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Johnson's Russia List


July 23th, 2000    
This Date's Issues: 4419 •   • 


Johnson's Russia List
23 July 2000

[Note from David Johnson:
1. Baltimore Sun editorial: Putin deploys skill on arms control.
2. Washington Post: David Ignatius, Putin and the Oligarchs.
3. The Observer (UK): Jonathan Watts, Putin tells world leaders to log on.
4. The Russia Journal: Vera Kuznetsova, Putin’s oligarchic round table.
5. Phantom Mercenaries Inflame Caucasus Tensions.
6. Los Angeles Times: Walter Russell Mead, West Confronts the Riddle 
of Putin.

THAN SPIES. (Semen Novoprudskiy in Izvestiya)

8. The Russia Journal: Dmitry Bulgakov, Youths march in bid to keep 
things clean. Environmental concerns spur a new generation.

10. Bloomberg: Putin Makes Scant Progress on Debt Relief at 

11. The Electronic Telegraph (UK): Guy Chazan, Russians now bugged 
'more than in KGB era']


Baltimore Sun
23 July 2000
Putin deploys skill on arms control
G-8 meeting: Russian brings reasons for U.S. not to pursue missile defense.

THROUGHOUT the Cold War, a main objective of U.S. policy was to divide the 
two great Communist powers, the Soviet Union and China. The last thing that 
Washington should want now is to allow the old Communist alliance to be 
revived against this country's interests. 

President Vladimir V. Putin made a splashy debut in big power politics by 
limning such a revival, traveling to the Group of Eight summit on Okinawa via 
Beijing and Pyongyang. It was skillfully done. 

Mr. Putin agreed with China's President Jiang Zemin that the U.S. national 
missile defense project undermines strategic stability and provokes an arms 

He represented North Korea's Kim Jong Il as wanting rockets only to explore 
space. He implied that North Korea would for a consideration drop the missile 
development that provides Washington's rationale for the national missile 
defense that Moscow and Beijing find so objectionable. 

Thus equipped, Mr. Putin was ready to go one-on-one with President Clinton on 
Okinawa. Their joint statement afterward suggests that while they did not 
come to terms on U.S. national missile defense, they did not allow that 
disagreement to disrupt declared cooperation on arms control. 

The statement reiterated support for the nuclear nonproliferation treaty and 
START II and III arms reduction. In discussing theater missile defense as 
possibly including other states, which would seem to mean Taiwan, they 
appeared to drive a wedge between Russia and China. 

The probing of Mr. Putin's intentions must be carried on by Mr. Clinton's 
successor. North Korea's reported vague offer must be explored for precise 

If Mr. Putin is manipulating Kim Jong Il to allow the administration to find 
that the need for national missile defense no longer exists, so much the 
better -- providing there is verification. 

No matter what candidates Al Gore and George W. Bush say, a good possibility 
exists that the election winner will, within a year, cooperate with Mr. Putin 
on arms control, on a basis laid down by Mr. Putin and Mr. Clinton in 


Washington Post
23 July 2000
[for personal use only]
Putin and the Oligarchs
By David Ignatius

Vladimir Putin's battle with the Russian oligarchs often seems like the 
Iran-Iraq War. It's a shame that both sides can't lose. 

But there's one possible outcome in Moscow that would benefit everyone. 
That's a negotiated truce in which the oligarchs--in exchange for their 
business survival--agree to make changes that would create real businesses 
and capital markets in Russia. In that way, the oligarchs would give back to 
the Russian people some of the resources they've plundered over the past 

"Putin should lock the power brokers in a room until they come up with an 
agreement to give something back--pay taxes, do some real investing, give 
back some of the phony privatization. He should say: 'You come up with a plan 
or I'll come up with a plan,' " says Fritz Ermarth, a former top Russia 
analyst at the CIA.

The process of negotiation toward such a truce could begin as soon as this 
week, when the Russian leader returns from the Okinawa summit. According to 
Russian press reports, Putin may meet with the tycoons to discuss whether 
he'll reverse some of the privatizations of the mid-1990s.

That's the stick Putin wields--that he could, in effect, re-nationalize what 
the oligarchs looted from the state. Bashing the businessmen would certainly 
be popular politically. The Russian people seem to like Putin's recent war 
against the oligarchs even better than they liked his earlier crusade against 
Chechen "terrorists."

But outright expropriation would be a bad move, not because it would hurt the 
oligarchs--who deserve whatever misfortune comes their way--but because it 
would further erode confidence in Russia's already fragile economy. Investors 
would worry that Putin was restoring a KGB-led police state and subverting 
the foundations of a market economy.

The oligarchs have already won some undeserved sympathy in the West, thanks 
to Putin's heavy-handed attacks. An especially stupid move was allowing the 
police to arrest Vladimir Gusinsky, who in addition to being an oligarch in 
good standing runs Russia's only independent media company. The assault on 
Gusinsky made Putin look like an enemy of democracy rather than of 
corruption. Although cloaked in the rhetoric of law and order, it actually 
undermined those values. And something is surely wrong when plutocrat in 
chief Boris Berezovsky gets to look like a good guy, as he did this week when 
he resigned his parliamentary seat in the Russian Duma in protest against 
Putin's tactics.

One of the leading oligarchs argued Friday that if the tycoons want to 
survive, they must clean up their act. Vladimir Potanin, who runs the holding 
company that controls nickel giant Norilsk Nickel, said in an interview with 
the Financial Times that the tycoons should offer to pay more taxes and make 
other concessions--quickly--to improve their public image. "We should say to 
people: 'You think we were bad. But we want to be normal and socially 
acceptable,' " he said, adding: "Many oligarchs are tired of the lack of 
well-defined rules and are waiting for the Kremlin to define the guidelines."

The very fact that Potanin is talking compromise suggests that Putin's 
squeeze play is working. Earlier this month, Potanin was targeted by the 
Russian prosecutor general, who demanded that he repay $140 million in 
alleged underpayments in the 1995 privatization of Norilsk. Potanin was an 
important symbolic target, because he was one of the architects of the 1995 
"loans for shares" program, which allowed the oligarchs to gain control of 
Russia's leading natural-resource companies for a pittance.

So what sort of deal should Putin demand as the price for allowing the 
oligarchs to retain control of their companies? Here's a simple proposal that 
emerged in conversations last week with several leading Russia-watchers. They 
suggest a truce that would require the oligarchs to bring their companies up 
to Western business standards. That means cleaning up corporate balance 
sheets, accepting modern auditing rules, negotiating enforceable legal 
contracts and paying what's owed in personal and corporate income taxes.

Putin could also push the oligarchs to invest more at home in Russia, rather 
than exporting their money to secret Swiss bank accounts.

Putin, for his part, should stop the goon tactics and embrace the rule of 
law. He shouldn't offer a blanket amnesty to the oligarchs, any more than he 
should continue waging personal vendettas against them. He shouldn't play 
favorites, supporting his own pet financiers even as he attacks others, as 
some critics charge.

Investors in Russia, including the oligarchs themselves, crave political 
stability. Putin's goal shouldn't be to wipe out the tycoons but to create 
thousands more of them as Russian capitalism grows and prospers.


The Observer (UK)
23 July 2000
[for personal use only]
Putin tells world leaders to log on 
Jonathan Watts in Okinawa may soon be swapping messages with after 
a proposal yesterday by Russian President Vladimir Putin that the leaders of 
the world's most powerful nations should start communicating by email. 
Putin's attempt to propel the group of eight into cyberspace took leaders by 
surprise at the Okinawa summit and threatened to expose the digital divide in 
their own ranks. 

The Russian President may come from the poorest of the G8 nations, but as a 
former head of the KGB intelligence service he is well versed in information 
technology. The same cannot be said of all G8 leaders, several of whom are 
barely computer literate. 

Prime Minister Tony Blair has only recently completed a crash course on the 
internet and writes most of his correspondence in long hand. 

Earlier this year French President Jacques Chirac had to ask what a mouse 
was. And the Japanese Prime Minister, Yoshiro Mori, only sent his first email 
last month. 

With information technology as the main theme of the summit, the leaders gave 
a cautious welcome to Putin's initiative. Blair's spokesman said an email 
network between the leaders would probably be largely symbolic. 'Email is not 
the most secure form of communication,' he noted. 

Despite their own lack of cyber savvy, the G8 heads unveiled a plan to set up 
a new body to tackle the 'digital divide' - the growing gap between those 
benefiting from the internet revolution and those being left behind. One of 
the roles of the 'dot force' (Digital Opportunity Taskforce) would be to 
promote the use of information technology in developing countries. 

Poverty-reduction campaigners said the resources would be better used to 
relieve the debt of poor nations. 'The poorest people in the world cannot eat 
lap tops,' said Ann Pettifor, UK director of Jubilee 2000. 


The Russia Journal
July 22-28, 2000
Putin’s oligarchic round table

An unusual event will take place at the end of July. Acting on a request
from Duma Deputy Boris Nemtsov, President Vladimir Putin will hold a round
table between business and the authorities. The meeting is said to have
been planned in two parts – one behind closed doors, while the other, with
a mutual exchange of niceties, is to be open to the press. 

Familiar oligarchs such as Vladimir Gusinsky, Boris Berezovsky and Vladimir
Potanin will be invited, along with less well-known figures such as
director of Severstal Dmitry Mordashev and director of Surgutneftegaz
Vladimir Bogdanov. The organizers’ aim is to widen the circle of Moscow
oligarchs by bringing in some from the provinces who are closer to the
people and the actual industries.

The oligarchs have already begun preparing – they want to clarify their
relations with the authorities and propose that the president sign a
document setting out clearly just what business and power expect from each
other. In other words, it’s an attempt to lay down the rules of the game.
And since the initiative is coming from below – from the oligarchs – this
puts the cards in their hands. 

It is the oligarchs who will put the their questions to the president, and
they hope to receive answers and draw conclusions on what could be the
subjects of compromise. Putin himself, it seems, is ready to listen, but
not to sign any kind of charter, joint declaration or other document.

This is the biggest problem. Putin’s predecessor, Boris Yeltsin, needed the
oligarchs as much as they needed him, but today, things are different.
Putin is sure he doesn’t need the oligarchs, and if he does, it’s not these
oligarchs, but others who don’t lay claims to political influence, don’t
"compete with the authorities."

Examples of such oligarchs are Roman Abramovich and Alexander Mamut, who,
from the Kremlin point of view, are focused solely on business rather than
politics. What’s more, since this new group of oligarchs is now starting to
flourish on the domestic market and is ready to take over from the old
oligarchs, Putin has no need to fear that he will end up without the
support of big business in general.

Yeltsin’s oligarchs don’t have anything much to offer Putin. All the bigger
pieces of pie have already been shared out, and the vacancies in power have
been filled. The oligarchs will say they’re ready to hand back their
Kremlin passes, that they’ll be law-abiding, pay their taxes and bring
their capital home. This would leave Putin nothing else to do but say "All
right boys, I won’t send you to prison." 

Of course, the oligarchs will be happy to hear that they’re not going to be
treated like murderers and rapists, but they want more. They want to know
what’s going to happen to the assets the state sold through the
loans-for-shares scheme, how budget money is to be distributed in the
future and whether the government intends to reform law-enforcement agencies. 

In short, are the authorities ready to share with business the
responsibility for the half-baked reforms of the past? Are they ready to
"equally distance" the oligarchs in a way that doesn’t involve threats and
men in masks but leaves it to the courts to seek the truth?

Some politicians and big business representatives have even proposed that
during this transition period, where the laws are still being formed, a
special appeals court could be created for the oligarchs, which would have
something like a jury system.

While the oligarchs have been trying to decide whether they should join
forces in the face of Putin’s new purge of Russian business, notorious
political lobbyist Berezovsky has launched a war all of his own against
Putin. He chose a sensational tactic to draw attention to his "war" –
renouncing his seat in the Duma. 

He aired his view on Putin publicly – "If the authorities want to arrest
me, they will, and parliamentary immunity won’t stop them." Giving up his
Duma seat was an unnecessary and highly cynical act, but it has given
Berezovsky the aura of a martyr who battles valiantly for democracy and for
the rights of the oligarchs. 

Berezovsky also called for an amnesty – "Anyone who hasn’t just slept
through the last decade has deliberately or unwittingly broken the law," he
said. "If an amnesty isn’t decided, the consequences for Russia will be
grave and society won’t be stable." 

Berezovsky’s decisive stand certainly doesn’t stem solely from his love for
democratic freedoms. He has found himself somewhat distanced of late from
the Kremlin and strategic state decisions. But the members of the
Presidential Administration are determined to change the rules of the game
that Berezovsky is used to playing. Even though it is they who came up with
many of the rules.

Berezovsky, for his part, wants to change the authorities who want to make
new rules. There is no room for compromise in this game, all the more so as
Putin, a politician from the "security structures," won’t accept
compromise. Putin believes power should be firm, strong and effective. And
that policy also applies to oligarchs. 

(Vera Kuznetsova is a member of the governmental and presidential press
pools and a long-time observer of the Russian political scene.)


July 21, 2000
Phantom Mercenaries Inflame Caucasus Tensions

Russian media on July 19 reported a concentration of Pakistani and Afghan
mercenaries massing on the Azerbaijani border with Dagestan. ITAR-Tass
reported the group as part of a Chechen invasion force that planned to move
into Dagestan. The report may have been leaked to the press in order to
stir up tensions between the two countries, and now Russia appears to be
building the justification for punitive measures against Azerbaijan. 

According to Interfax and ITAR-Tass the 1,500-strong force planned to
invade Dagestan from the south, and meet up with Chechen troops invading
from the north. The media reports also stated that the Dagestani State
Council had announced the presence of these forces at a July 18 meeting
discussing border security. 

However, an official at the Azerbaijani Embassy in Washington on July 19
denied the presence of any mercenary force. As well, Azerbaijani Television
questioned the motives behind the ITAR-Tass report and claimed the report
was an attempt to damage Russian-Azerbaijani relations. Azerbaijani
Television said senior officials from the Russian federal Border Service,
officers from the North Caucus regional district and participants in the
Dagestani State Council meeting had flatly denied the reports. The U.S.
State Department also issued a special statement acknowledging that the
“Azerbaijani government has taken all necessary measures to prevent
terrorism on its territory.” No one at the Russian Embassy was available
for comment. 

The false report of the troop concentration comes on the heels of two other
potentially damaging incidents between Russia and Azerbaijan. 

First, Azerbaijani independent television broadcast an interview with
Chechen rebel leader Shamil Basayev on July 14, which elicited stern
admonition from the Russian government. Russian presidential aide Sergey
Yastrhembskiy said that Russia would take the Basayev incident into account
in further dealings with Azerbaijan. Yastrhembskiy also said that Moscow
was aware of Chechen rebels who received medical treatment in Azerbaijan, a
charge that Baku denies. When asked about the Basayev tape, the Azerbaijani
Embassy said it hoped Russia would not fault the Azerbaijani government for
its broadcast, noting that an independent station had broadcast the tape. 

Second, the Azerbaijani state oil company, SOCAR, stopped oil shipments
through the Baku-Novorrosiysk pipeline on the grounds that the country
needed to build reserves due to an energy shortage. The Russian pipeline
company Transneft promptly fined SOCAR for breach of contract. Since that
time, Baku has refused to pay the $29 million in fines, saying the closure
was an uncontrollable event. The Azerbaijani Embassy claimed the Russians
should exhibit more understanding in the matter, and cited Azerbaijan’s
response to the closure of the pipeline by Chechen rebels in July of 1999. 

Tensions are flaring, providing an impetus for future Russian actions. In
December of 1999, Russia aircraft launched multiple missile attacks from
inside Georgian airspace against alleged rebel camps inside of the country.
At the time, Russian officials accused Georgia of “interfering in the
conflict in the North Caucasus, including support for Chechen armed
detachments,” according to ITAR-Tass. Georgian officials said they had
sealed off the Chechen border,and that was simply trying to draw Georgia
into the Chechen conflict. A similar strike against Azerbaijan cannot be
ruled out, given the deterioration in Russian-Azerbaijani relations and
Russia’s allegations that Azerbaijan is harboring an invasion force. 

The implications are serious. With Russia incensed over the broadcast of
the Baseyev interview and unconfirmed reports of Chechen rebels receiving
medical treatment in Baku, Russia has ample reason to claim that Chechens
are receiving assistance from Azerbaijan. Combined with the closure of
Baku-Novorrosiysk, the mercenary report may be another attempt by Moscow to
stir up animosity against Azerbaijan and justify military action on the
northern border. 

Azerbaijan is almost powerless to respond to such an attack, and the
government will soon realize how one-sided its relationship with the West
really is. If Baku keeps goading Russia into action on the West’s behalf,
it may find itself alone in dealing with a Russian response. This harsh
reality check may push Baku to moderate its relations with Moscow, thus
undermining Western influence in the Caucasus. 


Los Angeles Times
July 23, 2000
[for personal use only]
West Confronts the Riddle of Putin 
Walter Russell Mead, a Contributing Editor to Opinion, Is a Senior Fellow at 
the Council on Foreign Relations. he Is the Author of "Mortal Splendor: the 
American Empire in Transition."

NEW YORK--'I don't want to participate in the destruction of Russia," 
Boris A. Berezovsky said last week, explaining his decision to step down from 
the Russian parliament. 
It's a bit late for that. Berezovsky has already done his personal best 
to ruin that unhappy land. As one of the richest and most successful of the 
so-called "oligarchs" who joined in the decade-long orgy of looting that 
wrecked the economy while creating a handful of billionaires and 50 million 
paupers in the Russia of former President Boris N. Yeltsin, Berezovsky's 
place in the annals of Russian destruction is sure. 
But now, with President Vladimir V. Putin's tax police and prosecutors 
raiding one oligarch after another, and with his loyal political minions 
ramming one bill after another through the Russian Duma, the new Russian 
president poses serious questions for everyone concerned about Russia's 
future. In particular, as Putin steps into the international limelight at the 
Okinawa G-8 meeting this week, the seven heads of state of the world's 
leading developed nations are trying to figure out whether Putin's drive to 
restore central authority in Russia is a personal power play or a sincere 
effort to stop the chaos. 
There's a reason why the leaders of Germany, Japan, the United States 
and the other G-8 countries are so puzzled by Putin. Whether Putin's goal is 
to save Russia or re-enslave her, he would have the same steps on his to-do 
By attacking the once untouchable oligarchs, Putin is serving notice 
that even rich people must comply with fundamental state laws. Furthermore, 
he is making sure that, in the future, Russian business will pay taxes. That 
is really the only way the government can get the funds to do its basic jobs, 
like keeping hospitals running, paying teachers and getting pension checks to 
senior citizens on time. 
Attacking the oligarchs isn't just a good way to get some money into the 
coffers. It's excellent politics. Most ordinary Russians bitterly resent 
Berezovsky and his peers. They are convinced, with some reason, that the 
privatization of Russian state assets was a dirty and illegal business, and 
that the current "owners" of Russia's oil and gas fields and its other 
valuable assets have no valid moral claim to their riches. 
The harder Putin cracks down on the oligarchs, the more popular--and 
more powerful--he will become. This is a political logic Putin's G-8 peers 
understand; few of them will be surprised if Russian tax officials and 
prosecutors continue cracking down on the oligarchs. 
So far, so good. But here's the rub. If your goal was to create a new 
and more efficient dictatorship, you would do exactly what Putin is doing. 
You would scare the oligarchs, confiscating the wealth of some and sparing 
others. You would fire some of the regional governors, terrify the others, 
and generally convey the message that crossing the Kremlin could be hazardous 
to your political health. 
If Putin succeeds--if he crushes the oligarchs and disciplines the 
regions--he won't just be the elected leader of a democratic state. He'll be 
bigger than that--in effect, he'll be the czar of all the Russias, and nobody 
and nothing in the whole country will be out of his power. 
So the G-8 summiteers are looking at Putin and asking the question 
Glenda asked Dorothy in "The Wizard of Oz": "Are you a good witch or a bad 
The answer is that Putin himself may not know yet what kind of witch he 
wants to be; and the United States has very little influence over how he 
decides to rule Russia. As we wait to see the shape of the new Russia that 
Putin is building, we need to remember a few basic truths. 
The first is that whether Putin turns out to be a good witch or a bad 
witch, it is in the U.S. interest for him to be a strong witch. A weak Russia 
looks good to a handful of foreign-policy experts who are still fighting the 
Cold War, but in the real world, the United States needs a strong central 
government in Moscow. Washington needs a Russian government forceful enough 
to control any loose nukes floating around, and it wants a Russian government 
strong and self-confident enough to sign international agreements--and then 
keep them. 
When Putin stopped off in China and North Korea on the way to this 
week's G-8 summit in Okinawa, some observers worried that Russia was trying 
to rebuild its international influence as a rival power to the United States. 
They should all take a deep breath and relax. Russia is far weaker today 
than the Soviet Union ever was. It's economy is half the size it used to be, 
and Russia's population grows older, sicker and smaller every year. (The 
latest estimates show Russia's population falling from 147 million in 1998 to 
121 million over the next 50 years.) Even if Putin miraculously heals the 
Russian economy and reverses its demographic slide, Russian growth for the 
foreseeable future simply doesn't pose a serious threat to U.S. national 
interests. Continuing Russian weakness and failure, however, could create big 
problems ranging from the spread of organized crime to more loose nukes to 
serious instability in both Europe and Asia. 
It isn't just the old Cold Warriors who worry about Putin's new Russia. 
Western investors who got into bed with the oligarchs are worried, too. If 
Putin gets serious about enforcing Russian laws, there's no telling how much 
wealth of the oligarchs--and their foreign business partners--he can 
As Berezovsky himself admits, "Everyone who wasn't sitting with arms 
folded during [the Yeltsin] years willingly or unwillingly broke the law." 
That is partly because Russian laws are so poorly written it is virtually 
impossible for a business to operate without breaking some law somewhere; and 
partly also because in the great stampede for riches and power, nobody cared 
anything about legal or illegal, right or wrong. 
Berezovsky proposes that Putin should therefore grant an amnesty to the 
oligarchs and let them keep whatever they managed to grab, however they got 
it. Plenty of Westerners will agree with that logic--especially Western 
investors who've sunk billions of dollars into companies controlled by the 
oligarchs. These investors will try to get the U.S. and the other G-8 
governments to protect them if Putin's tax police and prosecutors start 
digging too deeply. 
This is something we shouldn't do. Foreign investors in Russia knew full 
well that its privatization process was deeply flawed. Their hunger for 
potential profit was so great that they overlooked a basic business 
principle: Don't buy anything until you make sure the guy selling it has a 
clear title. 
If Putin is as smart as he seems, he knows that a pragmatic compromise 
with the oligarchs and foreign investors is Russia's best course. He will 
claw back enough money to satisfy public opinion and rebuild the credibility 
of the government; give the country a viable set of commercial and tax laws; 
and go on to other urgent issues--like rebuilding Russia's crumbling medical 
and educational systems before they collapse. 
Let's wish him well--and hope he's a good witch. There isn't much more 
we can constructively do. * 


Source: 'Izvestiya', Moscow, in Russian 19 Jul 00 

Intelligence officers should not be given the job of rebuilding Russia,
because they are "demolishers" rather than builders, according to the
Russian newspaper 'Izvestiya'. Columnist Semen Novoprudskiy says the Putin
regime is using people from the security services to fight the so-called
"oligarchs", who, in fact may be more "sound and useful" for the country.
The following is the text of the newspaper report, published on 19th July: 

There are people whose professions imply by definition their inability to
do constructive work. Paradoxically, those are exactly the people who have
been entrusted with installing order in our country, which periodically
(although not so often as one would like) "gets out of hand". 

It is easy to guess whom I have in mind: KGB officers and people from other
secret services. Just as is the case with any other professions, they
include worthy and unworthy, decent and mean, brave and cowardly, gifted
and mediocre people. However, those people should not be the main driving
force of the state-building effort because their role is to fight those in
our country who do not want to live by the law. In their essence, they are
fighters against the bad reality, not builders of the good one. They are an
organ of the state and society, but not the organism itself. 

The cloud of wariness that is increasingly heavily shrouding the new
Russian power is largely caused specifically by the fact that the
demolishers received an order to build. Those people are accustomed to
understand the word "build" in one way: to build ranks for a general roll
call, which is associated with such notions as counting off, "one step
right or left will be treated as an attempt to escape", and a strict
regime, but not the law. 

If the secret services become the brains of a nation, its country will be
actually ruled by the spinal cord rather than the brain and by reflexes
rather than thoughts. Russia was a country of reflexes and instincts rather
than intelligence for too long to perform such experiments on people after
a decade of its relatively normal development. 

We were subjected to a pure experiment: since the first Russian security
police was established by Ivan the Terrible and headed by Malyuta Skuratov,
we have always had strong secret services - and almost never a strong
state. This kind of state did well as an "oppression machine" (Lenin's
phrase can hardly be disputed here) but never as a machine helping to
reveal the creative potential of a free and constructive individual. 

The present Russian oligarchs (whatever we may think about them), who are
being gradually driven out by the new power, may prove to be people much
more sound and useful for our country than the new contenders for the
oligarchic rule. After all, the problem is not that big business
representatives learnt how to lobby for decisions favourable to them
through their "own" people in the government and the presidential
administration. The problem is whether those decisions are of good quality
and whether it is possible to make them in a different way. The adolescent
dreams about the "equidistant" business and power will now be shattered
against the Russian economic reality. For now, the authorities do not have
a clearly expressed wish to reform radically the natural monopolists.
Meanwhile, even if the Ministry of Railways actually becomes just a kind of
state corporation within the Ministry of Transport and even if Gazprom and
Unified Energy System of Russia are managed personally by Mr [head of
presidential administration Aleksandr] Voloshin and Mr [first deputy head
Dmitriy] Medvedev from the presidential administration, oligarchy will not
disappear anywhere. At this point, big business in Russia is too big and it
pays too much money (proportionately) to the state treasury to stop being
oligarchic. A change of the chief or the owner of a company that is
virtually a state in the state would be merely a change of a person in the
oligarchic position. It is a position, not a person, that is oligarchic. 

A strong Soviet-type manager such as [Gazprom chief Rem] Vyakhirev or a top
manager with political inclinations such as [Unified Energy System chief
executive Anatoliy] Chubays are much more preferable in an oligarchic
position than any representative of the power structures. Typically in
their profession, officials from the power structures do not distinguish
between half tones, they think in the "white-black" and "friend-foe" terms.
Even the spectrum of Rem Vyakhirev's thoughts seems to be richer, while
Boris Berezovskiy, who has already passed away as an oligarch, would even
come across as a torchbearer of constructive thought against this
background. The people whom some want or may want to make organizers of the
new Russian reality are most suitable for the role of executants. The
executive and organizational roles are, as people in Odessa say, two big
differences. If the presidential team really intends to ensure the
separation of business from power, there is no other way of doing that than
gradually decreasing the role of large Russian companies in our economy.
This can be done only through structural reforms of national monopolists
(we will not utter the word "dissection" so that we do not scare the
public, but it is implied as one of the measures). 

No operational actions against top figures in Russian business and no party
building with the cardboard opposition will produce any results. Mother
nature did not give the spy-catchers the skills to write economic
legislation or draw the legal contours of a future federation. A removed
grenade interlocking pin [pun on acronym for secret service] will
inevitably lead to an explosion. Likewise, if the Cheka [intelligence]
(alias the Audit Chamber, alias the Prosecutor-General's Office, alias the
Federal Security Service) is pulled out of its habitual work domain and
forced to build a new Russia, it will produce nothing but an explosion. 


The Russia Journal
July 22-28, 2000
Youths march in bid to keep things clean
Environmental concerns spur a new generation
Russian young people gathered in Pushkin Square to raise awareness of
environmental problems.

Thousands of Russian young people, such as 21-year-old Mikhail Sverdlov,
are increasingly taking time out from their studies and hectic social lives
to take a stand on environmental issues.

"We live on the Earth, and it is our essential need to live on a clean
planet," said Sverdlov, who was among dozens of people, mostly under the
age of 25, who gathered last weekend in Moscow's Pushkin Square to draw
public attention to some of Russia's most serious environmental problems.

Sverdlov, from St. Petersburg, and the others at the demonstration are
members of Russia's new, more environmentally aware generation, one that
appears increasingly determined to ensure that the country has a brighter,
greener future.

• Referendum urged

Participants at the event called for a Russian ecological referendum on
issues including nuclear power and slammed what they called government
ignorance on ecological matters.

Among the issues they highlighted as government errors were the abolition
in May of two governmental organs – the Federal Forestry Service and the
State Committee for Environmental Protection. The organizations' functions
were handed over to the Ministry of Natural Resources, which critics say
does not have enough staff to handle its responsibilities properly.

Speakers warned that further weakening of Russia's environmental protection
apparatus could dramatically harm the country's ecological balance and pave
the way for widespread damage.

Sverdlov, a member of the Youth Christian-Democratic Movement and a
university graduate, said his organization spoke for human rights – which
necessarily include ecology. 

He said Moscow colleagues invited him to take part, and added that Russia's
youth is now the segment of society that is keenest to see environmental
protection measures implemented.

Others attending the demonstration also expressed concerns about the
effects of ecological neglect.

"I worry about Russia's future," added Maria Chunina, 20, "and I don't want
the government to shut down the only environmental organs here. The
government doesn't ask ordinary people what we think about that." 

Chunina, a student at Moscow State Pedagogical University and a member of
the Yabloko party's youth movement, added that she attended the event
because she wanted to make sure her voice is heard. 

Aside from students, a number of professional environmentalists attended
the demonstration. Anna Esipova, 24, a Greenpeace activist from St.
Petersburg, said she attended in order to gain experience for a similar
event in her hometown scheduled for July 22. 

• ‘We should unite’

"Our task is to let the public know what's at stake," she said. "The
president signed a decree and he abolished the apparatus of environmental
protection. However, that is not the president's area of concern. We should
unite in order to show our strength."

Esipova and her friends said they are taking concrete steps in that
direction in St. Petersburg. They promote ecological education in high
schools, where they teach schoolchildren what should be done to avoid
polluting the environment. Above all, they say, like many concerned
youngsters, they try to put all their ideas into practice. 

"Probably our most effective campaign is about picking up trash," Esipova
said. "We bring people together and pick up the garbage. These people soon
realize what they've done and won't carelessly drop litter in the future.
We also ask those who will govern our country in several decades to solve
theoretical environmental problems."

Svetlana Kainova, a student at the Moscow State Academy of Sophisticated
Chemical Technology, said her motive for attending was a simple one.

"I came because we have to breathe this air, and I don't want to be choked
by the exhaust fumes. We should fundamentally improve the situation if we
want to stay alive."

The young people at the event said they believe it's important for everyone
to take a stand if the situation is to change in the country. Anna
Gadareva, 20, a student at the Timiryzev Agriculture Academy, said she
wanted to play a role in protecting the environment from pollution, however
small that role might be.

• Initiative group

Igor Shestin, director of the World Wide Fund for Nature's Russian office,
was one of those who addressed the meeting. He said he is one of 177
members of a special initiative group set up to lobby for a Russia-wide
referendum on environmental issues. "Today, I told the audience about the
seriousness of these problems," he said.

Speaking after the event from Greenpeace's Moscow office, representative
Polina Malyasheva said she supported young Russians' involvement in the
demonstration. "We back all attempts to give a voice to ecological
matters," she said. "It's an extremely positive trend among the youth."

The entire demonstration lasted just 40 minutes, but as Timur Koteyev, one
of the organizers, said, the participants felt they achieved their aim,
because they showed the will of Russia's young generation.


Source: `Krasnaya Zvezda', Moscow, in Russian 15 Jul 00 p 2 

The Russian Defence Ministry has applied for substantial improvements in
service pay to being it up to civil service levels, according to a report
by the Defence Ministry newspaper `Krasnaya Zvezda'. So far the Finance
Ministry has not responded, the paper adds. The article, by the deputy
chief of a ministry research department, analyses the income of service
personnel at present and concludes that service personnel on fixed
contracts are particularly badly off. The following is the text of the
newspaper report, published on 15th July: 

The monetary allowances of servicemen, and this includes salaries for
position and for rank and other payments, amount to 55 per cent of the
aggregate income in "military" families. Here the wages of wives of
servicemen on average increase family budgets by only 7 per cent. This is
explained by 53 per cent of women not having job opportunities (in the
families of young officers the percentage of non-working wives reaches 75
per cent). 

Approximately 1 per cent of the statistically average family budgets
reports additional income; this is owing to those 8 per cent of servicemen
finding supplementary work during their free time. The supplement is not
large - on average 754 roubles per worker. 

Privileges and compensation prescribed in the law "On the status of
military servicemen", subsidies for children and payments from social
insurance funds stipulated by acting legislation should also be included in
the labour income of military servicemen. Expressed as a value, their
percentage amounts to 33-34 per cent of aggregate income. 

Here, however, it must be explained that in 1999 servicemen performing
service by contract received monthly only one-fifth of their nominal
monetary income because of delays in the payment of compensation and the
failure to pay a significant part of their statutory privileges. On average
this sum equalled 863 roubles, or 62 per cent of the value of the amount of
all privileges and compensation. 

It should also be emphasized that in the current year the Ministry of
Defence has more than once sent proposals to the Ministry of Finance on
increasing the monetary allowances of military servicemen. It has been
already planned in July to increase salary for rank by 50 per cent and for
position by 30 per cent. In addition, another increase was proposed for 1st
October - this time increasing the entire scale by 50 per cent. Carrying
out this measure would permit equalizing the pay of military servicemen and
government workers. 

Other force structures support the position of the Ministry of Defence;
however the Ministry of Finance has remained deaf to these proposals. In
addition, efforts were undertaken to cancel a number of already acting
privileges. It would not seem necessary to explain what this would lead to.
Privileges and compensation provide one-third of the aggregate income of
the families of military servicemen. Protected, we note in particular, from

A comparison of monthly monetary incomes of various social groups in Russia
indicates that the income of military servicemen performing service on
contract amounts to 0.78 per cent of the average level for the country.
This gap is even more tangible in families with many children and the
families of young officers, warrant officers, NCOs, and soldiers (sailors). 

Structure of monthly income of statistically average families of military
servicemen of the Russian Federation armed forces: 
\ \value of unpaid privileges and compensation - 20 per cent 
\ value of paid privileges and compensation - 12 per cent 
\ monetary allowances of servicemen - 55 per cent 
\ wages of wives - 7 per cent 
\ additional income - 1 per cent 
\ income from monetary savings - 2 per cent 
\ social subsidies for children - 1 per cent 
\ other social transfers - 2 per cent. 


Putin Makes Scant Progress on Debt Relief at Summit

Okinawa, Japan, July 23 (Bloomberg)
- Russian President Vladimir Putin won praise at his first summit 
of the Group of Eight nations, though made little headway in convincing 
leaders of the world's richest countries to forgive Soviet-era debt. 

Russia's economy has bounced back from its 1998 debt default and currency 
devaluation to achieve the fastest growth in a decade. Putin was praised for 
strengthening the role of the central government in securing the rule of law. 

The Okinawa meeting ``was most of all the summit at which Russia got fully 
integrated,'' said German Chancellor Gerhard Schroeder at a press conference. 
``In his policy of internal reform and the reestablishment of the state 
monopoly of power he's received unconditional support from all of us.'' 

Plaudits for Putin didn't translate into support for his effort to have half 
of Russia's $42 billion in Soviet-era debt forgiven. Schroeder stuck to his 
position that Russia should pay the debts, though said terms might be 
restructured. French President Jacques Chirac said Germany, as Russia's 
largest creditor, would have the biggest say on the matter. 

Russia wants to write off half its debt to the Paris Club, a group of nations 
that includes its G-8 partners, to match an agreement made earlier this year 
with private creditors. Putin says debt relief is key to sustaining economic 

`World Power' 

Germany said it would sign an agreement this week to reschedule 8 billion 
marks ($3.8 billion) of Russian debt. Canada and Britain said relief wasn't a 
priority at the Okinawa meeting, and the issue never came up at a meeting 
between Putin and U.S. President Bill Clinton that was devoted to security 

``Russia is not a Third World country, but a world power,'' Schroeder told 
reporters. Debt forgiveness is not ``what Russia needs, or, taking a sober 
look at things, what would be good for Russia,'' he said. 

Schroeder proposed including Russia in discussions on economic policies at 
future meetings of the leaders of Germany, France, Britain, the U.S., Canada, 
Italy and Japan. Russia's participation at the summits is now limited to 
political issues. 

Putin said he shouldn't be excluded from any ``forums where decisions 
affecting Russia are made. Russia will work in the G-8 and we are prepared to 
expand our participation.'' 


Canadian Prime Minister Jean Chretien described Putin as ``eloquent and very 
knowledgeable,'' but stopped short of advocating Russia's full membership in 
the group. 

``Did the G-7 become a G-8?'' Chretien asked. ``That is definitely not the 
case; they do not participate in the first meetings'' of the original seven 
economic partners. 

Rising Russian exports and improved tax collection have lifted revenue and 
pushed the budget into surplus, helping boost central bank reserves to $21.8 
billion, the highest level since 1997. Russia has argued that lower debt 
payments are necessary to push through market-based reforms with high social 
costs, including breaking up monopolies and cutting energy subsidies. 

Russia must reach an agreement on economic reforms with the International 
Monetary Fund to start talks on its Soviet debt to governments. Both the IMF 
and Russia have said an agreement is unlikely before September. 

A draft G-8 statement encouraged Russia to carry out economic reforms, 
including tax cuts and welfare overhaul, and to reduce corruption. 

If Russia and the IMF reach an agreement, talks on rescheduling Russia's 
Soviet debt payments will start this autumn, the draft statement said. 
Payments will be rescheduled only for the period covered by the IMF program. 
The entire section on Russia was removed in the final version of the G-8 

``It was clear that if Putin asked for debt reduction, he would not get it,'' 
said Nicholas Bayne, a visiting fellow at the London School of Economics. 
``Wisely, Putin did not ask.'' 


The Electronic Telegraph (UK)
23 July 2000
[for personal use only]
Russians now bugged 'more than in KGB era'
By Guy Chazan

A GROUP of Moscow investigative journalists used the internet last week to
publish a collection of "operational reports" compiled by security agents
on various VIPs. These included transcripts of bugged telephone calls and
detailed dossiers on some of Russia's most prominent ministers, businessmen
and entertainers.

The journalists, calling themselves the Freelance Bureau, said they had
acquired 20,000 pages of material from sources in the FSB domestic
intelligence agency - heir to the KGB - and the interior ministry. Most of
the information, they added, had originated from private security firms
working for Russia's most influential businessmen and often run by ex-KGB

"We wanted to show that there's no privacy any more - for anyone," said
Alexei Chelnokov, one of the Freelance Bureau's founders. "Even in Soviet
times, the KGB needed the prosecutor-general's permission to bug phones or
tail someone. Now everyone does it, and no one can stop them."

Mr Chelnokov said the information first appeared on the black market two
years ago. He said it was being hawked for $50,000 (£33,000) by hard-up
former employees of security firms, who lost their jobs after the 1998
financial crash when many businesses collapsed.

Material published on the Freelance Bureau's website ranges from
biographical dossiers on politicians, with their addresses, passport and
telephone numbers, to detailed transcripts of phone conversations involving
figures such as the Russian Orthodox Patriarch Aleksy II, the tycoons Boris
Berezovsky and Vladimir Potanin, and the former privatisation chief Alfred
Kokh. Alleged conversations between Mr Berezovsky and leading Chechen
rebels have surfaced before in the Russian press.

Mr Chelnokov said one of his aims was to prompt an investigation into the
whole issue of illegal phone-tapping. "This is a crime and the people
responsible should be prosecuted," he said. Natalya Veshnyakova, an
official at the Russian prosecutor's office, declined to comment. "We don't
have internet access here, so we can't read it," she said.

One phone-tap target was Natalya Gevorkian, a leading journalist and
writer. She was bugged speaking to Lena Erikkson, a friend who was editing
the revealing autobiography of Alexander Korzhakov, Boris Yeltsin's former
bodyguard. During the conversation, Miss Erikkson says she had received
threatening phone calls and feared that her flat was stuffed with listening

"I never really believed they tapped ordinary people's phones until I saw
that file," said Miss Gevorkian, an expert on the KGB, who is now the Paris
correspondent of the Russian newspaper Kommersant.

She said she believed that most bugging was carried out by security firms
employed by Russia's "oligarchs" - the powerful business elite - to spy on
each other. These private agents often maintained close ties with former
colleagues in the FSB. "The secret police have been privatised," she said.
"These people used to be the servants of the Communist Party - now they
just serve whoever pays them."

Mr Chelnokov said FSB officers had been known to moonlight to supplement
their meagre state salaries. "You can get them to tap someone's phone for
about $150 [£100] a day, while the going rate for tailing someone is $500
[£333] a day."

The authorities have cracked down on one leading private army - that
belonging to Media-Most, Russia's biggest independent media empire. FSB men
in ski masks raided the organisation in May, and later alleged that the
company's bodyguards had been spying on its own journalists. Media-Most's
founder, Vladimir Gusinsky, was subsequently jailed on fraud charges.

The problem is not confined to private firms, however. Many observers say
the state is still the main culprit. "I'm scared to use the phone, at work
or at home," said Genrikh Padva, a prominent lawyer. "You can't have a
confidential conversation on the phone any more."

Mr Padva has noted a sharp rise in the number of cases in which prosecutors
have bugged a suspect's phone before the official start of criminal
proceedings - a move that is illegal under Russian law. Transcripts of the
suspect's conversations are then used as evidence in court. One such
transcript, he said, was of talks between a lawyer and his client.

Campaigners for the right to privacy have also raised the alarm over moves
by the FSB to install monitoring equipment at internet service providers,
enabling agents to read all electronic correspondence, as part of the fight
against terrorism and organised crime.


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