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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

July 29, 2000   

This Date's Issues:   4430


Johnson's Russia List
#4430
29 July 2000
davidjohnson@erols.com

[Note from David Johnson:
DJ: I am experimenting with a very short "Subject" line to see if that makes a difference for those who have had a problem receiving JRL recently. Please give me feedback. I plan to
restore the longer "Subject" line.
1. Reuters: Putin reassures Russia's "oligarchs"
2. Reuters: Kremlin statement on meeting with businessmen.
3. Moscow Times: Gregory Feifer, Oligarchs Are 'Sick of Being Oligarchs' 
4. Reuters: QUOTES-What they said after Kremlin meeting on business.
5. Jamestown Foundation Monitor: TAX AUTHORITIES AUDIT BEREZOVSKY-CONTROLLED TV STATION.
6. Edward Lucas: re JRL 4429/Armstrong/Foreign Mujahaddin in Chechnya.
7. The Globe and Mail: Geoffrey York, Putin tightens his grip on Russia. (re Nizhny Novgorod)
8. RFE/RL: Paul Goble, Aiming At The Wrong Target. (re Muslims)
9. Reuters: Lower status for Russia rocket force ``unavoidable''
10. The New Republic: Lawrence Kaplan, What Dick Cheney has been doing all these years. From Russia With Loans.
11. Moscow Times: Andrei Zolotov Jr., Gusinsky's Freedom Sparks Speculation.
12. The Wall Street Journal Europe editorial: If You Can't Beat Him...
13. AP: Katyn Massacre Memorial Opens.]

******

#1
Putin reassures Russia's "oligarchs"
By Patrick Lannin

MOSCOW, July 28 (Reuters) - President Vladimir Putin reassured the country's 
business elite he would not overturn post-Soviet privatisations on Friday, 
allaying one of the main fears of corporate Russia. 

Company bosses also said they wanted to stop being known disparagingly as 
"oligarchs" and have equal rules for all. 

Liberal politician Boris Nemtsov said Putin gave the assurance during talks 
in the Kremlin with 21 of Russia's key business leaders intended to calm 
tensions generated by legal proceedings launched against big companies. 

"The president clearly and concisely said there would be no review of the 
outcome of privatisations," Nemtsov, who organised the Kremlin meeting, told 
reporters. 

Calling into question the selloffs of the 1990s has been one of the key 
concerns of the business elite. 

"The oligarchs are tired of being oligarchs," Nemtsov added. He was seconded 
by one leading businessman, Vladimir Potanin of the huge Interross holding. 
"I confirm that," he said. 

Privatisations under former President Boris Yeltsin have been criticised for 
allowing corporate bosses, known as "oligarchs," to become wealthy by 
acquiring industries cheaply. 

Putin, elected in March, has said that some insiders exploited connections to 
amass huge personal fortunes, like anglers "fishing in murky waters." He 
vowed to distance himself from the small group that built empires under 
Yeltsin. 

BUSINESS GROWN FEARFUL 

Some business leaders have also grown fearful this year after pressure on 
media boss Vladimir Gusinsky and the launch of tax cases against car maker 
AvtoVAZ and oil giant LUKOIL <LKOH.RTS>. Prosecutors have dropped the 
Gusinsky proceedings. 

Nemtsov said he was cautiously optimistic after the meeting that a new base 
had been laid for business relations in Russia. Potanin agreed that 
businesses wanted to act according to the law rather than benefit from inside 
contacts. 

"Business has at last understood that everything we gain by exploiting 
various holes in the law is much less benefit than the loss we suffer because 
such methods exist," said Potanin, owner of the huge Norilsk Nickel 
<NKEL.RTS> metals plant. 

He said Russia was "moving to new rules and new understandings." 

Despite the fine gloss put on the meeting by both sides, it was not clear 
whether recent antagonism would die down. 

The Kremlin said in a statement that Putin and the business leaders had 
agreed to hold regular meetings and Potanin said the entrepreneurs now saw 
the authorities as allies. 

Yet some of the most prominent members of the corporate elite who have been 
particularly at odds with Putin were not there, notably businessman Boris 
Berezovsky, oil and metals magnate Roman Abramovich and media baron Gusinsky. 

Berezovsky, who was linked closely to Yeltsin, last week resigned as a member 
of the lower house of parliament in protest against Putin's attempts to curb 
the powers of regional leaders and what he called a "totally destructive" 
attack on business. 

NO GRAND CONCLUSIONS 

Despite Nemtsov's statements, the head of the Uralmash plant said no grand 
conclusions were drawn at the meeting. But Kakha Bendukidze, whose plant is 
at the foot of the Ural mountains, thousands of miles from Moscow, called the 
talks useful. 

Putin was earlier shown on Russian television opening the meeting in a 
glittering hall by calling for a discussion of relations between business and 
the authorities, which he said had been "excessively politicised." 

"I want to draw your attention to the fact that you built this state 
yourself, to a great degree through the political or semi-political 
structures under your control," he told the group, a roll call of Russia's 
business elite. 

"So there is no point in blaming the reflection in the mirror. Let us get 
down to the point and be open about what is necessary to do to make our 
relationship in this field civilised and transparent." 

The president, joined by Prime Minister Mikhail Kasyanov and Kremlin chief of 
staff Alexander Voloshin, gestured to business leaders and asked them to 
speak one by one, from right to left. 

Nemtsov said Putin had answered four questions, addressing laws to reduce the 
tax burden on businesses and changes to customs rules. He also spoke about 
the chances of joining the World Trade Organisation. 

*******

#2
TEXT-Kremlin statement on meeting with businessmen

MOSCOW, July (Reuters) - President Vladimir Putin on Friday met 21 of 
Russia's most influential businessmen to calm tensions generated by legal 
proceedings launched against major businesses. 

Following is the text of a Kremlin press service statement issued after the 
meeting (translation by Reuters, about 300 words): 

The President of the Russian Federation, V.V. Putin, today held a meeting in 
the Kremlin with the heads of some of the largest companies and commercial 
banks in Russia. 

Discussions at the meeting centred on the role of businesses in strengthening 
Russia's statehood, maintaining social stability and preserving and expanding 
national wealth. 

The representatives of Russian business voiced concern about the rapid ageing 
of industrial machinery and spoke in favour of stepping up investment to 
upgrade production equipment. 

The president reiterated his position that authorities would not review the 
outcome of privatisations. At the same time, he said it was unacceptable for 
competing companies to try to use state structures and law enforcement 
agencies to achieve their goals. 

Participants in the meeting reconfirmed their vision that it was necessary to 
continue reforms in the Russian economy, aimed above all at improving living 
standards in the country. 

At the end of the meeting, a decision was taken to set up a permanent 
mechanism of consultations between the authorities and entrepreneurs. 
Authoritative and representative bodies, grouping the leaders of Russian 
business, will take on the responsibility of putting forward agreed positions 
at regular meetings with the president of the Russian Federation and the 
government of Russia. 

******

#3
Moscow Times
July 29, 2000 
Oligarchs Are 'Sick of Being Oligarchs' 
By Gregory Feifer
Staff Writer

President Vladimir Putin told 21 of the country's most influential 
businessmen Friday that the government would not revisit post-Soviet 
privatization deals. 

The Kremlin meeting was held to assuage fears of government reprisals, and 
participants emerged smiling and joking. Boris Nemtsov, who came up with the 
idea of the meeting, said it brought an end to the era of the oligarchs. 

"A final end has been put on the last 10 years of capital accumulation," said 
Nemtsov, head of the State Duma's Union of Right Forces faction. "The 
president said clearly that there would be no reviewing of privatization. 

"And the oligarchs have become sick of being oligarchs," Nemtsov added during 
a news conference after the meeting with several of the participants. "They 
want to be law-abiding taxpayers." 

The participants issued a joint statement that said the president would 
guarantee his support and complete cooperation with companies and banks 
"whose actions function in the state's interests." 

The business leaders said they were satisfied that the president heard out 
their concerns during the meeting, which ran 40 minutes over its originally 
scheduled two hours. 

Echoing the opinion of several of his fellow businessmen, Yevgeny Zimin, head 
of Vimpelcom telecom company, said, "I liked the meeting. I liked the honesty 
and goodwill of the way in which the president conducted the meeting." 

"The meeting was very successful," added Vladimir Potanin, whose Norilsk 
Nickel was at the center of a dispute over privatization with the Prosecutor 
General's Office this month. 

Asked whether the business leaders could take Putin for his word, Nemtsov 
said, "I know words are words and deeds deeds, but it was the president of 
the Russian Federation speaking." 

During the meeting, Prime Minister Mikhail Kasyanov proposed forming a 
council of industrialists under the aegis of the prime minister that would 
facilitate dialogue between business leaders and the presidential 
administration and government. 

"Putin said he wants regular meetings with businessmen to discuss important 
problems," Potanin said. "That's what we wanted to hear: Does the state need 
to hear our voice?" 

The meeting follows a crackdown by prosecutors and other law enforcers on the 
business elite that included the arrest of Vladimir Gusinsky, founder of NTV 
television, which has irked the Kremlin with its critical coverage. Tax 
police also accused No. 1 oil company LUKoil and top carmaker AvtoVAZ of tax 
evasion. 

Nemtsov said he asked the president what steps would follow the recent 
crackdowns. "Putin replied that the law enforcement system must work properly 
and no one can get in its way," he said. 

In return, the oligarchs promised to obey laws and play on a level field. 
"The oligarchy is over in Russia," Nemtsov quipped. "Ask Potanin." 

Potanin smirked in reply. 

But when asked what a level playing field constituted, the businessmen were 
unanimous in their vague explanation that it meant closeness to political 
authorities. "Everyone agreed that business has to turn away from political 
power and the authorities can't ask anything of business," Nemtsov said. 
"That requires cardinal reforms. The bureaucracy needs new people whose 
salaries are much higher." 

"We have to confront inspectors checking us almost every day," said Zimin, 
who proposed private companies and international auditors take over some of 
the government's duties. 

"There's no quick fix," said Kakha Bendukidze, general director of the 
Unified Machine Factory holding. "Political power in the economy must be 
minimized and that will reduce opportunities for businessmen to be close to 
power. 

"Meanwhile, the fear remains. Unless the state calls off its tax inspectors  
any businessman is a potential criminal," he said. 

The government's recent crackdowns have been seen as part of Putin's promise 
to level the playing field by ending incestuous ties between officials and 
the oligarchs, who generally enjoyed complete immunity in return for 
political loyalty under the administration of former President Boris Yeltsin. 

Some critics say the government pressure is evidence Putin is attempting to 
create a police state. Yet others have said the actions have been aimed 
against rivals to Kremlin-aligned oligarchs. 

Topics at the Friday meeting included discussion about strengthening the 
state, social stability and investment in the country's aging industrial 
plant, a presidential press service statement said. 

The business leaders welcomed the president's promise during the meeting to 
strengthen the country's ailing legal system. "The president said there would 
be reforms that would provide a truly independent court system," Nemtsov 
said. 

Alexei Mordashov, head of steel producer Severstal, voiced caution. "It's 
difficult to ascertain the results of the meeting," he said. "Only time and 
concrete actions will tell." 

Glaring exceptions from the meeting were Gusinsky and Sibneft oil tycoons 
Boris Berezovsky and Roman Abramovich. 

Gusinsky flew to Spain on Wednesday immediately after prosecutors announced 
they had dropped all charges against him. 

Berezovsky, a behind-the-scenes Kremlin power broker, helped bring Putin to 
power, but has recently criticized the president for threatening democracy. 

"It would have been better if Gusinsky, Berezovsky and [former Sibneft head 
Roman] Abramovich had taken part but the Kremlin did not invite them," 
Nemtsov said. 

While he was absent from the meeting, Berezovsky's interests were represented 
by Sibneft chief Yevgeny Shvidler and Russian Aluminum head Oleg Deripaska. 
Berezovsky partially controls both enterprises. 

Berezovsky has called for an amnesty for those who conducted business during 
the chaotic post-Soviet transition last decade, saying every major 
businessman had to have broken the law at some point in order to stay in 
business. 

The meeting's participants said the question of amnesty had been addressed, 
but not answered. 

Potanin said Putin told the meeting that he was facing the difficult task of 
building the state. "He told us that he wants us to be his helpers in that 
framework," Potanin said. 

Russian media on Friday voiced skepticism the meeting would result in any 
changes for the business leaders. 

Kommersant newspaper, echoing a general opinion, wrote on Friday that Putin 
had already "won round one" in his tryst with the oligarchs. "The president 
does not intend to be an equal partner with big business, but an elder one." 

"The meeting's goal, as the Kremlin's directors joke, is to 'change the 
[business leaders'] diapers' and 'wipe away their tears,'" Vedomosti 
newspaper opined. 

*******

#4
QUOTES-What they said after Kremlin meeting on business

MOSCOW, July 28 (Reuters) - President Vladimir Putin reassured business 
leaders on Friday he would not overturn the privatisation deals of the 1990s, 
criticised by some economists for allowing entrepreneurs to amass huge wealth 
on the cheap. 

Here are some of the key quotes after the meeting in the Kremlin, called to 
ease tensions between the authorities and big business after recent pressure 
on some companies. 

BORIS NEMTSOV, LIBERAL POLITICIAN WHO ORGANISED THE MEETING: 

"The president clearly and concisely said there would be no review of the 
outcome of privatisations." 

"The oligarchs are tired of being oligarchs," said Nemtsov, who himself first 
started using the term to describe the businessmen who amassed great wealth 
in the post-Soviet era. 

VLADIMIR POTANIN, HEAD OF THE INTERROS HOLDING: 

"I confirm that," he said, seconding Nemtsov's words. 

"It is not that I have lost my fear (of the authorities) after this meeting. 
I was uncertain and worried about the development of the situation. The main 
uncertainty was whether we were being heard and whether in general we 
businessmen were needed as a class." 

"On this main question I received an answer. We can be useful to the 
country." 

MIKHAIL KHODORKOVSKY, HEAD OF OIL FIRM YUKOS: 

Interfax news agency quoted him as saying his negative opinion on the risks 
of investing in Russia had decreased. He was quoted by Itar-Tass news agency 
as saying the discussions in the Kremlin had been important and necessary. 

KAKHA BENDUKIDZE, HEAD OF URALMASH MANUFACTURING FIRM: 

He said the discussion had been of a technical nature but still useful. He 
called for fresh tax cuts adding: "Without a tax cut, any Russian businessman 
can become a criminal." 

OLEG KISELYOV, HEAD OF LEADING BANK, IMPEXBANK: 

"The problems of the state and business will not be solved in a revolutionary 
way...Before us sat a most reasonable and capable man (Putin), a man able to 
understand the situation." 

*******

#5
Jamestown Foundation Monitor
July 28, 2000
Authorities suddenly interested in Berezovsky and Abramovich entities

TAX AUTHORITIES AUDIT BEREZOVSKY-CONTROLLED TV STATION. The tax
authorities 
have begun an audit of TV-6, one of the outlets in the media empire 
controlled by Boris Berezovsky. The federal tax police yesterday visited 
the television station's offices in Moscow, after which its general 
director, Aleksandr Ponomarev, said that the visit was a surprise, but 
adding that "it is not in the tradition of the tax police to warn about 
their arrival in advance." Ponomarev said, however, that the audit may be 
routine, given that the station was previously audited in 1998, and that 
there was no reason "thus far" to raise a fuss about "an attack on our 
freedom." Ponomarev said the station had presented the tax inspectors with 
financial documents, as required by law, and that no materials had been 
seized (Russian agencies, July 27).

Given that the tax police showed up at TV-6 just as the charges against 
Media-Most's Vladimir Gusinsky were being dropped, and on the eve of 
President Vladimir Putin's roundtable meeting with eighteen oligarchs, it 
is difficult not to conclude that the raid was at least in part designed to 
illustrate the Kremlin's determination to put all the oligarchs equally in 
their place. At the same time, Deputy Prime Minister Aleksei Kudrin, who is 
also finance minister, ordered the tax authorities and other federal 
agencies to look into allegations that certain oil companies--above all, 
Sibneft, which is said to be controlled by Roman Abramovich, the State Duma 
deputy and Kremlin insider--have been using "special methods" to evade 
taxes. The Finance Ministry recently reported that Sibneft was paying many 
times less tax than other leading oil companies. It also reported that the 
Tyumen Oil Company (controlled by the influential Alfa Group), Yukos 
(controlled by leading oligarch Mikhail Khodorkovsky) and Slavneft had been 
significantly underpaying taxes. Kudrin's demarche came on the heels of 
accusations that the Kremlin has been giving certain oligarchs, 
particularly Abramovich, preferential treatment (see the Monitor, July 27).

*******

#6
Date: Fri, 28 Jul 2000 
From: Edward Lucas <edwardlucas@economist.com
Subject: re JRL 4429/Armstrong/Foreign Mujahaddin in Chechnya

As the author of the Economist piece a couple of weeks ago pooh-poohing
the Kremlin's claims on foreign mercenaries and volunteers in Chechnya,
I'd like to say in response to Patrick Armstrong (JRL 4429) that I never
said that there were _no_ muslim volunteers there--just that there seem
to be a lot less than the Kremlin says. The meagre haul of four or so
foreigners captured alive seems to me to be strikingly low figure, and I
wanted to highlight it.

I certainly didn't mean to imply that the arabs were in the same
fictional category as the Baltic female snipers. Several people have
written to me complaining about the piece, and I can see that it may
have sounded too dismissive and flippant (a hazard of the Economist's
prose style). Had space permitted, I might have included something from
the qoqaz.net website, although I wonder whether there may be an element
of hype on that side too--it may also suit some people in the Islamic
corner to exaggerate the role outside volunteers are playing.

But anyway I think the basic point still stands. The Kremlin hypes the
muslim involvement, both to bolster its claim that this war is a fight
against international terrorism, and also to play on deepseated Russian
fears of the islamic hordes to the south and east. In fact, this is
basically a colonial war against a nation that never wanted to be part
of Russia.

Edward Lucas
Moscow correspondent
The Economist
edwardlucas@economist.com

******

#7
The Globe and Mail
July 28, 2000
Putin tightens his grip on Russia
Tough reforms are designed to put the fractious provinces
on notice that Moscow is still the central authority
GEOFFREY YORK

Nizhny Novgorod, Russia -- The painters and electricians are applying the 
final touches to the new outpost of Vladimir Putin's expanding empire.

The Russian President is installing his commanders on every floor of a 
six-storey building in an ancient fortress here in the Volga city of Nizhny 
Novgorod. Their mission: to wrest control of rebellious regions and pull them 
back under Moscow's laws.

Construction workers are swarming through the building, with its freshly 
painted walls, filling it with new furniture, light fixtures and -- most 
important -- new telephone lines to allow the Kremlin to dispatch orders to 
its minions.

The strongest evidence of Mr. Putin's tightening grip over the Russian 
provinces, however, is the aggressive schedule of activities by the federal 
officials in their newly renovated headquarters.

The Kremlin's agents have launched a series of high-level meetings with 
regional military chiefs and prominent business leaders. Their goal is to 
bolster the Kremlin's power by creating a new system of authority, 
undermining the area governors.

"In the past, the former president [Boris Yeltsin] was too weak to control 
the situation," said Oxana Nikolaichuk, spokeswoman for the federal office in 
Nizhny Novgorod. "Now the President is strong. The new federal inspectors 
will have the authority to ask for reports and control the situation."

Mr. Putin, who announced the reforms in May, is launching the biggest changes 
in Russia's federal hierarchy since the collapse of the Soviet Union in 1991.

He has reorganized the vast Russian federation -- with its 89 unruly regions, 
each headed by a sometimes-mutinous governor -- into a new structure of seven 
huge "super-districts," each headed by a centralized bureaucracy of tough 
Kremlin agents. Five of the seven chiefs are military commanders or former 
KGB or police officers. Their task is to force the 89 governors to obey the 
federal constitution and federal laws.

"It's like any management textbook would say: It's easier to manage seven 
people than to manage 89 people," Ms. Nikolaichuk said. "If the governors 
work well, the federal representatives will not interfere in their work."

In the Volga district, the new federal office, based in Nizhny Novgorod, is 
headed by former prime minister Sergei Kiriyenko. Under the old system, each 
region had its own Kremlin representative, but most were powerless -- the 
representative in Nizhny was so obscure and weak that Ms. Nikolaichuk cannot 
remember his name. "Nobody knew who they were," she said.

The new office will have more than 100 employees, half of whom will be based 
in Nizhny and the remainder spread out through the other Volga regions.

The basic document for each office is a list of regional violations of 
federal laws or the federal constitution. In the Nizhny region, for example, 
the office has a list of 15 cases of violations so far this year, each of 
which prompted a federal prosecutor to lodge a complaint with the regional 
administration.

But a much bigger target is the oil-rich republic of Tatarstan, a Volga 
region that has gained a high degree of autonomy from Moscow in recent years. 
If there are 15 violations of federal laws in Nizhny, there are hundreds of 
violations in Tatarstan, where Governor Mintimir Shaimiyev has declared his 
own form of sovereignty, including his own constitution and flag. He appoints 
all key district leaders, he controls the area police, and he infuriates the 
Russians by giving preference to ethnic Tatars in government hiring.

To wrest back control of Tatarstan, Mr. Putin has already dispatched a tough 
officer from the former KGB spy agency to the region. He has cancelled many 
of the tax concessions that Tatarstan had won. And now he is requiring 
Tatarstan to report to the new "super-district" based in Nizhny Novgorod.

The battle between Moscow and Tatarstan is not yet settled. Some analysts 
suspect that the wily Mr. Shaimiyev has enough power and oil money to survive 
it.

"I can sense that the people in Moscow are still afraid of Tatarstan," said 
Yevgeny Zakablukovsky, assistant to the chairman of the Nizhny Novgorod 
regional parliament.

"Shaimiyev knows he is taking a big risk, and he knows he could be fired if 
he violates federal laws. But he is like an old Mongol khan. A lot of the new 
federal representatives in Tatarstan are still loyal to Shaimiyev. It means 
that Moscow doesn't want an immediate confrontation."

In the battle between Moscow and the unruly regions, Mr. Putin will be 
supported by moderate regions such as Nizhny Novgorod, where the governors 
have always resented the greater autonomy of Tatarstan and other ethnic 
regions.

By forging alliances with pro-Kremlin regions such as Nizhny Novgorod, the 
Kremlin is trying to tighten the pressure on Tatarstan and other recalcitrant 
regions.

"Some of the governors had become uncontrollable," Mr. Zakablukovsky said. 
"Russia was becoming more and more decentralized every year. Russia is a huge 
country, and the system had become very unbalanced. If it continued, a 
growing number of regions would be living on their own."

Alexander Batyrev, vice-governor of Nizhny Novgorod, willingly offers his 
support for Mr. Putin's federal reforms. "We think it's a good thing," he 
said. "It will be helpful to us. There will be equal conditions for all 
regions. We want all the regions to have the same powers."

******

#8
Russia: Analysis From Washington -- Aiming At The Wrong Target
By Paul Goble

Washington, 28 July 2000 (RFE/RL) -- Moscow risks violating the rights of 
Russian Muslims, offending important Muslim states in the Middle East, and 
increasing the terrorist challenge against itself by attempting to ban 
Wahhabism without carefully defining just what that Muslim trend is. 

That message was delivered on Thursday by Ravil Gainutdin, the chairman of 
Russia's Council of Muftis, in response to a decision the day before by 
Akhmad Kadyrov, the head of the pro-Moscow Chechen administration, to ban 
Wahhabism on the territory of that north Caucasus republic. 

While acknowledging that Kadyrov, himself a Chechen mufti, had "acted quite 
reasonably," Gainutdin used the occasion to warn against any broder ban at 
least until the Russian authorities define precisely what they mean by 
Wahhabism and clearly distinguish between Islamic beliefs and terrorist 
activities. 

At present, Gainutdin continued, the Russian authorities have not done so, 
nor have they yet understood that there are very few genuine Wahhabis on the 
territory of the Russian Federation, something most Russian and Western 
scholars have long been at pains to point out. 

Indeed, the Russian mufti argued, most of those whom the Russian authorities 
call Wahhabis know little about Islam in general--or Wahhabism in 
particular--and routinely violate its norms. As a result, he said, 
"pseudo-Wahhabism is a serious threat to Russia," but genuine Wahhabism is 
not. 

But an even greater threat to Russia, Gainutdin implied, is likely to arise 
from a misplaced government campaign directed at an ill-defined enemy. 

First of all, he said, this official effort will threaten the rights of all 
believers in Russia. In the absence of a clear definition of just what 
Wahhabism is, any ban could potentially be used against almost any believer 
and that in turn could lead to the alienation of otherwise loyal and 
increasingly numerous Muslim citizens. 

Consequently, Gainutdin warned against any ban "at the federal level" as well 
as against "the shutdown of 'mosques of discord," two moves that he suggested 
would violate the constitutional rights of the faithful and might make it 
easier for anti-Russian extremists to gain recruits from among them. 

Second, Gainutdin pointed out, any such government campaign would be certain 
to offend countries in the Middle East like Saudi Arabia, where Wahhabism, a 
puritanical brand of Islam, is the official religion of the state. 

Such governments and their populations, he suggested, would be unlikely to 
view favorably any Russian effort to ban the followers of the Islamic trend 
they practice or to suggest as Moscow officials already have that Wahhabism 
is somehow linked to terrorist activities. 

Their potential negative reaction to such a ban, Gainutdin argued, would 
limit Russian influence in the region and thus represents yet another reason 
why Moscow should not extend the ban. 

And third, and perhaps most significantly, the Moscow mufti implied that 
misplaced official attacks on Wahhabism could have the effect of making it 
more attractive to those Muslims who for other, political reasons are angry 
with Russian policies. 

As other Russian muftis have done in recent weeks, Gainutdin stressed that 
political extremists have been successful in using Islamic terminology to 
recruit followers precisely among those groups, particularly the young, who 
know almost nothing about Islam. 

By attacking Wahhabism, he argued, Moscow may be helping to create its own 
nemesis. 

None of these arguments is new or even new from Gainutdin. He and other 
Russian muftis successfully used them earlier this month to turn down a 
Russian government request that they ban Wahhabism throughout Russia. 

But what is striking is the self-confident tone with which Gainutdin repeats 
them. Unlike the leaders of many other religious groups or societal 
institutions, the Moscow mufti clearly sees little need to defer to what he 
views as a misguided effort by the Russian government. 

And that in turn points to a growing self-confidence among Russia's Muslims, 
an attitude that may prove to be more of a challenge to the new Russian 
nationalism under President Vladimir Putin than any actions taken by the 
relatively few Wahhabis or even pseudo-Wahhabis in that country. 

*******

#9
Lower status for Russia rocket force ``unavoidable''
By Martin Nesirky

MOSCOW, July 28 (Reuters) - A senior general said on Friday a reduction in 
the status of Russia's nuclear forces was unavoidable under proposed military 
reforms but that did not necessarily mean their deterrent role was about to 
be eroded. 

Colonel-General Valery Manilov, first deputy chief of General Staff, told 
foreign correspondents the Kremlin's Security Council would meet in early 
August to discuss plans for the next phase of defence reforms first started 
in 1997. 

``This is not a simple question but it did not crop up just yesterday and 
there is no doubt it'll be solved,'' Manilov said. 

Russian media have made much of an unusually public rift between Defence 
Minister Igor Sergeyev and Chief of General Staff Anatoly Kvashnin over the 
proposals, which cover all the armed forces but include important changes for 
the Strategic Rocket Forces. 

Sergeyev, who ran missile units during the then-Soviet Union's nuclear 
superpower days, favours holding on to the Strategic Rocket Forces as a 
fourth branch of the armed forces alongside the army, navy and air force. 

Last month, Kvashnin proposed cutting the size of the rocket forces and 
placing them under air force command. He wants more of the scarce military 
funding to go on conventional forces. 

Manilov denied there was a rift between Kvashnin and Sergeyev, noting the 
proposals had been drawn up by a special Defence Ministry commission and not 
just the General Staff. He said Kvashnin's comments had been from a jointly 
prepared text rather his own personal proposals. 

SIMILAR TENSIONS DURING EARLIER REFORMS 

But Manilov said: ``It is unavoidable, logical and objectively the case 
that...the Strategic Rocket Forces must become part of one of the new 
branches of the armed forces under a three-prong structure.'' 

He said this did not necessarily mean the missile forces would be reduced in 
size but that there would be a reallocation of funds towards conventional 
forces and air- and sea-based nuclear missiles and away from ground-based 
missiles. 

``This is not about the liquidation of the rocket forces,'' Manilov said. 
``It is a logical development under which all forces, means and resources 
have to be consolidated in the three branches.'' 

There were similar tensions in the military when Russia merged its air 
defence forces with the air force under the first wave of reforms. 

But these strains are more serious as they have brought into the open 
long-rumoured differences between Sergeyev, who is over retirement age, and 
the younger, ambitious Kvashnin. 

Manilov noted the three-branch structure was spelled out in Russia's security 
concept and military doctrine, which President Vladimir Putin has approved. 

The Security Council, which advises Putin and has become even more 
influential since he took over from Boris Yeltsin on New Year's Eve, is 
expected to examine the military proposals and choose the most appropriate 
options in various areas, including nuclear missiles. 

The military budget was about $4.5 billion, a fraction of the U.S. defence 
budget, he said, adding the government had yet to fulfil a pledge to give 3.5 
percent of gross domestic product to the military because of the country's 
economic problems. 

As in earlier comments to Interfax news agency on Friday, Manilov took a 
swipe at NATO's own strategic doctrine, yet said there was scope for 
cooperation with the alliance. 

On U.S. plans for a possible national missile defence system against rogue 
rocket attacks, Manilov repeated Russia's view it could spark a new arms 
race. He also said unspecified ``terrible'' types of weapons could be 
developed in retaliation. 

******

#10
The New Republic
August 7, 2000
[for personal use only]
What Dick Cheney has been doing all these years.
>From Russia With Loans
By LAWRENCE F. KAPLAN
LAWRENCE F. KAPLAN is executive editor of The National Interest. 

One of the reasons George W. Bush chose Richard Cheney as his running mate is 
the foreign policy experience his father's secretary of defense brings to the 
ticket. And, by most accounts, Cheney was indeed an impressive defense 
secretary, presiding over American victories in Panama and Iraq. It's his 
foreign policy experience since he left the Pentagon that's problematic. 

Following a stint at the American Enterprise Institute, in 1995 Cheney became 
CEO of Halliburton Company, a major provider of energy services and products 
(oil-drilling equipment, for example). Halliburton didn't hire Cheney for his 
managerial skills alone. "Dick gives us a level of access that I doubt anyone 
else in the oil sector can duplicate," said one Halliburton executive. And, 
like a number of Bush pre's other foreign policy counselors--including James 
Baker, Brent Scowcroft, and Lawrence Eagleburger--Cheney began prospecting 
for oil contracts in parts of the world once off-limits to American 
investors, namely the former Soviet Union. 

One of Halliburton's major areas of operation is the former Soviet republic 
of Azerbaijan. And, while the company's interests there derive from a single 
concern--beneath Azerbaijan lies one of the largest untapped oil reserves in 
the world--there's more to the country than just oil. Above ground, in fact, 
Azerbaijan is a complete mess. 

The country's president, Heydar Aliyev, deserves much of the blame. In 1993, 
the former Soviet Politburo member and head of the local KGB directed a coup 
against his country's elected president. He has held power ever since. Among 
other things, Aliyev has presided over the latter half of a vicious war and 
blockade against the Armenian enclave of Nagorno-Karabakh and over the ethnic 
cleansing of Azerbaijan's Armenian population. According to Human Rights 
Watch, his tenure has been characterized by "the treason trials of President 
Heydar Aliyev's personal enemies, brutal treatment in detention, and 
continued repression of freedom of speech." Responding to such facts (and to 
lobbying by Armenian-Americans), Congress in 1992 passed legislation 
prohibiting the United States from providing official aid to Azerbaijan. 

Alas, the legislation seems not to have made the slightest impression on 
Cheney, who has become one of Aliyev's biggest backers in the United States, 
schmoozing with the aging dictator when he comes to Washington. "The average 
Halliburton hand," Cheney has said, "knows more about the world than the 
average member of Congress." So Cheney has tried to educate the poor saps. 
He's lobbied to repeal the aid embargo against Azerbaijan, fretting about the 
price "domestic constituencies" exact from American interests abroad. He's 
even denounced sanctions against Iran, complaining, "Our policy toward Iran 
contradicts our policy of encouraging the independence and sovereignty of the 
states of the Caspian region." Indeed, his efforts on behalf of Aliyev have 
been so impressive that, as well as being named honorary adviser to the 
U.S.-Azerbaijan Chamber of Commerce, Cheney has been awarded its "Freedom 
Support Award." 

Cheney suggests that selling oil-drilling equipment to Azerbaijan furthers 
America's national interest by bolstering Azeri independence from Russia. But 
one of Halliburton's most recent ventures--in Russia, no less--was certified 
by the State Department as explicitly contravening U.S. national interest. 

More than 1,000 miles to the north of Azerbaijan, deep in western Siberia, 
lies the massive Samotlor oil field. Until last year, a Russian firm called 
Chernogreft controlled the northern part of the field, while another Russian 
company, Tyumen Oil, operated in its southern half. Along with Halliburton, 
Tyumen had been awaiting word from the U.S. Export-Import Bank on what would 
eventually amount to a $490 million loan guarantee, almost $300 million of 
which was to be used to support purchases of equipment from Halliburton. Last 
April, the Export-Import Bank--whose chairman, James Harmon, had been keeping 
Cheney apprised of the loan's progress--offered its preliminary approval. 
Then Tyumen went on a rampage. 

Flush with the prospect of the largest Ex-Im loan guarantee ever made to a 
Russian company, Tyumen's chairman, Simon Kukes, set about stripping his 
corporate neighbor to the north. Exactly how Kukes was able to snatch 
Chernogreft remains the subject of considerable disagreement. But this much, 
at least, is clear: Chernogreft's troubles began in early 1999, when an 
obscure company filed a suit against Chernogreft's parent company, calling in 
a $20,000 debt. Despite revenues of more than $1 billion per year, the parent 
company was subsequently declared bankrupt. A Russian court appointed 
insolvency managers, whom press reports have linked to Kukes, to oversee 
Chernogreft's finances. (Many of the region's power brokers are Kukes's 
associates--he has even appointed the mayor and governor of the area around 
Chernogreft as directors of Tyumen.) 

Aided by the bankruptcy managers, Kukes helped pay off some of Chernogreft's 
debts and effectively seized control of the firm. Before long, Chernogreft 
was no longer supplying oil to its parent company, which itself was now being 
harassed by Russian police raids and hit with government fines. (Kukes wasn't 
the only engine of the Chernogreft takeover. The Russian government at the 
time owned 49 percent of Tyumen, and two Russian oligarchs with close ties to 
President Vladimir Putin ran a bank that controlled much of the rest.) 
Finally, last November, Tyumen cleaned Chernogreft's bones. The 
billion-dollar company was auctioned off to Tyumen for $176 million. The 
European Bank for Reconstruction and Development pronounced the sale "a sham" 
and "wholly contrary to the concepts of fairness and transparency." 

Reasonable people can disagree about how Cheney and Halliburton should have 
responded to well-publicized reports of corrupt practices by their Russian 
loan partner. On one hand, Tyumen's deal with Halliburton was to be 
guaranteed by American taxpayer money, and Halliburton officials were keenly 
aware of Tyumen's dubious conduct. On the other, the arrangement had been 
"baptized" by the Ex-Im Bank; bank chairman Harmon had traveled to Russia 
himself to meet with Tyumen officials. 

Unfortunately for Halliburton, a few weeks after Chernogreft's destruction, 
Secretary of State Madeleine Albright--now armed with a CIA report detailing 
Tyumen's corrupt practices--invoked a seldom-used State Department 
prerogative and ordered the Ex-Im Bank to suspend approval of the loan. The 
guarantee, she wrote, ran counter to America's "national interest." According 
to Stephen Sestanovich, the State Department's ambassador-at-large for the 
newly independent states, the issue was "serious allegations concerning abuse 
of investor rights by Tyumen Oil." In fact, even George W. called on the 
administration to halt Ex-Im loans to Moscow. 

But, if Tyumen's conduct prior to the State Department's intervention didn't 
give anyone at Halliburton pause--and sources there say it did not--neither 
did the full force of the U.S. government. On the contrary, lobbyists whom 
Cheney had dispatched to Capitol Hill continued to press Halliburton's case. 
They lobbied, among others, Kentucky Senator Mitch McConnell and staffers on 
the Senate and House Appropriations Committees. (British Petroleum and George 
Soros joined the battle on the opposite side. Both owned a stake in 
Chernogreft.) 

Tyumen itself, meanwhile, employed Aken, Gump and Strauss to make its half of 
the case. Congressional opposition to the State Department's veto quickly 
began to mount. In response to the loan suspension, moreover, Tyumen had by 
this time agreed to return Chernogreft to its rightful owners--in exchange 
for a sizable share of the company. In the end, Albright relented, and in 
April of this year the Ex-Im Bank approved the loan guarantees. "This is 
exactly the type of project we should be encouraging if Russia is to succeed 
in reforming its economy," Cheney declared. Today Halliburton is Russia's 
largest provider of oil services. 

Cheney, to be fair, never intended to return to elective office. Indeed, when 
Bush asked him four months ago whether he was interested in the vice 
presidency, Cheney said no--so Bush asked him to head up the veep search. 
But, now that Cheney is on the ticket, his Halliburton days raise serious 
questions. Someone, it seems, forgot to vet the vetter.

*******

#11
Moscow Times
July 29, 2000 
Gusinsky's Freedom Sparks Speculation 
By Andrei Zolotov Jr.
Staff Writer

The silence has been deafening. Vladimir Gusinsky is free, but he and his 
media have been strangely tight-lipped about the matter f leaving the rest of 
the media world to speculate that the NTV television founder has traded NTV's 
independence for his own freedom. 

The Prosecutor General's Office dropped its loudly trumpeted embezzlement 
case against media magnate Gusinsky on Wednesday f just three weeks after 
opening it f and Gusinsky left for Spain the same day. It took prosecutors 
until Thursday, 24 hours later, to tersely confirm they had dropped the 
charges. 

Yet even Friday, two days later, still nothing had been heard either from 
Gusinsky or from his deputy and chief spokesman, Igor Malashenko, who flew 
with him to Spain. 

And NTV, which has rarely missed an opportunity to criticize the case, was 
far from triumphal: Friday it offered neither reporting nor commentary on 
Gusinsky's release, while on Wednesday and Thursday it had offered only a few 
short, dry announcements. 

Gazprom-Media f a major shareholder in NTV's parent company, Media-MOST f 
also had no comment Friday. Nor did the Kremlin. 

In fact, for official comment on the matter, one had to range as far afield 
as Washington. 

"The apparent resolution of these charges sends a welcome signal regarding 
respect for freedom of the press, rule of law and due process in Russia," 
Reuters quoted from a written U.S. State Department statement. 

"The United States will continue to work hard on behalf of democratic 
principles, human rights and media freedom in Russia. Charges against 
Gusinsky appeared to be a manipulation of the legal system to harass and 
intimidate government critics." 

Back in Moscow, few saw Gusinsky's release as so unequivocally positive. 

Igor Shabdurasulov, who has started assembling a holding company to unite the 
various media properties of politician-businessman Boris Berezovsky, said 
Friday he assumed Gusinsky had won exoneration by giving up NTV. 

"If in the nearest future it will be announced that Media-MOST has been sold 
to someone, the logical chain will be completed," Shabdurasulov said in 
remarks reported by Interfax. He singled out Gazprom as a likely buyer, 
adding that a sale to state-owned Gazprom would be the same as a sale to the 
state. 

Kommersant, a Berezovsky-controlled newspaper, said Friday that Gusinsky is 
unlikely to return to Russia any time soon. Berezovsky and Gusinsky have been 
on-again, off-again rivals. 

And Nezavisimaya Gazeta, another Berezovsky media property, reported that 
Media-MOST is in negotiations not just with Gazprom but also with "one of the 
Western media magnates." 

The paper asserted Media-MOST had planned to announce the sale of its NTV 
flagship to a foreign investor at a press conference last week, but canceled 
it at the last minute because "active consultations" f apparently about 
Gusinsky's fate f were opened with the government. 

Media-MOST last month announced that a major foreign investor was seeking to 
buy out Gazprom's loan of $211 million to the holding. Some speculated the 
foreign investor was Capital Group International Inc., which last year bought 
into two Media-MOST companies f taking up 4.5 percent of NTV and 4.5 percent 
of THT. 

On June 29, Kommersant published what purported to be a letter addressed to 
Gazprom CEO Rem Vyakhirev and signed by Martial Chaillet, senior vice 
president of Geneva-based Capital Research Co., a branch of a U.S. investment 
holding that unites Capital Group and Capital Research and Management Co., in 
which Chaillet discussed buying out the loan. 

Reached by telephone Friday, Chaillet confirmed that he had indeed written 
that letter f but he added that he was now so appalled by the fact that it 
had fallen into the hands of "spies of Gusinsky's enemy Mr. Berezovsky" that 
he had decided to "forget about Russia" for the next several years. 

******

#12
The Wall Street Journal Europe
July 28, 2000 
Editorial
If You Can't Beat Him...

Few Russians would shed a tear for the defeat handed to regional governors on 
Wednesday -- by the governors themselves no less. Indeed, polls show most 
citizens agree with Vladimir Putin that a strong central power is necessary 
to keep Russia together, overcome its economic troubles and restore its place 
as a global power to be reckoned with. This theory will now be put to the 
test, assuming that the governors remain cowed.

Mr. Putin further consolidated his control over the country's power 
structures Wednesday with the capitulation of the Federation Council, the 
upper house of parliament. After a series of speeches denouncing the 
Kremlin's plans to strip regional governors of some of their powers, Council 
members overwhelmingly passed the plans anyhow, putting themselves out of a 
job in 2002. The upper house also approved the Kremlin's new tax code, which 
introduces a flat personal income tax rate of 13% -- a much-needed measure -- 
but which also ends the regions' control over billions of rubles in business 
tax receipts.

Most governors figured they had little choice but to give President Putin his 
way. The Duma, parliament's lower house, had enough votes to override most 
upper house vetoes and indeed did so recently over a bill to allow the 
president to impeach governors who violate federal laws. Then there was the 
very credible threat to implement the measures as part of an executive decree 
should the parliament refuse to approve them; and a lot of lobbying by the 
Kremlin of Council members. As one governor from the Siberian region of Altai 
put it, "Regardless of whether we vote it down or pass it, the law will come 
into force anyway."

Russia's governors were granted substantial powers by Boris Yeltsin to win 
their support for his new post-Soviet constitution. But in the Yeltsin era 
they were also tenacious in growing their own local power bases and in 
resisting federal control, and laws, wherever possible. Mr. Putin argued that 
this atomization was undermining federal authority and even threatening the 
break-up of Russia into mini-states.

The upper house, dominated by the governors under the Yeltsin formulation, 
turned out to be something less than a body of Jeffersonian federalists. Most 
of Russia's 89 regional leaders behave as mini-czars, themselves paying 
little attention to democratic processes when they can get by with it. No 
doubt a good share of the tax they collect goes to expanding that same power 
base. A recent poll showed that almost two-thirds of those polled (63%) 
supported giving the president the right to remove regional leaders from 
office.

But it is also significant that only 27% (against 60%) of those polled would 
approve of the removal of their governors. We take this not necessarily as a 
vote of confidence in local leaders, but as a statement that, when asked 
specifically, Russians prefer to decide the fate of their own governor rather 
than leave it to the president. If there's one thing Russians cling to now it 
is their distrust of the center.

That democracy sometimes throws up some unsavory characters is not an 
argument for strengthening central control. Both as regional leaders and as 
members of the upper house, the governors constituted an important check on 
federal power. That check is, for now at least, effectively neutralized. The 
Putin changes replace governors -- who are directly elected -- with 
"senators" who will be nominated by regional legislators and thus are not 
directly answerable to the people.

All of this leaves a great deal more power in the hands of Vladimir Putin, a 
president who has so far shown himself to be intolerant of dissent and 
impatient with restraints on his authority. If he proves a centralizer who 
also brings economic reform, a rule of law and a more honest government 
administration to Russia, history will forgive him. But it also is a fact of 
history that the more power a political leader accrues, the less urgent his 
desire for reforms is likely to become.

******

#13
Katyn Massacre Memorial Opens
July 28, 2000
By SERGEI GRITS

KATYN, Russia (AP) - Laying wreaths at the spot where secret police massacred 
thousands of Polish army officers in 1940, Russian and Polish officials 
joined relatives Friday in remembering one of the Soviet Union's most brutal 
actions. 

A memorial dedicated Friday honored more than 4,000 Polish officers shot and 
dumped into mass graves in April and May 1940 - a slaughter communist 
authorities concealed for decades. 

Nazis found the graves of the Katyn victims, who were among some 15,000 
Polish officers killed by Josef Stalin's secret police, in 1943. The Soviet 
government in Moscow blamed the killings on the Nazis, and made discussion of 
the massacre taboo. 

In communist Poland, all information about Katyn was banned. 

``The word 'Katyn' in Poland and the whole world will remain a symbol of 
genocide and war crimes,'' said Polish Prime Minister Jerzy Buzek, who led 
Poland's delegation, which included military officers. 

Russia finally admitted responsibility for the massacre in 1990, handing over 
secret police documents to Warsaw. 

``I've come here because my father is lying here. And there are thousands 
like me,'' said Lukrecia Hal, a retiree who was among hundreds of relatives 
and other ordinary Poles who traveled to Katyn in western Russia for the 
ceremony. 

They laid 1,500 wreaths along the walls, where the Polish section is marked 
by a large Catholic cross. Icon lamps illuminate the names of 4,421 officers 
who were executed. 

Poland's Roman Catholic Cardinal Josef Glemp and Bishop Slawoj Leszek Glodz, 
Poland's chief army chaplain, celebrated a memorial Mass. Russian Orthodox, 
Muslim and Jewish clerics also said prayers. 

The mass graves also contain the bodies of some 500 Russian and other Soviet 
victims of the Nazis. 

``Those who lie here, Russians and Poles - all of them are victims of 
totalitarian systems of the 20th century. Poland has never left them behind 
and will never forget them,'' said Andrzej Przewoznik, secretary-general of 
the Polish Union of Memory group. 

The tragedy is still painfully felt in Poland. Russian officials worry that 
anger and resentment will color relations between the two countries for years 
to come. 

``The shadow of the past should not haunt the present, and more importantly, 
the tomorrow, of bilateral relations between Russia and Poland,'' said 
Russian Deputy Prime Minister Viktor Khristenko. 

``The memory of the Katyn tragedy, mutual grief for the dead, should not 
divide but unite our people,'' he said. 

Mieczyslaw Geneja, who lost a brother at Katyn, told Poland's PAP agency that 
the Poles ``must forgive the Russians but not forget the crime.'' 

******

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