July 21th, 2000    
This Date's Issues: 4415 • 4416   • 

 
Johnson's Russia List
#4415
21 July 2000
davidjohnson@erols.com

[Note from David Johnson:
1. gazeta.ru: Pollsters Find Population In The Dark.
2. Anatol Lieven: Oligarchs.
3. Michael Flier: Re: 4413-Deever/Psalms.
4. The Economist (UK): Editorial, A more realistic Russia. If it 
could translate its new foreign-policy thinking into practice, it 
might truly deserve its seat at the G8 table.
5. Jake Rudnitsky:: re: 4412, Robyn Dixon. (smoking)
6. Stratfor.com: Warning: Chechen Terrorist Threat in Russia Rises.
7. Reuters: Jews to test Putin's attitude towards Gusinsky.
8. Moscow Times EDITORIAL: A Medieval Vision of 'Modernity' 
9. Nezavisimaya Gazeta: Valentina FEDOTOVA, PUTIN SEEMS TO BE 
FORMULATING A POLITICAL LINE.
10. CDI's The Weekly Defense Monitor: Tomas Valasek, Norwegian Radar 
Site Controversy Flares Anew.
11. Reuters: Germany-Russia debt restructure deal soon-report.
12. Reuters: Senators ask Clinton not to reschedule Russia debt.
13. Russia/Central Europe Executive Guide: Foreign Investor 
Perspective--Review of the First 100 Days of the Putin Presidency.]

*******

#1
gazeta.ru
July 20, 2000
Pollsters Find Population In The Dark
Elena Alexandrova, staff writer 

According to a recent nation-wide public opinion poll, approximately half
of the Russian population knows almost nothing about the political
developments in the country and has no idea of what the power vertical
reform is, and what the federal districts are. However, the other 50% of
respondents gladly shared their informed opinions. 

Think tank experts have concluded that almost 50% of Russians know
absolutely nothing about the ongoing reform of the executive power
structure. Even those who manage to hold a conversation on the subject
cannot give the name of the newly created federal district in which they
reside. 

The deputies, the governors, the Kremlin, basically all of the organs of
power in Russia are engaged in a heated discussion concerning the further
development and the possible outcomes of the reform of the nation’s
political apparatus. 

Many political movements and think tanks are hiring specialists to gauge
what common people think of the reforms and the new administrative division
of the state into 7 federal districts and the new initiatives aimed at
curbing the regional leaders’ (governors and presidents of the so-called
autonomous republics) powers. 

Experts have conducted various opinion polls. The experts with the Public
Opinion Fund (Fond obshchestvennogo mneniya) have conducted the largest
nation-wide poll, i.e. interviewing the largest amount of people in the
most places. The fund’s pollsters asked respondents for their opinion on
the reform of the Federation Council, on Putin’s recent state-of-the-nation
address, and on the creation of the 7 federal districts, headed by the
presidential envoys. 

44% of respondents approve of Putin’s moves to replace the governors with
regional representatives in the upper house of the Russian parliament, the
Federation Council. 18% think that Russia will not anyway benefit from
these measures. 38% could not give a definite answer. 

58% of respondents agreed with the opinion that the governors vetoed the
presidential bill ‘on the principles of the formation of the Federation
Council’ because they did not want to lose their seats in the Federation
Council, and 14% think that the true reason for the senators’ veto is that
they believe the country would not benefit from the bill. 30% found it hard
to answer the question. 

The poll results indicate there are three problems that deeply concern
Russians: Firstly, the governors enjoy absolute power in their personal
fiefdoms. Secondly, given the president’s growing influence, respondents
are worried about the revival of an authoritarian regime. And, thirdly,
respondents said they are concerned as to whether the legislation on
reforming the power structure complies with the Federal Constitution. 

Public opinion experts conclude that the majority of Russians do not
support the governors, not because they believe the regional leaders were
wrong to veto the FC formation bill, but simply because supporting the
governors would mean approving of the policies they pursue in their regions. 

Many Russians agree that the governors should stay in their provinces and
mind the local economy rather than be involved in big politics and waste
budget funds on trips to Moscow. Only 18% believe that pushing governors
away from big politics could weaken their chances of lobbying regional
interests and consequently might worsen the situation in the regions. 

As for the compliance of the disputed reform bills with constitutional law,
only Muscovites and experts participating in the poll dwell on the issue,
whereas the respondents in the regions have not yet recognized the problem. 

It is worth noting that 94% of respondents assert they are perfectly
familiar with the provisions of the bill on the reform of the Federation
Council. Only 3% confessed they had no idea what it is all about and other
3% failed to answer at all. 

Admittedly, only 14% of the respondents had heard about Vladimir Putin’s
state-of-the-nation address dedicated to the reform of the power strucure.
24% said they had “heard something about it”, and 52% of respondents learnt
about it in the course of the poll. 

The Public Opinion analysts Fund conclude that respondents who support
Putin’s initiative on dividing the state into federal districts believe
that the bills could strengthen the state system, increase control over the
regional governments, curb arbitrariness and exorcise corruption, bring
down the number of personnel in bureaucratic structures, and cut costs. 

On the exact contrary, the opponents of the structure of political power
assert that the introduction of the federal districts would weaken the
state and reinforce separatism, increase arbitrariness and corruption and
lead to an increase in the number of state officials. 

Poll experts conclude that people feel worried and uncertain of the future;
they do not have a clear understanding of the functions of the presidential
envoys to the federal district and often exaggerate their powers. 

The ROMIR public opinion research centre conducted a similar poll that
produced approximately the same results. 31.8% of respondents assume that
the creation of the seven federal districts will lead to strengthening
power and control, 18.1% said the federal centre would grow stronger and,
consequently, the rights of the regional leaders would be limited. 24.7% of
respondents assume the reform will only lead to an increased number of
state officials and 25% failed to answer. 

As for the reform of the upper house, the ROMIR poll results show that
20.8% welcome the idea. Another 22% say they would rather approve of the
reform than disapprove. 19% said “neither yes, nor no”. 16% would rather
disapprove. 15.7% do not approve of the Federation Council reform at all
and 5.6% had difficulties answering. 

On the bases of these results, ROMIR’s analysts conclude that people
willingly participate in the polls for questions are usually followed by
multi-choice answers and respondents can choose the variant s/he likes
most. However, in reality, often they do not have a clear understanding of
the issue in question. 

It is worth noting that two thirds of the Public Opinion Fund respondents
assert they know or have heard something about the creation of the federal
districts. However 42% of respondents could not say which federal district
their area falls into and 46% failed to give their opinion on the
president’s decision to introduce the federal districts. 

ROMIR’s president Yelena Bashkirova told Gazeta.Ru: “Indeed, society is not
very well, or not correctly informed of the executive power reform that the
country is currently undergoing, the reasons being that the level of
education of the respondents, besides, a certain part of population does
not pay attention to politics, they have their own lives and their personal
interests. 

Some respondents do not understand the questions. But, of course, they’ve
heard something about the formation of the federal districts while making
dinner. They recognize the words they’ve heard on TV and form their opinion
on the matter. Russians are poorly informed on many issues.” 

“And could you name issues Russians are even more poorly informed about? “ 

“Well, for example, many have no idea what the ABM treaty is about.” 

*******

#2
Date: Thu, 20 Jul 2000 
From: Anatol Lieven <alieven@ceip.org> 
Subject: Oligarchs

>From Anatol Lieven, Carnegie Endowment, Washington DC.

May I briefly summarise the dominant Western opinions on the Russian state
and the "oligarchs" in recent years (often expressed by one and the same
people)? 
1) The oligarchs have been a critically important force in undermining
democracy, frustrating true economic reform, looting the state, crippling
revenue collection and discouraging foreign investment. Reducing their role
is a priority for any truly reformist Russian government. Any actual move
against by the state against an oligarch will however be immediately
denounced as heralding a return to
authoritarianism-totalitarianism-Stalinism, even when this move is made
through the courts and in cases where a very strong presumption of guilt
exists.
2) The oligarchs have seized control of most of the mass media, often by
illegal means, and used them to further their own interests both against
the state and in battles with each other. The media generally reflects the
interests of this class. Russian journalists have unfortunately been
effectively bought up en 
masse. This is called pluralism and a free press.
3) Putin's move against the oligarchs is in fact a move of the
oligarchical clique of Berezovsky against his rivals, and is therefore to
be denounced as a dishonest sham and a sign of Putin's weakness. The move
is obviously against Berezovsky as well. It is therefore to be denounced as
an assault on the free market and heralding a return to
authoritarianism-totalitarianism-Stalinism etc etc
4) Russia desperately needs to establish respect for the rule of law and
honest standards in public life. 
The first step should be to declare an amnesty for all the thefts which
have taken place over the past ten years.
5) Russia is a society in steep decline, wrecked by 70 years of
communism, with a very weak civil society and deeply corrupted public
institutions. Creating democracy and economic reform in these circumstances
is extremely difficult. Russia must immediately show complete adherence to
Western-style democratic behaviour. If a Western ally fails to meet these
standards, this will be described as "growing pains on the path to
democracy and the free market". If Russia fails, it will be denounced as a
return to authoritarianism-a police 
state-totalitarianism etc etc
6) Some of the most strikingly successful examples of capitalist economic
growth over the past half century have been conducted by authoritarian
regimes with a strong element of state support and planning (often in
alliance with and subsidised by the USA). It is now generally acknowledged
that in the case of South Korea, Taiwan, and elsewhere, this growth created
a modern middle class, which in turn eventually demanded democracy and is
now providing a stable foundation for democracy. Without such a middle
class, democracy (as in Peru and 
elsewhere) is liable to prove an empty and deeply unstable shell. Any
suggestion that this model might be appropriate to Russia will be
dismissed out of hand as simultaneously: a) impossible b) quite possible,
but a return to totalitarianism-a police state-authoritarianism-the Tsarist
era-the Stalin era-the era of Nicholas
II-the era of Ivan the Terrible-Uncle Tom Cobbley and All.
7) Let's all hope that when our heads stop spinning round they end up
pointing in the right direction.

*******

#3
Date: Wed, 19 Jul 2000
From: Michael Flier <flier@fas.harvard.edu>
Subject: Re: 4413-Deever/Psalms

Dear David:

I am responding to John Deever's remarks about the discovery of early
eleventh-century wooden tablets with Psalms 75 and 76 in Novgorod. He
should not assume that those numbers correspond precisely to the numbers in
his version of the Bible. The original article in Johnson's List cited the
Russian historian Aleksandr Khoroshev, who is almost certainly using the
Eastern Orthodox numbering of the Psalms, based on the Septuagint (Greek
translation from the original Hebrew), whereas the King James Version and
the later versions based on it follow the original Hebrew numbering,
including the New Revised Standard Version that Deever cites. 

The Greek and Hebrew versions agree until the Greek Psalm 9, which
corresponds to the Hebrew 9 and 10 combined. Accordingly, for Greek Psalms
10-112, one has to add one to the Greek number to obtain the correct Hebrew
number. Thus the Eastern Orthodox Psalms 75 and 76 from Novgorod actually
correspond to the Hebrew (and King James Version and New Revised Standard
Version) 76 and 77.

Prof. Michael S. Flier
Dept. of Slavic Languages and Literatures
Harvard University

*******

#4
The Economist (UK)
July 22-28, 2000
[for personal use only
Leader/editorial
A more realistic Russia 
If it could translate its new foreign-policy thinking into practice, it
might truly deserve its seat at the G8 table 

RUSSIA has long thought of itself as a singular power. At the G8 summit of
rich, democratic nations, which opens in Okinawa on July 21st, it will
indeed be the odd one out. While the other seven leaders from North
America, Europe and Japan fret about the digital divide, and the poor
health and bad debts of the world’s hard-up nations (see article), Russia’s
president, Vladimir Putin, by his own admission, knows he is struggling to
avoid his country’s relegation from the big-power table to the ranks of the
third world. 

In Beijing this week, on his way to Japan, Mr Putin made a lot of Russia’s
much-vaunted strategic partnership with China, their shared determination
to build a multi-polar world (read, to limit America’s influence) and their
opposition to America’s plans for limited national missile defences. In
North Korea, he staked his claim to a part in the diplomacy after last
month’s historic summit between North and South Korea. Meanwhile, Russian
officials warn westerners, with varying degrees of bad temper, that they
have plenty of other friends—China, India, Iran, Iraq, former Yugoslavia—if
NATO and the European Union again overlook Russia’s interests in places
like Kosovo and Eastern Europe. 

So far, not so different from the later Yeltsin years, when Russia went
into a deep sulk over its loss of empire and influence. It saw the world as
a 19th-century power game: a gain for the West meant a loss for Russia.
Conversely, any spanner Russia could toss into western works—protecting
Iraq despite its flagrant disregard of UN disarmament resolutions, selling
weapons to China for use in regional rows or for browbeating Taiwan, or
helping Iran with its longer-range missiles—disguised Russia’s great
decline. The trouble was that it did nothing to reverse it. Mr Putin
recognises that. Despite the week’s rhetoric, there have been some welcome
hints of a new realism about where Russia’s real interests lie. 

It is reflected in Mr Putin’s travels in Europe, and Asia, in speeches at
home and in a new foreign-policy doctrine published last month. It comes in
three bluntly expressed parts. 

First, Mr Putin has no illusions about reversing Russia’s imperial decline;
the burdens of empire helped drag it down. He looks forward to rebuilding
Russia’s influence, but with qualms. Economic weakness, he points out, has
been Russia’s undoing, not dastardly western plots. Russia needs to pull
itself up by its own bootstraps, reforming its tax system, defending
property rights, if it is to break its harmful dependence on either
fortuitously high oil prices or western handouts. Hence the qualms: without
reform, Russia will fare just as badly in the new information-based economy
as it did in the old industrial-based one. 

Second, says Mr Putin, in these straitened times Russia needs to rethink
its foreign ambitions. He claims he will keep talking, even at difficult
moments, and tackle problems collectively, for example at the UN. The
theory is encouraging; the test will be whether he still uses Russia’s
influence there to coddle dictators such as Iraq’s Saddam Hussein and
Serbia’s Slobodan Milosevic. Meanwhile, he could explain the new realities
to his generals (see article), who are fighting over whether Russia needs
more soldiers or more nuclear missiles, when in truth it needs fewer of both. 

In the past, Russia’s annoyance at the West and its need for cash from arms
sales have driven the search for friends in unhelpful places. This is where
the third element in Mr Putin’s rethinking needs to get most bluntly
realistic: Russia’s past tactics have often harmed its long-term interests. 

The countries that count 

Though it makes sense for a country with as many neighbours as Russia has
to be on good terms with as many as possible, China included, Mr Putin
knows that, if Russia is to grow strong again, it needs to link its future
with the world’s rich democracies—the folk around the G8 table—not the
world’s few surviving dictators. His generals know that the fancy weapons
Russia sells to China may some day be turned against them. Obliquely, Mr
Putin acknowledges that Russia’s past missile and nuclear help to countries
like Iran and Iraq has helped to spur what could be a destabilising search
for new missile defences. And Russia is slowly recognising that, if it is
to be friends with the EU, the price may be to get on better with Balts,
Ukrainians and others round its rim. 

Mr Putin has so far put these new thoughts only on paper. They will be hard
to put into practice. If he managed it, Russia would indeed deserve the
respect it earned. 

******

#5
Date: Thu, 20 Jul 2000 
From: Jake Rudnitsky <jake@thepost.kiev.ua>
Subject: re: 4412, Robyn Dixon 

Dixon's article about Belomors was a great read. But there is one fact she
missed. The major market for these foul cigarettes is not soldiers,
prisoners and poor folk, but people who smoke pot. Using the paper from
papirosi is by far the most popular means of making kosyaki (joints)
throughout the CIS. I bet the rising demand for Belomors has less to do with
widespread poverty (Dixon had to travel to some village Tishanka, where ever
the hell that is, to find a single pensioner that smokes them) than growing
use of pot in recent years. It is a shame that the story's heroine Larissa
Solovyova wastes her talents testing the quality of papirosi, because most
customers clear out the black low grade tobacco of the cigarette to make way
for a more palatable substance.

****** 

#6
Stratfor.com
Warning: Chechen Terrorist Threat in Russia Rises
July 19, 2000

A poorly aimed Russian artillery attack damaged a section of the main gas
pipeline from Chechnya to Dagestan on July 17. The errant shell was part of
a larger artillery attack on Chechen rebels reportedly in the area,
according to official claims by the Russian military. 

The location of the shelling – well away from the fighting – indicates an
increased concern by the Russian government that Chechen rebels may be
leaving Chechnya to begin terrorist attacks elsewhere. Chechen leaders are
signaling that they will repeat a tactic they used in the first Chechen
war, taking the war into Russia itself. The chance of an attack beyond
Chechnya is high. 

A Russian artillery shell damaged a section of gas pipeline located in the
village of Pervomaiskoye in the Khasavyurt region of Dagestan. Russian
military commanders told ITAR-Tass that artillery was targeting a nearby
rebel group; it is unclear if the attack, however, actually struck any
Chechen troops. This particular region holds special precedence: In January
1996, during the first Chechen war, rebels infiltrated Dagestan, seized
hostages, and holed up in Pervomaiskoye. Russian troops struck with
rockets, but most of the rebels escaped.

In this, the second Chechen war, the shelling of Pervomaiskoye comes days
after Russian forces completed Operation Filter, a 3,000 -strong Interior
Ministry effort to sweep rebels from Dagestani border areas and prevent
Chechen militants and their weapons from crossing into the neighboring
Russian republic. In the operation, government forces rounded up 100 people
suspected of involvement with Chechen rebels, including five on the
Interior Ministry’s wanted list. 

Operation Filter was the latest in a series of attempts to keep Chechen
rebels from crossing into Russia proper, where they could carry out
terrorist attacks. Since June 25, various internal checkpoints have been
set up inside Chechnya, with passport and cargo inspections occurring in
the capital of Grozny as well as in Argun, Gudermes and Urus-Martan.
Additionally, ITAR-Tass reported July 10 that Russia had closed the
Dagestani-Chechen border from 6 p.m. to 8 a.m. 

The renewed urgency to seal the borders comes in the wake of comments by
Chechen President Aslan Maskhadov, Chechen Field Commander Shamil Basayev
and Chechen spokesman Movladi Udugov. All claimed the rebels are preparing
to extend the war beyond Chechnya. Udugov told Agence France Presse July 17
that the Chechens had “two battalions numbering some 500 suicide bombers
who are fully prepared and awaiting orders to carry out operations within
Chechnya and throughout the rest of Russia.” 

"The Russians find themselves in Chechnya in the same impasse which led
them during the first war to launch negotiations," Maskhadov told Agence
France Presse. Moldavian authorities claim to have captured five Chechen
rebels, who were bound for Romania with forged Ukrainian passports. 

There are distinct signs that the closing phases of the first Chechen
conflict will be replayed against a backdrop of terrorist attacks. On July
19, a bomb was found in an apartment, another exploded in Vladivostok and a
bomb threat was called into a North Caucus airport, raising the possibility
of renewed terrorist violence. 

Toward the end of the 1994-1996 Chechen War, rebels launched a widespread
terror campaign. Two notable attacks struck Budennovsk and Pervomaiskoye.
These last two attacks occurred after Russia had declared victory. While
the Russians celebrated, the rebels hit targets beyond Chechen territory as
well as within Grozny itself, which the Russians had supposedly captured. 

In the case of Pervomaiskoye, rebels first seized the village, and then
escaped after Russian forces surrounded the area. Simultaneously, the
Chechens orchestrated a series of bombings in and around Moscow, leading
some Russians to call for an end to the fighting. 

In response, the government forces’ accidental shelling of a high value
installation – a gas pipeline – marks an apparent change in the rules of
engagement for Russian forces in Chechnya. Instead of shying away from
these areas, the Russians are apparently no longer concerned about damaging
critical infrastructure in attempts to hit the rebels hard. This “shoot
anything that moves” strategy is a far cry from the more conservative
“surround and mop up” strategy that has governed Russian tactics to date. 

The Russian shelling, increased border restrictions and passport controls,
speaks to Russian fears of Chechen rebels exfiltrating. With domestic
support for the war dropping, attacks outside of Chechnya can only hurt the
Kremlin’s image. 

The Russian government is desperate to control rebel movement at all costs,
even if it means damaging its own infrastructure. Maskhadov’s and Udugov’s
comments are exactly what Russians fear. The Chechens have apparently begun
a campaign to take the war to Russia. The chance of an attack beyond
Chechnya is high, giving the new leadership its first real political crisis. 

*******

#7
Jews to test Putin's attitude towards Gusinsky
By Joan Gralla

NEW YORK, July 20 (Reuters) - A Jewish advocacy group on Thursday said it 
will invite Russian President Vladimir Putin to a groundbreaking ceremony for 
a new religious centre in Moscow to test his attitude towards Jews and 
embattled media tycoon Vladimir Gusinsky. 

The World Jewish Congress's Russian chapter, headed by Gusinsky, is 
sponsoring Moscow's first big Jewish community centre in half a century, 
according to Elan Steinberg, WJC executive director. The $20 million 
building's cornerstone will be laid at a Sept. 18 ceremony that Putin will be 
invited to attend. 

Since June, Gusinsky, head of Russia's biggest independent television 
station, has been fighting fraud charges stemming from his media empire's 
purchase of a St. Petersburg television station. On Wednesday, Russian 
investigators moved to seize all property belonging to Gusinsky. 

Other prominent business leaders, known as oligarchs, who have reaped 
enormous profits from industry privatisations, also are being probed by 
Russia prosecutors. But the WJC noted Gusinsky was the businessman to be 
jailed, however briefly, and the only one whose television station has bashed 
Russia for human rights violations in Chechnya. 

The WJC says Gusinsky's case is the most troubling, and perhaps another 
indication that anti-Semitism is growing. 

Russian prosecutors have denied political motives drove their investigation 
of Gusinsky and said the Kremlin is not involved in the cases. 

Steinberg, explaining why the WJC wants to invite Putin to the groundbreaking 
ceremony, said: ``In a sense, it is both a celebration and a test, a 
celebration of renewal and a test of the intentions of the Russian president 
and the Russian government.'' 

Russia has a long and troubling history of anti-Semitism and late 19th 
century pogroms helped spawn Zionism. 

The WJC now fears that anti-Jewish prejudice is on the rise. Moscow's chief 
rabbi told the WJC that parents are not enrolling as many children in Hebrew 
schools as had been expected -- ``principally because of heightened concern 
of anti-Semitism,'' Steinberg said. 

******

#8
Moscow Times
July 21, 2000 
EDITORIAL: A Medieval Vision of 'Modernity' 

Kim Jong Il , it seems, is "an absolutely modern man." He was 
"well-informed," says President Vladimir Putin, adding that "discussion was 
possible on any subject," and that the Russian and North Korean leaders found 
common ground on most subjects and enjoyed "good personal relations." 

We can think of many adjectives for Kim Jong Il f weird, reclusive, 
totalitarian, dictatorial. But "absolutely modern" doesn't spring to mind. 
And we have a hard time believing discussion and common ground could be found 
"on any subject" between Kim and the leader of any other democracy. 

In fact, one wonders what Putin and Kim discussed that left Putin so charmed 
and enthusiastic. Economics? Press freedoms? Those who "struggle against the 
state"? Those snazzy Mao jackets Kim favors? 

Certainly it must have been nice for Putin to be cheered by thousands in 
Pyongyang. But surely President Putin understands such crowds are created at 
government order f that the cheering is less out of sincere respect or liking 
of Putin than of fear of the state? 

In fact, we can't help wondering what the point is of going to North Korea. 
Was it just to keep moving f from England to Spain to Italy to Chechnya, by 
jet and submarine and paddle boat f instead of actually ruling? 

Or perhaps it was merely to score some cheap points in the "debate" with the 
Americans over the national missile defense the U.S. White House is 
proposing. If so, that is really quite lame: NMD is a bad idea and the 
Americans should abandon it. But for those who oppose NMD, the goal should be 
to gain and hold the moral high ground f not to surrender it overnight by 
talking up one of the world's last and most odious dictators. 

President Putin does not seem to understand that no one trusts Kim because he 
is a reclusive totalitarian who has reduced his people to eating grass to 
survive. By gushing about him as a peaceful man in need of purely peaceful 
missiles, Putin convinces no one and instead fritters away his own fading 
credibility f and Russia's as well. 

And in the process, Putin again raises doubts about his own dedication to 
leading a democratic state. It is interesting that while Putin is again away 
enjoying discussions "on every topic," prosecutors again moved in for another 
round of harassment of NTV's Vladimir Gusinsky. They also moved to reopen the 
case against retired Navy captain Alexander Nikitin, whose only crime seems 
to have been wanting to warn his countrymen of a major environmental 
catastrophe. 

This time, of course, no one worried that Putin would be "embarrassed" on his 
foreign trip f his host more likely congratulated him on the news, and the 
North Korean press corps is not exactly a tough crowd. 

*******

#9
Nezavisimaya Gazeta
July 19, 2000
[translation from RIA Novosti for personal use only]
PUTIN SEEMS TO BE FORMULATING A POLITICAL LINE
Dr. Valentina FEDOTOVA (Philosophy), professor and head 
of the Philosophy Centre, Russian Academy of Sciences

One can understand Putin only in the contents of the 
preceding anarchy, the grave economic problems of the bulk of 
the population, the exit of capital, growing crime and the 
threat of the dissolution of the country. Such circumstances 
always create prerequisites for the authoritarian regime, which 
have been reaffirmed by certain statements and actions of Putin.
The Russian and foreign public is worried by the 
possibility of authoritarianism. But what is authoritarianism 
as such? It is an attempt to assume control of the political 
and (sometimes) the economic sphere of society, leaving all 
other spheres - private life, the mass media and small business 
- free of such control.
It appears that even if Putin is tilting towards 
authoritarianism, he is doing this for the sole purpose of 
precluding anarchy and chaos and institutionalising democracy. 
He is not restoring, as his critics on the right would say, but 
establishing democracy, for democratic freedoms are socially 
organised and rely on a democratic state, and do not mean the 
freedom to do whatever one wants. 
Today we have a choice between oligarchs and those who are 
fighting them. Putin decided to create a state. How democratic 
will it be? This depends on many factors, including the 
seriousness of Putin's intentions and the resistance of the 
elite and the masses. 
The oligarchs appeared as a result of the thievish 
privatisation (this is how it is described in international 
reports and documents) of 1995. The priority goal of 
privatisation was to privatise major enterprises, whose staff 
could be forced by the deteriorating living standards to 
support communists at the forthcoming presidential elections. 
The second goal of privatisation was to create a class capable 
of accumulating money and paying for the 1996 presidential 
campaign.
The oligarchs fulfilled these tasks with the assistance of 
the active part of society, but failed to create a system of 
relations between wealth and society that exists in civilised 
capitalist countries. It is Soros, a US national, and not 
Russian oligarchs, who is financing educational programmes and 
the publication of books. Our oligarchs bought up the 
industries but are not investing money into them or modernising 
them. They have not built concert halls or libraries, or sent 
100,000 students to the West, as communist China did, and they 
have not provided grants to our best students. Putin is using 
force in an attempt to combat their greed, which is an 
impossible task in view of the fact that they can leave the 
country whenever they want. 
Putin promised us that there would be no oligarchs. How 
can he plan to do this? The thievish privatisation was an 
expedient measure in terms of the revolutionary period, and it 
would be illogical to judge the oligarchs by modern laws. 
Yeltsin had no legitimate means of retaining power by 
destroying society, instead of by carrying through any reforms 
at all. Likewise, Putin has no legitimate means of restoring 
it. This is why political expediency will dominate the 
dictatorship of law for a very long time yet. Putin is reaction 
to what we had before.
Society asks if the liberal ideas in Putin's programme 
were only an embellishment provided for the West. This question 
seems justified, but the answers to it are mostly wrong. Here 
is how I see the situation so far.
Russia tends to be radical. This is its main disease. We 
chose the most radical - communist - of all possible variants 
of socialism. We also chose the most radical, neo-liberal, 
variant of capitalism, which is a kind of Western 
fundamentalism. The political pendulum of Russia moved from 
communist radicalism to neo-liberal one. We could expect it to 
move back, for this is what pendulums do. But a part of the 
older and the bulk of the middle-aged generations, who have 
experienced both variants, are not ready for extremes today. 
They preferred Putin to Zyuganov at the 2000 elections. The 
people want to live in the new way, but in conditions of order. 
The pendulum has stopped a little left of the centre, but not 
in the far left corner. That Putin has kept back the movement 
of the pendulum is the main and new factor of Russian politics. 
I think his programme can be understood if we assume that 
his goal is to stop the movement of the pendulum. He is using 
authoritarianism to cut short anarchy that is moving towards 
chaos and to create conditions for transition to democracy, 
which means that his goal today is not justice or freedom 
(these are more long-term goals), but the narrowing of the 
amplitude of the pendulum whose movement is destroying the 
country. Putin has created outposts in the form of Unity left 
of the centre and of Gref's economic programme right of the 
centre. 
It is probably because he studied Germany that Putin knows 
about the experiments of orthodox liberals in post-war Germany, 
who established state control of the market in order to prevent 
the shadow structures from assuming such control. Of course, 
Russia is not Germany. But the pendulum of Putin - the 
narrowing of the amplitude of confrontation - is the second 
most important fact characterising the obtaining situation. 
In the previous decade, Russia's policy was impromptu or 
instinctive. How did Yeltsin create the social base among the 
people who supported the state only because it allowed them not 
to deal with it (the anarchic base) in 1996? How did he manage 
to sign that strange social contract: "Do what you want but 
vote for me"? The answer is not that he relied on his 
understanding of the people, or that it was a reasonable 
decision or, a clever plan.
No, unlike his previous impromptu decisions, he followed his 
instincts that time, using the similarity of his archetype with 
the archetype of the masses (the preference of free will to 
freedom). 
It appears that Putin is not improvising or using his 
instincts, but formulating a political line, a kind of social 
engineering. The policy line is the third most important fact 
in the new situation. The existence of such line is the 
prerequisite of a successful policy, but not a guarantee 
thereof. There is a danger in this line, and this is the danger 
of becoming enamoured with the means and forgetting the goal. 
The question is also what the pendulum is suspended from. Can 
it integrate Russia into the global post-industrial world? 
Putin has a logic of his own. By cutting off extremists on 
the left and on the right, he is trying to shift the accent of 
his politics to those who stand inbetween. 

******

#10
The Center for Defense Information
The Weekly Defense Monitor
July 20, 2000
Norwegian Radar Site Controversy Flares Anew
By Tomas Valasek, Senior Analyst, tvalasek@cdi.org

The controversial Vardo X-band radar site in Norway has been targeted by
Russian nuclear missiles, Norwegian press reported this week, quoting
Russian sources. Moscow has previously alleged that the radar is a part
of the U.S.-proposed national missile defense (NMD) system, and as such
violates the 1972 Anti-Ballistic Missile (ABM) Treaty. X-band radars play
a crucial role in NMD architecture, tracking missile trajectories and
discriminating between warheads and decoys. Norway claims the Vardo
radar's purpose is to monitor space debris.

General Leonid Ivashov, the head of the Defense Ministry's Military
Cooperation section, also warned the same day that Russia would take
unspecified measures "unless Norway closes the radar during Russian
military exercises." The Vardo radar, even if not connected to the NMD
system, could be used to monitor Russian tests and gather information on
the radar signature of Russian missile launches -- information that can
be used to improve performance of the NMD system.

In response, Norway's Defense Minister Sigur Frisvold suggested that
Norway be included in a U.S. missile defense program, ostensibly to
protect against threats from "terrorist nations." However, the timing of
the request a day after the Russian threat to target Vardo with nuclear
missiles makes it abundantly clear that Norway desires protection from a
possible Russian nuclear strike against the Vardo radar.

The Vardo X-band radar was manufactured by Raytheon in the early 1990s.
It operated for three years at Vandenberg Air Force base in California
before being dismantled and moved to Norway. Although the NMD system
plans to use two Europe-bases X-band radars in its latter stages (in
Denmark-administered Greenland and in Great Britain), Vardo does not
appear in U.S. plans. The Norwegian government maintains that the radar's
sole purpose is to monitor space debris. "We have an exceptionally clear
agreement with the Americans. If they wish to use the radar for another
purpose than space surveillance, the whole agreement [on the use of the
radar by the United States] has to be renegotiated," said the project
leader for the Vardo radar, Tom Rykken, in an interview with the
Norwegian daily Bergens Tidende.

However, the radar's unique technical capabilities and its proximity to
Russia -- 40 miles from the border -- aroused suspicions of foul play in
Moscow. "In the opinion of our analysts, the [Vardo radar] station will
function as part of the anti-missile system [NMD]," said General Ivashov.
Russian President Vladimir Putin named Norway alongside Britain and
Denmark when warning the European countries against cooperation with the
United States on NMD. "Washington needs European help, above all from
Britain, Denmark, and Norway. These states risk being drawn into a
process that will lead to an unpredictable destruction of strategic
stability," he said.

The Russo-Norwegian dispute appeared to die down in early summer 2000.
After unsuccessfully requesting access for its experts to the Vardo
station, Russia softened its criticism of Norway. General Vladimir
Yakovlev played down Vardo's role in NMD. "Judging by its technical
characteristics, that radar is not an element of an [anti-ballistic
missile defense] system," he said. However, he added, "the information
obtained by the radar station could be used to develop and improve the
anti-ballistic missile system as it is able to [monitor] routes and sites
for space vehicle launches in the North Sea."

But the crisis flared anew in July, inflamed by suggestions in the United
States to switch from destroying enemy missiles in their final, re-entry
phase, as currently planned, to so-called "boost phase" intercepts. The
latter concept relies on hitting ballistic missiles with intercepts
shortly after they take off when the missiles are still attached to
boosters (thus presenting a much larger and hotter target) and moving
considerably slower. A boost-phase intercept system, however, would
require placing interceptor missiles and radars close to likely launch
sites, on land or on U.S. Navy ships. Norway has ordered five Aegis-class
radar and missile launch systems from the United States. According to the
U.S. Navy, the Aegis system could serve as a backbone of a boost-phase
intercept missile defense system. Russian officials again sounded warning
signals. "If this [Vardo] station works jointly with the radars of
cruisers with guided missiles, which Norway will receive and which can be
hypothetically armed with Aegis anti-missile systems, the systems can be
used to liquidate our missiles at the boost stage," said General Yakovlev.

*******

#11
Germany-Russia debt restructure deal soon-report

BERLIN, July 20 (Reuters) - Germany will sign a bilateral agreement on debt 
restructuring with Russia in coming weeks that will massively reduce Russia's 
debt burden, a German newspaper reported on Thursday. 

Citing government sources, the Handelsblatt business daily said in an advance 
copy of a report in its Friday edition that Russian debt from 1998, 1999 and 
2000 would be restructured to the tune of around eight billion marks. 

Repayment dates would be extended until 2016, Handelsblatt said, which would 
enable a Russian debt restructuring deal reached last year with the Paris 
Club of debtors to be implemented bilaterally. 

No comment was available from the Finance Ministry but the report is in line 
with recent comments German Deputy Finance Minister Caio Koch-Weser, who said 
on Wednesday that another Paris Club rescheduling was possible later this 
year. 

Any rescheduling would be in the context of talks between the International 
Monetary Fund and the Russian government, he said. 

A deal on debt repayment interest had also been reached, where the rates 
would be clearly lower than the current 7-percent level, Handelsblatt said. 

Koch-Weser said Germany will sign an agreement with Russia next week 
resolving disputes over export credit guarantees that should unlock one 
billion marks in new cover soon. 

Koch-Weser said contracts would be signed at the first meeting of the 
high-level economic cooperation council, which is a consultative group 
revived at last month's German-Russian summit in Berlin. 

Germany does not want outright debt forgiveness for Russia as it believes 
that Russia's economy is strong enough to bear its national debt burden. 

Moscow owes Germany around half of its $43 billion in sovereign debt 
inherited from the former Soviet Union. 

******

#12
Senators ask Clinton not to reschedule Russia debt
By Christopher Wilson

WASHINGTON, July 20 (Reuters) - On the eve of the Group of Eight summit in 
Japan, several influential Republican U.S. senators, critical of the war in 
Chechnya and Russian aid to Yugoslav President Slobodan Milosevic, have urged 
President Bill Clinton not to agree to any rescheduling of Moscow's 
Soviet-era debt. 

The senators made clear in a letter to Clinton that they ``strongly oppose 
any further debt rescheduling, reduction or relief for the government of 
Russia absent significant changes in Russian spending priorities.'' 

The issue is expected to come up when leaders of the world's seven richest 
nations -- the United States, Japan, Germany, France, Britain, Italy and 
Canada -- and Russia meet at a G8 summit on Friday in Okinawa, Japan. 

Signatories to the letter, dated on Wednesday, included Senate Republican 
Leader Trent Lott of Mississippi, Foreign Relations Committee Chairman Sen. 
Jesse Helms of North Carolina and Sen. John Warner of Virginia, chairman of 
the Armed Services Committee. 

``It is our view that the principle and interest owed to the United States 
should be manageable within Russia's current available resources and 
budget,'' the letter said. 

``Instead of fulfilling these financial obligations, the Russian government 
has chosen to spend limited resources on the prosecution of a vicious and 
debilitating war against Chechnya and offered substantial financial support 
to Slobodan Milosevic's criminal regime.'' 

The move was the latest in a series of efforts by congressional Republicans 
to block the Clinton administration from allowing Russia to postpone payment 
of $485 million in bilateral debt owed to the United States. 

The White House has resisted the attempts and resolved to press on with 
rescheduling the Russian debt as part of a broader pact with the Paris Club 
of 19 creditor nations. 

Russia inherited $42 billion in debt to the Paris Club from the Soviet Union, 
some dating back to the Second World War. 

The debt restructuring has grown into a political test of wills in the United 
States with the Republican-led Congress accusing the Clinton administration 
of being soft on Russia. Republicans argue that postponement of Russian debt 
repayments merely frees up funds for Moscow to use for purposes contrary to 
U.S. interests. 

On Wednesday, the House of Representatives voted 275-146 in favour of a bill 
to try to prevent the United States from rescheduling unless Russia shuts 
down an electronic listening post in Cuba, reported to be used to spy on 
America. 

And last month the Senate unanimously approved a measure urging the United 
States to instruct its debt negotiators to oppose further forgiveness, 
restructuring and rescheduling of Russia's international debt, including that 
being considered in the Paris Club negotiations. 

*******

#13
Date: Thu, 20 Jul 2000 
From: Scott Studebaker <scott@wtexec.com>
Subject: Foreign Investor Perspective--Review of the First 100 Days of
the Putin Presidency

>From Scott Studebaker
Managing Editor
Russia/Central Europe Executive Guide
tel: 978-287-0301 fax: 978-371-7866
Visit our website at www.wtexec.com

Russia/Central Europe Executive Guide
July 15, 2000, edition
[for personal use only]

Foreign Investor Perspective--Review of the First 100 Days of the Putin
Presidency

Russia/Central Europe Executive Guide talks with Philip Poole, head of
emerging Markets Research at ING Barings, about the actions so far by the
Putin government in the areas of minority shareholder rights, structural
economic reforms, and a weak vs. strong ruble. Excerpts from the interview:

Undoing Privatization Sales

EG: Could official efforts be taken to overturn other sales in the
unpopular privatization program?

Poole: It could happen. What could also happen is that the prosecutor's
office may find that the Norilsk sale was legal. As far as we can see there
was a deal done. It is true that the privatization loans, which were part
of the process, were never repaid and consequently the stakes that were
sold as part of that deal remained with the providers of the loans. The
structure of the privatization sale may not have raised as much money as
could have been raised through other means but it was done, I think, at the
time partly to ensure that some cash came in quickly and also to ensure
that the privatization process itself was irreversible. Many people
profited from the process, but there were also genuine reasons why it was
done that way at the time.

Danger to Economic Growth-Pressure for a Stronger Ruble

EG: Right now Russia's trade balance looks quite favorable. But the trade
surplus is pushing up the value of the ruble. Do you see a danger of the
ruble appreciating and setting back economic progress?

Poole: I think this probably is one of the biggest risks particularly
because Russia is now in an economic recovery phase. The present recovery
is based on import substitution which followed the devaluation. In order
for Russia to sustain the recovery, the economy must see productivity
growth enhanced as a result of structural reforms. Those structural reforms
must be achieved one way or another, but in the short term there is a risk
that real currency appreciation through nominal targeting of the exchange
rate-which is effectively what is happening at the moment-can squeeze
margins for domestic producers. The result is that domestic producers get
priced out of their own market. The central bank has first focused on the
profitability of exports. Exports clearly are profitable at the moment
given the high levels of dollar prices for commodities. However, another
important element in this, and probably more important, is to focus on
imports. Domestic producers must be able to compete with international
producers on the domestic market. Real currency appreciation will make such
competition more difficult; the danger is that the momentum of the recovery
will be lost precisely for that reason.

Effect on Ruble of Drop in Oil Prices

EG: While strengthening of the ruble may be the problem right now, it is
the weakening of the currency that has caused more serious problems that
led to the devaluation in August, 1998. If commodity prices start to drop
and capital flight continues at its current pace in Russia, will we see the
ruble in trouble again?

Poole: I don't think so. We are not expecting oil prices to fall
precipitously from these levels. We might see oil prices fall to $24 to $25
a barrel from $30 $31 a barrel. That would still leave a very healthy trade
surplus for Russia. There is an issue that imports at some point in time
will pick up but also it is important to understand the nature of capital
flight in Russia. Part of the leakage in foreign exchange away from the
official sector is to finance imports that do not show up on the trade
accounts. The reality is that a large part, or certainly a sizable part, of
what shows up as capital flight is in fact unrecorded imports, so it is not
as if this is money that is entirely leaving the Russian economy and going
into a Swiss bank account, as many think of capital flight, for example, in
Latin America. There is also been an element of this capital flight being
used, or this leakage being used, to repay debts of the corporate sector.
After the devaluation, corporations were forced to pay back loans to
Western banks and Western banks cut lines of refinancing. On the one hand,
there was a repayment of debt, and, on the other hand, these companies
needed working balances. They, therefore, had to build up deposits
off-shore in order to provide working capital, basically to keep themselves
going.

Future of Import Substitution Policy

EG: Can the Russian government maintain high tariffs on imports as part of
an import substitution policy?

Poole: The Russians want to join the World Trade Organization and on that
basis they will have to move tariffs into line. It is interesting that the
tariff policy was not, in my opinion, as restrictive as it could have been
and this is one of the reasons why imports captured such a large proportion
of the market initially. In the long term, I see tariffs coming down rather
than going up. But in the short term, it is quite possible that Putin may
decide selectively to put higher tariffs in place in order to protect
certain industries. Such protective tariffs would be counter to the spirit
of what [Minister of Economic Development and Trade, German] Gref has
developed in terms of the economic plan but it is not something that is
inconceivable, in my opinion.

Pragmatist or Reformer?

EG: In the three and a half months that Mr. Putin has been president, what
are the indications that he is going to be committed to structural reform?

Poole: The indications are positive on tax. He has pushed ahead with
reforming the tax code that has been going through parliament. He has also
clearly understood a need to re-centralize certain elements (that were
de-centralized by Yeltsin) in order to make the implementation of policy
more effective. It is one thing to put in place structural changes, it is
another thing to make sure that the changes work and that they are
implemented at the regional level. This, in my opinion, is what the reform
of the administrative structure taking power away from the governors is
about. In terms of other specific areas, at the moment there aren't an
awful lot of other things to focus on. We are waiting for this plan to be
implemented. The plan itself included land reform, reform of the
residential code, reform of the customs code. All of the key issues are
included. What is less clear is a timeline for their implementation.

Litmus Test for Foreign Investors

EG: What is the litmus test by which foreigners can judge Mr. Putin?

Poole: I think the first thing that has to emerge is a clear plan and a
clear timeline for implementation of key structural reforms. Land reform
could be, in that sense, a litmus test because it is going to be more
politically difficult even than tax reform. Government actions on land
reform are going to provide a broader signal of a commitment to market
reforms and liberal economics. Resolution of the UES issue in a way that
treats minority shareholders favorably is also, I think, a key litmus test.
I think that Putin or the administration does need to send a positive
signal to foreign investors that their investment in the economy will be
protected and their interests will be taken into account.

Russia/Central Europe Executive Guide, published by WorldTrade Executive,
Concord, MA (www.wtexec.com)

*******