And in any
case, how could he reverse his original decision if, thanks to Chubais, the
world already knew about it?
Informed sources say that Voloshin, agreeing that Chubais' untimely
initiative put the Kremlin in an awkward position, played his trump card:
He asked Tatyana Dyachenko to put her father onto the case. When Yeltsin
telephoned Vladimir Putin, Putin gave in. Voloshin quickly redrafted the
nomination, replacing Kozak with Ustinov, and, without registering it in
the office (the secretaries had been in bed for hours), gave it to the
The senators, furious that someone was playing games with them for no
apparent reason, categorically refused to debate the document, which did
not contain the proper reference information (it was neither numbered nor
dated), and thus had no legal force. Nothing could persuade the speaker of
the Federation Council, Yegor Stroev, to change his mind. Then Stroev got
in touch with Voloshin who promised to fax him a correctly drawn up
nomination form. Time ticked by, but no fax came through. Again Stroev
called Voloshin, and this time Voloshin said that Ustinov would bring the
document from the Kremlin himself. But the runner arrived empty-handed.
Eventually, the senators gave in and took Ustinov's word for it that he was
the person Putin was nominating.
After such a demonstration of "family power," for Putin to leave Kalyuzhny
in the government would have been tantamount to a public admission of his
lack of independence. And neither influence group would be happy with that.
The little-known mayor of the town of Kogalym, Aleksandr Gavrin, was
swiftly recruited to the rank of minister in place of Kalyuzhny. The Right
would have been happy with anyone but Kalyuzhny, so they quietly notched
this appointment up as a victory, only to learn that Gavrin had been
recommended by the president of Transneft, Semyon Vainshtok, who used to
work with him at Lukoil. Vainshtok was appointed to his current post by
Nikolai Aksenenko and Kalyuzhny. The new fuel and energy minister--once
again--is a family protege. And, in the end, Kalyuzhny himself was
certainly not hard-done-by: The president appointed him his Caspian
representative, with the rank of deputy minister for foreign affairs.
The overall score in this match, then, was not in the Right's favor, though
it can certainly credit itself with some appointments: Its leader Sergei
Kirienko is the president's plenipotentiary in the Volga okrug, Aleksei
Kudrin and Viktor Khristenko have become vice-premiers, German Gref is
minister of the economy, and Aleksandr Pochinok and Ilya Yuzhanov have
entered the government. The president's administration made no secret of
its categorical opposition to the appointment of Kudrin and Gref. It was no
coincidence that the Kremlin kept leaking to the press stories about how
Gref wasn't up to the job of "economics guru," and that the post of deputy
minister of finance was as high as Kudrin could expect to go. Yet the
Right's gains pale in comparison with the successes of the Family. They
have on their side their own prime minister, Kasyanov, Prosecutor General
Ustinov, Interior Minister Rushailo, Railways Minister Aksenenko, Atomic
Energy Minister Adamov and virtually the entire Kremlin administration
In the opinion of Boris Nemtsov, who succeeded Kirienko as SPS leader in
the Duma, the current cabinet may be considered a "coalition
oligarch-liberal government." It will be torn apart by internal differences
between the two rival groups, which will inevitably tell on its
performance. When asked what Russian government ministers are up to, it is
now possible to answer with confidence: Fighting each other.
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