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Johnson's Russia List


July 22th, 2000    
This Date's Issues: 4417 4418   • 

Johnson's Russia List
22 July 2000

[Note from David Johnson:
1. Reuters: Putin came, saw and conquered G8 summit.
2. Washington Post editorial: Mr. Putin vs. the Oligarchs.
5. Edward Lucas: re Anatol Lieven's recent note on the JRL4415.

7. RFE/RL: Sophie Lambroschini, Kremlin At A Loss To Deal With Declining Population.
8. Novaya gazeta: Boris Kagarlitsky, Our Statistics Are Always Happy to Cheat.
9. AP: World Bank Under Fire in Russia.
10. USA Today: James Cox, Russia's economic 'paralysis is over' U.S. companies reinvest in nation.
11. Moscow Times: Anna Badkhen, Oil Rush May Kill Caspian Ecosystem.
12. Reuters: Russian rabbi downplays anti-Semitism.
13. FSB Secretive About Terrorist Arrests.]


Putin came, saw and conquered G8 summit
By Tom Heneghan

OKINAWA, Japan, July 22 (Reuters) - Vladimir Putin, the ex-KGB spy elected 
Russian president in March, came, spoke and conquered at his first Group of 
Eight summit with rare insight into North Korea and a cooperative approach to 
world issues. 

Leaders at the summit of leading industrial states, held this year on the 
southerly Japanese island of Okinawa, heaped praise on the Kremlin leader 
after he dazzled them at a working dinner on Friday evening and played a full 
role in talks on Saturday. 

Putin's polished performance, a notable contrast to the erratic conduct of 
his predecessor Boris Yeltsin, went down so well that Russia might now become 
a full member of the exclusive group launched as a rich men's club of leading 
economic powers. 

``I was extremely impressed by his knowledge (and) the way he articulates his 
position,'' Canadian Prime Minister Jean Chretien said. ``He's a very 
impressive person in a discussion.'' 

Diplomats said German Chancellor Gerhard Schroeder thought Putin's report on 
his visit earlier this week to North Korea, the Stalinist hermit state now 
slowly opening to the outside world, was ``brilliant.'' 

An aide to Britain's Tony Blair said: ``The prime minister was very 
impressed.'' A French official described Putin as ``very consensus-oriented, 
very much acting as an equal member.'' 

U.S. President Bill Clinton said Putin convinced him to look into a baffling 
offer from North Korea to scrap its ballistic missile programme in exchange 
for help in exploring space. 

Clinton admitted he did not fully understand the surprise proposal but 
highlighted Putin's role in presenting it: ``Based on what President Putin 
said last night in our conversation, I think it is something that needs to be 


The G8 talks, which bring Moscow into the annual Group of Seven 
industrialised states summit after the economic powers discuss world 
financial issues, have been a major world stage for a Russia struggling to 
reform after the end of communism in 1991. 

Putin's two more charismatic predecessors in the Kremlin, Yeltsin and Mikhail 
Gorbachev, attended previous summits as welcome guests, but it was not until 
1998 that Moscow was formally included as a member of the expanded session. 

Germany, a tireless champion of an equal role for Russia, has now begun 
asking aloud whether the separate G7 economic meeting -- with the U.S., 
France, Italy, Germany, Japan, Britain and Canada -- should be scrapped in 
favour of a single G8 summit. 

Schroeder's diplomatic adviser Michael Steiner described the separate session 
as ``a fossil from the G7 days'' and said Russia should be included as a full 
member in all talks. 

Several G7 economic discussions now had to be repeated in the G8 for the 
Russians' benefit, he told journalists, so there was no reason to keep Moscow 
out of these talks anymore. 

``If the G8 keeps developing as it has, this will come,'' he said, adding he 
did not know if other delegations agreed. 


In his talks with other leaders here, Putin has made a point of presenting 
Russia as an equal partner that neither asks for special favours nor intends 
to play a special role. 

Officials noted approvingly that Putin, despite earlier expectations, did not 
even mention the idea of having Western creditors cut the $42 billion of 
Soviet debt Moscow inherited. 

Creditors would consider a rescheduling but had made clear in advance that 
debt relief was out of the question for a resource- rich country vying for 
equal status with the wealthy seven. 

Putin also declined to play the ``Slavic card'' with Belgrade, insisting he 
would press Yugoslav President Slobodan Milosevic to move towards democracy 
but not play up the two countries' Slavic and Orthodox Christian heritage, as 
Moscow had in the past. 

``Putin wanted to say he is in the G8 boat not ready to play a part 
on the other side,'' Steiner said. 

Recalling Moscow's dual role during the abortive Kosovo peace negotiations 
last year, he added: ``There will not be the G7 and a 'G-Eighth' who tries to 
win understanding for Milosevic.'' 

Putin clearly enjoyed his debut at the summit, where his reserved but 
decisive style contrasted markedly from the jovial back-slapping approach 
Yeltsin took. 

``The talks were also interesting because the interlocutors are all 
experienced politicians who know their subject very well,'' a tired-looking 
Putin said after the dinner. 

``On the whole we have roughly similar views on these issues and there is a 
general desire to resolve the problems through 


Washington Post
July 22, 2000
Mr. Putin vs. the Oligarchs

RUSSIAN PRESIDENT Vladimir Putin's "dictatorship of the law" continues to 
take shape. As Mr. Putin prepared to meet with President Clinton and other 
Western leaders at the G-8 summit in Okinawa, his prosecutors seized the 
personal property of Vladimir Gusinsky, the wealthy businessman whose NTV 
television station has been the leading source of critical coverage of the 
Putin government--and who has already been repeatedly jailed, interrogated 
and otherwise harassed by Mr. Putin's minions. 

The latest charges against Mr. Gusinsky concern supposed fraud in his 
purchase of a St. Petersburg television station from the government in 1997. 
In this sense, they fit a pattern: Mr. Putin is apparently revisiting the 
privatization deals overseen by his predecessor, Boris Yeltsin, which gave 
rise to Russia's powerful "oligarchs." Former deputy prime minister Vladimir 
Potanin, for example, has been informed by the General Prosecutor's Office 
that he underpaid the government $140 million for his 38 percent share of 
Norilsk Nickel, the vast mining company sold off in 1997. Others, including 
oil giant Lukoil, and Avtovaz, Russia's largest auto manufacturer, are being 
pursued for back taxes.

Some of these companies have murky links with the biggest oligarch of them 
all, Boris Berezovsky, who is said to have helped Mr. Putin's rise but is now 
quitting his seat in the Russian Duma in protest of (or frightened by?) the 
new president's moves against big business. Mr. Berezovsky says he wants to 
build a "constructive opposition"--perhaps spearheaded by his own media 

Let us be clear: Mr. Berezovsky and company are not exactly democratic 
heroes. There was abundant cronyism and shady dealing in the chaotic sell-off 
of Soviet-era assets during the Yeltsin era. Indeed, given the general lack 
of effective legislative oversight or functioning, honest courts, and the 
attendant prevalence of corruption in all spheres of Russian business and law 
enforcement, it's difficult to imagine that the oligarchs amassed their power 
and wealth without, shall we say, cutting a few ethical corners.

Yet any effort at a retrospective cleanup of the privatization process risks 
destabilizing the already fragile Russian economy--with no guarantee that Mr. 
Putin, an old KGB hand whose government is densely populated by former 
colleagues from that nebulous agency, would distribute assets any more 
transparently than his predecessor did. The seemingly selective manner in 
which Mr. Putin has stalked Mr. Gusinsky (while leaving other, more 
politically reliable tycoons untouched) suggests that the current crackdown 
is not purely about law or economics. Mr. Putin's punitive policies may be 
popular among the many Russians who have gotten poorer while the oligarchs 
got richer. But if Mr. Putin does not swiftly demonstrate that he really 
intends to root out corruption--rather than political opposition--the damage 
to both Russia's economy and Russia's democracy could be severe and 



MOSCOW. July 20 (Interfax) - Only a third of Russians, 33%, agree 
with statements by certain politicians and journalists that freedom of 
speech is endangered in Russia, while 36% disagree and 31% are 
undecided on this score. 
Interfax obtained this information from the independent agency of 
regional political surveys (ARPI), which conducted a poll of 1,600 
people in 120 rural and urban communities of 46 Russian regions on 
July 19. The respondents were interviewed at their homes. 
Only 11% of respondents believe that the reason behind the 
actions against the Media-MOST holding were a result of the political 
position of its CEO, Vladimir Gusinsky. 
At the same time, 23% of respondents believe the real reason 
behind the Prosecutor General's Office's actions are Gusinsky's 
illegal dealings during the privatization era. Seventeen percent of 
respondents believe the reason lies in his financial debts to the 
state and Russian companies and 16% of Russians polled say the actions 
are due to the fact that the NTV television company controlled by 
Gusinsky criticizes the central authorities. 
About one-third of respondents were undecided.



MOSCOW. July 21 (Interfax) - Fifty-one percent of Russians polled 
by the Public Opinion fund on July 15 said they think a reasonable 
social policy should be the chief priority of the Cabinet at this stage. 
The respondents were asked to choose three priorities from the list 
mentioned by President Vladimir Putin in his message to the Federal 
The next most urgent priority, they said, is tax reduction (46%), 
protection of ownership rights (24%), development of the financial 
market (19%), assuring equal and fair conditions of competition (18%) 
and protecting businessmen from administrative pressure (15%).


Date: Fri, 21 Jul 2000 
From: "edward lucas" <> 
Subject: [EdwardLucas] From Edward Lucas--personal view from Moscow
(actually Baku)

The usual reminder: what follows is not an article from The 
Economist, just my personal thoughts from Moscow. Anybody who would 
like to receive them every week is welcome to e-mail me on

Anatol Lieven's recent note on the JRL [4415] raises the 
question of whether Putin-bashers like myself have been unfair or 
not. As Anatol correctly points out, many of the accusations against 
Putin are contradictory. 

Certainly the idea that he was absolutely incapable of anything, and 
completely the creature of the crook/spook alliance that put him in 
office, is proving unfounded. In my favourite Magician-Mouse-Monster 
analysis, this means that the extreme version of the Mouse theory is 
looking a lot less tenable. Neither has the country descended into 
total chaos (although I am not sure if anyone was actually arguing 
that it would) nor has there been martial law or a putsch. However, 
the big optimists (Magician-theorists) are also having a hard job 
explaining what has happened to the "decisive action within the first 
100 days" that they were expecting earlier this year.

And of course it is still early days.

But I think it is a mistake to say "the Russian state has been too 
weak, so bashing the oligarchs is a welcome sign of returning 
strength". The first point about the Russian state is that it is 
both too weak _and_ too strong. Too weak to guarantee people's 
rights against thugs and goons, Too weak in that it can't collect 
taxes fairly or fully (outside the current oil bonanza conditions) 
Too strong in that it can lock people up wrongly, or take their 
property, or kill them, and no one can do much about it. Putin is 
trying to address the weakness, but not the excessive strength. In a 
car where both the engine and the brakes are faulty, simply reparing 
the engine but ignoring the brakes does not make it safer or more 

Secondly, I think it is a mistake to focus on the oligarchs as being 
the issue themselves. The oligarchs (both federal and local ones) are 
a symptom of something else: the weaknesses in Russia's legal system, 
administrative culture, and general value system that allow ruthless 
individuals to grab public property (not only physical property, but 
by creating private rents from what should be neutral bureaucratic 
processes). Simply tackling the most conspicuous (and, so far, only 
the more politically vulnerable) oligarchs is not dealing with the 
fundamental problem. That is not to say that Putin won't do it, but 
he is not doing it now (look at telcoms or the aluminium industry, or 
the new proposals for the railways)

Thirdly, the oligarchs' individual merits should not be the main 
criterion in judging whether Putin is acting fairly. I don't like 
Gusinsky. NTV's record over the years is very flawed. But any self-
proclaimed democracy that is starting criminal proceedings against 
the owner of the only opposition TV channel needs to behave extremely 
correctly to avoid even the appearance of political vindictiveness. 
Putin and his gang do not show any sign of understanding this. The 
Russian media's pluralism is based not on healthy political 
divergence but clan interests. True. But that is not an argument for 
the authoritarian press policy being pursued by the government. 

Fourth, dishing out arbitrary fines and other intimidation to 
selected oligarchs may make for good whip-cracking, and is popular, 
but it has little to do with creating a law-governed state. It would 
be better to start with a systematic approach to the most shameless 
crime of the oligarchs: their fraudulent, asset-stripping, depositor-
swindling banks. But Putin doesn't want to do that, because he is--
for whatever reason-- too chummy with Geraschenko. 

All this assumes that the current campaign is genuine. For the sake 
of argument, I'll accept that it is. But it may well turn yet out 
that after all the sound and fury, some, most or even all of the 
oligarchs are still very much in place, just a bit less insolent.

I agree that it is important to avoid knee-jerk russophobe reflexes, 
in which everything that happens is interpreted as part of a fiendish 
plot. Putin may yet, conceivably, learn on the job and do better. But 
I still think that the overall picture is extremely gloomy. There has 
been an institutional shift in Russian politics over the past few 
years, from crooks to spooks, whose inclinations towards internal 
repression and external aggression are no longer braked by Yeltsin's 
presence in the Kremlin. The current prosperity is very artificial. 
There has been no real reform of either government or industry. The 
reformers' presence in government so far to me loooks more
than real. Putin's administration pays lip service to the rule of law 
but shows practically no sign of understanding that to be effective 
it would need to apply to them. 

So I still think that the first big risk is that the whole thing will 
get bogged down (mouse), and that the second is that this will tempt 
them to look for short cuts (monster).

On that happy note, have a nice weekend-and don't forget to raise a 
glass for Captive Nations Week. Twenty years ago, like now, people 
were so ready to write it off as an anachronism...

As usual, all comments welcome. Coming soon: thoughts on Russian 
imperialism (or not—must keep an open mind) in the Caucasus.


Source: `Segodnya', Moscow, in Russian 20 Jul 00 

Text interview with Institute of Political Studies Director Sergey Markov, 
headlined "The Kremlin's media temptation: The special services are 
suggesting a simpler solution to mass media problems to the Kremlin", 
published by the Russian newspaper 'Segodnya' on 20th July: 

[Q] There is more and more confirmation of the Kremlin's intentions to 
establish total control over the mass media. In your opinion, how will the 
authorities' relationship with the mass media develop further? 

[Markov] The relationship between the Kremlin and the mass media is entering 
a new phase. The Kremlin needs propaganda provision for its policy. It must 
interpret the new political course to rank-and-file citizens. The problem is 
that special-service people ready to use old KGB methods of pressure, 
provocation and so forth are on the increase in the Kremlin. But this would 
be a serious mistake. The government undoubtedly needs PR, but it could turn 
out to be too special-service-like and that is a cause for alarm. I fear 
that, while trying to build a "governable democracy", the Kremlin is prepared 
to go too far and to commit very many blunders. It could move from a regime 
of dialogue with the media to a regime of establishing complete control over 
them. Although, according to some rumours, there is a halfway option - free 
newspapers and controlled television. 

[Q] The Kremlin does not have a united approach to control of the media? 

[Markov] There is a clash of two approaches in the Kremlin - a 
special-service approach and a manipulative approach. The first means 
influence through legislative mechanisms and the use of economic levers. The 
second approach is represented by the political team and is based on 
dominating the information space and countering chiefly Media-Most as a 
grouping aspiring to political extra-territoriality, subordinate not to 
Russian but world public opinion. These two approaches are essentially 
different in their methods for controlling the mass media. 

[Q] Perhaps the Kremlin prefers the special-service option as the cheaper 

[Markov] The authorities are tempted not so much by its cheapness as by its 
simplicity. Clearly, no good will come of cheap solutions in this field. But 
capturing a dominant position in the information space is a complex process 
that requires a high level of professionalism. The special-service people are 
offering a simpler, more understandable and more realizable solution. And 
they are tempting the authorities with it. They will not have to wait for 
money in this matter. It is now being proposed to replace the oligarchs' 
control of the media with the state's. I think the way out of the situation 
would be to create conditions, including economic ones, which would make the 
media dependent on their readers, listeners and viewers, not changing one 
boss for another. That is the road to real mass media independence. 

[Q] Will the Kremlin's overly tough pressure not lead to the opposite effect, 
even losing its existing control of the media? 

[Markov] The Kremlin is in danger of losing control of the information space. 
The conflict surrounding Gusinskiy's arrest demonstrated the fact that the 
Kremlin does not control the media space. People in the Kremlin are anxious 
that the media holding companies could form into a configuration whereby it 
would be left with nothing. That is why they will work on this problem. The 
crux of the solution will be taking control of ORT [Russian Public 
Television] away from Berezovskiy. Incidentally, the situation surrounding 
ORT could serve as a kind of litmus paper for Berezovskiy's political 
initiatives. If ORT remains with Berezovskiy, it means his opposition has 
been agreed with the authorities; if they take it away, it means Berezovskiy 
has indeed decided to head up business's opposition against the Kremlin's 
bear-like ways. 

[Q] What is your forecast for the further development of the situation? 

[Markov] The Kremlin is clearly gaining strength in the matter of setting up 
its own propaganda machine. Pressure on the media that come out with overly 
harsh criticism of the authorities will intensify in order to secure if not 
their loyalty then at least their neutrality. For this they will chiefly use 
economic levers and partly special-service methods. ORT will be more 
controlled by the Kremlin than by Berezovskiy. There will be a continuation 
of the tough confrontation between various Kremlin groupings as to what 
methods should be used to create the Kremlin's propaganda machine and to 
neutralize those who criticize it too harshly. We will witness periodic 
spates of this battle. 


Russia: Kremlin At A Loss To Deal With Declining Population
By Sophie Lambroschini

Russia's population is decreasing by 750,000 people a year, with no 
foreseeable upswing. The Kremlin has called it a security threat, but 
specialists are at a loss as to how to tackle it. Our correspondent spoke 
with an expert, who says the problem of falling population extends beyond 
Russia's borders.

Moscow, 21 July 2000 (RFE/RL) -- If present trends continue, Russia's 
population could fall by 22 million people by 2015. It's an alarming 
statistic that has grabbed the Kremlin's attention. During his recent state 
of the nation address, president Vladimir Putin warned the very survival of 
the nation could be at risk: 

"If this trend continues, the survival of the nation will be in jeopardy. We 
are facing a real threat of becoming a 'senile' nation. The present 
demographic situation is really alarming." 

Russian authorities have even included the problem of declining population in 
a new national security concept. 

The demographic picture is indeed grim. The country's fertility rate is one 
of the lowest in the world. Its abortion rate is the world's highest. 

Aggravating the problem is that Russians are dying younger on average. This 
is especially true for men. 

Many blame the problem on the collapse of Russia's health and social 
protection system following the breakup of the Soviet Union. The communists 
take the issue farther, accusing Russia's reformers of "depopulating" the 
country. The communists have also played on xenophobic fears in Russia, 
saying the country's "gene fund" is being "dissolved" with unhealthy children 
and with a growing percentage of non-Russian immigrants. 

But some specialists argue that even if Russia's economic hardships were to 
end tomorrow, the overall demographic picture would probably remain 
unchanged. That's because the most disturbing statistic-- Russia's falling 
birth rate --is not a recent phenomenon. In fact, it goes back at least 30 
years, and some specialists say, even a century. Moreover, these specialists 
say there likely is no link between low birth rates and poverty. 

Professor Sergei Zakharov, a leading demographer, works at the Russian 
Science Academy's Center for Demography and Human Ecology. He recently 
briefed Putin on the demographic situation in Russia. 

Zakharov told RFE/RL that in many respects, the birth rate in Russia simply 
mirrors the well-known pattern of low birth-rates seen in most industrialized 
developed nations, like France or Japan. Despite its deplorable living 
standards, Russia, Zakharov says, belongs to the same category. 

"Russia has the mentality of an urbanized society, with a high level of 
education with a social demand for these things. In what way is a Russian 
family different from a French one? They live in large cities, both mother 
and father work. Even if there is high unemployment, it's question of 
mentality, of values." 

Zakharov notes that no government has figured out how to reverse the trend, 
holding out little hope the Kremlin will succeed. 

In the past, though, it didn't stop them from trying. The Soviet Union 
launched program after program to jump-start the country's birth rate. Most, 
if not all, failed or had unintended results. In the 1980s, a series of 
family-friendly measures by the Soviet government only government only 
encouraged women to have children younger. 

The Putin government appears to understand the difficulty it faces. The 
president's adviser for economic affairs, Andrei Illarionov, told Russian 
state television RTR recently that the government was working on measures to 
encourage more births, but only time will tell if they succeed. 

Zinaida Suslova, an adviser to the Duma Committee on women's affairs, is 
skeptical of the Kremlin's intentions. She points out that it was Putin who 
vetoed an amended law on protecting families with more than three children. 
And according to Suslova, Russia's bad financial situation excludes any real 
policy options. 

"The main reason for the veto is the lack of funds to implement what the law 
provides for." 

But Zakharov says any government program will have to go beyond just 
encouraging more births. He says it's more about financing education and the 
health-care system. 


July 20, 2000
Novaya gazeta
Boris Kagarlitsky
Our Statistics Are Always Happy to Cheat
[translation for personal use only]

To believe our sociological data is the same as to watch oneself in a curved
Our sociological services would be unable to provide credible information,
at least on the nationwide scale, even if they were willing to do it. One
can complain at great lengths about the corruption of sociologists who
assign priority to fulfilling the demands of their sponsors instead of
searching for the truth. Yet there are two additional reasons that prevent
from being able to study public opinion in earnest.

Reason number one is trivial: lack of money.

The second one is also very well-known: Western methodologies don't work in

The only paradox is that these two factors are very tightly intervowen. That
is, Western methodologies are not applicable because there is not enough

In the West, sociologists have grown accustomed to studying societies that
are more or less stable, that have an established structure as well as a
civil culture that had been developing for a long time. Here, everything is
on the move. People change their views and values at an astonishing speed,
and they are not to be blamed for that, because they live in an unstable
society. They cannot understand who they are themselves. And all of us are
to some extent Lumpens.

Thus, an engineer changes his profession for half a year to become a shuttle
trader, after which he comes back to his enterprise, but also does some work
on the side as a tailor. A teacher may be earning additional money as a
prostitute. An academic views his lecture tour abroad as easy money earned
on the side, which enables him to do his favorite research at home for a
miserly pay. Industrial workers may go without work for several months
without losing their position. Politicians earn their money via business,
while businessmen consider themselves to be public figures.

Today's Russia is dramatically heterogenous, in social, cultural, and ethnic
terms. Regions are very different from each other, small cities are very
much unlike metropolitan areas, and the provinces have little in common with

Therefore, in order to take into account all the peculiarities, nuances and
trends in public opinion, one needs much larger samples than those used in
the West. Only if three to five thousand respondents are included, it
becomes possible to understand something about Russia as a whole. But our
sociologists have not enough money for that. And with smaller samples,
Western methodologies inevitably produce distorted results.

In addition, no one is willing to go to remote areas. In our sociological
polls, bigger cities are better represented than the smaller ones, cities in
general - better than rural areas, Western regions - better than Russia's
North and East.

On top of that, our sociologists often include the same respondents again
and again in their consecutive polls: this is simpler and cheaper than to
create a new sample.

It is also well known that in Russia people just don't believe that the poll
is anonymous, and are worried that their utterances will become known to

other people than public opinion experts. This is especially so if the poll
is conducted by phone. In the past, people did not disclose their
inclination to vote for the "democrats", just as now most prefer not to let
others know about their sympathies for the communists or Zhirinovsky.

And, finally, let us name the most funny but widely known reason: usually,
pollsters tend to employ attractive young girls. When one sociological
service decided to find out about people's motivations in the process of
filling out questionnaires, it discovered that one of the most widespread
motivations was "to please the pollster". So much for the accuracy of the

Nevertheless, Russian sociology is interesting to follow at least in one
respect. While it cannot show you the real picture, it can give you an idea
about the direction of developments. Thus, even if you study an object
through a curved glass, you can still observe how it is changing. In this
regard, it is highly indicative to see what has been going on with public
opinion polls over the past several months.

Thus, polls conducted by VTsIOM [All-Russian Center for the Study of Public
Opinion] in June and July demonstrate a drastic increase in the numbers of
those unhappy with the Chechnya war. In spite of wide differences in
figures, the same has been registered by other polling services. According
to VTsIOM, the war is still supported by 55% of the population, down from
70% last fall. (However, other services claim, to the contrary, that even in
Putin's honeymoon
season the share of the Chechnya war supporters was never above 42-45%.)

The VTsIOM data are also indicative in another sense. They show the
simultaneous increase in the number of people who believe that the army in
Chechnya should act more firmly, and those who would like to see the army
leave this territory for good. Moreover, in many cases these two positions
are supported by the same people! This only seems to be a paradox, and it is
quite revealing.

Last fall, ordinary everyday racism was mistaken by both politicians and a
large number of sociologists for the support of the military campaign. It is
clear that a substantial part of the population is convinced that "black
asses" ought to be "rubbed out" or otherwise "be taught a lesson". In this
case, appeals to "human values", references to the Geneva Convention and so
on simply don't work. But all this does not imply that same people are
prepared to accept the loss of thousands of young Russian lives in the

Moreover, dislike for the Caucasians may be expressed not solely in a desire
conquer Chechnya, but also in proposals to fence it off with an official
border and declare all its inhabitants undesirable aliens. Those same people
who are willing to support military operation are unwilling to spend money
on the reconstruction of Chechnya - without which military operations make
no sense over the long term.

(...) There is yet another paradox, however: popularity ratings of the
present authorities depend to a substantial degree upon a factor that is
beyond anyone's control. Neither the authorities themselves, nor the

oligarchs, not even the Chechen fighter can change the price of oil. As long
as the latter remains high enough, the ruling circles can afford both waging
war and sustaining the impression of economic growth. As soon as the flow of
petrodollars into the federal budget and the oligarchs' pockets will cease,
it will soon be discovered that there are neither prospects for an indusrial
upswing, nor enough funding for the military operation. In these conditions,
the authorities may suddenly show an unbelievable devotion to human values
and global political correctness, they will remember the Geneva Convention,
and, eventually, initiate negotiations with the enemy. But this may be too
late. The opponents of the war will hardly become affectionate to Putin. The
supporters of the war will once again feel betrayed.


World Bank Under Fire in Russia
July 21, 2000

MOSCOW (AP) - Some Russian experts blame foreign aid programs for feeding 
corruption and urge the World Bank and other foreign lenders to clean up or 
clear out. 

These Russians say aid projects are well intentioned but dismally executed, 
lining the pockets of corrupt Russian bureaucrats and ignoring local needs. 

Aid to Russia is under scrutiny at this weekend's summit of the world's 
richest nations in Okinawa. More than eight years into its clumsy economic 
transition, Russia is nominally part of the Group of Eight - but owes huge 
debts to the club's wealthier members. 

Lenders insist they are doing their best to help, but say their projects are 
sometimes derailed by the requirement that aid funds travel through 
government channels. That opens the way for corruption and delays, they 

The latest target of Russia's foreign aid frustration is the World Bank, 
already under increasing pressure from opponents in Washington. The bank is 
smarting from having to cancel a farming loan to China this month amid 
criticism that it would displace Tibetan herders and harm the environment. 

The World Bank has launched nearly 50 projects in Russia, worth $11 billion, 
since 1992. 

Initial enthusiasm for the aid has turned to exasperation for many 
recipients, particularly on environmental projects. 

After an October 1994 oil spill in the Arctic region of Komi, the bank 
pledged $99 million in emergency cleanup loans. As of this month, the Russian 
government had disbursed only part of the money and oil was continuing to 
bubble out of leaky pipelines into nearby streams, said Greenpeace Russia 
spokesman Ivan Blokov. 

``It was just one example of the problem with these aid projects. It was a 
very smart decision, to try to clean up that oil. But the result was 
catastrophic,'' Blokov said. 

The World Bank said $82 million of the money has been transferred to the 
Russian government - the amount necessary to take care of the spill - and 
that the rest is being reconsidered for other projects. 

The respected Initiative for Social Action and Renewal won a $2.5 million 
grant from the bank in 1997 for conservation work at Lake Baikal, the world's 
largest freshwater lake - then quit the project a year later. 

The group's Moscow director Mila Bogdan said the government body charged with 
approving and disbursing foreign environmental aid, the Center for Project 
Preparation and Implementation, had refused to release the funds. 

``It was impossible to work with them. It was never clear where the money 
was,'' she said. ``It makes more sense to work with small, private donors.'' 

Alexander Averchenko, the government aid center's director, said he was under 
constant pressure from rival Cabinet ministries trying to influence where 
foreign aid goes. But he faulted the World Bank for paying too little 
attention to where its money ends up. 

The World Bank has been among Russia's most eager lenders. It granted its 
largest ever one-time loan, $1.5 billion, in August 1998 - just days before a 
massive government debt default and ruble crash. 

This year, the World Bank was the first lender to offer money to Russia after 
President Vladimir Putin's election in March: a $60 million loan to the 
forestry industry. 

But environmentalists say the aid would accelerate destruction of forests and 
do nothing to stem widespread illegal logging. 

Last week, 67 Russian scientists and activists called on the World Bank to 
suspend all lending to Russia until Putin reinstates the State Environmental 
Protection Committee. The activists say the government now has no way to 
enforce environmental regulations. 

The World Bank agreed in a letter Wednesday not to disburse the loan until 
the government clarifies its plans. But the letter's author, bank Vice 
President Johannes Linn, said the environmental committee had done little to 
solve Russia's ecological woes. 

``The government's decision to reorganize those services ... can therefore be 
seen as an opportunity to improve natural resource management in Russia,'' he 


USA Today
July 21, 2000
Russia's economic 'paralysis is over' U.S. companies reinvest in nation 
By James Cox

Russia's turbulent business climate is finally brightening, two years after a 
currency collapse, economic crisis, scandal and political turmoil sent 
foreign investors rushing for the door.

Since spring, there have been increasing signs that stability and economic 
reform are taking hold, U.S. companies, business groups and diplomats say. 

''The paralysis is over. The dead hand of the (Boris Yeltsin) administration 
is gone,'' says Scott Blacklin, president of the American Chamber of Commerce 
in Moscow. ''We're seeing a lot of companies coming back to check the 

American firms, Russia's biggest source of foreign investment, are virtually 
unanimous in their praise for President Vladimir Putin, despite reservations 
in the Clinton administration. 

Several U.S. companies have recently announced or started costly projects in 
Russia. Ford Motor is spending up to $170 million on a plant that will make 
the small car Focus. Gillette recently opened a $40 million razor-production 
plant. Caterpillar has begun making components for earth-moving equipment. 
Intel set up a software development center that eventually will employ 500 

Among others considering investments in Russia: General Motors, farm 
equipment giant John Deere and spicemaker McCormick. U.S. oil companies are 
expected to follow if Russia legalizes production-sharing agreements. 

Russia ''is moving toward a more predictable situation. That gives us 
confidence . . . to participate in the revitalization of the Russian 
agricultural economy,'' Deere spokesman Ken Golden says.

The Chamber, one barometer of U.S. corporate interest, lost 70 members after 
the collapse of the Russian ruble in August 1998. Since then, membership has 
climbed to 540, topping the pre-crisis total of 480. 

Driving the interest:

* Economic reforms. Putin has moved to simplify the country's tax code, adopt 
international accounting standards, protect intellectual property rights and 
set up liberal guidelines for electronic commerce. He also has cut business 
and personal taxes. 

* Centralization of power. Putin wants to tame Russia's maverick regions, 
many of which are corrupt fiefdoms where foreign investors will no longer put 
themselves at risk. ''There are regions now where everything's aboveboard and 
they play it straight,'' says Jim Balaschak, deputy chief of the Moscow 
office of accounting firm Deloitte & Touche. ''But these are still 

* Rule of law. U.S. companies nervously watched a pivotal court case for 
control of porcelain maker Lomonosov. Buyout firm KKR and the U.S.-Russia 
Investment Fund, together owners of 58% of Lomonosov, emerged victorious on 
appeal in March.

* Exchange rates. The ruble's collapse forced Russians to switch from 
expensive imported goods to made-in-Russia substitutes, including many 
manufactured by foreign companies in Russia. With Russian productivity still 
lagging Europe and the USA, those foreign companies were desperate for the 
low-cost labor advantage restored by the weakened ruble.

U.S. investors join the Russian public in applauding Putin's moves against 
the handful of moguls who attained immense wealth by gaining control of 
privatized state assets in the Yeltsin era.

GM is one of few foreign firms that could be squeezed by Putin's campaign. It 
is exploring a manufacturing venture with Russian carmaker Avtovaz, which is 
the target of a tax investigation.


Moscow Times
July 22, 2000 
Oil Rush May Kill Caspian Ecosystem 
By Anna Badkhen
Staff Writer

ATYRAU, Kazakhstan -- Despite the splendid lunch dedicated to the release of 
1.1 million baby sturgeon into the Ural River, the mood at the Ural-Atyrau 
fish farm last week was dismal. 

After two months at the farm pools, the cigarette-sized fish headed down the 
river to the Caspian Sea, where, in 10 years, they should become full-grown 
sturgeon. But, warned Adylgerei Kayralanov, director of the farm, they may 
not live that long. 

"The Caspian ecosystem is dying," Kayralanov said glumly at a July 14 
luncheon at the fish farm. "When our children grow up, there may be no 
sturgeon anymore." 

Scientists and environmentalists are puzzling over a dramatic plunge in the 
sturgeon population this year, as well as thousands of seals that have washed 
up dead on the Caspian's shores. 

Many environmentalists suspect that the cause of both tragedies is 
Kazakhstan's booming oil industry. But activists warn that the truth may 
never be uncovered, since the official investigation was funded and 
facilitated by the oil companies. And, they say, the government seems more 
interested in oil revenues than in environmental protection. 

The Caspian's environmental woes grabbed headlines this spring when some 
11,000 seals were found dead or dying on the shores of Kazakhstan and 
Dagestan. Ak Zhayik, an Atyrau daily newspaper, reported that the seals were 
bleeding from their noses, mouths and ears. 

Makhambet Khakimov, leader of the independent environmental group Kaspy 
Tabigaty, or Caspian Nature, and Murat Dzhanbatyrov, head of the Atyrau Fish 
Inspection, say the seals were poisoned by sulfur gas, a deadly colloid 
accumulated on the surface of any oil field that is usually burned during oil 

But so far, water tests have proved no connection between the oil business 
and the seals' deaths. Atyrau activists say that, given the state's interest 
in the oil business, it is unlikely that the connection will ever be 
officially established. 

Environmentalists claim sulfur gas was repeatedly discharged by oil companies 
such as Tengizchevroil f a group that includes Chevron Corp. and Mobil Corp. 
f which explores the Tengiz offshore oil field, and the Offshore Kazakhstan 
International Operating Co., which explores the recently discovered Kashagan 
oil field. Chevron, OKIOC and Kazakh officials have denied any sulfur gas 
discharges occurred and say oil drilling had nothing to do with the seals' 
deaths. A U.S. Embassy official in Almaty, Kazakhstan's second city, said 
last week "there is no oil in the seal story." 

But Dzhanbatyrov of the Atyrau fish inspectorate, the run-down state-funded 
organization that was responsible for investigating the seals' deaths, said 
in an interview that the water tests his organization carried out were not 

"These tests were not independently carried out and the results were biased" 
as the testing was supervised by and sponsored by OKIOC, he said. 

According to Ayna Zubair, an OKIOC public relations official, the testing was 
almost completely funded by the consortium, which unites Phillips Petroleum, 
BP Amoco, Agip, BG PLC, Royal Dutch Shell, ExxonMobil Totalfina, Statoil and 
Japan's Inpex. Zubair said that the consortium provided the fish inspection 
with boats, helicopters and monitoring equipment to carry out the tests. 

Dzhanbatyrov said the government did not provide the fish inspectorate with 
additional funding to conduct the tests, leaving his agency completely 
dependent on OKIOC. 

"We only tested the water in places where OKIOC took us on their helicopters 
and boats. We would have liked to test different water in different places, 
but OKIOC did not give us a chance to do so," he said. 

"We are sure that the deaths of the seals and the decrease of the Caspian 
fish population are caused by the growing offshore oil business, but nobody 
will acknowledge it," he said. "Kazakhstan will not acknowledge it because 
they are strongly interested in the oil business. Foreign oil businesses will 
do anything to prevent society from knowing that they are responsible for the 
death of the Caspian fauna." 

The news of the dying seals was followed this summer by the decrease in 
sturgeon. In both Kazakhstan and Russia, fishermen have not come close to 
catching the legal quota f a task they easily managed last year. 

During the fishing season, which coincides with the two-month mating season 
when the sturgeon migrate north, Kazakh fishermen caught less than 100 tons 
of sturgeon, while the official quota is 360 tons, officials said last month. 
Russia, which had a quota of 560 tons, caught only 220 tons. Vladimir 
Izmailov, deputy head of Russia's State Fishing Committee, was quoted by 
Interfax this month as saying that Russia may be forced to cancel all 
commercial fishing in the Caspian Sea by 2002. 

Russia, Iran and Kazakhstan are the world's largest producers of black 
caviar, and the quality of Russia's and Kazakhstan's caviar is considered 
higher than that of Iran. But Izmailov of the Russian fishing committee told 
Interfax earlier this month that Russia will export less than 30 tons of 
caviar this year, as opposed to 100 tons in 1999. Due to the decrease in 
caviar production, the costs of caviar abroad have doubled from $500 to $800 
per kilogram last year to between $1,000 and $1,500 this year. 

Alexei Kiselyov, a spokesman for Greenpeace's Moscow office, said the fish 
may be feeling the effects of heavy metals carried into the sea by the Volga 
and Ural rivers, which often carry nonfiltered waste from Russian plants. 

In 1998, heavy metal salts were found in sturgeon caviar produced by 
Kazakhstan, and the caviar was banned from export to the United States and 
European Union member states. The cause of the contamination was never 
investigated, Dzhambatyrov said. 

Still, many suspect that oil may be a main, if not the only, culprit. 

Irina Kim, chief researcher at the Atyrau fish inspectorate, said she was 
"very concerned about the growing oil business." 

"We have strong doubts that the fish business and the oil business are 
compatible," she said. 

Crude oil makes up about one-third of Kazakhstan's exports. 

According to Kazakh oil officials, Kashagan has an estimated output of more 
than 100 billion barrels a year. Saudi Arabia's Ghawar field, the largest 
onshore field in the world, has remaining reserves of 70 billion barrels, 
while its Safaniya field, the world's largest offshore field, has 19 billion 

"Our organization warned about the contamination of the Caspian water and the 
death of seals and decrease of the sturgeon population last winter" after 
OKIOC announced its plan to explore the Kashagan field, Khakimov said. 

"Today, we want to warn that seals and fish are only the beginning. The 
Caspian is polluted and dangerous not only for the sea fauna. People will be 
dying next." 


INTERVIEW-Russian rabbi downplays anti-Semitism
By Robert Eksuzyan

MOSCOW, July 21 (Reuters) - A top Russian rabbi denied on Friday suggestions 
that anti-Semitism was on the rise in the country and said President Vladimir 
Putin had agreed to attend the opening of a lavish Jewish community centre in 

Berl Lazar, one of two clerics claiming to be Russia's chief rabbi, said the 
post-Soviet state had no policies detrimental to the interests of the Jewish 

Although petty anti-Semitism existed, he rejected recent suggestions by the 
World Jewish Congress (WJC) that it was rising. 

``There is some anti-Jewish prejudice everywhere, but as for Russia there is 
no state-level anti-Semitism. I have never felt it at government level for 
the 10 years I've been in Russia,'' Lazar said in an interview in his modest, 
book-lined office. 

``The World Jewish Congress is not very aware of the changed situation in 
Russia concerning Jews.'' 

Recent anti-Semitic statements by extremist politicians, he said, ``were 
immediately repudiated by the authorities.'' 

The WJC has expressed concern that anti-Jewish feeling might be growing, 
citing a case for fraud launched against media magnate Vladimir Gusinsky, 
head of the Russian Jewish Congress. 

It said this week that it would launch a campaign to secure restitution of 
property seized under communism and test Kremlin attitudes to Russia's 
estimated 800,000 Jews by inviting Putin to the opening of the community 


Lazar said he had verbal assurances from the Kremlin that Putin would attend 
the inauguration of the $20 million centre in the traditionally Jewish 
Mariyna Roshcha district -- made up of a synagogue, school and recreation 

``We received a positive verbal response to our invitation and we expect him 
to come with (Moscow Mayor) Yuri Luzhkov and other officials,'' he said. 

Anti-Semitism was deeply rooted in tsarist Russia, with authorities confining 
Jews to live in areas known as the ``pale of settlement'' and doing little to 
prevent pogroms by Cossacks and other extremists. 

In the Soviet era of official atheism, authorities prevented Jews from 
attending some universities and taking sensitive jobs. Hundreds of thousands 
left Russia and since the end of communism those remaining have expressed a 
new interest in cultural and spiritual activities. 

Lazar acknowledged the split in the Jewish community's ranks and said he 
hoped it ``can eventually be settled among ourselves. I am pleased Russia's 
authorities are not interfering in this.'' 

Lazar, 37, was born in Italy and holds dual U.S. and Russian citizenship. He 
was elected earlier this year as head of the Federation of Jewish 
Communities. A rival group is headed by a cleric who has held the title of 
chief rabbi since 1989. 

Lazar said synagogues had been handed back to communities in several towns, 
including Vladikavkaz in southern Russia, Ryazan and Tambov near Moscow and 
in Birobidzhan, capital of the Jewish autonomous republic set up in the 1930s 
on the Chinese border. 

``There are more to come. This is only the start,'' he said. 

He predicted that life for Jews, as for all Russians, would improve and that 
many who had emigrated would return to Russia. 

``We believe that more and more Jews will come back to Russia from where they 
are now,'' he said. 


July 21, 2000
FSB Secretive About Terrorist Arrests
Tatyana Gomozova

Brave intelligence officers and policemen have rescued thousands of Russian
citizens from a series of terrorist attacks. However, the whole story
remains a mystery. Law enforcers are refusing to provide any details of the

Sensational reports hit the headlines on Thursday that the Federal Security
Service (FSB) and the Interior Ministry had succeeded in preventing a whole
series of terrorist acts in a number of Russian cities. 

The list of cities targeted includes Moscow, Tula, Rostov-on-Don, Volgograd
and Nizhny Novgorod. Law enforcers reportedly detained several groups of
terrorists specially trained for the occasion by the rebel ‘field
commander’ of Jordanian origin, Khattab. 

Gazeta.Ru has learnt that the terrorists were detained in Volgograd where
they allegedly confessed they were en route to other Russian cities. 

Earlier reports of several groups of terrorists allegedly detained in other
cities happened to be the result of either confusion or disinformation. 

Nevertheless, Interior Ministry officials still insist on the initial
version of events. They even produced TV footage showing a police operation
conducted at the Kursky station in Moscow. News reports alleged that the
special services officers detained a terrorist at the train station at the
moment he was planting an explosive device. 

However, the FSB refused to comment on the footage. Unofficial sources in
the power structures assert the film could have been a skillfully staged

On Friday the situation became somewhat clearer: The daily newspaper
Kommersant found out that the arrests really had taken place, with one
exception: The detained Chechen had not planted a bomb at the moment of his
arrest, and what is more, he was not carrying any explosives whatsoever.
And still officers insist he “may have been involved” in subversive activity. 

Obviously, things were the same in other cities listed by law enforcers.
The number of “rescued” cities has, by the way, decreased. Now officials
are naming only Moscow, Tula and Nizhny Novgorod. Volgograd is no longer
mentioned, although genuine terrorists were undoubtedly detained there too. 

By midday new reports emerged. Interior Minister Vladimir Rushailo told the
press that 8 men had been arrested on suspicion of planning terrorist
attacks and that all of them had begun to testify. According to the
spokeswoman for the Interior Ministry’s Head Department for Organized
Crimes Yelena Rumyantseva, there are people among the detainees “connected
to Chechen rebels”. 

She also said, “arrests, and seizure of explosives and detonators will
continue.” The press service refused to reveal the names of the cities
where the arrests took place. 

All this confusion suggests that the law enforcement authorities did, after
all, succeed in preventing terrorist attacks. But their actions have not
been presented as heroically as they could have been. If the Interior
Ministry had coordinated their actions with their colleagues in the FSB,
the operation could have looked more exciting. 


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