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Johnson's Russia List


July 6th, 2000    
This Date's Issues: 4387 4388 

Johnson's Russia List
6 July 2000

[Note from David Johnson:
1. AP: Russian Journalists Name Enemies.

3. Matt Bivens: hello from Moscow Times.

5. The Globe and Mail (Canada): Geoffrey York, Canada monitoring 
Russian academic's imprisonment. Sutyagin charged with spying and 
treason for work assigned by Canadian universities.

6. Reuters: Human rights group urges Russia to free academic.
Beware of Indigestion in the Economy.

8. Novaya gazeta: Sergei Kirillov, Berezovsky's Genius and the 
Future of the First TV Channel.

9. Aleksandr Golts, Internal strife 
in the Russian military. Plan lands on Putin’s desk to revamp 
the armed forces.


11. The Globe and Mail (Canada): John Lloyd, Raising the curtain 
on the first 100 days. To convince Russians to spurn brute power 
in favour of democracy, Vladimir Putin - and his admininstration - 
must practise what he preaches.]


Russian Journalists Name Enemies
July 5, 2000

MOSCOW (AP) - Complaining they are increasingly made to feel like enemies of 
the state, a group of Russian journalists struck back Wednesday by publishing 
a blacklist of their own: a list of ``enemies of the press.'' 

Government officials on the list were faulted for affronts ranging from 
refusing to speak to the press to failing to protect the lives of 

The Russian Union of Journalists, the country's largest trade group for 
members of the news media, said it put together the list to draw attention to 
individual officials who blocked the press' efforts to serve as watchdogs for 
Russia's fledgling democracy. 

``It's not an anonymous trend. There are real people behind this,'' said 
Union Secretary Igor Yakovenko. 

At the top of the list was Russia's press and information minister Mikhail 
Lesin, who was criticized for outlawing television broadcasts of interviews 
with rebel leaders in the break away republic of Chechnya. 

President Vladimir Putin, a former KGB colonel, came in second, tied with the 
country's prosecutor general, Vladimir Ustinov. 

While Putin insists press freedoms are crucial to democracy, he has been 
widely criticized for the arrest last month of media tycoon Vladimir 

Another journalist, Radio Liberty correspondent Andrei Babitsky, was also 
detained in January by secret service agents in Chechnya for not having 
proper accreditation and is now barred from leaving Moscow. His reports 
contained interviews with Chechen rebels, and he gave graphic accounts of 
Russian atrocities against Chechen civilians. 

Human rights advocates said that in both cases, the men were targeted for 
being critical of the Kremlin. 

``Especially since Putin came to power, we see the government trying to limit 
the rights of journalists,'' said Oleg Panfilov, director of the Center for 
Journalism in Extreme Situations, a Moscow-based rights group. 

Also on the list was Kirsan Ilyumzhinov, president of the Russian republic of 
Kalmykia. In 1998, Larisa Yudina, the editor of an opposition newspaper in 
Kalmykia, was found stabbed to death after reporting on alleged misuse of 
public funds. 

Former regional government officials have been convicted of the killing. 
Ilyumzhinov has denied involvement. 


Source: `Nezavisimaya Gazeta', Moscow, in Russian 4 Jul 00 

The Internet site of a private journalists' organization is about to
publish almost 600 files containing transcripts of telephone conversations,
pager messages, results of "surveillance", and "operations reports" on
hundreds of Russian politicians, businessmen, journalists, actors, public
figures, and criminals. The files contains not only material "gathered" by
private special services but also data from the regional administration for
combating organized crime, the Federal Security Service directorate for
Moscow and Moscow Region, and the Moscow city hall Moscow Regional analysis
centre. The following is text of report by the Russian newspaper
'Nezavisimaya Gazeta' on 4th July 

The Internet site of the private journalists' organization Agentstvo
Federalnykh Rassledovaniy [Federal Investigation Agency] at will
tonight publish almost 600 files running to approximately 20,000
typewritten pages: transcripts of telephone conversations, pager messages,
results of "surveillance", and "operations reports" on hundreds of Russian
politicians, businessmen, journalists, actors, public figures, and
criminals. The site's chief editor Sergey Sokolov describes the imminent
publication as nothing less than "Russiagate". His editorial office
acquired this database some six weeks ago for a rather sizable amount and
has spent all this time preparing it for publication, arranging material in
alphabetical order and deleting from the files the home addresses, home and
mobile telephone numbers, and passport details of more than 300 individuals
who are well known across Russia. Furthermore, details of any sexual
liaisons and "other dirty linen" were also deleted. 

Today it is already possible to read the transcripts of telephone
conversations by Alfred Kokh, former chairman of the State Committee for
the Management of State Property; former Deputy Finance Ministers Aleksey
Kudrin and Andrey Vavilov; Moscow Mayor Yuriy Luzhkov; Yuriy Chayka, former
deputy general prosecutor of the Russian Federation; Culture Minister
Mikhail Shvydkoy; Information and Press Minister Mikhail Lesin; Anatoliy
Lysenko, former Moscow Government minister of information and press; Unexim
Group President Vladimir Potanin; financiers Arkadiy Yevsafyev, Mikhail
Fridman, Boris Jordan, and Boris Ivanishvili; State Duma Deputy Aleksandr
Korzhakov; and so on. 

Journalists Mikhail Leontyev, Sergey Dorenko, Aleksandr Khinshteyn, and
Yelena Erikssen were being thoroughly bugged and shadowed. There was only
slightly less keen interest in Natalya Gevorkyan, Lev Kolodnyy, Vladimir
Yakovlev, Aleksandr Minkin, Aleksandr Budberg, and Nikolay Dolgopolov.
`Kommersant''s former chief editor Raf Shakirov was actually "under
surveillance" and the results of this surveillance are cited. TV-6
President Eduard Sagalayev; ATV head Anatoliy Malkin; producer Nikolay
Dostal; actors Oleg Basilashvili and Leonid Yarmolnik; and several dozen
other personalities of sociopolitical life were bugged as interlocutors of
Anatoliy Lysenko. 

All the material refers to the period from the early 1990's through the end
of 1998. Scandalous episodes from recent Russian history are most fully
"represented": The so-called "writers case" involving the royalties for the
book "History of Privatization in Russia" by Anatoliy Chubays, Alfred Kokh,
Maksim Boyko, and Aleksandr Kazakov; the story involving the publication of
the book "From Dawn to Sunset" [Ot Rassveta do Zakata] by Aleksandr
Korzhakov; the story about the building of Anatoliy Chubays' dacha in the
settlement of Zhavoronki; and the story about erotic adventures at the
Unexim Bank's Luzhki recreation facility. The material about the late
Mikhail Manevich, who was chairman of the Committee for the Management of
St Petersburg Property, even contains a brief "operations report" on
Vladimir Putin. 

The editorial office has acquired material of this kind running to a
total of 90 megabytes. Less than one-half of the data is being published
after the culling. The site will eventually publish material under the
"Find Your Bug" rubric. This will comprise transcripts of telephone
conversation by hitherto unidentified but obviously high-ranking
individuals who, apart from all else, say that they are "on the way to the
White House", have "just come out of a conference with Chernomyrdin", and
so on. 

In Sergey Sokolov's words, this database appeared in Moscow towards the end
of 1998 and was offered for sale for 50,000 dollars. `Nezavisimaya Gazeta'
wrote about this back on 2nd October last year. Journalists codenamed it
"MOST security service database". But Sergey Sokolov believes that this is
a consolidated database. It contains not only material "gathered" by
private special services but also data from the regional administration for
combating organized crime, the Federal Security Service directorate for
Moscow and Moscow Region, and the Moscow city hall Moscow Regional analysis
centre. Its only link with MOST is the time of its appearance: Major staff
cutbacks occurred at the MOST Group's security department just a month
before the database was "offered for sale". In addition, the database also
contains several files of internal reports and official correspondence from
within that security department. Over a two-year period the price of the
information being published by today fell almost tenfold and
individual files could have been bought for 200 dollars each. 

Sergey Sokolov emphasized in an interview with `Nezavisimaya Gazeta' that
his publication is in no way a targeted "leak" of compromising material but
simply an attempt to submit for the public's judgment a picture of massive
illegal interference in citizens' private lives. Furthermore, Mr Sokolov
said, people would be quite interested in finding out how representatives
of big business sort out their personal financial affairs cynically and
with impunity with help from their friends in ministries and state


Date: Wed, 05 Jul 2000 
From: Matt Bivens <> 
Subject: hello from moscow times

Hello JRL readers,

My name is Matt Bivens and I am the editor of The Moscow Times. After eight
years in Russia, we will be publishing, in about two weeks, our 2,000th 
issue. On this occasion, I wanted to solicit an open discussion on JRL 
about The Moscow Times.

Is it useful? significant? necessary? biased? good for international
relations or bad for them? Alternatively, some might use the opportunity 
of the 2,000th issue of MT to talk about something else -- about the 
state of the Russian/world press in general, about English-language media 
in Moscow, whatever.

My hope is that if enough of a discussion materializes on JRL we could
publish some or all of it in our 2,000th issue (with credits, of course, 
to the Johnson List). Of course, if someone would prefer to offer their 
thoughts more privately, they can always email me directly at

So, I look forward to reading what my fellow Johnson List readers think of 
our newspaper.

Matt Bivens


Text of report by Russian newspaper 'Izvestiya' on 4th July 

One-third of all the money in the country is earned by the wealthiest 10
per cent of Russian citizens. Compared with last year, however, they have
become a little poorer. 

The State Committee for Statistics has summed up the results of Russia's
economic and social development in the first quarter and it transpires that
stratification among Russian citizens remains high. The wealthiest 10 per
cent account for over one-third of the population's entire money incomes
whereas the poorest 10 per cent account for 2.4 per cent. But the
interesting thing is that it is not only the poor who are getting poorer,
the rich are getting poorer too. In the first quarter of last year, the
wealthiest 10 per cent accumulated over 40 per cent of all money incomes
whereas this year the figure was "only" 33.7 per cent. In 1999 the poorest
people accounted for 2.7 per cent of all money, now the figure is 2.4 per

If, however, you broaden the "rich and poor" range, the figures you get are
these: 20 per cent of citizens with the highest incomes "took" almost 49
per cent of the money for themselves (as against 53.2 per cent in 1999).
The least well-off 20 per cent account for 5.9 per cent of incomes (last
year's figure was 6.19 per cent). 

In absolute terms, the number of people whose incomes were below the
subsistence minimum fell in the first quarter this year compared with the
same period last year: One year ago they accounted for 43.6 per cent of the
country's population whereas now the figure is 41.2 per cent or 59.9m people. 

Thus, as the statisticians state, the polarization of citizens in terms of
income level has diminished somewhat over the year. This can probably be
attributed to the fact that since the end of last year those people who
were hit hardest by the 1998 crisis - the middle class - have begun to
restore their incomes. The middle class also "took" some of the money from
the wealthiest people. Although it is patently obvious that there is no
such thing as a full-fledged middle class yet. The subsistence minimum in
the first quarter of this year was almost R1,138 per person with R1,232 for
the able-bodied population. At the same time, according to the statistics,
only 27 per cent of citizens had money incomes above R2,000. The bulk of
the population, according to the State Committee for Statistics' accounts,
have incomes ranging from R600 to R1,600. So things are still tight for the
middle class. 

Real pensions have increased a little. The results for the five months of
this year show the average pension was R611 per month. This is 27.6 per
cent higher than for the same period last year. Furthermore, the
statisticians are confident that in the past five months the real
purchasing power of pensions has risen by almost one-fourth. Admittedly,
the overall statistical picture is not yet favourable: Our lives are
frankly poor. 


The Globe and Mail (Canada)
5 July 2000
Canada monitoring Russian academic's imprisonment
Sutyagin charged with spying and treason
for work assigned by Canadian universities
Moscow Bureau

Moscow -- A Russian judge has rejected an appeal to free an accused spy who 
conducted academic research for two Canadian universities.

Igor Sutyagin, a 35-year-old researcher at a respected Moscow institute, has 
been in jail for more than eight months on espionage and treason charges 
filed by the former KGB, now known as the Federal Security Service.

The Canadian government has chosen only to monitor the situation, in contrast 
to its vocal protests against the earlier jailing of Alexander Nikitin, 
another researcher who faced similar charges.

The FSB has been investigating the research that Mr. Sutyagin conducted for 
Carleton and York universities, but the schools insist that he was hired for 
an innocent study on relations between the Russian military and civilian 

Mr. Sutyagin was originally arrested on accusations that he had gathered 
secret information on Russian nuclear submarines. But after his arrest, the 
FSB began questioning witnesses about the Canadian academic study, which it 
suspects was an attempt to obtain classified information from Russian 
military officials.

A judge in the Russian city of Kaluga ruled last week that Mr. Sutyagin must 
remain in a Kaluga prison while the FSB continues its investigation of him.

His lawyers had requested that Mr. Sutyagin be freed from prison on the 
condition that he remains in Kaluga while the police agency pursues its 
investigation. They are appealing the latest ruling.

Meanwhile, the Canadian government's refusal to lodge any official protest 
against the espionage charges is provoking criticism from some quarters.

"I think Canada is afraid of the FSB too, just as we are," said Pavel Podvig, 
an arms-control researcher in Moscow who is a colleague and supporter of Mr. 

"If Canada just stands by and looks on as the FSB implies that Canadian 
universities are spying on Russia, then we will see more of this kind of FSB 
harassment of people," Mr. Podvig said.

A senior Canadian diplomat in Moscow said there is no indication that the 
espionage charges were directly linked to Mr. Sutyagin's research for the 
Canadian universities. It is "inconceivable" that the FSB could cite the 
Canadian study as evidence of espionage, the diplomat said.

Canada was quick to protest against the Russian persecution of Mr. Nikitin, 
who faced the same kind of espionage and treason charges that were filed 
against Mr. Sutyagin.

The diplomat said that Mr. Nikitin's case was different because Canada 
believed he was "clearly being mistreated." The diplomat did not explain how 
Canada can judge the fairness of the charges against Mr. Sutyagin without 
contacting the FSB or the prosecutors.

Because of the serious charges that he faces, Russian law requires that Mr. 
Sutyagin be kept in solitary confinement. But the Kaluga jail has no such 
facilities, so for several weeks he was held in an unheated "punishment cell" 
without electricity, a toilet or a bed.

After he filed a complaint, he was transferred to a regular cell in the same 
prison. But his wife and parents have been denied permission to visit him for 
the past month.

In the meantime, they are sending him food parcels to supplement the prison's 

"We try to do it every week or he will starve," his wife, Irina, said in an 
interview. "The food ration is one ruble [about five cents Canadian] per 
person per day."

Mr. Sutyagin, a staff member of the Institute of USA and Canada Studies in 
Moscow, was hired in 1998 to conduct interviews in Russia for a team from 
York and Carleton. The project, financed by Canada's Department of National 
Defence, studied civil-military relations in 12 post-Communist countries, 
including Russia.

The FSB appears to be suspicious of the Canadian military's funding for the 
academic study. Mr. Podvig said the FSB has been questioning every Russian 
military official who was interviewed by Mr. Sutyagin, telling them that the 
study was financed by the Canadian Defence Department. The FSB obtained a 
list of the interviews in the Canadian study when it raided the researcher's 
apartment last year, Mr. Podvig said.

The Canadian universities have complained that the FSB's suspicions are 
nonsensical. The study was based on open sources and published openly last 
year, they point out.


Human rights group urges Russia to free academic
July 5, 2000

VIENNA (Reuters) - A leading international human rights group Wednesday urged 
the head of Russia's FSB domestic security agency to release an academic 
detained without trial for almost nine months on spying charges. 

The Vienna-based International Helsinki Federation for Human Rights (IHF) 
said Igor Sutyagin, an arms control expert at Moscow's prestigious USA/Canada 
Institute, had been held in isolation for allegedly passing state secrets to 

The IHF said Sutyagin had no access to such material and all his work with 
foreign academics was carried out in the open. 

``There is very little that seems to suggest any wrongdoing, let alone the 
very serious crime of high treason,'' IHF President Ludmilla Alexeyeva and 
IHF Executive Director Aaron Rhodes wrote in a letter to FSB Director Nikolai 

Russian President Vladimir Putin, a former KGB spy, was also head of the FSB 
until last summer when he was appointed prime minister by then-President 
Boris Yeltsin. 

The FSB, a successor to the Soviet-era KGB, charged Sutyagin last November 
with high treason, a catch-all charge which covers spying and carries a 
maximum penalty of 20 years in prison. 

Sutyagin was denied the right to inform his relatives and lawyer of his 
arrest at the time of detention and reports about the conditions in which he 
is being held reveal gross violations of the European Convention on Human 
Rights, IHF said. 

``His health might already have been permanently damaged,'' wrote Alexeyeva 
and Rhodes. 

The IHF urged the Russian authorities to release Sutyagin immediately, speed 
up the investigation and, if warranted, conduct an open trial in compliance 
with the country's obligations as a member of the Organization for Security 
and Co-operation in Europe (OSCE) and the Council of Europe. 


Date: Wed, 05 Jul 2000
From: "stanislav menshikov" <> 

"MOSCOW TRIBUNE" 29 June, 2000
Beware of Indigestion in the Economy
By Stanislav Menshikov

The Gref program of long-term economic development prepared by the Centre
of Strategic Studies has been approved in a preliminary way by the
government but is still open for discussion with academic circles until
September. Because the program itself is a very general statement of
reforms to implement and economic policies to follow in the next ten or so
years it is not too concrete in details. For that reason some do not
consider it of no practical substance. That is not exactly true. The
positive value of the document is that, for the first time since the famous
"500 Days Program" (presented but never realised in the early 1990s) an
overall systematic and consistent statement of this sort is being made on
the official level. Between then and now most reforms and policies, while
described as true follow-ups of the "Washington Consensus" were in fact
conducted on a controversial, inconsistent and ad hoc basis with the well
known negative results for the economy. The best way of describing that
experience is "wandering in the fog". Contrary to that, Gref's program,
while very general indeed, seems to know exactly where it is heading for.

In simple terms, it formulates a policy concept that claims to be the
"golden mean" between extreme economic liberalism and active government
intervention. The "mean", however, is definitely slanted towards minimising
participation of government in business activity. But unlike earlier
policies, no visible accent is put on speed. As the program unequivocally
states, shock therapy is not applicable in Russian conditions. This is, at
least in words, a healthy diversion from the destructive Gaidar-Chubais
practices of Neoliberal bolshevism.

However, due to its generality, the program can be easily turned either
way. For instance, consider a list of priority measures to be implemented
in the first 18 months also approved by the government. Apart from the new
tax reform it stresses "social reform" which is mainly about reducing many
current social benefits, reworking the pension system with dubious
consequences for poorest majority of pensioners, pushing the so called
housing-communal reform (which amounts to skyrocketing rents without
adequate hikes in personal incomes). In addition, a reform in the fuel and
energy complex is looming, i.e. restructuring natural monopolies Gasprom
and RAO UES, switching non-paying consumers off electricity supplies, plus
raising passenger rail fares, eliminating the possibility of
reprivatisation, creating markets for land and buildings, improving
bankruptcy procedures, reducing government interference in business,
reducing tariffs for imported goods. No mention in this list is made of
raising wages and pensions, modernising the defence industry and protecting
domestic producers despite the fact that these too are to be found in the
big Gref program. If this set of priority measures indeed becomes the
practical program of urgent action, the slant towards liberalism and at
partial shock therapy is even more pronounced. 

The same tendency is apparent in the section on macroeconomic policy where
the professed aim is stimulating long-term growth. To be sure, not a trace
can be found here of such methods as the Keynesian government expenditure
multiplier. The only possible route considered is adhering to the balanced
budget dogma, selective tax reduction and monetary policy stimulants, i.e.
mainstays of Reaganomics albeit liberated from its Keynesian component.
This limited approach will hardly fit the Russian reality of a deflationary

It is also absurd to insist on balancing the budget as a 10-year priority
when that goal has already been achieved. To avoid this absurdity, the
program insists on using the concept of a "real budget" which compares all
financial obligations of the government (including those that are not
currently honoured) with potential resources. On that basis, a deficit
equal to 18 per cent of GDP is discovered and a conclusion made in favour
of major cuts in government expenditure, particularly the social component.
However it stands to reason that if some of the excessive obligations have
already been cut in order to successfully achieve a balanced budget, why
cut them further? Wouldn't restructuring and optimising expenditure be
enough? Apparently not because Gref's program is attempting to lay a
rational foundation for restrictive fiscal policies where they are not
necessary and may indeed be harmful.. 

If it also true that if Russia achieves an average annual growth rate of 5
per cent (as projected) over the next decade, then government revenues will
surely increase at the same or faster speed. Even without economising,
government expenditure will rise accordingly without putting the budget
balance in jeopardy. Chances are that a budget surplus will appear at
current tax rates. Then the choice is between increasing government
expenditure in order to satisfy urgent national needs and further cutting
tax rates when those needs are met. Under sustained growth there is no need
to economise on government spending. Moreover, reduced spending leads to
less aggregate demand and to slower economic growth.

Unfortunately, most government agencies are not interested in
macropolicies. This creates the danger of the government and the public
swallowing a dish of dubious composition. Such dishes usually create
indigestion both in human beings and in the economy.


July 3, 2000
Novaya gazeta
Sergei Kirillov
Berezovsky's Genius and the Future of the First TV Channel
[translation for personal use only]

While we are all watching the clumsy maneuvering of civilian and armed
bureaucrats around opposition TV channels, it is sometimes much more
enlightening to learn about the intricate plans built by some private
individuals with regard to the government media.

Thus, for example, last year, on the 5th of March, the State Duma approved
in the first reading the draft bill entitled "On the Special Features of the
Use of Shares of the Public Corporation ORT [Russian Public Television]". In
the bill, its authors from the NDR, CPRF, LDPR, and other factions, known as
big friends of the media, explained to the readers in legal terms that the
first channel was a jewel in the government's crown. For this reason, it was
proposed "to establish that the transfer of ORT shares as loan collaterals,
their sale and other ways of disposal are to be conducted solely on the
basis of a special federal law," and that "the transfer of ORT shares to any
foreign individuals or corporate entities is forbidden."

Clearly, the very conception of this legislative hodgepodge ran counter to
all our relevant laws that are currently in force. No one has the right to
forbid a public corporation to dispose of its property. But this was not the
most important issue. At the moment of the bill's approval (which coincided
with the peak of [then-Prime Minister Yevgeny] Primakov's attack against
[Boris] Berezovsky) this draft was designed to formalize the status of ORT
as government property and thus to absolve the oligarch from accusations of
conducting a creeping de facto privatization of the government property.

And now, what a surprise! - over the last week deputies of another Duma have
brought the immortal bill back on the agenda. So far, it is just distributed
for internal circulation. And, just by some coincidence, Berezovsky
immediately announced that he is prepared to return a part of ORT shares to
the government. Either he will do it out of his familiar altruism, or, may
be, he just decided to disarm in the face of the party of power.

Meanwhile, it happened to be that some experts have received an assignment
from Berezovsky's trusted associates, to research the particulars about
working with shares of TV companies in domestic and foreign stock markets.
Well, didn't we know before that ORT is a public corporation? At the same
time, informed its readers about secret preparations by Berezovsky
for the purchase of 13% of ORT shares from the government (as of now, he
owns 49%). One concludes that not only does Berezovsky plan to put the
entire channel in his pocket, he simultaneously thinks about selling a
portion of his shares after such a takeover. And he immediately announces
his readiness to return a part of his shares to the government.

What is the point of all this? Who is this deranged foreigner who will agree
to buy this losses-incurring business with all its debts? And not the entire
business, but just a portion of its shares? To be frank, Berezovsky would be
able to sell this black hole only to himself, to his private offshore
company. No investor that can be held answerable for his actions would take
such a gift even if he would be paid for that. It is the same as buying four
square meters in someone else's apartment that is nearly in ruins.

Berezovsky's main task after his takeover of ORT would be to get a maximally
advantageous evaluation of his property. This can be done through the stock
market. It would be sufficient to sell to himself - under a different
persona - 5% of ORT shares for about 300 million. Then the entire
corporation would get a fictitious capitalization value of 4 to 5 billion of
American roubles. This is not a very sophisticated trick - it was mastered
by American crooks in the age of O'Henry.

To sum up, in the middle of summer vacations, Boris Abramovich plans to
become the proprietor of a national sanctuary, and then, by masquerading as
a foreign company, to inflate the value of his new property to an impressive
sum of money.

At this moment, all the state-oriented patriotic public opinion will raise
its voice: "How could it be that this impudent Freemason bought a control
number of shares of this national asset, and then sold it to foreigners!" At
this moment, the friends of our constructive oppositionist in the Duma will
lose their patience, and they will breathlessly vote the aforementioned bill
into law. Then Boris Abramovich will be "forced to bow" before this popular
rage and give back his control portion of shares. But he will give it back
at the market price, already established by himself. He will not even take
anything from the federal budget. He will graciously return his property to
the treasury, in exchange for quotas and licences (for Sibneft, to take one
example). Or else, for measures of support for the national aluminium
producers. But this will not be the subject of press reports. The media will
rather tell us the story about the president, who made a personal
intervention in defense of the national property.


Internal strife in the Russian military 
Plan lands on Putin’s desk to revamp the armed forces 
By Aleksandr Golts

MOSCOW, July 3 — If the rumor mill is any indication, there may be big
changes afoot for the Russian military. At first glance, it appears to be
nothing more than the latest round in the perennial political battle
between Russia’s elite “missile men” — led by Defense Minister Igor
Sergeyev — and the “field generals” and their leader, Chief of the General
Staff Anatoly Kvashnin. But the conflict has already dragged on for at
least two years, and this time around things are far more serious. 
ACCORDING TO Itogi sources, in April of this year Kvashnin sent
President Vladimir Putin, the commander-in-chief of the armed forces,
proposals for a radical change in the Russian military. By most accounts,
Kvashnin has been persistent in getting Putin’s approval.
Kvashnin’s proposal to Putin began with the now-ritual complaints about
the deplorable condition of the conventional forces, citing a manpower
shortage and almost total lack of modern military equipment. He then
proceeded to propose an extraordinary, truly revolutionary way to solve the
crisis: slash the strategic missile troops by over 80 percent and use this
cutback to secure the funds needed to revive the conventional forces. This
should be done, in Kvashnin’s view, by 2003 — four years before the service
life of Russia’s heavy missiles comes to an end.
For the Russian diplomats and generals who got Washington to move back
the deadline for eliminating Russian missiles as laid down in the START-2
treaty, Kvashnin’s proposals can only cause consternation. After all, that
1997 New York protocol, which gave Russia the right to remove missiles from
service only when their service life expired rather than by the originally
arranged date, was regarded at the time as an outstanding success. 
But Kvashnin does not feel this way at all. In his opinion, rather
than prolong the service life of missiles, they should be sent off to the
scrap heap as soon as possible. Kvashnin proposes reducing Russia’s nuclear
weapons now — and on a unilateral basis — to an even lower level than the
still unsigned START-3 treaty provides for. 

Kvashnin’s deputies were said to be in shock when he outlined his
strategic plan to them. After all, it is a radical change in Russia’s
defense policy, which is based on the maintenance of a strategic balance
with the United States. In fact, this is specified in the just-adopted
Framework for National Security and Military Doctrine, President Putin’s
revamped outlook for the country’s military defenses. The doctrine also
proclaims nuclear weapons to be the chief deterrent of a full-scale
non-nuclear aggression against Russia. 
Implementation of Kvashnin’s plans will give the United States a huge
military advantage, far beyond what it will get if the U.S. National
Missile Defense (NMD) system that Moscow so strenuously opposes is deployed.
Kvashnin’s argument in support of his position boils down to this:
nuclear war with the United States is impossible, so there is no purpose in
maintaining a strategic balance with it.
Nuclear weapons have historically been a political tool. Possessing
them protects a country against possible aggression, both from nuclear and
non-nuclear nations. It is, in fact, largely due to nuclear weapons that
Russia claims membership in the club of the world’s leading powers. The
Kremlin derives very specific benefits - both political and economic - from
its membership. 

Yet Russia with a small number of missiles would pose a greater danger
to America and the whole world than the current Russia that has a powerful
nuclear capacity. Once Russia loses the ability to deliver a retaliatory
strike in the event of nuclear attack, the Kremlin would be compelled to
bank on a pre-emptive strike. This means that political tensions that are
insignificant by today’s standards could in the future prod Russia toward
using nuclear weapons first.
But such trifles don’t worry Anatoly Kvashnin at all. He is obsessed
with the idea of reviving the conventional forces by virtually eliminating
the only branch of the armed forces that has retained its combat capacity:
the strategic missile troops. This obsession makes him completely deaf to
the arguments of military theorists and economists, who assert that the
elimination of missiles in a small time frame, the break-up of missile
units, the compensatory payments and the allocation of housing for a large
number of discharged commissioned and warrant officers will require such
vast amounts in the next few years that any savings are completely out of
the question. 
It should also not be forgotten that no more than 18 percent of the
military budget is spent on the strategic forces. Even if all that money
were turned over to the conventional forces, it would not revive them. And
until the conventional forces themselves are reformed, even much larger
sums will not help them.
This is why serious military experts, in particular Aleksei Arbatov,
the vice-chairman of the State Duma Defense Committee, propose cutting back
not the nuclear forces, which actually meet all modern requirements, but
the total manpower of the army to 700,000 or 800,000 men from the current
1.2 million. Naturally, such a cutback would not be cheap, either. But
unlike the strategic forces, where more than half of the personnel are
commissioned and warrant officers, other branches of the armed forces can
be cut back simply by reducing the number of enlisted men. This already
would make it possible to substantially increase the amounts spent on
armament purchases and combat training. 

But Kvashnin apparently doesn’t even want to hear about a cutback — he
thinks in terms of a multimillion-strong draft army. 
No matter how much Kvashnin repeats that the redistribution of the
defense budget will help to strengthen the country’s defense capability, he
is by no means motivated by concern for the national interest. If he
succeeds in eliminating the strategic forces, this will severely weaken the
position of their former commander and now defense minister, Igor Sergeyev,
which is what Kvashnin is ultimately seeking to accomplish. It was no
coincidence that he began to push his plan in April, when Putin, then the
acting president, was deciding whom to put in charge of the Defense Ministry.
Kvashnin, to put it mildly, not too bright. He completely lacks the
systemic thinking that is so essential to a military leader of such rank.
Kvashnin has, however, more than enough energy, determination and
rabid persistence. This leads to deplorable results: recall the rushed
transfer of paratroopers to Kosovo (ahead of NATO troops) last year, which
is still haunting Russia’s relations with the West. And the
spur-of-the-moment attempt to take Grozny in December 1999, which led to
many casualties. But Kvashnin gets away with everything; in fact, he is
clearly a favorite of the new president. 
Kvashnin was also appointed to Russia’s powerful security council —
by presidential decree. His predecessors in the chief of General Staff job
never had that honor — and such access to the president. Defense Ministry
officials took this appointment as a sign that Defense Minister Sergeyev is
living out his final days in his job.
Experienced generals are horrified at the prospect of Kvashnin as
minister of defense. But since there’s a good chance that Kvashnin will
become defense minister, they are choosing their words carefully, no matter
what crazy ideas he puts forth. 
Itogi, Russia’s leading weekly news magazine, is a partner with
Newsweek. Steven Shabad translated this report.


Source: 'Kommersant-Vlast', Moscow, in Russian 4 Jul 00 

A senior Swiss prosecutor has voiced doubt that his counterparts in Russia
"can be trusted" in investigating a money laundering case involving
accounts belonging to former President Boris Yeltsin, his family and the
former head of the Administrative Office of the Russian Presidential
Administration, Pavel Borodin, who is now state secretary of the Union of
Russia and Belarus. In an interview published in a Russian newspaper,
Geneva prosecutor Bernard Bertossa said he senses that "the Russian side
does not want to work on investigation of cases of corruption among
high-ranking state officials". Bertossa said that the total sum of money
being investigated amounts to 65m dollars and added: "If I were [Borodin's]
lawyer I would not advise him to travel to Switzerland." The following are
excerpts from the interview, conducted by repiorter Vladimir Mironenko and
published in 'Kommersant-Vlast' on 4th July. Subheadings have been inserted

'Vlast' has learnt new details of the case being investigated by the Swiss
prosecutor's office concerning the laundering of money designated for
senior Kremlin functionaries. `Vlast' reporter Vladimir Mironenko talked
with Geneva prosecutor Bernard Bertossa. 

Let us recall that the case was opened in the autumn of 1998 on the basis
of a statement to the Swiss prosecutor's office by Felipe Turover, a native
of the USSR. Turover worked with the Swiss branch of Banco del Gottardo,
and supposedly became aware of accounts opened at this bank in the names of
Boris Yeltsin, his wife and daughters, and also the president's former
business manager [head of the Administrative Office of the Presidential
Administration] Pavel Borodin. According to the investigators' theory, the
money in these accounts was transferred by Behgjet Pacolli and Viktor
Stolopovskikh, the heads of the Mabetex and Mercata companies respectively,
in gratitude for a favourable contract to refurbish the Kremlin. Last week
Swiss investigator Daniel Deveau formally charged Pacolli with money

The RF [Russian Federation] Prosecutor-General's Office is conducting a
similar investigation. But investigator Ruslan Tamayev states that so far
he has not found any instances of corruption in the president's circle. 

[Mironenko] What kind of sentences are Pacolli and the other defendants in
the case facing? 

[Bertossa] Pacolli can get three years for money laundering. The others can
get five years for participation in a criminal group. 

[Q] How did investigator Deveau formulate the official indictment? 

[A] "A group of people formed for the purpose of receiving an unlawful
advantage in contracts concluded with Russia." Under Swiss law such a group
is criminal. 

[Q] It was reported in the press that the time limit on investigation of
the Mabetex and Mercata case expires in August. 

[A] That is not quite accurate. Money laundering cases are investigated for
five years plus, if necessary, an additional two and a half years. The
problem is that the time is counted from the date that the crime is
committed, not from the date that the criminal file is opened. We have
financial documents from the Mabetex and Mercata companies that indicate
money transfers from account to account, for example, to Borodin. The
organizers of this deal concocted a fairly complex scheme where bribes were
transferred to accounts opened for other legal or natural persons. In order
to recreate the entire path that the money travelled you need the help of
law-enforcement bodies in other countries. 

[Q] And this is where the problems begin? 

"I am not certain that [the Russian side] can be fully trusted" 

[A] There are problems with this all over the world. But the case with
Borodin is a special one. He occupies a higher post today than he did
before (he is state secretary of the Union of Belarus and Russia -
`Kommersant'). One senses that the Russian side does not want to work on
investigation of cases of corruption among high-ranking state officials.
Therefore, I am not certain that they can be fully trusted. Here is a
simple example: when we sent a request in the case of Sergey Mikhaylov, the
Russian Prosecutor's Office responded that it did not know such a person. 

[Q] But Mikhaylov was acquitted and is even suing for 800,000 Swiss francs
in compensation for non-material loss. 

[A] That is his right. And the court will decide this issue quite soon. But
what we want is for our laws to apply to everyone, not just to petty
crooks. We do not want members of criminal groups to get the feeling that
their illegally earned money is completely safe in Switzerland... 

But in Russia to this point only [dismissed Prosecutor-General Yuriy]
Skuratov has taken any steps in this direction, and he was removed. Why?
That does not concern me. Does Putin want to fight corruption, and can he
do it? I hope so, above all, for the sake of the people of Russia. 

[Q] How much money was laundered through Mabetex and Mercata? 

[A] About 65m dollars. But that is not the record. Nine billion was
laundered in the Bank of New York case. 

"If I were [Borodin's] lawyer I would not advise him to travel to

[Q] In Russia today it is fashionable to refer to criminal cases that are
opened "on order". Are you experiencing any pressure? 

[A] No. But I have to admit that such cases do not please everyone. We are
sometimes criticized in Switzerland. They say we would do better to concern
ourselves with the affairs of the Canton of Geneva than with international
scandals. I consider such criticism unsound. We are only investigating
those crimes that were committed in Switzerland. 

[Q] Can Pacolli be detained before trial? 

[A] Only if there are grounds to fear that he will flee from justice,
destroy evidence or repeat the crime. At this point there is no such risk. 

[Q] Borodin has a diplomatic passport from an international organization.
Do you consider his arrest possible? 

[A] It is better if he does not know what I think on that subject. But if I
were his lawyer I would not advise him to travel to Switzerland. 


The Globe and Mail (Canada)
June 28, 2000
Raising the curtain on the first 100 days
To convince Russians to spurn brute power in favour of
democracy, Vladimir Putin - and his admininstration - must
practise what he preaches, says John Lloyd
John Lloyd, a former editor of the New Statesman, was Moscow bureau chief for 
the Financial Times from 1991 to 1996.

To those tired of the confusion of Russia, there is a kind of program to run 
that makes it all simple. Call it POWER.COMSKI. Run it, and you will find the 
answer to any issue that puzzles you.

The program says: Russia thrives when its ruler has a lot of power and wields 
it ruthlessly. Consider, for example, Ivan the Terrible, Peter the Great, 
Catherine the Great and Joseph Stalin. The program also says that, when the 
ruler lacks power or declines to use it, Russia is afflicted with great 
dissension and grows weaker. See Boris Godunov, Nicholas II and Mikhail 

People who know something about Russia like to use this program, and say it 
will run forever.

In 1917, the Russian religious philosopher Nikolai Berdyayev commented sadly, 
on witnessing the October revolution in St. Petersburg, that "the past is 
returning, only behind a mask." Years ahead of others, he had seen in the 
Bolshevik tyrants-in-the-making a thirst for monopolizing power not seen 
since Ivan. More recently, Mr. Gorbachev pricked the Bolshevik bubble by 
trying to bring democracy to the citizens of the Soviet Union. They took too 
much of it to allow his system to continue, and the chaos that resulted from 
loosing their bonds has continued to the present.

In his crucial first 100 days in office (he was sworn in as President on 
March 26), Vladimir Putin has sent a decidedly mixed message as to what kind 
of leader he intends to be: He has said one thing, and done another.

Mr. Putin came to office promising to make Russia great again, but he 
inherited a state in collapse, and he knows why. Boris Yeltsin, although 
sufficiently schooled in the ways of power to avoid any serious challenge to 
his position, presided over a state that became progressively weaker during 
his decade in office. The old party boss proved unable to whip into line the 
regional barons, the city bosses and the big business people, or "oligarchs." 
Mr. Yeltsin and his governments ostensibly made law, but actually made deals 
with these people -- trading this personal or financial favour for that state 
or tax concession.

This is not the way of Mr. Putin. During his first 100 days, the former 
security chief had the oligarch and media magnate Vladimir Guzinsky arraigned 
on charges of corruption and thrown -- temporarily -- into Butyrka jail, one 
of Moscow's most unpleasant. Mr. Guzinsky founded the largest independent 
media group in Russia and runs the only nationwide independent TV station. He 
backed Moscow Mayor Yuri Luzhkov for the presidency against Mr. Putin, and 
his Kukly puppet show cruelly lampoons the new President (and everyone else 
in the establishment) each week. Drawing on the trusted power program, the 
conclusion many people are drawing is that Mr. Putin is using his power, as 
Russian rulers always have, to punish his enemies.

It's tempting to agree, but countries change, and Russia is changing in ways 
not always visible on the outside. And it's changing through institutions 
that we in the West often think of as opponents of reform.

Russia is a European state. Its territory may stretch across Asia and it may 
have ruled over lots of non-European peoples, but its intelligentsia and its 
ruling class have always seen themselves as European in thought and 
civilization. During the heavy-handed era of Leonid Brezhnev, these people 
planned for a democratic Russia, pluralist, with freedom of speech and 
religion and with a market economy.

It's true that such people grew disillusioned under Mr. Gorbachev. They do, 
indeed, want order, and they are prepared, even now, to support their 
President and army waging a brutal war against the Chechens in pursuit of 
this order.

But they do not want dictatorship, or even authoritarianism. No poll taken 
has shown less than strong support for the institutions of democracy, for 
continued elections, for an independent press.

We have to keep this in mind when we try to work out what will happen to 

Power may be the key to finding the answer, but the power equation is 
changing, too. Power in democratic societies is constrained by the people, 
and the people of Russia are beginning to learn that they, too, in a very 
imperfect democracy, can nevertheless constrain power. Politicians are 
beginning to learn that they have to obey the stated, and unstated, will of 
the people. A civil society is being formed in Russia -- it is inchoate, but 
it is happening.

The arrest of Vladimir Guzinsky has to be seen against that background. Mr. 
Putin can't revert to simple authoritarianism because the state isn't one 
that permits such a reversion -- at least, not without a struggle. There are 
too many vested interests -- the interests of property, of independent 
elected position, of intellectual curiosity, of delight in travel, of 
attachment to a genuinely private life -- to have society once more grabbed 
in the fists of a ruthless clique and submitted to their utopian experiments.

We have seen quite a remarkable outpouring of support for Mr. Guzinsky since 
his arrest. Some of Russia's top business people signed an open letter of 
protest. Almost all the media, including those in bitter competition with 
him, have cried foul. The businessman closest to the Kremlin -- Boris 
Berezhovsky -- expressed his disquiet. The issue was raised by Spanish 
journalists when the story broke while Mr. Putin was in Spain and by German 
journalists when he was in Germany. When he got back to Russia, it was raised 
by Russian journalists.

All of this ensured that Mr. Guzinsky was released from punitive detention.

The next stage, though, is the most critical. For there may be a good case 
against him. It has been a major theme of Western criticism of Mr. Yeltsin 
that he allowed the oligarchs -- to whom he was deeply indebted for their 
financial support -- to acquire huge assets from the state at bargain prices 
and to conduct themselves in a criminal manner. Under his administration, it 
was an unwritten rule that no oligarch could be arrested -- to challenge one 
was to pose a potential threat to all.

That taboo seems to have gone. And that's a good thing. But it must be 
followed by the elaboration of a case against Mr. Guzinsky that holds water 
and against which he can defend himself on rational grounds. That means 
evidence, transparency, and no political meddling. It's a lot to ask of a 
justice system that is held in low esteem and paid on a low scale.

Justice came out of the Soviet era holding scales on which the state 
permanently had a thumb. Mr. Putin seems to want to take it off -- now is the 
time to show he can do it.

"History proves all dictatorships, all authoritarian forms of government, are 
transient. Only democratic systems are lasting. Mankind has not devised 
anything superior." The author of these lines was Vladimir Putin, in his 
message to the Russian people when he was made acting president at the end of 
last year. We have to hope he knows what he was saying. 



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