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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

July 20th, 2000    
This Date's Issues: 4412 4413   4414

 Johnson's Russia List
#4414
20 July 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Bloomberg: Russian Poll Shows Almost Half Support Changes to Upper House.
2. Wall Street Journal: Thomas Graham, Tackling Tycoons: Revenge, or Rule of Law?
3. Los Angeles Times: Stephen Blank and Theodore Karasik, 'Reforms' 
That Hark Back to Stalinist Times. Russia: Putin is centralizing 
control over the media and tax revenue to snuff out dissent. 

4. Baltimore Sun: Russians to visit Republican convention.Trip is latest overture by Putin allies to GOP.
5. Reuters: Russian PM says sees no debt decision in Okinawa.
6. Financial Times (UK): Mikhail Kasyanov, A financial end to the cold war: It is in everyone's interest for the Paris Club of official creditors to reduce the burden of Soviet-era debt.
7. RFE/RL: Paul Goble, A Test Of Privatization.
8. Jerry F. Hough: Democracy.
9. Contents of Russian-language journal Rossiya-XXI ("Russia-21st Century").
10. Paul Backer: Factoids and RF Corporate Governance.
11. Reuters: Putin praises North Korea's ``modern'' leader.
12. BBC MONITORING: RUSSIAN AUDIT CHAMBER EXPOSES "SUBSTANDARD" 
WESTERN FOOD AID.]


*******

#1
Russian Poll Shows Almost Half Support Changes to Upper House

Moscow, July 20 (Bloomberg) -- Almost half of Russians support President
Putin's initiative to replace local governors with regional representatives
in the Federation Council, the upper house of the Russian parliament, while
almost an equal number were not sure, a recent poll by the Russian Public
Opinion fund shows. 

The fund is a public organization founded in 1990 by former members of the
All-Russian Center for Public Opinion, the largest state-owned research
company in Russia. 

In the following poll, 1,500 people were surveyed July 8-9. The margin
error is 3.6 percentage points. Figures are in percentages. (Russian
President) V. Putin proposed that the Federation Council be made up of
regional representatives, rather than of the governors and heads of
legislative assemblies. In your opinion, will it be better or worse
for Russia if the governors and heads of legislative assemblies are not
members of the Federation Council? 
Better 44 
Worse 18 
Difficult to answer 38 

The Federation Council rejected the law proposed by Putin. Some people
think that the governors didn't accept the law because they didn't want to
lose their seats in the Federation Council. Others think that the law
wasn't accepted because it contradicts Russia's interests. Which of
these opinions do you share? Governors didn't want to lose their seats
56 
Law contradicts Russia's interests 14 
Difficult to answer 30 
(7/20, Public Opinion Fund, www.fom.ru) 

*******

#2
Wall Street Journal
July 20, 2000
[for personal use only]
Tackling Tycoons: Revenge, or Rule of Law?
By Thomas Graham (tgraham@ceip.org) 
Mr. Graham, a senior associate at the Carnegie Endowment 
for International Peace, was the chief political analyst at the U.S. embassy 
in Moscow 1994-97.

Vladimir Putin's offensive against "oligarchs" puts the West in a tight spot. 
We believe in civil liberties, free speech and the due process of law. And 
yet, many of us have cheered the Russian president.

Since the Bank of New York scandal broke last summer, these tycoons have been 
demonized as a source of the rot that has marred Russia's transition to 
market democracy. Some hope that the recent "investigations" mark the 
beginning of a campaign to root out corruption, as well as to create a level 
playing field for all businessmen, both Russian and foreign.

The trouble with this approach is that it is still unclear whether the 
Kremlin is taking true aim at the structural conditions that gave rise to the 
oligarchs in the first place. The oligarchs are hardly unique to Russia. 
Crony capitalism was one of the reasons for the Asian crisis; and in China, 
to have guanxi, or connections, gives one a distinct advantage. In Russia, 
the oligarchs are only the most visible and powerful products of a pervasive 
phenomenon: the intertwining of power and property. This has stymied progress 
toward effective governance and efficient markets.

Unless the tie between power and property is broken, any crackdown on today's 
oligarchs will only make room for new oligarchs tomorrow. Russia needs a 
clear separation of government from business. Mr. Putin can begin to do 
achieve this by building an independent court system, by encouraging honest 
law enforcement agencies and by reducing bureaucratic interference in the 
economy.

Despite Mr. Putin's campaign promise to "eliminate the oligarchs as a class," 
the Kremlin denies that it is engaged in an attack on the country's 
politically influential business magnates. It is widely believed that these 
oligarchs employed illicit means to obtain control of some of Russia's 
leading enterprises in the past decade. Over the past several days, Russian 
government agencies have launched investigations for financial improprieties 
against the country's largest oil company, the leading car manufacturer and 
the national electrical utility. Questions have been raised about the 
privatization of the country's biggest nickel producer.

Meanwhile, pressure continues on Vladimir Gusinsky, the media magnate charged 
with embezzlement of government property shortly after Mr. Putin was 
inaugurated in May. Few observers believe that government agencies would 
target an oligarch without the Kremlin's sanction. Boris Berezovsky, another 
tycoon, resigned his seat in parliament on Tuesday to protest what he said 
were government attacks on big business.

Tackling the deeper structural problems will not be easy, for these have 
roots in Russian history. For much of the czarist period, the right to 
property was conditional on performing service for the czar. During the 
Soviet period, virtually all property was state-owned, and the state 
determined who had the right to use property. In the post-Soviet period, 
power and property remain interlocked, with one key difference: The 
relationship has become a two-way street. As the economy was privatized, 
property could be used to secure control of government power. Property became 
the dominant factor in the equation as many parts of the state apparatus were 
privatized for the benefit of small cliques.

Breaking the power-property link will require great will. To date, Mr. Putin 
has offered little more than rhetoric, and even that has dwindled over time: 
Judicial independence did not even merit a mention in his recent State of the 
Federation address. The selective, politicized nature of the crackdown -- 
with the Kremlin's favored oligarchs as yet unscathed -- does little to 
enhance the public image of law-enforcement agencies or the independence of 
the judicial system.

Are there other explanations for Mr. Putin's actions? The assault on certain 
oligarchs could be part of one of two other processes. First, as was often 
the case under former President Boris Yeltsin, the Kremlin could be allowing 
its favored oligarchs to use the levers of government to settle commercial 
scores. For example, Roman Abramovich, an oil and aluminum magnate who is 
reputedly a member of the "Family" (the group of Yeltsin cronies that was 
instrumental in Mr. Putin's rise to power), is in conflict with oligarchs now 
under investigation.

Second, Mr. Putin could be reasserting the prerogatives of power in the 
power-property equation. He has stressed a need to build a strong state. 
While he has opposed a broad review of the privatization process, he has 
mooted the idea that private enterprises should work in the interests of the 
state. He has said that Mr. Gusinsky used his media "as a means of struggle 
against the state," which hints at why he moved against the baron.

Neither of these explanations would reflect well on Mr. Putin. In the first 
case, either he has condoned the misuse of government for commercial 
interests, thus raising questions about his commitment to market reform, or 
he simply cannot prevent this activity, which would raise grave doubts about 
his political strength. In the second case, Mr. Putin would appear to be 
re-creating the methods of the late Soviet period, minus the Communist 
ideology. This would call into question his commitment to democracy and 
market reform.

How should Western leaders and investors react? Clearly, any cheering would 
be premature. Rather, we should let Mr. Putin know that we still await clear 
signs that his main goal is a fundamental reform of Russia, and not simply 
the undoing of political opponents or commercial rivals. Proof of good 
intention would be for him to start cleaning up the Kremlin itself, where the 
links between power and property remain as strong as ever.

*******

#3
Los Angeles Times
20 July 2000
[for personal use only]
'Reforms' That Hark Back to Stalinist Times 
Russia: Putin is centralizing control over the media and tax revenue to 
snuff out dissent. 
By STEPHEN BLANK, THEODORE KARASIK
Stephen Blank Is a Professor at the Strategic Studies Institute of the U.s. 
Army War College. Theodore Karasik Is Adjunct Assistant Professor at the 
School of International Relations at Usc and Editor of the Russia and Eurasia 
Armed Forces Review Annual. the Views Expressed Here Are Those of the Authors 
Alone

Boris N. Yeltsin's legacy to Vladimir V. Putin--a government, military 
and police forces that are not accountable to anyone--is now bearing fruit. 
Rather than leaving behind the prerequisites of democracy, Yeltsin left 
behind a splendid opportunity for Putin to abuse those institutions and grab 
equally unaccountable power for himself. 
Putin is now building a police state using primarily the police organs 
of the Federal Security Service, known as the FSB, and the army to seize all 
key power positions in Russia, eliminate dissent and attack both internal and 
external enemies. New laws and decrees have given the FSB control over 
electronic and e-mail transmissions in Russia and reinvigorated the FSB's 
agent network in general society and its ability to recruit informers in the 
army. Building on Yeltsin's neglect in reforming reform the police and army, 
Putin is taking giant steps to eliminate parliamentary immunity, civil rights 
and privacy in Russia. 
The tax police and FSB have conducted raids on businesses and media 
outlets deemed critical to Putin and the regime. Critics of the regime, like 
Media-Most owner Vladimir A. Gusinsky and Radio Liberty reporter Andrei 
Babitsky, a Chechen war correspondent for U.S.-funded Radio Liberty, have 
been arrested and harassed. The campaign accelerated immediately after 
Putin's anti-Yeltsin State of Russia address, with Putin's police going after 
supporters of Yeltsin's privatization program, including the oligarchs Vagit 
Alekperov, head of Lukoil; Anatoly B. Chubais, head of the energy giant UES; 
Vladimir O. Potanin, president of the group that owns Norilsk Nickel; and 
even media tycoon Boris A. Berezovsky. Equally troubling is the attempt to 
split the Jewish community, of whom Gusinsky was a leader. Gusinsky's arrest 
also raised the equally time-tested anti-Semitic card, always featured in the 
arsenal of Russian authoritarians. 
Putin has launched a police offensive against the devolution of power to 
the provinces that is an essential prerequisite of democracy and federalism, 
even if the governors themselves have abused their powers, another legacy of 
Yeltsin's lawlessness. The aim is to centralize control over tax revenue and 
local media and snuff out any hope of true dissent. These moves parallel the 
creation of new federal judicial agencies to accelerate criminal proceedings 
against uncooperative politicians and business owners. All these moves to 
purge internal enemies recall the worst hallmarks of Russian despotism. It is 
hardly accidental that Putin has glorified the use of informers and even 
stated his wish that things were as they had been in 1937, the zenith of 
Stalin's terror. 
The search for enemies at home, however, is only part of Putin's grand 
design. Putin believes that Russia faces coordinated internal and external 
threats. These threats aim to fragment Russia at home and constrain it 
abroad, and use terrorism--as in Chechnya and elsewhere--against it. These 
expressions recall the Leninist-Stalinist paranoia of internal enemies and 
capitalist encirclement. 
In response, Putin has launched an offensive to re-integrate all the 
police and military structures in former Soviet republics under pro-Moscow 
leaders. Moscow now demands total freedom for its army and police to operate 
throughout Central Asia and Belarus to oppose terrorism and extremists. This 
police-military integration and coordination also involves China, where Putin 
was this week. Beijing is a firm supporter of Putin's police assault. 
Putin's moves to create a police state are bringing Russia down the most 
dangerous road imaginable. Indeed, many Western and Russian analysts assert 
that Putin and the FSB used the corruption of Yeltsin's family to force him 
out lest more compromising information be revealed about him and them. Even 
without this charge, Russian neo-imperialism and its perennial accomplice, a 
police state, are making a comeback. As Russia approaches government and 
colonialism by conspiracy, can we really call Putin, as so many have, one of 
Russia's leading reformers? And who is served by that description? 

*******

#4
Baltimore Sun
20 July 2000
[for personal use only]
Russians to visit Republican convention
Trip is latest overture by Putin allies to GOP
Associated Press

WASHINGTON - The Russians are coming! The Russians are coming! To 
Philadelphia, that is. 

Seeking to improve relations with the Republican Party and learn how to build 
a political party, emissaries from Russian President Vladimir V. Putin's 
political faction plan to attend the GOP nominating convention this month. 

Rep. Curt Weldon, a Pennsylvania Republican who is arranging the trip, said 
the group will be led by Boris Gryzlov, head of the pro-government Unity 
group in the Russian State Duma. 

"They want to cover both bases," Weldon said. "I've told the Russians, 'Don't 
put all your eggs in either party's basket.'" 

"My concern was that Putin was too closely identified with [President] 
Clinton and, if that continued to happen, Russia could become a whipping boy 
in the presidential elections," he said. 

In Moscow, Gryzlov's office said he plans to leave Wednesday for the GOP 
convention with a small delegation of Unity lawmakers. Gryzlov's aide, Alexei 
Sigudkin, declined to discuss the trip's purpose, except to say "it was the 
initiative of the American side." 

The visit is just the latest overture by Putin allies in Russia to reach out 
to the Republican Party in the midst of the U.S. presidential election. 

Russian Foreign Minister Igor Ivanov met in April with presumptive GOP 
nominee George W. Bush. The two discussed foreign policy and Russia's 
concerns about a U.S. missile defense shield that the Texas governor 
supports. 

More recently, a Russian delegation visiting Washington dropped by a 
fund-raiser for North Carolina Rep. Robin Hayes, a Republican member of the 
House Armed Services Committee. 

"They were very pleasant, very nice and very interested in the [political] 
process," said Andrew Duke, a spokesman for Hayes. 

Such overtures in a presidential election year are common. In 1992, Boris N. 
Yeltsin met with candidate Bill Clinton, striking up a friendship that lasted 
through most of Clinton's presidency. 

One Russian expert said the visit is part of Moscow's effort to better 
understand Republicans' view on U.S.-Russia relations amid conflicting 
messages. 

"They are being told by senior Clinton administration officials that 
Republicans are going to be harsher on Russians than the current 
administration," said Dimitri Simes, president of the Nixon Center for Peace 
and Security. 

"I think they are quite confused about Governor Bush, about the Republican 
Party and the Republican Congress in particular. And from that standpoint, 
for the Russians to have a dialogue with the GOP party is a service not only 
to the party but also to foreign policy," Simes said. 

Democratic officials said they were unaware of any plans for Russians to 
visit their convention. Vice President Al Gore is well known in Russia after 
spearheading much of the administration's dealings with the country the past 
seven years. 

*******

#5
Russian PM says sees no debt decision in Okinawa

MOSCOW, July 20 (Reuters) - Russian Prime Minister Mikhail Kasyanov said on 
Thursday the Group of Seven leading industrial countries would not take a 
decision on the country's debt to the Paris Club of state lenders at the 
weekend summit in Japan. 

Russia wants the Paris Club to reduce the $42 billion debt it inherited from 
the Soviet Union, but Kasyanov told a news briefing the country could survive 
without a reduction. 

"There are no clear grounds for saying that we shall not cope without a 
write-off of the Soviet debt," he said. 

"When we speak about relief on the Soviet part of the debt burden, we are 
saying that the burden is slowing down our development. If Russia can pay, 
this does not mean that it should pay." 

Russia's financial health has improved significantly since the 1998 economic 
crisis, thanks largely to high world market prices for its main energy and 
commodity exports and the 1998 rouble devaluation. 

Kasyanov said the absence of debt relief would mean spending 30 to 40 percent 
of budget revenues and Russia could do it "to demonstrate goodwill," but it 
would be very difficult. 

Kasyanov said there would be no decision on the Paris Club debt at the July 
21-23 summit in Okinawa, but said Russia expected support from the G7 which 
would provide the basis for further debt negotiations. 

Kasyanov, in an interview with the Financial Times on Thursday, urged the 
Paris Club to agree to a debt deal similar to the one Russia signed with the 
London Club of commercial creditors late last year. 

The London Club offered a 36.5 percent reduction and rescheduled the rest for 
30 years. 

However, some Paris Club countries, including Russia's biggest creditor 
Germany, have said they did not favour a debt writeoff. 

*******

#6
Financial Times (UK)
20 July 2000
[for personal use only]
A financial end to the cold war: It is in everyone's 
interest for the Paris Club of official creditors to reduce the burden of 
Soviet-era debt
By Mikhail Kasyanov 
Mikhail Kasyanov is prime minister of the Russian Federation 

The Russian government this month adopted an ambitious economic programme 
calling for urgently needed structural reform that will lay the groundwork 
for sustained economic growth and the development of an open and democratic 
society. Russia's ability to implement this programme will depend largely on 
solving the debt burden inherited from the Soviet Union. 

In 1991 and 1992, Russia agreed - at the urging of the Group of Seven 
industrialised nations - to be responsible for the foreign debt of the Soviet 
Union, even though Russia then represented only about 61 per cent of its 
assets and population, and experienced massive economic decline. 

This week, Russia offered to exchange new Russian eurobonds for Dollars 
31.8bn of debt of the former Soviet Union owed to the London Club of private 
sector financial institutions. This voluntary exchange will provide much 
needed debt relief, reducing the principal amount of London Club debt by, on 
average, 36.5 per cent, and will serve as a benchmark for the restructuring 
of Russia's other Soviet-era debt. 

Russia has also agreed to be responsible for Dollars 38bn of Soviet debt owed 
to official bilateral creditors organised as the Paris Club. The meeting of 
the leaders of the Group of Eight industrialised nations in Okinawa this 
weekend offers an opportunity for Russia's official creditors to give serious 
consideration to the need to provide debt relief comparable to that provided 
by the London Club in order to ensure the success of Russia's reform 
programme. 

The Paris Club traditionally insists, as a condition of granting debt relief, 
that sovereign debtors seek comparable restructuring terms from their other 
creditors. This ensures that the debt relief provided by first-moving 
creditors is not used to fund payments to other similarly situated lenders. 
Comparable treatment should, therefore, run two ways: it should apply both to 
the London Club when the Paris Club is the first to agree restructuring 
terms; and to the Paris Club when the London Club goes first. To do otherwise 
would allow one club to "free ride" at the expense of the other. 

In the light of the G7's recent initiative to "bail-in" the private sector as 
part of the new global financial architecture, it is important that official 
creditors also share the burden and provide comparable treatment when the 
private sector takes the lead on debt relief. Only if all creditors 
participate on comparable terms will the current informal system of sovereign 
debt work-outs remain viable. 

Even if two-way comparable treatment is generally appropriate, some say the 
Paris Club should not follow this rule in the case of Russia because Russia 
does not need comparable relief and, even if it does, will not apply the 
resulting savings in support of reform. While Russia's economic performance 
has improved significantly since the financial crisis of August 1998, much of 
the improvement is the result of one-off events. The challenge for Russia 
today is to implement extensive structural reforms that will ensure long-term 
economic growth and macroeconomic stability. Transforming the Russian economy 
will be enormously expensive and, unfortunately, will constrain Russia's own 
resources for a considerable period. 

Two examples of western generosity in assisting structural economic reform 
provide guidance for Russia's current situation. After the second world war, 
the US provided an estimated Dollars 88bn of aid - in current dollars - under 
the Marshall Plan to promote postwar European economic recovery. It is now 
widely accepted that the Marshall Plan not only benefited aid recipients but 
also directly contributed to western Europe's economic and political 
stability during the succeeding decades. 

Western Germany's post-unification assistance to eastern Germany provides an 
example of the enormous cost of economic transition in formerly socialist 
economies. The German federal government has overseen the transfer of more 
than Dollars 70bn annually from western Germany to eastern Germany in the 
decade since 1990. This is beginning to bear fruit, confirming that the 
reform of formerly socialist economies requires a massive and long-term 
commitment of funds. 

This historical record suggests that it will be very difficult for Russia to 
succeed in transforming its economy or, at a minimum, that successful reform 
will be seriously delayed without significant Paris Club debt relief. It is 
also clear that a traditional Paris Club "flows" rescheduling, in which the 
payments due during the term of Russia's International Monetary Fund 
programme are capitalised and repaid over time, will only create an 
ever-increasing stock of debt. This stock will ultimately be the subject of 
further Paris Club discussions and undermine Russia's ability to carry out 
long-term structural reform. 

In response to the charge that Russia cannot be trusted to use the savings 
from debt relief for meaningful reform, I acknowledge that Russia's record 
here has not always been strong. As an indication of the current government's 
commitment to economic reform, I can confirm that Russia is prepared to agree 
to mutually acceptable conditionality appropriate to the debt relief provided 
by the Paris Club. 

Finally, some say a Paris Club write-off would place Russia in the category 
of nations that are perennial wards of the international community. Yet the 
challenges Russia faces today resemble those of western Europe in 1947 and 
eastern Germany in 1990. Russia has suffered massive economic dislocation as 
a result of the dissolution of the Soviet Union. Its formerly state-dominated 
economy is in transition to a market-based economy. Its government is 
committed to economic reform and to democratic governance, and its people 
aspire to be counted among the world's great nations. 

Russia has accepted responsibility for the debts of the former Soviet Union 
and forgiven a significant portion of its Soviet-era claims on other 
countries. It is time for the Paris Club to put a financial end to the cold 
war by agreeing to a comprehensive solution to Russia's Soviet-era debt 
comparable to that already agreed with Russia's London Club creditors. A 
prosperous and democratic Russia is in all our interests. 

*******

#7
Russia: Analysis from Washington -- A Test Of Privatization
By Paul Goble

Washington, 19 July 2000 (RFE/RL) -- Russian businessman Boris Berezovsky's 
announced plans to resign from the Duma may represent a critical test of the 
widely-held proposition that privatization of state assets by itself can 
promote democracy and prevent the return of authoritarian regimes. 

Berezovsky, one of Russia's economic oligarchs, announced on Monday that he 
was giving up his seat in the lower house of the Russian parliament because 
he does not want to be part of "the destruction of Russia." Specifically, he 
said he was stepping down because of President Vladimir Putin's attacks on 
other oligarchs, his efforts to rein in regional leaders, and his campaign in 
Chechnya. 

There has been an explosion of speculation about why Berezovsky has taken 
this step. He was after all widely assumed to have played an important role 
in Putin's rise to power. Moreover, even in announcing his resignation, he 
indicated that he would vote again for Putin if elections were held today. 
And he has said that he hopes to create a "constructive opposition" to the 
Russian president. 

Some have suggested that, by resigning, Berezovsky may be trying to preempt 
any government action against him. Others have suggested that he is simply 
trying to regain his influence with the Russian president. And still a third 
group have argued that Berezovsky is trying to use his own economic clout as 
a launching pad for a political career of his own. 

But whatever Berezovsky's motives may be -- and his past record suggests that 
they are likely to be mixed -- his resignation and the notice it has 
attracted have the effect of calling attention to some of the problems with 
the assumption that privatization of state property by itself represents a 
bulwark of democracy in Russia and other post-communist countries. 

Following the collapse of the Soviet system in 1991, Russian reformers and 
their Western supporters simultaneously proclaimed Russia a democracy and 
argued that the best way to prevent it from going back to the past or 
drifting off into some other kind of authoritarianism was the rapid and 
complete privatization of all state assets. 

The logic for such an approach seemed compelling. On the one hand, by 1991, 
Russia had already conducted a competitive race for president, one that Boris 
Yeltsin won. And on the other, depriving the state of its control of the 
economy appeared certain not only to deprive the Kremlin of one of its most 
important levers of power but also to create alternative bases of power 
independent of the state. 

Indeed, many in both Russia and the West deemed the creation of such 
independent power bases as a necessary and sufficient foundation for the rise 
of a vigorous civil society. 

As a result, Russian reformers at the urging of their Western partners saw 
privatization as something more than an end in itself: They came to view it 
as the magic solution to the transformation of post-Soviet politics and 
society as a whole, as a process that took precedence over the development of 
the rule of law and over the promotion of other democratic institutions. 

And because privatization was deemed to play such a central role, the 
reformers carried it out in ways that in many cases led not to the 
competitive market economy they wanted but rather to privatized monopolies 
less interested in the competitive pursuit of profit than in continuing to 
seek rents through corrupt but now privatized relationship with the state. 

In short, the privatization campaign contributed to the rise of oligarchs 
like Berezovsky, people whose wealth depends on their ties to the state and 
whose need for these ties has made them deeply opposed to any radical break 
with the existing post-communist economic and political system. 

By striking out on his own politically this week, Berezovsky may represent 
the kind of political breakthrough that many had hoped privatization would 
produce. That is, the wealth he has acquired may allow him to stand up to the 
state both personally and by mobilizing voters to advance his own political 
program. 

But Berezovsky's move may also prove to be nothing more than a game within 
the Moscow elite, one that will confirm once again that privatization alone 
won't produce democracy or prevent the return of a new and potentially ugly 
authoritarianism. 

********

#8
Date: Thu, 20 Jul 2000 
From: "Jerry F. Hough" <jhough@duke.edu>
Subject: Democracy

In all the dispute involving Michael McFaul and democracy, 
everyone keeps overlooking one fundamental fact. Democracy is supposed 
to mean that the government does what the people want. All our polls from 
the beginning have shown that the majority in Russia does not want the 
IMF reform. The thing that has been awful about Michael is that from 
the beginning, he has defined democracy as Gaidar, Yavlinsky, Nemstov, the 
economic reform of Aslund. That consistently has had 15 percent in 
support in Russia. Michael has wanted a big Republican Party that is 
opposed to Big Business and that tries to use the state to confiscate its 
property for the benefit of a group of corrupt economists and corrupt former 
Komsomol secretaries. That economic reform may or may not be good, but it 
is not democracy. (It also is totally opposed to the Coase theorem that is 
used to support it.) Democracy will support a Gerschenkron reform, and we 
need both. Democratization should not be condemned in Russia, only the 
Orwellian definition of it prevalent in the US. Real democratization is 
crucial--or, rather, the institution of constitutional democracy. A 
Gerschenkron reform will easily win majority support.

I was just in Spain for two weeks trying to understand the 
country. Franco's last years, like Brezhnev's, Mao's, etc., are 
interesting. His physical and mental health declined, but he still 
prevented what came after his death. We need to include this kind of 
phenomenon in our definition of different types of dictatorship.

While in Spain, I watched CNN international. A week or 
two ago, it ran a truly wonderful report from its Moscow correspondent on 
pig farming in Russia. Truly wonderful. I don't know if it was 
carried in the US or how many saw it, but I hope that if the 
correspondent reads your newsletter, he will submit the transcript for the 
letter. If he doesn't, I hope some Moscovite who does will call this 
request to his attention. One may argue for or against the Treasury and 
IMF reform in principle, but nothing shows the utter corruption on the 
American side more than the failure of its proponents and American supporters 
of reform to call for meaningful agricultural reform and damn the system 
in place. Today we sue over the Holocaust, give Indians casinos, 
apologize for slavery, and talk about massacres in the Korean 
War--after all the guilty and nearly all the victims are safely dead. We 
are living through a policy that will be treated the same way in 50 
years. Can we not do something before then? Since real agricultural 
economic reform always works--and is compatible with almost all 
industrial or monetary policy--it should be acceptible to everyone. It 
is crucial for health to get people off a potato, bread, and vodka diet 
and eating pork, etc. I hope other reporters will beat the drums and 
that scholars will really look at what happens. Indeed, since 50 
percent of the population lives in villages and towns under 80,000, it is 
the kind of democracy that McFaul should be pushing.

********

#9
Subject: Rossiya-21
Date: Tue, 18 Jul 2000 
From: 2000 Rossiya-21 and Experimental Creative Center <dyogen@dol.ru>

Dear David: 

We would like to attract the attention of your readers to our
Russian-language journal, Rossiya-XXI ("Russia-21st Century"). It is
published bimonthly since January 1993. The journal's founder is the
International Foundation "Experimental Creative Center", and its Chief
Editor is Sergei Kurginyan, a widely known Russian political scientist. We
welcome and publish contributions that address a broad range of political,
historical and cultural issues at a conceptual level and that shed light
upon the prospects of Russia's development in the 21st century. We are
particularly interested in those writings that consider Russia's position
and development in the framework of global politics. The circle of our
current authors includes prominent Russian and foreign scholars as well as
young academics at an early stage of their career. 

We give our floor to people of different political convictions whose
writings fall within the broadly defined purpose of our journal, which is
to contribute to the strengthening of the Russian state. Articles in our
journal are published in Russian, with an introductory summary in English. 

Foreign citizens can subscribe to our journal at their local branches of
"Mezdunarodnaya Kniga" (Moscow office fax: 7-095-238-4634, e-mail:
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With best regards, 
Yelena R. Mamikonyan, 
Deputy Chief Editor 

Below is the Table of Contents of issue 1, year 2000, along with
English-language summaries of articles provided by their authors: 

Dmitri Glinski Vassiliev 
Between Utopianism and Fatalism: Russian Elite as a Participant in the
Euroatlantic Expansion 

In recent years, Moscow's relations with Nato evolved along a vicious cycle
of love and hate: musings about potential Russian membership in the
Alliance were followed by Nato's eastward enlargement and mutual
animosity. This essay analyzes Russia's internal debate on its relations
with Nato over 1990s and the reasons behind Russia's contradictory
policies on Nato expansion. These were determined to a large extent by
Russia's authoritarian modernizers' craving for a seat in the Alliance
perceived as a military-political equivalent of "the West" and of the
center of the world system. This holistic image neglected the
controversial status of Nato and its expansion within Western world, not to
speak of the rest of the global community, and the intensity of debates
between Euroatlantic expansionists and their domestic opponents. This
misperception, along with the Kremlin's short-term interests, enabled
Western expansionists to engage Russia on their terms in a bargaining
process, which made the bulk of Russia's foreign policy elite an often
unconscious participant of Nato expansion and intervention. Russia's
policies oscillated between utopian embrace of a North Atlantic community
from Vancouver to Vladivostok (which, if ever achieved, might lead to an
institutionalization of the North-South divide, thus pitting Russia
against its own southern neighbors), and, on the other hand, fatalistic
resignation before an enlargement that was perceived as inevitable, however
unpleasant, geopolitical development. In addition, Moscow's approach to
Nato was driven by internal cold war between Russia's authoritarian
reformers and the parliament, which was not to be allowed to set the
agenda and emerge as a decision-making force in foreign policy. This helps
explain Moscow's consent that the Nato-Russia Founding Act be in fact an
executive agreement rather than a legally binding treaty. These internal
and self-imposed constraints on Russia's diplomacy helped to shape an
outcome that, judging by Western sources, was far from predetermined. 

Dmitri Glinski Vassiliev, historian and political scientist, is senior
research associate of the Institute of World Economy and International
Relations of the Russian Academy of Sciences (RAS). 


Vadim Mezhuev 
The Russian Civilization: Utopia or Reality? 

In contradistinction to A.J.Toynbee, O.Spengler and S.Huntington, the
author maintains that the civilization is the cultures "body" while the
culture is the civilizations "soul". Russias main search for the idea
consists in overcoming of the gap between the civilization and culture and
the principal aim of the country consists not of becoming a part of the
West or achieving and defining its essential difference from the West but,
in collaboration with the West, to create an universal human supranational
civilization which is the only alternative to the dissociation of
civilizations. According to the author, "the society of culture" is the
sole acceptable model of the global civilization. 

Vadim Mezhuev, D.Sci., philosopher, is Professor and chief specialist of
the Institute of Philosophy (RAS). 


Albert Sobolev 
On the Eurasian Idea as the Culture-centered Weltanschauung 

The Eurasian idea which emerged as a reaction of the Russian national
conscience to upheaval of 1917 in Russia involved in its orbit prominent
figures of the Russian culture and aristocracy who emigrated from Russia.
The proponents of the Eurasian idea were distinguished by a clear
understanding of the fact that the power of Russia was determined by its
culture while a habit to pay attention to external achievements of
civilization (in an attempt to catch up with the West) would lead to a
gross undervaluation. That, in its turn, made Russians doomed to the blind
imitation of foreign samples and models. All that would bring about the
degradation of culture. The proponents of the Eurasian idea saw the
Russian culture creators irresponsibility, their predisposition to
imitation, their inability to evaluate the Russian originality properly as
the principal cause of the Russian revolution. The Eurasians did not
accept changes of the political order or fundamental ideas if these changes
were not accompanied and even caused by cultural changes. 

Albert Sobolev is senior research associate of the Institute of Philosophy
(RAS). 


Dmitri Liseytsev 
Russian-Crimean Relations in the "Times of Trouble" 

Taking relations between Russia and the Crimean khanate in the early 17th
century as an example, the author demonstrates the importance which the
Tsars of Russia imparted to contacts with the world outside of Russia. The
period under consideration was characterized by the exceptionally difficult
situation inside Russia. In ten years five supreme rulers succeeded each
other in Russia, yet each of these autocrats (including the so-called
"impostors", or false Tsars) devoted a great attention to the foreign
policy. The author considers all messengers and embassies sent to the
Crimean khanate as well as the reciprocal diplomatic missions and
demonstrates the importance these relations had for Russia. 

Dmitri Liseytsev is post-graduate student at the Institute of Russian
History (RAS). 


Yuri Aksyutin 
The Sixth Soviet Prime-Minister 

The author considers the carrier of N.A.Bulganin who ascended from a
security guard at a provincial manufacturing plant to the position of the
chairman of the USSR Council of Ministers. The author also considers the
wreckage of this brilliant carrier which happened after the attempt to
demise Khruschev when Malenkov, Molotov and Kaganovich, members of the so
called "anti-Party group", succeeded in winning Bulganin over. The author
points out that Bulganin was one of the most educated members of the
government of those times (anyway he graduated from the "real" public
school) but did not plume himself on his superiority, was loyal to
comrades and was not avid for leading positions. 

Yuri Aksyutin, Ph.D., is historian, Assistant Professor of the Moscow State
Pedagogical University. 


Victor Mal'kov 
1945: The National Interest as Viewed by Americans 

As World War II was drawing to a close, U.S. policymakers, diplomats and
publicists worried about the future of the international system but, even
more than that, about the American national interest in each of its
components. Given their countrys overwhelming power, they now expected to
refashion the world in Americas image and establish "the American
century". They intended to promote world peace, foster international
stability, safeguard national security, perpetuate American power and
prosperity in spite of the growing strength of the Soviet Union and its
new role in the European affairs and geopolitical situation as a whole.
The Hamilton Armstrongs memorandum for the Secretary of State
(E.Stettinius), written on the eve of the Yalta conference, reveals the
new global view of the American foreign policy ideologists, convinced in
the superiority of the American values, as well as economic and military
power. 

Victor Mal'kov, D.Sci., historian, is Professor, Merited Science Worker of
Russia, Head of Scientific Center for Theoretical Research at the Institute
of World History (RAS). 


Susan McCaffray 
The Russian Political Economist of the 19th Century (translated by
I.Diakonova) 

The author deals with N.Mordvinov, the thinker and statesman. It is unknown
to the general public that as early as in the very beginning of the 19th
century there were Russian scientists who contributed to the world
economic science. Having meticulously studied works of foreign economists,
Mordvinov applied their discoveries to Russian reality and developed these
discoveries, with the Russian peculiarities taken into consideration.
According to the author, Mordvinovs essay on private provincial banks is
of particular interest, for Mordvinov in that work stated his opinion on
the monetary system and budget, i.e., on the issues which were within the
sphere of his official duties (for some time Mordvinov was the chief of
the State Economy Department of the Russian State Council). 

Susan P. McCaffray is Professor of Russian History, University of North
Carolina at Wilmington, USA. 

*******

#10
From: "Paul Backer, Esq." <pmcllc@email.msn.com>
Subject: Factoids and RF Corporate Governance
Date: Wed, 19 Jul 2000 

As thoughtfully pointed out by Exile, I do spend all my spare time
nitpicking JRL for tiny factual errors.

By the by, umm... Mr. Weir, good article on compromat, but the Justice
Minister was not photographed with naked women in a sauna, (a man
resembling) Prosecutor General Skuratov was, it is important. Introducing
the peerless "man resembling" into the Russian language.

On more significant matters like corporate governance and foreign aid
policy.

Corporate governance is a uniquely important and impressively mismanaged
area of U.S. aid effort in Russia. Absent meaningful corporate governance
and shareholder rights protection, the RF stock market will continue its
dismal Ponzi scheme subsistence as a hamster wheel for speculators, scammers
and suckers. 

I managed, organized and lectured dozens of commercial and corporate law
seminars and CLE in the RF, providing training and putting accurate, timely,
Russian language materials prepared and taught by Russian experts into the
hands of hundreds of attorneys all over Russia. Handling of the corporate
governance and shareholder rights program is an example of our inability to
focus on anything or sustain effort, jumping on the fad of the week.
Cheerfully running the gamut from the irrelevant to the bizarre. One of my
favorites was a project to introduce formal accounting and tax methodology
for black market transactions, believe it or not.

The efforts of U.S. AID in corporate governance sphere were analogous to
adopting Herbalife as part of federal medical care. The corporate
governance and shareholder rights program was (to my knowledge) the ONLY:
1. entirely self-sustaining (presented at no cost to U.S. taxpayers,
through co-sponsorship with NAUFOR) U.S. AID sponsored seminar in the RF.
This is significant, b/c US AID made self-sustainability a lodestone for
every RF program, and achieved it in none.
2. US AID sponsored publication accepted for reprinting by a RF
publisher at own commercial risk. see above why it's significant.
3. Prepared entirely by recognized RF experts in the field (with input
from US legal experts on comp. law). Actually relevant to something in the
RF.
4. Prepared entirely in Russian on Russian law. One of the more
cutting edge U.S. AID initiatives took a U.S. legal case, translated into
Russian as means to teach Russian attorneys to practice in ... Russia.
5. Prepared simultaneously on disk, using the most common Word
processing programs in Russia, to make distribution immediate and free to
anyone who wants one.
6. To this day used as a teaching text in RF law schools.
7. Repeatedly requested by regional centers.

US AID had something that they invested a great deal of money and time to
develop, that paid its own way, had a real demand and cost NOTHING to
distribute. Something that was actually meaningful to actual reform in the
RF and needed. What did they do with it? Nothing, of course. It was a
pure example of an orphan program, it was all in Russian, dense and unsexy
and a mortal sin of not requiring invaluable short-term tourists from the
U.S. and to put it gently, not a core area of interest for Russian powers
that be. The last thing RF corporations want is for RF shareholders to know
their rights. 

U.S. AID went on to some fad of the week, the program was abandoned, whether
for micro loans to T'ma-Tarakan', sub-arctic organic broccoli farming,
retraining KGB officers to macrame or whatever.

All of the follow up has been solely at Russian initiative and expense.
U.S. AID inability to pursue any policy or identify priorities is one of the
major reasons why many Russian nationals view U.S. aid as either an evil
plot or just a cruel joke. I once had the experience of inviting a Deputy
Chairman of a RF Federal Agency to a seminar given by a U.S. expert (spoke
no Russian, no background in Russian law) who was a "bargain" for the ROL
program, b/c the hotel, transportation, MI&E and other expenses were fobbed
off on the lucky taxpayers of his judicial circuit and not paid by US AID.
He opened with this great phrase, "What many of you don't realize that
commercial law is important, because you can't have commerce without
commercial law and commerce is important to commercial development." Not
bad for a few thou of taxpayer money. 

******

#11
Putin praises North Korea's ``modern'' leader

MOSCOW, July 20 (Reuters) - President Vladimir Putin praised North Korean 
leader Kim Jong-il on Thursday as ``an absolutely modern man'' who showed 
great understanding of world affairs. 

Putin met the reclusive Kim Jong-il on Wednesday in Pyongyang, the North 
Korean capital, allowing the world a rare glimpse of him. 

The North Korean leader's contacts with foreign dignitaries have been limited 
to a visit to China earlier this year and a summit in Pyongyang last month 
with the South Korean president. 

``The leader of the DPRK is an absolutely modern man, objectively assessing 
the world situation,'' Itar-Tass news agency quoted Putin as saying on a 
stopover in Blagoveshchensk, in Russia's far east bordering China. 

``He was well informed, he had a good reaction to the talks...discussion was 
possible on any subject,'' he said. 

Putin said the two shared ``good personal relations'' and had found common 
ground on most subjects. 

They pressed their opposition to Washington's anti-missile defence plans in a 
statement on Thursday, saying U.S. concerns about a possible threat from 
Pyongyang were ``groundless.'' 

The United States wants to set up a nationwide anti-missile shield, or 
National Missile Defence (NMD), because of a threat it sees from ``rogue 
states'' among which it numbers North Korea. 

Putin has vigorously opposed the NMD plan as a threat to global security and 
rejects any attempt to modify the 1972 Anti-Ballistic Missile (ABM) treaty, 
which Moscow considers a cornerstone of deterrence. 

Russia fears it is the real target of NMD. 

The declaration by the two countries, whose ties have languished since the 
fall of the Soviet Union in 1991, followed a day of talks cemented by common 
suspicion of U.S. intentions. 

Both men championed sovereignty, territorial integrity and the right to act 
outside international bodies in a thinly veiled reference to Western 
criticism of Russia's military campaign in Chechnya and of North Korea's 
human rights record. 

Putin, cheered by thousands when he left Pyongyang, invited Kim to visit 
Moscow. 

``We agreed to continue our dialogue in Moscow,'' Putin said, giving no 
information about when Kim would visit Russia. 

*******

#12
BBC MONITORING 
RUSSIAN AUDIT CHAMBER EXPOSES "SUBSTANDARD" WESTERN FOOD AID
Text of report by Russian newspaper 'Izvestiya' on 19th July 

The Russian Audit Chamber, risking the life of its auditors, has exposed a 
great variety of defects in the food aid received from abroad, ranging from 
red flour beetle to grain anobiidae. The "foreign" aid contains stuff that 
they do not want themselves. 

The Audit Chamber, under its new chairman, Sergey Stepashin, has decided to 
make its name by showing that it is a serious organization. As a real 
"all-seeing eye", it has published the results of its inspection of the 
foreign food aid arriving in the country. The results confirmed the popular 
opinion about the quality of overseas output: it transpires that virtually no 
type of food meets Russian quality standards. According to a statement by an 
Audit Chamber auditor, Sergey Openyshev, there is "substandard" produce 
present in both the grain and the raw meat. 

For example, grain anobiidae were discovered in the 47,000 tonnes of rye 
donated by the EU. Well, fair enough, the European countries do not have much 
territory and even less land available for grain crops. But what is far worse 
is that the United States, with its vast tracts of lands, has sent Russia 
9,300 tonnes of rice infested with creatures that go by the ghastly name of 
"red flour beetle". Furthermore, 90,000 tonnes of US corn turned out to have 
been mixed with waste products and unidentified grain crops, and there were 
5,000 tonnes of soy mixed with weeds of unknown origin. The only thing that 
is known about these weeds is that they do not grow on our country's 
territory. 

Examinations of the meat led to some simply shocking results. It turned out 
that 30-40 per cent of European beef consists of meat from animals 
slaughtered back in April to September 1996. In other words, four years ago. 
The French have treated us in a completely harsh and cynical manner: their 
beef was not even stamped with a slaughter date. Thus, our experts had to 
determine its fitness for consumption literally by giving it the "tooth 
test". Furthermore, traces of rodent were discovered in the frog's legs 
destined for gourmets, after which the meat was immediately sent to be 
"recycled". 

Joking aside, the Russian Veterinary Service tracked down 132.3 tonnes of 
Belgian pork in which dioxin was discovered and banned it from sale. This 
chemical is not just a powerful toxin for the human organism but also causes 
hereditary mutations. And in 411 tonnes of US beef our scientists discovered 
a percentage of antibiotics exceeding the permissible norm. 

But our people are not idiots. According to Sergey Openyshev's statement, 58 
regions courageously turned down 163,400 tonnes of meat. Consequently, there 
are 70,000 tonnes of beef, 67,700 tonnes of pork and 59,000 tonnes of poultry 
meat left at the Rosmyasomoltorg Joint-Stock Company's refrigeration combines 
[figures as published]. Another good thing is that not all the planned 
shipments have been delivered. Russia has now received food worth 16 billion 
and 958.4 million roubles [out of a planned R18.121bn. 

There is another pleasing aspect. According to information available to 
`Izvestiya', none of the Audit Chamber auditors who has tasted the Western 
food aid has been adversely affected by it. 

******


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