July 28th, 2000    
This Date's Issues: 4428• 4429   • 

Johnson's Russia List
#4429
28 July 2000
davidjohnson@erols.com

[Note from David Johnson:
1. RFE/RL: Donald Jensen, Putin to Meet Oligarchs Today.
2. Bloomberg: Putin to Challenge Top Businessmen at Kremlin Meeting.
3. From Edward Lucas--personal view from Moscow.
4. The Economist (UK): Chechnya. Falling apart.
5. gazeta.ru: Student Loans For Wealthy Only.
6. Moscow Times: Robert Coalson, MEDIA WATCH: Rising Use of 
Infographics.
7. Obshchaya gazeta: Interview with Yury Luzhkov.
8. Yuri Luryi: Re: 4427-Gusinsky and the Russian Criminal 
Procedure Law. 
9. RFE/RL: Breffni O'Rourke, Central Europe: EU Warns Candidates 
Against Links With 'Nomenklatura'
10. Patrick Armstrong: FOREIGN MUJAHADDIN IN CHECHNYA.
11. Financial Times (UK) editorial: Putin's power.
12. Segodnya: Avtandil TSULADZE, THREE GOVERNMENTS - THREE 
SOURCES OF CONTRADICTIONS. Political Scientists Are Bewildered by 
Swift Changes in Russian Politics.
13. AFP: Former communist broadsheet l'Unita folds.]

******

#1
From: JensenD@rferl.org (Don Jensen)
Date: Fri, 28 Jul 2000 10:08:40 +0200
Subject: Putin to Meet Oligarchs Today

Putin to Meet Oligarchs Today
Donald Jensen, RFE/RL

In recent weeks Vladimir Putin has seemingly begun to carry out his
election promise to reduce the influence of Russia's notorious business
oligarchs, who grew rich during the Yeltin era due to their close ties to
government officials and easy access to public funds. So far, however, his
campaign has largely settled scores against the Kremlin's political and
business opponents, while leaving magnates close to him untouched. Putin's
summit with the leading oligarchs on Friday July 28 may be a first step
toward the creation of a fairer economic playing field or toward
reasserting the role of the state. It is unlikely, however, to address a
more fundamental problem, the interconnection between property and
political power. Putin's rhetoric to the contrary, he has so far neither
the power, not shown the intention to break the link between the two.

Putin has moved against several leading business empires, including
Media-MOST, Lukoil and Norilsk Nickel, whose owners have been accused of a
variety of crimes ranging from embezzlement to tax evasion. Media-Most
owner Vladimir Gusinsky has long been critical of the government,
especially the war in Chechnya, and last year supported the Fatherland
political movement of Yevgeny Primakov and Yury Luzhkov, at the time Putin
rivals. Lukoil's Vagit Alekperov is close to powerful Tatarstan Governor
Mintimar Shamiev, and also backed Fatherland, while Norilsk Nickel owner
Vladimir Potanin has never been close to the Kremlin. 

By contrast, Kremlin "bankers" Roman Abramovich and Aleksandr Mamut, who
financed Putin's election campaign, have been spared. In fact, several of
Putin's steps so far benefit have benefited their business interests.
Accusations of tax evasion against Lukoil, for example, may have been
intended in part to knock it out of the running for the state-controlled
oil-company ONAKO, Russia's twelfth largest oil producer, whose majority
stake went on sale July 21. Abramovich's Sibneft company, as well as the
Transneft, controlled by Semyon Vainshtok, another pro-Putin oligarch, are
said to be considering strong bids. For the all hoopla in recent days
surrounding Boris Berezovsky's public break with the President and
intention to create an opposition party, Berezovsky, another backer of
Putin's rise to power, recently installed his daughter on the board of the
state television network ORT, which remains in his control. The
state-owned Vneshtorgbank recently indicated it may loan Berezovsky $85
million to operate the channel. 

Putin's strong-arm tactics have relied on the MVD, FSB, the tax police and
the procurator - rather than the courts -- to bring the oligarchs to heel.
The "Family" - the Kremlin faction that includes former Yeltsin
speechwriter Valentin Yumashev, Yeltsin's daughter Tatyana Dyachenko, and
Presidential Administration chief Aleksandr Voloshin, as well as Mamut and
Abramovich, reportedly favors maintaining a few large oligarchic empires
who are independent, but close to the Kremlin (Procurator Vladimir Ustinov
is an ally of The Family, according to press reports). A second faction,
centered in the FSB and the newly empowered Security Council, prefers to
remove the oligarchs entirely and transform Russia's large businesses into
state companies headed by proteges of the president. Putin appears not to
have firmly committed to either option so far.

Even if the most notorious oligarchs were removed, however, it would do
little to untangle the interpenetration of business and politics that is a
fundamental aspect of Russian politics. Alliances between governors and
regional oligarchs - sometimes against the intrusions of better known
magnates from Moscow - are common. At the federal level, ministries
routinely engage in commercial activities. By most measures Voloshin's
Presidential Administration qualifies as an oligarch in his own right.

Perhaps more significantly for Putin, the security services on which he has
relied have long been as motivated by money as much as the public interest.
Many large firms employ former FSB intelligence officers, and ties
undoubtedly remain strong between the latter and Lubyanka. Interior
Minister Vladimir Rushailo, one of Russia's major law enforcement officers,
was extensively involved in entrepreneurial activity when he headed
Moscow's organized crime directorate in the early 1990s, according to press
reports. Among his alleged activities was the provision of protection to
major Moscow firms in exchange for corporate contributions. In the
regions, governors and the firms that support them often supplement the
federal salaries of law enforcement officials out of their own pocket,
thereby eroding their loyalties to Moscow. 

Among the 18 business officials invited to attend Putin's meeting with
business leaders today are Alekperov, Gazprom chief Rem Vyakhirev, and
Yurkos head Mikhail Khororkhovsky, as well as an executive from the
telecommunication company Vympelcom. Berezovsky and Gusinsky reportedly
have not been invited. Union of Rightist Forces faction leader Boris
Nemtsov, who along with Voloshin pressed for the meeting, has predicted
that business leaders would proposed a three-point declaration in which the
Kremlin would agree to stop investigations into past privatization deals.
In return the oligarchs would agree to "play by the rules" -- pay all taxes
and obey the law. The government, in turn, would get rid of corrupt
bureuacrats, "beginning with the Procurator General's office." Kremlin
sources have stated that it is unlikely that any agreement will be signed.

*******

#2
Putin to Challenge Top Businessmen at Kremlin Meeting

Moscow, July 28 (Bloomberg) -- Russian President Vladimir Putin intends to
tell 21 prominent business leaders invited to a meeting in the Kremlin
today to pay their taxes and obey the law. 

The list of invited guests includes OAO Lukoil Holding President Vagit
Alekperov, under state investigation for alleged tax evasion, Interros
Holding President Vladimir Potanin, the target of a state asset sale probe,
and OAO Gazprom Chief Executive Rem Vyakhirev, whose power the government
has sought to limit. 

The large number of guests, and the inclusion of high-tech companies
together with communist-era oil and metals producers, suggests Putin is
determined to curb the political influence of the so-called oligarchs, a
handful of businessmen who took control of large companies after the
collapse of communism, analysts said. 

``The Kremlin wants to emphasize there are no more oligarchs,'' said Sergei
Markov, director of the Institute of Political Studies. ``The president's
aim should be to stop business from stealing and teach them how to make
money.'' 

Aside from the familiar names of oligarchs who in the past influenced
policy through connections to former President Boris Yeltsin, Putin
broadened the circle to include Dmitri Zimin, general director of AO
Vimpelcom, Russia's No. 2 mobile phone company, Anatoly Karachinsky,
president of the IBS Group computer company, and Yuri Zapol, president of
Video International. 

The businessmen have a different idea for the meeting. 

Yeltsin Years 

Accustomed to Yeltsin's approach of granting favors to a small group of
oligarchs in exchange for support, the businessmen want Putin, who won
election in March, to state publicly how his administration will differ,
analysts said. They're specifically concerned about recent probes that
could lead to a reversal of state asset sales in the 1990s. 

The government also said this week it will investigate why the nation's
biggest oil companies, the main sources of tax revenue, are paying
different tax rates per ton of oil they produce. 

``The main threat is that business as a whole loses confidence in the
government,'' RAO Unified Energy Systems Chief Executive Officer Anatoly
Chubais, who was invited to the meeting but couldn't attend because of a
scheduled meeting abroad, told the Kommersant daily. ``There are already
signs of nervousness which are growing into panic.'' 

Kommersant, under the headline ``Scenario for the Oligarchs,'' said the
meeting is unlikely to result in any formal agreement. 

``Business will have a few questions, the most important of which is what
will be the new rules of the game,'' said Markov. ``The second issue they
will raise is for Putin to give a signal to law enforcement authorities to
slow down'' their probes. 

Raids, Probes 

The Kremlin's 90-minute `roundtable' meeting with business leaders,
scheduled to begin at 5 p.m. in Moscow, was initiated by Boris Nemtsov, a
parliamentary deputy, following police raids on the biggest media, metals
and oil companies for alleged tax evasion and fraud during state asset sales. 

Key names missing from the Kremlin's guest list include Media- Most
Chairman Vladimir Gusinsky, jailed in a high-security prison in June
without charges before prosecutors formally accused him of embezzlement.
Media-Most said yesterday the government dropped the case because of a lack
of evidence, and Gusinsky flew to Spain. 

Boris Berezovsky, a former parliamentary deputy, and a business partner
Roman Abramovich, who are linked to the OAO Sibneft oil company as well as
to several aluminum companies, also weren't invited, Kremlin officials said. 

The remaining guests make up a list of `Who's Who' in Russian industry and
represent a broad cross section of industry, from steel production to
banking to machine building. 

Tax Reform 

Putin's chief concern is to have businesses cooperate with government
efforts to overhaul the tax system to ensure increased compliance. 

Lawmakers approved his tax reform package this week, which lowers income
tax rates, reduces a Soviet-era tax on company revenue and cuts the amount
of social contributions that businesses must pay on behalf of their
employees. 

``They are not meeting to negotiate,'' said Economics Minister German Gref.
``It is an attempt to build a new social contract. We lowered taxes as much
as we could. Now it is up to the business to make the move.'' 

Analysts said the meeting could bring positive results if Putin and
business leaders address why industry has fallen behind the world's most
developed countries and how to develop sustained economic growth. Russia's
economy is growing at the fastest pace since the fall of communism,
expanding almost 8 percent in the first quarter from the same period last
year, though largely because of a weaker ruble and high commodities prices. 

``By recognizing business as the independent partner in the economic
revival, President Putin can fulfill his economic mission,'' AO Yukos Oil
Co. Chief Executive Mikhail Khodorkovsky, also invited to the Kremlin
meeting, said in an open letter to Kommersant. 

******

#3
From: "edward lucas" <esl@economist.com>
Date: Fri, 28 Jul 2000 
Subject: [EdwardLucas] From Edward Lucas--personal view from Moscow

The usual reminder: this is not an article from The Economist, just
my personal thoughts. Anyone who wants to receive them each 
week is welcome to write to me at edwardlucas@economist.com

It is surprising enough that Putin is so far ahead, and even more
surprising that he is winning on several fronts at once (oligarchs, 
governors, G-7). At a tactical level, the key to the whole thing is
his grip on the Duma. The deal between Unity and the Communists 
right at the beginning creates the veto power than outgunned the
Federation Council. 
More fundamentally, all power in Russia, both public and private,
is weak, in terms of ability to think up ideas, find good people, 
spend money sensibly, make things happen, stay focussed. If there is
a really well-functioning large organisation in Russia not run by 
or reporting to foreigners, I have yet to find it (possibly there is
some low-profile big company in consumer goods or software that I 
have not heard of: nominations welcome). That means that to win power
you have to be just a bit less weak than the other guy. Putin 
perhaps realised more than some foreigners did that his opponents
looked formidable only when compared to the previous landscape 
of power. 
When life in Russia restarts in September, Putin will have to
show how he is going to use the initiative and clout that he has 
gained. The danger is still that the new regime will prove as
selective, ineffective and authoritarian as in the past. On the
oligarchs, I 
still have the feeling that he is re-slicing the cake rather than
trying to establish new rules of the game. If Gusinsky was such a 
dangerous criminal two months ago that he had to be imprisoned, why
is he going free now? Clearly Gusinsky has made some 
concessions (or managed to sell NTV to a foreigner) and so he is off
the hook. This episode had nothing to do with rule of law; it was 
the political use of the criminal justice system to intimidate an
annoying opponent who has now backed down, or wriggled away.
To prove that he is being even-handed, Putin really needs to
have Mamut and Abramovich quailing too (although perhaps they are 
ring-fenced by the deal that brought him to power). To prove he is
being consistent and effective, we need to see new rules for big 
business (eg on new privatisations and on banking), applied fairly,
and over a decent period of time. 
I think ultimately the bureaucrats are the biggest problem for
any Russian reformer, and they are harder targets because there are 
so many of them and they are not as visible as the governors and
oligarchs. It is one thing to crack the whip and frighten people, it
is 
another to make them come to work each day willing and able to be
honest and efficient. And there are strong pressures the other 
way. My friend Tom Adshead (www.russianinsider.com) thinks we will
see some governors and bureaucrats shot dead by 
disappointed clients. 
In short, I think that the reform euphoria at the moment is
likely to be fairly short-lived. If Kasyanov is replaced by Kudrin or
Gref in 
the autumn, that will keep it going longer, though. Anyway the Hurrah
Chorus are now belting out their favourite numbers (Money 
Money Money). For any financier, I think it is an elementary
principle that you can't judge a reformed bankrupt's trustworthiness
by 
how he spends a windfall. When Russia goes through another dip in the
oil price (say $10 a barrel) and both public and private 
borrowers pay their debts punctiliously, then I will believe that the
moral climate has truly changed. But the familiar faces from pre1998 
are coming back. Clearly they reckon that this time they will get out
again in time. 

On that happy note, have a nice weekend

******

#4
The Economist (UK)
July 29-August 4, 2000
[for personal use only]
Chechnya
Falling apart 
M O S C O W 

CASUALTIES mount and military discontent increases, Russia’s puppet
government is a shambles, and mutterings about peace talks lead nowhere.
The war in Chechnya follows an all too predictable pattern. 

There is no sign that the rebels will give up. On the contrary, Russia is
still losing dozens of soldiers a week, even by its own official estimates.
On July 24th, three Russian soldiers were killed and 24 injured when rebels
attacked a military convoy in the capital, Grozny, in broad daylight. The
Russian general in command in eastern Chechnya, Alexander Popov, said this
week that he needed more, and better trained, forces to deal with the three
main guerrilla commanders on his patch. His checkpoints came under fire as
often as 20 times a day, he complained. That flatly contradicts the
Kremlin’s assertion that the war is over and the troops are going home. 

Russia says it has caught a bunch of Chechens planning to set off bombs in
Russian towns outside Chechnya. It announces daily spectacular successes in
its air strikes and reports that it has killed scores of rebels. It says it
has found a television transmitter used by Chechnya’s rebel president,
Aslan Maskhadov. And it also says that some of the 200,000 refugees who
fled to neighbouring Ingushetia are returning home. Even if true, these
modest successes are overshadowed by a relentless stream of Russian
casualties and most of all by the difficulty in making the republic’s
pro-Russian administration work. 

The latest problems involve the deputy head of this outfit, Bislan
Gantamirov. He was the Kremlin’s first choice as its top tame Chechen last
year—and was freed from prison, where he was serving a sentence for
embezzlement, in order to lead a pro-Russian militia. But his men proved
uncontrollable, even by Russian military standards, and he was sacked in
May. Re-appointed this month to take charge of the pro-Moscow police in the
republic, he promptly fell out with his boss, Ahmad Kadyrov. Formerly the
republic’s mufti, the top Muslim cleric, Mr Kadyrov supported Chechen
independence in the first war, from 1994 to 1996. A 200-strong band of Mr
Gantamirov’s militiamen raided Mr Kadyrov’s offices, claiming that rebels
might be hiding there, and then threatened to hold a parade. Mr Kadyrov
denounced this as “armed rebellion”. Only after President Vladimir Putin’s
main man in the region, General Viktor Kazantsev, banged both Chechens’
heads together did all sides declare the row over, at least for the moment. 

The feebleness of Russia’s grip on Chechnya was also illustrated by
interviews given recently to a television station in Azerbaijan by Mr
Maskhadov and by one of the top Chechen commanders, Shamil Basaev. This
infuriated Russia, because both men came across as confident and
determined, and because the journalists said they had managed to get the
interviews in the usual way. That is, by bribing Russian soldiers to bring
them safely to the right place. 

As a result, Russia has been bullying Azerbaijan more than usual. The
privately owned Azeri television company that broadcast the interviews
suffered mysterious power cuts. Without explanation, Russia closed its
border to Azeri trucks, threatening the livelihood of the many Azeris who
sell fruit and vegetables in Russia. Russia also claims that Azerbaijan is
funnelling hundreds of Arab and assorted Muslim mercenaries and volunteers
to Chechnya, along with $34m from the Saudi fundamentalist Muslim
terrorist, Osama bin Laden. It has produced no evidence for this;
Azerbaijan denies it. 

In his interview, Mr Maskhadov (pictured left) called for a ceasefire.
Russia says he is a criminal and must surrender. A glimmer of hope is that
a newly-arrived Russian official, General Vladimir Bokovikov, who once
served with Mr Maskhadov in the Soviet army, said he was ready for
“personal” contacts with him, and hinted at an amnesty. That idea was
quickly quashed by the Kremlin. But can Mr Putin and his advisers think the
current approach is working well? 

******

#5
gazeta.ru
July 27, 2000
Student Loans For Wealthy Only

As from July 25th Russia’s largest savings bank Sberbank will provide
student loans for higher education. However, the loans will be given mostly
to those who can afford to pay themselves. 

The loans will be granted to school leavers once they have successfully
passed all university entrance exams and students already studying in
higher education institutions. 

The loan agreements will be signed by the bank the student and his or her
parents or guardians. 

Sberbank’s spokesman Alexander Golovanov informed Gazeta.Ru of the terms
and conditions and the criteria the borrower has to meet in order to
receive a loan from the bank. 

Firstly, the student will have to provide conformation of acceptance from
the college where s/he studies or has been accepted. 

The borrower will have to provide a guarantee for the loan, such as
securities or property. It can also be a fully insured vehicle. Golovanov
stressed that family silver and family heirlooms will not be accepted as a
collateral. 

The borrower will also have to provide evidence of the declared income of
his or her parents or relative. In other words, a parent or a relative will
have to produce a letter certifying his or her legally declared salary.
What is more, that salary cannot be “very low”. 

If relatives or parents are not willing to take the risk of revealing their
incomes to Sberbank, they may turn to their bosses. Sberbank will also
accept credit guarantees from legal entities. 

Finally, the borrower must be a citizen of The Russian Federation and enter
a Russian educational institution. 

Alexander Golovanov added that Sberbank is currently working on another
loan scheme for students studying abroad. 

The loans will not exceed 75% of the total tuition fees and the borrower
will pay monthly interest on a loan. Loan repayment will be expected as
from when the student graduates or leaves the institution prematurely,
either by his or her own choice or expulsion. 

Students will have to pay 21% interest on the loan per annum. The rate may
be changed depending on the economic situation, including the Central
Bank’s refinancing rate or in the event of a leap in the rate of inflation,
Sberbank’s president Andrei Kazmin said in a statement. 

Tuition fees in Moscow’s leading institutes of higher education are as
follows: the Moscow Institute of International Relations (or MGIMO) charges
$5-8 thousand a year, The Higher School of Economics - $2-4.5 thousand,
Moscow State University - $1.5-4 thousand. 

Andrei Kazmin expressed his optimism about the scheme and said he believed
it would be popular among Russian students. He predicts the bank will grant
1.5 billion rubles worth of loans in the forthcoming academic year and
expects the first borrows to knock on the bank’s doors ant day now. 

However, many observers note that the new loan scheme is not as attractive
as it may first appear. Parents who cannot afford to pay for their
children’ education, as a rule, do not have well-to-do guarantors and
cannot provide the required collateral. 

Mila Kuzina, staff writer 

*******

#6
Moscow Times
July 28, 2000 
MEDIA WATCH: Rising Use of Infographics 
By Robert Coalson 

Smart newspaper designers have long argued that a good illustration can make 
a point far more effectively than any number of words. In Russia, this idea 
has just started catching on over the last couple of years. While there is 
obviously still a long way to go here in the development of so-called 
"infographics," there is considerable enthusiasm for the concept among 
journalists, and progress is made nearly every day. 

More and more of the nation's papers are including maps, diagrams and charts 
in their reports, a phenomenon that most likely will also help gradually make 
the texts of articles more precise and detailed. Since reporters are required 
to gather the data that is used to create a good infographic, they must train 
themselves to think of and ask the kinds of questions that lead to 
disciplined journalism rather than mere commentary. 

One regional paper I know of has been doing USA Today-style graphics of 
reader opinion polls regularly for about the last year. The editor of the 
paper, who originally resisted this innovation because he 
consideredillustrations to be just filler, tells me that this practice has 
done a lot to b ring his journalists closer to their readers. Some of his 
reporters now tell him this feature is one of their best sources of story 
ideas, and, as a result, the whole paper has become more relevant to local 
readers. 

Of course, careless or unscrupulous journalists can mislead with pictures at 
least as easily as with words. I remember being struck once by a graph in 
Kommersant that seemed to indicate that the value of Internet advertising 
sold in Russia in 1999 was nearly the same as it was in the United States. 
Only after studying the graph far more closely than the average newspaper 
reader ever would did I notice that the U.S. figure was presented in billions 
of dollars, while that of Russia was presented in millions. I hope this 
dis-infographic didn't lead any busy executives to start up Russian web sites 
in hopes of getting a piece of this illusory pie. 

On the other hand, though, creative journalists can use this art not merely 
to efficiently convey statistical information but also to provoke 
consideration of broader issues. An excellent example of this craft appeared 
last week in Moskovsky Komsomolets. 

In a stroke of genius, MK had the brilliant idea of comparing President 
Vladimir Putin's recent state of the nation address with Boris Yeltsin's 1995 
effort. The editors reasoned logically that in 1995, the nation faced many of 
the same issues it does today f specifically, economic development, 
corruption, conflict with Chechnya and center-region relations. Therefore, a 
comparison might give some indication of how the country's political and 
social climates have changed with the onset of a new regime. They ran their 
results under the headline, "Now Everyone Knows What Putin Wants." 

In 1995, for instance, Yeltsin mentioned Chechnya 18 times, while this year 
Putin referred to the republic just twice. Maybe the president thinks the 
issue is resolved. 

The most telling statistics that Moskovsky Komsomolets unearthed were related 
to civil-society issues. In 1995, Yeltsin referred to "democracy" 11 times 
and to "reforms" 13 times. Putin, in contrast, thought "reforms" worth 
mentioning only twice and made it through his entire speech without using the 
word "democracy" even once. 

Similarly, Yeltsin referred to "Europe" 13 times in 1995, most often in the 
context of Russia's rejoining the community of modern European nations and 
being further integrated into European affairs. Putin did not refer to Europe 
once. Yeltsin also specifically mentioned "human rights" three times in 1995, 
while Putin was silent on this subject. 

The impression created by this powerful comparison was magnified by a 
quotation printed alongside from Alexander Kuvayev, a high-ranking member of 
the Communist Party. Kuvayev particularly applauded the part of Putin's 
speech in which he criticized the nonstate media for its excesses, but he 
doubted whether the president had the "political will" to really create "a 
strong centralized state." 

In short, in just 20 or so square centimeters of space, MK managed to present 
provocative, although not conclusive, evidence of how the winds of change are 
blowing these days, while other papers devoted whole rolls of newsprint to 
articles speculating on the same subject. That's what a good infographic is 
all about. 

Robert Coalson works for the National Press Institute. The views expressed 
here are not necessarily those of NPI. 

******

#7
July 27, 2000
Obshchaya gazeta
Interview with Yury Luzhkov
by Anatoly Kostyukov
[translation for personal use only]

Q: Relations between the Federation Council and the State Duma were never
very affectionate. Yet this is the first time that the two chambers are in
an all-out confrontation. In your opinion, will the senators's revolt serve
to strengthen democratic developments in the country?

A: I cannot agree that this is a conflict between the FC and the Duma. No,
this is a clash between the FC and the Kremlin, the administration of the
president. The Duma merely executes the will of the administration, it is by
no means an independent actor. Likewise, I believe these are not just some
minor problems on the way to democracy, but a conflict with very grave
consequences for the nation.

Q: Do you still hold this opinion in spite of the fact that the Duma and the
Kremlin made significant concessions to the Federation Council? For eighteen
months, the senators will preserve their seats in the FC and the
parliamentary immunity.

A: This deferment does not change much. This fall, there will be regional
elections in three dozens of federation units, and by the end of the
eighteen-month period there will be little left of today's Federation
Council. By then, this will be an entirely different body - with little
political weight, with few opportunities to influence federal policies. The
compromises that were reached in the inter-chamber conference - related to
procedures of appointment and recall of regional representatives - were
purely technical, there was nothing to fight over.

Q: Don't you agree that regional leaders were not very persuasive in this
public debate over presidential draft laws? There was nobody except for
[Chuvashia president] Nikolai Fyodorov to argue on behalf of the senators.
The rest of your colleagues were either evading journalists or failing to
articulate their views.

A: But won't you admit that many of them may be simply afraid to speak out
in public? I remember one governor who was honest enough to tell me, under
Yeltsin: you can speak your mind, because you don't have to go to the
Finance Ministry to negotiate transfer funds, but anything critical that I
may say will cost me real money. People who have millions of voters behind
them have to be careful in expressing themselves.

Q: The regional leaders who rejected the presidential project of
administrative reform did not offer any alternative.

A: The alternative already exists, it does not need to be invented anew.
There is an established system of governing the federation, it ought to be
improved rather than broken down. I believe that the very idea of the
current reform is a mistake. There is no need for this reform, because the
Federation Council is in no way an obstacle for the president to fulfill his
program. It is not an opposition body, on the contrary, it was due to the FC
that an equilibrium of forces was established. Now suddenly someone
discovers that this is not a legislative chamber but "the party of
governors", which is so malicious that the state cannot be strong without
dispersing this body. Isn't this stupid? What kind of a joint party can I
have with, say, Starodubtsev or Rutskoy?

Q: Do you think that the reason for the FC's misfortune is that Putin didn't
find anybody else at the moment to fight against?

A: No, I don't think so. Our president is a smart man who weighs the pros
and cons of his actions. If he started doing this, it means that he has some
long-term plan. It is my hunch that the decision has been made to do away
with the Federation Council. After the composition of the chamber will be
changed, it will become clear that no one needs such a body with so little
authority, and that it should just be abolished. This will be done through
amendments to the constitution, after which a part of the FC functions -
such as strategic political planning, questions of war and peace,
appointment of key officials, delineation of internal administrative
borders - will be transferred to the State Council appointed by the chief of
state. The purpose of these measures is to concentrate power in the hands of
the president. I believe it is now clear to everyone.

Q: The first moves of the president were met with resistance on the part of
influential forces in society. Nevertheless he seems prepared to move
forward in the same direction. How would you explain this?

A: I think the president is too much in a hurry. He should tell himself that
he still has eight years in office ahead of him, and that there is no need
to try to solve all problems at once. By the way, I don't agree that all of
the president's initiatives have been met with resistance. This is not true.
I, for one, support the creation of federal districts. I think that a
three-level system of administration (federal authorities - districts -
federation units) is more effective than the two-level structure.

Q: How would you respond to the claim that the clash between the president
and the elite was predetermined, because society expects change from the new
leader and the elite does not want any change?

A: I believe that it reflects the desire to provoke a conflict. The
governors carry all the responsibility for providing daily life support for
population in the provinces. These are the people who saved the country from
the consequences of the radical excesses of Yeltsin's reforms. While the
absolute majority of the people was deprived of basic necessities and was
outraged by the federal policies, regional leaders managed to preserve
stability in society. It is not acceptable to play with these people as with
toys. First, they were told: "please take as much sovereignty as you can
cope with" [reference to Yeltsin's dictum], and now they are being ordered
to give back what they have taken. Moreover, since 1993
this is already a third model of the Federation Council that is being
implemented. Didn't we have enough experiments already? Is it acceptable to
revamp the system of national government every three years? And this occurs
just at the moment when the first signs of improvement in the economy
appeared and political conflicts have just calmed down.

Q: How far, do you think, the current rejection of the president's
initiatives may go? Will the Federation Council vote down the second half of
the Tax Code, and then the 2001 budget bill?

A: True, it is difficult for the regional leaders to accept the tax and
budget innovations proposed by the government. This is a typical example of
a conflict initiated by federal authorities when there was no ground for
conflict. We just got the budgetary federalism more or less established,
with the regions finally obtaining their title to 50 percent of the taxes.
And now their share is being reduced to 30 percent. What's the point? It is
clear that now almost all the leaders of federation units will have to go to
the government and the Kremlin to solicit money. I guess, this is an easy
way to secure their obedience.

Q: Assuming you vote down the tax code and the budget, what is next? Should
we expect a presidential decree dissolving the Federation Council for
sabotage?

A: Our constitution does not have such a provision. And I still believe,
despite everything, that the president will not go for anti-constitutional
decisions.

******

#8
Date: Thu, 27 Jul 2000
From: Professor Yuri Luryi <yluryi@julian.uwo.ca> 
Subject: Re: 4427-Gusinsky and the Russian Criminal Procedure Law. 

So, Vladimir Gusinsky was arrested inspite of the lack of evidence of any
crime,
was jailed inspite of any evidence of his guilt, was humiliated by the
prosecutors
inspite of lack of any evidence of the presence of any crime, was deprived
of his
right to travel inspite of any lawful reasons. And Andy Wiles, "who helps
manage about $450 million in Eastern European funds at Regent Europe Asset
Management Ltd" explains to us that "This shows the Russian legal process is
working properly and it is being followed, not abused as some people have
said"!
What "legal process" does he have in mind? Business Law? Family Law (when one
spouse is sometimes blamed by the other, inspite of the lack of proof)?
Yet, how about the Russian Code of Criminal Procedure? Can the procurator
INITIATE any criminal case without lack of proof of the very crime commited?
Can the prosecutor detain or arrest anybody without lack of two evidence -
first, the commission of crime, and, second, the guilt of a person (if the
fact of the very crime existance has been esablished)?
Can the prosecutor INDICTE any person without lack of evidence of that
person's guilt?
There are, I believe, some jurists among the members of David Johnson's
popular List. It would be interesting and even (taking into account Andy
Wiles'
strange opinion about "Russian legal process") useful to find out their
opinions.

******

#9
Central Europe: EU Warns Candidates Against Links With 'Nomenklatura'
By Breffni O'Rourke

European Union enlargement commissioner Guenter Verheugen is warning Central 
and East European candidate countries about what he calls damaging links 
between the old political nomenklatura of communist days and new economic 
structures. RFE/RL correspondents Breffni O'Rourke and Ahto Lobjakas examine 
Verheugen's concerns. 

Brussels, 27 July 2000 (RFE/RL) -- Guenter Verheugen, the European Union 
commissioner in charge of eastward enlargement, has told candidate countries 
to keep communist-era nomenklatura out of their economies and politics.

Verheugen delivered the unusually blunt warning in Brussels this week during 
a presentation of an enlargement-related study.

He said not all candidate countries satisfied the so-called "Copenhagen" 
criteria for enlargement: democracy, the rule of law, respect for human 
rights, and respect for and protection of minorities. The economic criteria 
include the need to have a functioning market economy as well as the ability 
to cope with competitive market pressures within the EU.

He added that in some candidate states, there are what he described as 
"damaging" links between the old political nomenklatura and new economic 
structures.

Verheugen says the commission will keep a close eye on developments and 
publish its findings in the annual progress reports on candidates, expected 
in October. He did not say which candidate countries he had in mind. 

Verheugen's spokesman Reijo Kemppinen tells RFE/RL that Verheugen's warning 
is not an off-hand remark and should be taken seriously. Verheugen voiced 
similar concerns a week ago (20 July) in London. Speaking at a lunch attended 
by the ambassadors of all 13 candidate countries -- including Cyprus, Malta, 
and Turkey -- he said the EU would not tolerate a situation where certain 
political circles controlled parts of the economy. This observation, he said, 
did not apply only to the Ukraine or Russia, but also to some Eastern 
candidates. Again, Verheugen did not specify which countries he had in mind. 

Krassen Stanchev, the director of the Bulgarian Institute of Market Economy, 
says Verheugen may well be concerned by what he has seen in the negotiation 
process with the candidates:

"He is summarizing the general impression from the negotiation procedures, in 
that you have on Brussels' part an accumulation of experiences which creates 
a negative impression, a feeling of something wrong going on, that 
negotiations on harmonization of laws and other things is taken more as a 
ritual instead of being really implemented."

Stanchev says in a number of Central and East European countries, when the 
old system collapsed, the former political establishment retained much 
decision-making and economic power. He says participation of the broader 
society and new business elements in the planning of reform has been 
relatively limited. 

Another analyst, Brussels-based Nicholas Whyte of the European Policy Center, 
says in terms of the over-concentration of economic power, Slovenia is a 
clear example: 

"Nobody looks at Slovenia and says that's an undemocratic country. On the 
other hand, the economy is not as open as it could be, and it is a question 
of the extent to which the EU's Copenhagen criteria are observed; namely that 
there should be a functioning market economy. One of the things for which 
Slovenia has been regularly criticized in the EU accession reports is that 
control of the economy is concentrated in too few hands and that it is not 
open for most Slovenians themselves to break into, let alone sufficiently for 
investment from the outside world."

Stanchev also sees "old-style" thinking as a barrier to economic progress. He 
says in Bulgaria, for example, the authorities are incapable of understanding 
and promoting necessary projects like joint ventures in the electrical power 
sector. He says other candidate countries also offer examples of how the 
presence of the old-style mentality has complicated progress.

As to what is to be done, Stanchev says he does not see a "quick-fix" 
solution. But he says there are some transparency measures which can be taken 
as essential steps. He lists the measures:

"These standards are: openness of government decision-making, access to 
government information, and preliminary impact analyses of regulations. And 
gradually I think these will open-up the government process and will set new 
standards for administrations to meet."

Analyst Whyte says the old nomenklatura system cannot in the long run survive 
in an open and free market system. Therefore, he notes, the development of a 
healthy entrepreneurial culture is a basic requirement. 

He also says that the long process of EU accession itself will, to a certain 
extent, break down the problem in time. 

******

#10
Date: Thu, 27 Jul 2000
From: Patrick Armstrong <GP.Armstrong@debbs.ndhq.dnd.ca> 
Subject: FOREIGN MUJAHADDIN IN CHECHNYA

I just noticed the Economist of 8 July 2000 in which there is a piece
“Are foreigners fighting there?” which pooh-poohs Moscow’s claim that
lots of foreigners are fighting in Chechnya (I don't remember whether it
was in the JRL). With a little more effort on the part of the writer he
could have found more than the four foreigners that he mentions.

He should look at the jihadist website (http://www.qoqaz.net.my) and
look at “Diary of a foreign mujahid”. The entry for 17 Jul 2000 gives
the names of ten foreign mujahaddin (including the author “Brother X
(Norwegian National)”). The report gives a rather different view of the
war than is being reported in the West.

“Brother X” describes a patrol of eight foreigners of whom it appears
four are so badly wounded they are left to die and at least three others
are wounded. He also mentions “two Chechens” but doesn’t give any
indication of their fate.
Here are the names he gives, where they’re from and their fates.

Abu Jafar, apparently the leader and Abu Yassir Jeddawi (Arabian
Peninsula) survive the patrol apparently only lightly wounded. Khalil
At-Turki (ethnic Kurd from Turkey) and Zakariyyah (At-Turki) are so
badly wounded by a claymore mine that they are left to die. Muthanna
Al-Najdi (Arabian Peninsula) is shot and left to die. Khalil As-Soori
(Syria) is mentioned as another Shaheed (martyr). Abu Asim At-Tabuki and
Yasser are both wounded. Field Commander Abul-Waleed is mentioned as
being unable to come to the aid of this patrol when they run into
Russians. Together with “Brother X”, that’s ten foreigners mentioned by
name. Further reading will give more names, biographies of Shaheeds and
so on.

This is an important source for anyone interested in the war in
Chechnya.

Patrick Armstrong
National Defence Ottawa

*******

#11
Financial Times (UK)
28 July 2000
Editorial
Putin's power

Vladimir Putin is stamping his authority on the Russian presidency. Less than 
three months after his inauguration, he has curbed the power of Russia's 
regional governors and oligarchs, and pushed through the most significant tax 
reform package the country has seen for many years. 

President Putin started with the advantage of a strong personal mandate from 
his convincing election win. He has capitalised on this to the full, by 
taking steps to consolidate his power. 

Russia's regional governors have been the main targets. This week, under 
intense pressure, the governors approved a reform which will deprive them of 
an automatic right to a seat in Russia's upper house. And Mr Putin has also 
gained important economic leverage. Under the tax reform package, also 
approved this week, revenues which were previously retained by the regions 
will now be paid into a central fund - to be distributed as Mr Putin chooses. 

Mr Putin's crackdown on Russia's oligarchs, the business barons who control 
vast swathes of the economy, has been more conspicuous but is perhaps of less 
substance. The raids on the offices of many of Russia's largest companies, 
and the recent arrest (and subsequent release) of media magnate Vladimir 
Gusinsky, represent a warning to the oligarchs not to cause trouble, rather 
than a removal of any of their powers or privileges. 

The question is how Mr Putin uses his power. The tax reform package is an 
encouraging sign. Russia's tax system is to be significantly simplified, and 
many tax rates will be cut. The burden on companies will be reduced, 
dampening the incentive to dodge taxes. And crucially, the recent 
high-profile tax raids are a sign that, at last, more efforts will be made to 
enforce payment. 

Progress on taxation, though, does not remove the concerns about Mr Putin's 
presidency. There are doubts about whether Mr Putin's anti-corruption drive 
will really be even-handed. He has his own inner circle - made up of members 
of the security services, as well as influential figures from the Yeltsin era 
- who will certainly pressure the President to grant them any favours, or 
even assets, that may be taken from the oligarchs. 

And while Mr Putin's authoritarian tendencies may, for now at least, be good 
news for economic reform, they bode far less well for progress on human 
rights. 

Russia's new president has made a welcome start in the task of modernising 
Russia's corrupt and distorted economy. 

The greatest risk is that Mr Putin's success in taming his opponents could 
lead to abuse of the very significant power he now holds. 

******

#12
Segodnya
July 28, 2000
[translation from RIA Novosti for personal use only]
THREE GOVERNMENTS - THREE SOURCES OF CONTRADICTIONS
Political Scientists Are Bewildered by Swift Changes in 
Russian Politics
By Avtandil TSULADZE

The Round Table, which took place at the Moscow Carnegie 
Center, summed up the results of the reform of the political 
system of Russia.
State Duma deputy Vladimir Ryzhkov came up with sharp 
criticisms. He said that the Federation Council had surrendered 
by voting for its elimination. With regard to the Tax Code, 
which has been adopted, Ryzhkov said that the tax reform, with 
the exception of some liberal ideas, is of a centralized 
character.
Regions will lose about 30% of their profits. The day before 
the Federation Council was to vote the Kremlin worked in it so 
actively that Senators eventually voted for everything they 
were offered. Putin won a complete victory and the government 
received all it wished. According to Ryzhkov, the present 
reform will lead to a sharp reduction of donor-regions, the 
number of which increased from 9 in 1996 to 18 in 2000. The 
deputy predicts that there will be only seven of them next 
year. He also informed the conference that business had already 
started having problems at the regional level. In his opinion, 
parliament has lost its importance as an independent political 
power center. Putin has a stake on a bureaucratic vertical to 
carry out market reforms with its help. Ryzhkov thinks it is a 
wrong strategy, and eventually it will be as Chernomyrdin once 
said: "We wanted things to be better but everything turned out 
as usual." Ryzhkov said that reality outpaces the worst of his 
expectations: there are no centers of restraint and the will to 
resist.
In the opinion of SPS deputy Yuli Nisnevich, a change of 
an era should be accompanied by a change of political subjects. 
Now we watch the struggle between the old and the new. He 
thinks that there is no way but the strengthening of the 
center, even though this process has a tendency towards a 
police state.
In the opinion of Sergei Markov, Director of the Institute 
of Political Research, all what is happening is quite 
legitimate.
The issue at hand is the consolidation of the regime of 
"manageable democracy" based on the ideology of "liberal 
patriotism." Very acute now is the problem of Russia's survival 
in global competition. Political storms will continue in the 
country as long as things are tightened up. Stability will set 
in next year. According to Markov's information, the Putin team 
comprises three governments - a political government, an 
economic government and a security government. Relations 
between them are a very serious problem for the President. 
Another problem is that Putin's opponents are not numerous but 
very well organized and structured, while his supporters are 
numerous but disorganized politically. The uncertainty of the 
situation is further aggravated by the circumstance that an 
announcement about new rules of the game has been made but the 
rules have not been announced. There is a vacuum of power in 
which petty bureaucrats begin to adopt decisions.
Olga Kryshtanovskaya, a sociologist, thinks that Putin has 
been acting as an "operative." He has the aim and the legend 
under the cover of which he is trying to achieve this aim.
Putin's mind is split; he was reared by a communist system in 
the womb of the KGB and worked with democrats after the USSR's 
disintegration. He uses liberal economists and spin doctors for 
operational work. He pursues the one and only goal - to take 
power into his hands. He creates his own base, thereby 
weakening his rivals. By crushing the Federation Council, the 
President turns governors from politicians into pure economic 
agents. The struggle against oligarchs is being waged to get 
hold of the financial levers of power. The strengthening of 
"power structures" gives him the power lever. Kryshtanovskaya 
also stresses that there is skilled operative work to diversify 
Putin's image. Bureaucratic officials feel that their time has 
come, because there is no "personnel grinder" under his regime.
Power structures are getting signals that Putin is "their kind 
of guy." Words about reforms are intended for liberally minded 
Russians and the global community. Pensions are raised for the 
aged. In fact, Putin has taken over the communist electorate.
Communists are confused. The "map" of parties will begin to 
change in the future: there will be one part and several 
pseudo-parties controlled by the authorities.
The speakers were unable to arrive to a common appraisal 
of what is happening. However, practically all of them are sure 
that there will be certainty very soon. But no one can say how 
specifically it will manifest itself.

******

#13
Former communist broadsheet l'Unita folds

ROME, July 28 (AFP) - 
Italy's former communist daily manifesto l'Unita, terminally ill for years, 
closed Friday cribbled with debts, 76 years after it first appeared.

The front page of Friday's last edition carried a facsimile of its first 
front page which hit newsstands February 12, 1924.

The paper also ran four other facsimilies, including one of its March 16, 
1978 issue after the kidnapping of former premier Aldo Moro by the Red 
Brigades.

Its headline that day read: "The enemies of democracy will not win."

The other facsimiles were an "Addio" (farewell) to charismatic communist 
party leader Enrico Berlinguer on June 13, 1984 and "The most beautiful day 
for Europe" on November 11, 1989 after the fall of the Berlin Wall.

The paper also reprinted its August 20, 1991 frontpage with the headline "The 
end of a great dream" after the putsch against then Soviet President Mikhail 
Gorbachev.

Closing down l'Unita, founded by Antonio Gramsci, is "a tragedy, a tragedy 
for the left," said l'Unita chief editor Giuseppe Caldarola in the paper's 
final editorial.

"Did this really have to happen? We are dying of debts, we are dying because 
of an absurd financial crisis," he added.

L'Unita lost more than 70 billion lire (more than 36 million euros, 33 
million dollars) over the past three years and the number of readers has 
dropped to less than 50,000.

There were some signs Friday that the newspaper might be re-edited at a later 
date, but Caldarola said if so it would be without him and many others.

The death knell for l'Unita comes as Italy's governing left is going through 
a serious crisis. Legislative elections, due by April next year, are expected 
to see center-right parties return to power.

L'Unita had been the main sheet of the Democrats of Left (DS) which, since 
1996, has been the principal party in the center-left alliance backing Prime 
Minister Giuliano Amato, after the breakup of the old communist party (PCI) 
in the early 1990s.

The PCI was the most powerful communist party in western Europe during the 
cold war years but also the first to distance itself from Moscow's hardline 
course, reinventing itself as a so-called euro-communist party under 
Berlinguer.

But Caldarola on Friday accused the DS of having stood by in silence as the 
paper entered its financial crisis.

"If the left does not go back to its roots and does not take pride in them, 
the Unita case will foreshadow other tragedies," he warned.

L'Unita's 195 journalists and employees all lost their jobs.

*******