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Johnson's Russia List
6 August 2000
[Note from David Johnson
1. The Russia Journal: Andrei Piontkovsky, Asymmetrical perceptions.
“Asymmetrical relationship” between Russia and U.S. is psychological.
2. AP: Putin Signs Last Bill in Plan.
3. EurasiaNet at http://www.eurasianet.org
4. Rossiyskaya Gazeta Eyes 'Rogue States,' Attitudes Toward Them.
5. Vek: PRESIDENT: MISSION POSSIBLE...The following are views and
insights by the famous writer and philosopher Alexander ZINOVYEV.
6. Moscow Times: New EBRD President Bullish on Region. (Jean
7. Financial Times (UK): Andrew Jack, Putin sets his sights on the
8. The Russia Journal: Eric Helque, Media moguls maneuver.
Results could alter face of Russian TV.]
The Russia Journal
August 5-11, 2000
SEASON OF DISCONTENT: Asymmetrical perceptions
By Andrei Piontkovsky
“Asymmetrical relationship” between Russia and U.S. is psychological.
Specialists in Russian-American relations on both sides of the ocean talk
ever more often of what they’ve termed an "asymmetrical relationship." The
term arises from the growing disparity between the two countries’
respective military industries and the widening gap in their military
potential, including nuclear capability and a number of other easily
quantifiable parameters. This is all fair enough.
But this asymmetry is far more fundamentally psychological in nature. It is
the asymmetry of the ideas we have of each other. The crisis in
U.S.-Russian relations is not military, political or ideological; it is a
crisis of perception.
For the Russian political class, the United States is a phantom opponent,
but one that serves to provide sense, for it is heroic resistance to this
phantom that is the foundation upon which all Russian foreign policy myths
are built. Numerous musings on a multipolar world, strategic partnership
with China, cutting-edge articles by political scientists, reports from
analytical centers, official statements and doctrine are all imbued with
Traumatic defeat in the Cold War provoked a deep-seated crisis in the
subconscious of the Russian political class that it has yet to get over.
This is why our foreign policy behavior is so contradictory and irrational.
We’re always talking about our "greatness," as if trying to convince
someone probably, above all, ourselves. And at the same time, we ask that
our great nation have its foreign debts written off, like some piddly
Third-World country, and we’re not too proud to ask the United States to
give us humanitarian aid when our harvest isn’t good.
On an official level, we talk of our "American partners," while our press,
from the communist Zavtra to Nezavisimaya Gazeta, heaps reproach and
condemnation on the United States. Then, our president goes to the West and
proclaims that Russia, in fact, is the shield protecting the West from
Islamic fundamentalism, and the "West should bow low before us."
We have subconsciously borrowed this last myth from the Great Slav,
Alexander Lukashenko, who proclaimed himself the shield protecting Russia
from NATO aggression a service in return for which he expects constant
economic dividends from Moscow.
For the United States, which finds itself caught up in deep and
contradictory relations with many players in world politics such as China,
the European Union or Japan the Russian political class, with its
complexes, claims, illusions and myths, is steadily losing in visibility
This asymmetry of perception is far more dangerous for Russia than for the
United States, because it forces a resource-strapped Russia to set false
priorities for its security policy. Seen through this distorted
perspective, virtually the most important issue for Russian diplomacy is
whether Slovenia will join NATO or not. As for U.S. plans to build an
expensive and probably useless national missile defense toy that poses
absolutely no threat to our nuclear deterrent capacity, it is seen here as
Armageddon, the final battle between Good and Evil.
So, we keep waving our fists in this mid-20th century Cold War that we have
lost, while the main security issue and even the key to Russia’s survival
in the first half of the 21st century lies on another plane again that of
keeping hold of our territory in the Far East and Siberia.
In this context, whether the United States will defend Taiwan or hand it to
China in order to create the condominium of two 21st century superpowers is
of far more significance to us than Slovenia joining NATO.
(Andrei Piontkovsky is director of the Center of Strategic Research.)
Putin Signs Last Bill in Plan
August 5, 2000
MOSCOW (AP) - President Vladimir Putin on Saturday signed the last of three
bills in his plan to tighten Moscow's control over Russia's far-flung
provinces, capping his victory over independent-minded regional bosses.
The new law allows provincial governors to fire mayors and local officials
who are found to have violated the law, Russia's state-controlled RTR and ORT
That bill had caused the least debate. The other two were more contentious
but were eventually approved by both houses of Parliament last month in what
was seen as a key domestic policy victory for the new president.
The first law will oust the regional governors and regional legislative
speakers from their seats in the upper house of Parliament, replacing them
with appointed legislators by 2002. The regional leaders will also lose their
immunity from criminal prosecution.
The second law allows Putin to fire governors who are found to violate the
Putin has already signed the first two bills, ORT said. In an apparent effort
to appease angry regional leaders, Putin also proposed Saturday that both
houses of Parliament create a committee on how to implement the new laws.
The presidential press service could not be reached for comment.
Putin says reining in the regions is necessary to fix Russia's economic
problems. Many of the regional governors are highly authoritarian and have
pushed for greater autonomy.
But opponents say Putin, who won election in March on a platform of
strengthening the state and Russia's global clout, is consolidating too many
From: Anthony Richter <ARichter@sorosny.org>
Date: Sat, 5 Aug 2000 17:26:09 -0400
We would like to call your attention to the launch of EurasiaNet -- a new
internet news and analytic service, covering the countries of Central Asia
and the Caucasus, as well as developments in Russia, the Middle East and
Southwest Asia that impact these regions. The site can be found at
EurasiaNet offers daily news:
* Today's Wires which consolidates news and information from outside
including the British Broadcasting System, Radio Free Europe-Radio
Liberty and Interfax. Every day, reports from these and other news
are also posted on the Resource Pages of all the countries in the region.
* Regional Datebook keeps you ahead of the curve on upcoming events
throughout the Caucasus and Central Asia.
EurasiaNet has seven different departments featuring original content on
political, economic, social, cultural and environmental developments through
an extensive network of contributors providing material that keeps readers
on top of
regional developments. The departments include:
* Eurasia Insight: Analytical articles on current events that place emphasis
on anticipating future developments.
* Business and Economics: Articles geared towards closely examining deals
trends and their possible impact on economic development.
* Q&A: Interviews with newsmakers and opinion shapers on regional issues.
* Human Rights: Articles that examine state-building practices of the
countries in the region within the context of internationally accepted
human rights norms.
* Environment: Articles that identify critical environmental issues and
examine what is being done to address problems.
* Book Reviews: Examines books that may appeal to those with an interest in
Central Asia and the Caucasus. This will eventually expand into a broader
cultural review column.
* Election Watch: Provides context, results and analysis of regional
* Resource Pages: Provide comprehensive data and links to other news sources
on the web.
EurasiaNet also features a variety of other resources, including a discussion
board, a database, and hundreds of links. Indeed, EurasiaNet is perhaps the
most comprehensive source for news and information about the countries of the
Caucasus and Central Asia found anywhere on the World Wide Web.
You can also subscribe to a weekly version of the stories that can be
emailed to your account.
Visit EurasiaNet, today and everyday at http://www.eurasianet.org.
Rossiyskaya Gazeta Eyes 'Rogue States,' Attitudes Toward Them
August 3, 2000
[translation for personal use only]
Article by Rossiyskaya Gazeta Political Observer Vladimir Lapskiy:
"Blinkers Do not Suit Politicians" --
The Italians have a saying: Two chance
occurrences are a phenomenon. What if there are three? That is a line
of conduct. A clear political course, if you like. Russia has set
about building relations with countries that until recently the Americans
called nothing other than "rogues" before it slightly softened and
refined the term: They have now become "unpredictable." We are
talking about Iraq and Iran, Libya, Cuba, and North Korea.
(Incidentally, not entirely diplomatically, former Russian Foreign
Affairs Minister Andrey Kozyrev called them "international ruffians.")
Attention was of course paid everywhere to the fact that Russian
President Vladimir Putin made a stop in Pyongyang en route to Okinawa,
striking the imagination of most world politicians with his "unusual"
step. The fact that this was the first visit to North Korea by a leader
of a great country was not even the point. For almost ten years now,
relations between Moscow and Pyongyang have been barely glimmering, as
they say: Inspired by the ideas of Chuchhe -- relying on one's own
strength -- our former class-brothers have lived in what is almost a
hermetically sealed area, cut off from the entire world by their own
will, taking from outside only humanitarian aid to feed a starving
population. At the same time, though, they could not deny themselves
the satisfaction of building (and even launching -- there was such an
event) ballistic missiles.
In Pyongyang this summer, the North Koreans' leader, Kim Jong-il, broke,
as they say, the international isolation of the DPRK [Democratic People's
Republic of Korea] by shaking the hand of his namesake from the South of
the Korean peninsular, Kim Dae-jung. After this handshake, came North
Korean diplomacy's hour of triumph. At a regional security forum of the
Association of South-East Asian Nations (ASEAN) in Bangkok, DPRK Foreign
Affairs Minister Park Nam-sun was in great demand. And who would have
thought it, the minister met and calmly chatted with US Secretary of
State Madeleine Albright, a representative of the imperialist octopus
country, whose extremities Pyongyang was threatening to tear off only
Thus, "the process has gotten going" on the Korean peninsular and a new,
dynamic Russia has not been left on the margins. "Our country is
sincerely interested in strengthening peace and stability on the Korean
peninsular," Russian Foreign Affairs Minister Igor Ivanov said. "For
that reason, we are prepared to assist in creating conditions for a
process of national reconciliation." Incidentally, in their talks with
Vladimir Putin in Pyongyang, the North Korean leaders talked of their
intention to abandon missile programs.
Few people completely understand what lies hidden beneath the surface of
Pyongyang's diplomatic activity. In the West, a "quiet" skepticism
prevails: But what if? "First, we do not know the real motives that
are moving Pyongyang," says Dan Goure [e acute], a well-known US
political scientist from the Center for Strategic and International
Studies. "It is quite possible that it is just a diplomatic game by
which the North Korean regime is trying to squeeze funds out of rich
countries in order to survive. Second, we do not know where this
process could lead us. Similar things have happened before over the
last five years, in the talks on the North Korean nuclear program, for
instance. Then, Pyongyang managed to secure promises of many billions
of aid. We do not know if they have met their obligations from that time."
In fact, you could scarcely find another country in the world that
conceals its military secrets so skillfully and is thus able to bluff as
skillfully as the DPRK. But something else is important for us at the
moment: The era of North Korean seclusion is coming to an end; the
country is coming out of isolation by its own will and light breezes of
change have already blown over the North of the Korean peninsular. The
DPRK and the Republic of Korea have agreed to establish diplomatic
missions in the border village of Panmunjom, renew rail communications
between the two countries, organize meetings of relatives from the South
and the North who were parted by the war half a century ago. Kim
Jong-il declared that he is preparing for a trip to Russia by train; he
will begin his visit in Vladivostok. And finally, a complete sensation:
US experts are not ruling out the possibility that the North Korean
leader will meet Bill Clinton.
Overall, Washington met the news about Moscow expanding its contacts with
Pyongyang calmly: Russia and the United States are strategic partners
linked by many common interests, above all in the security field.
Clearly, farsighted Americans are already seeing a future role for Russia
as intermediary in their efforts to persuade the North Koreans to abandon
long-range ballistic missiles.
The arrival in Moscow of Iraqi Vice Premier Tariq Aziz evoked a
completely different kind of emotion in Washington. The State
Department made it understood: They said that it was no business of
permanent members of the UN Security Council to lay out the carpet for
envoys of the Baghdad regime. Moscow's relations with this regime and
the recalcitrant President Saddam Hussein have undergone a complex
evolution over the last decade. When Iraq invaded Kuwait, together with
the United States and other countries, our country declared Baghdad to be
the aggressor and under UN codes, voted for sanctions against it,
including strict monitoring of its secret work to create weapons of mass
destruction. These sanctions have cost Iraq dear. Saddam, whom the
United States and Great Britain made every effort to overthrow, has kept
on his feet but that has perhaps been his greatest achievement over the
last ten years.
On one hand, Moscow has not tired of calling for the sanctions against
Baghdad to be repealed; on the other, it has demanded that it strictly
execute the UN resolutions. Russia actively participated in setting up
the UN program to provide Iraq with humanitarian aid, which gained the
name "Food for Oil." The Iraqi population was in poverty; urgent help
was required. One year later, the program came into effect: Baghdad
obtained the right to sell $2 billion's worth of oil and oil products
every six months and spend the money it received on food and medicine.
The "ceiling" for oil sales was finally raised to more than $8 billion.
It is noteworthy that 18 Russian firms participate in selling the Iraqi
oil; they have sold more than 100 million barrels to a value of $2.7
billion over the last year. (I would also remind you that Iraq's debt,
originally to the USSR and now to Russia comes to many billions of
dollars and it is practically impossible to receive it while the
sanctions are in effect.)
But even now, the money they receive is not enough for a normal life for
the Iraqis. The Red Cross has called the situation in the country a
humanitarian catastrophe: 2.2 million people, among them 1.5 million
children, have died from hunger and disease over the years of the blockade.
Thus, Washington considers our establishing relations with Baghdad to be
almost immoral. They say that you must talk more sternly with dictators
or avoid associating with them altogether. But let us take a more
attentive look at the Iraqi situation. US military ships are patrolling
the Iraqi shore. US and British airplanes are bombing the north of Iraq
almost daily just because the country is trying to protect its
sovereignty. It is not members of the Iraqi government or their
relatives or even soldiers who are dying; it is peaceful residents and
peasants. It is those who are far from politics who are paying with
their lives; the only thing they want is to live in peace and as far as
possible without hunger and with a roof over their heads.
Such is the face of Anglo-Saxon morality. It is quite apposite to
mention Yugoslavia here. The difference is in the details but the
essence is the same: Wishing to finish off a regime, they destroy a
country and make life unbearable for simple people. Cuba is another
example. The Yankees have been warring with the Commandante and the
Cubans for so many years now, sometimes trying to starve the island to
death, sometimes resorting to head-on strikes, and what is the result?
The people suffer, the regimes do not weaken because of it; moreover,
they seem to become even stronger.
Finally, Libya. The arrival in Moscow this week of this country's chief
of foreign political department, Abd-al-Rahman Shalqam. The "iron
curtain" with which it had been covered for many years on a charge of
aiding terrorists has been lifted slightly recently. Now, on the demand
of Washington and London, Tripoli has handed over to justice the two
supposed terrorists who allegedly blew up a US passenger airplane 12
years ago; the sanctions against the Libyans are on the verge of being
lifted. But a horde of Western European businesspeople have dashed into
this North African "rogue state" without waiting for them to be repealed.
It must be confessed that the Russians stood gaping and only now are
they trying to make up for lost time, looking at the heels of their
quicker and less scrupulous colleagues with envy.
...So Russia has recently "gone round" the countries that have been given
the unflattering name of rogues by the easy hand of some US politician or
political scientist. They do not represent shining examples of
democracy and observance of human rights, of course. But should that
mean that their leaders should be subjected to rigid obstruction and
their peoples subjected to endless suffering and humiliation? Russia
has decided to follow its own path, using its own rich and sometimes
dramatic historical experience. It has abandoned ideological yardsticks
and prejudices and is proceeding on the basis of its vital interests
while at the same time trying to show as much pragmatism and common sense
as possible. Will this harm its relations with the developed countries
of the West? I am convinced that it will not harm them at all. The
emotions will soon settle down and finally in their place will come a
sober view of things, an understanding that on the brink of the 21st
century, this entire political baggage of "sanctions," "blockades," and
"embargoes" should be consigned to the junkyard of history.
[translation from RIA Novosti for personal use only]
PRESIDENT: MISSION POSSIBLE
Though a great deal has been said about President Vladimir
Putin's personality lately, the answer to the question "Who are
you, Mr. Putin?" has not been found yet. The following are
views and insights by the famous writer and philosopher
On June 30, 1999, I returned to Russia after many years of
forced exile. I have now lived for a year in post-Soviet
(post-communist Russia). It was a year full of numerous events,
which are of keen interest for me as a student of social
phenomena. The most important of them was, in my opinion,
Putin's rise to the highest post in the country. It was
important not because precisely this concrete person, named
Vladimir Putin, turned out to be at the top of power but
because certain changes, which have taken place in Russia in
the past few years, have been focused in his personality.
The Family's Protege
Putin appeared in the highest spheres of political life in
Russia not as the only representative elected by the people but
as a bureaucrat who successfully rose up the career ladder and
the Family's protege. There is no denying this fact. But which
of the men who are building up their political careers does not
become anyone's protege at a certain stage of his rise to the
top? Putin worked professionally in the system of power. It is
natural that he worked for someone and this "someone" backed
him up. Putin was a good worker, for, otherwise, he would not
have made a professional career. It is natural that the Family
supported Putin, pursuing their own interests. It would be
absurd if the Family set forth anyone who would a priori act to
their disadvantage. But the Family promoted Putin to a
responsible post, counting that he would cope with the duties
that come with it. Judging by Putin's behavior, the Family has
not made a mistake. They supported Putin as one of the Family
but the role he would have to play depended on circumstances
which were beyond the Family's control.
Savior of Russia
The main factor, which determined the growth of Putin's
popularity, was the state in which the bulk of Russians were by
the time of his nomination and their frame of mind. Displeasure
with Yeltsin's regime reached the highest level among most
diverse cross-sections of the population and was manifested in
different spheres of life. Crying thirst for power capable to
assert due order in the country was the fundamental public
sentiment. The desire to have a savior mastered the minds and
hearts of tens of millions of Russians.
All the political figures who claimed the heights of power
either became too notorious to the public at large or were
insufficiently known and popular. Others did not command any
trust at all. None of them was fit for the role of the savior
of Russia, which was on the verge of ruin. Putin was a newcomer
on the political scene and he acted in accordance with the
rules of power, while others only talked of power. He was able
to act this way because he was in power. The scope and
importance of actions are of no importance from any other
standpoint in such a situation. The important thing was that
people reacted to them precisely as the indicators of his
ability to rule, which is exactly what the doctor prescribed. I
want to repeat and stress once again that Putin already had
power and demonstrated what he was capable of, while his rivals
were perceived as rulers with negative experience or loud
mouths who loved to talk of power.
All talked of the need to save Russia. Putin said very little
but acted in a way, which created the image of a potential
The suffering majority of Russians pinned their hopes and
aspirations on him.
His popularity reached the climax by the end of 1999. I
suppose that in the Family there had already appeared a number
of people who realized that Putin's popularity could not last
too long, that it would begin to decline in a short while and
that by the official presidential election date the situation
would be rather unfavorable for the Family and its protege.
Both in Russia and in the West there were sufficiently serious
anti-Putin forces. They hoped to introduce their own
corrections into the election process. It is more likely than
not that they had quite real possibilities for that. Anyway, no
one could be sure that the Family's protege would become the
President if the elections were held in due time. Aware of
this, the above mentioned members of the Family dared to an
operation as a result of which Yeltsin resigned, nominating
Putin acting President. In my opinion, it was a brilliant
operation conducted at the best possible time.
Yeltsin's resignation passed away as a voluntary decision
backed up by convincing motives. Formally, legality was
observed. It was flawless. In addition, there was no one who
wished to search for any faults.
However, whatever was happening behind the political scene
at that time and regardless of what political scientists,
analysts, politicians and journalists might say, it was a
political coup from the sociological point of view. In our
times and under the conditions of a post-Soviet Russia a
political coup is not necessarily illegitimate. Anyway, with
only a few months left to the official election date there were
no grounds for Yeltsin's resignation, except the above
mentioned fears and apprehensions.
That political coup predetermined the outcome of the
official elections. Elections only legalized its results. At
that time, election returns did not raise any doubts. The
overwhelming majority of Russians more than approved of the
Putin's election as President in the first round is more
than the personal success of a concrete personality. It is an
event of immense historic importance and, in my opinion, the
most significant social event in the post-Soviet Russia. I
regard it as the third attempt of resistance to Russia's forced
Westernization and its turning into a zone of colonization by
global pro-Western super-society (globalization). The first
attempt, in my opinion, was the August 1991 putsch and the
second - the uprising of the Supreme Soviet in the end of
September and the beginning of October 1993. Herein lies the
social essence of the event, regardless of the subjective
intentions of its active participants. Putin's election victory
is the victory of those forces and sentiments in Russia, which
ensured it. But the victory per se does not guarantee that the
wishes and hopes of these forces will be satisfied.
Standing at the Wheel of Power
A road to power is one thing but the activity to achieve
it is another. This activity depends on other factors than
those, which predetermined the election victory. The wishes and
hopes of the masses of Russians, which became the basis for
success on the way to power, is one thing but a concrete way to
satisfy them under the existing conditions is a different
thing. Putin's historic ascent began with a strange happening:
the protege of the Family hated by the broad masses of people
became the mouthpiece of their interests. From the very first
steps of his activities as the new head of state he had to come
across another strange happening - the resistance of those in
whose interests this political coup seemed to have been
committed. I mean conflicts connected with financial oligarchs,
the Federation Council, the mass media, etc. As a matter of
fact, there is nothing strange about these happenings from the
sociological standpoint. They are more than natural, because
they are the essence of the manifestation of regularities in
concrete realities, which could have been avoided in words but
not in deeds.
Regardless of obstacles, the President of the country has
to exercise his duties of the head of the system of power,
which has its own objective social laws which are beyond the
will of the President, and he must do this within the framework
of the entirety of objectively existing factors. The main of
these factors are the country's natural conditions and human
material, the state of the country (its power, economy,
ideology, culture, etc.), which had taken shape before his
election, the available social organization, and relations with
the rest of the world (above all, with the West).
Post-Soviet Social Organization
I would like to say a couple of words about the social
organization of the post-Soviet Russia as the most important of
the above-mentioned factors with which Putin's regime has to
reckon. Strengthening and perfection of this organization is
the most fundamental task of the post-Yeltsin era. However,
this organization as such is the main obstacle on the way to
I have more than once pointed to the fact that Russian
reformers created the post-Soviet social organization on orders
from Western (mostly, American) manipulators of Russian affairs
specifically for the purpose to thwart Russia's revival and
prevent it from raising to the level of a great power once
again capable of competing with the West for global domination.
What is more, the task of this social monster is to push Russia
to the path of degradation and turn it into a zone of
colonization by the West.
In the political sphere the post-Soviet Russia has created
a political monster which is incapable of acting in the
interests of the majority of the people of the country as a
whole, it only simulates real power, caring mostly about
self-preservation and satisfaction of its own needs. I would
call this system of power a conflict democracy, because it is
conflict-prone in nature:
conflicts between its individual units in different dimensions
- between the federal level and regions, between the Kremlin
and parliament, between parts of parliament, between parliament
and government, and so on and so forth, are inevitable in it.
It is easy to foresee that the Putin period of the post-Soviet
era will be a period of fierce socio-political struggle. Unity
proclaimed by post-Soviet ideologists is no more than a
propaganda slogan and an ideal of any power, which may not
become true for a long period of time.
Washington and Russia
I want to stress that Putin was not the stooge of those
Western forces, which manipulate the situation in Russia -
Washington, for one. Washington did not make a firm decision to
install precisely Putin into the Russian presidency, as was the
case with Yeltsin. There is ample ground to presume that Putin
managed to be elected without Washington's approval and sooner
by its oversight and even contrary to its will. The West looked
confused in connection with Putin's election and even feared
that the new Russian President would begin pursuing an
anti-Western line and restoring Sovietism. There is no ground
for the fear of the restoration of Sovietism - it is a purely
As for the attitude to the West, any orientation of the Russian
regime to its country's national interests is regarded as
anti-Western there. That is why Putin is a stranger to
Washington, one way or another. He has only one chance to
become America's man - to descend to the Gorbachev-Yeltsin
level. This would mean missing the last chance for Russia to
gain national sovereignty and for Putin to become an
outstanding President, for which he has real possibilities and
August 5, 2000
EDITORIAL: New EBRD President Bullish on Region
By Jean Lemierre
Jean Lemierre is president of the European Bank for Reconstruction and
Development. He contributed this comment to The Moscow Times.
The previous president of the European Bank for Reconstruction and
Development started work in the wake of the August 1998 financial crisis. I
joined the bank this summer faced not by crisis but by the very real prospect
that growth this year will return to all 26 countries in which the EBRD
operates f the first time that the whole region has experienced growth since
I am, of course, pleased by the slightly calmer conditions. But, having been
here for three weeks now, it is clear to me that the challenges facing the
region and the bank remain highly significant.
Since being confirmed as the EBRD's president in May, I have listened to
staff, shareholders, government officials and, perhaps most importantly,
clients. Even if I do not have all of the answers about the continuing
transformation of Central and Eastern Europe and the Commonwealth of
Independent States f and about the role that the EBRD will play in the region
f I think I can reasonably offer some perspective on the work that lies
One basic tenet is clear: The bank must continue to promote the transition to
a market economy in all of its countries of operations that embrace
democratic principles. In Central Europe, the EBRD's work on the municipal
level is breaking new ground each day. In Central Asia, the bank is focusing
increasingly on the private sector, while continuing to help mobilize private
capital for infrastructure projects. And in Southeastern Europe, a region set
back by war last year, the EBRD has been playing a leading role in economic
Over time, there may well evolve a natural progression toward "the East" as
the EBRD fulfills its mandate in the more advanced countries. This will be a
gradual process that will not involve any immediate shifting of assets by the
EBRD from one region to another.
Of course, Russia will continue to play a pivotal role at the EBRD. It is a
big country with big needs. The EBRD remained engaged during the crisis in
August 1998 and during its aftermath f a clear demonstration of the EBRD's
strength and commitment. Now I will certainly want to see our level of
commitment in Russia increase over the next few years.
Russia matters to the transition of all Eastern Europe. Indeed, there are
scant prospects for peace and prosperity in the region without a prosperous
and stable Russia. This is a market of 150 million people with an educated
labor force and abundant natural resources.
What's more, our own experience on the ground proves that it is possible to
find projects that not only make sense in terms of promoting transition, but
that are profitable as well.
And we see some very good signals coming from Russia. The reform program
outlined by President Vladimir Putin is promising; implementation is now the
The EBRD stands ready to play a constructive role. Two things have become
clear to me in my short time at the bank. One is that the bank is unique. The
other is that it is strong.
No other institution combines a public mandate and public capital with
private sector project finance as its main instrument. Its mandate has both a
political and an economic dimension. By working with local businesses and
entrepreneurs, the EBRD promotes growth from the ground up, cultivating a
market economy from the roots.
And the EBRD is strong in four ways. First, it has been through the Russia
crisis. That has demonstrated the ability of the bank to act. And
institutions, like men, are judged by their deeds, not words.
Second, the Bank's volume of business is healthy and increasing.
Third, the bank has a clear strategy, which was updated last year. It remains
a valid blueprint for the period ahead, focussing on the banking sector,
small and medium-sized enterprises, infrastructure, enterprise restructuring
and policy dialogue.
We will fine-tune as necessary, of course, but I see no reason why we should
reopen the strategic debate.
Finally, the bank is guided by a board, management team and staff that have
extensive experience and a fine reputation.
If the first 10 years of transition in this country have taught us anything,
it is the significance of the investment climate f the way a country's laws,
regulations and other relevant public and private institutions affect
investment. A strong investment climate reflects a commitment to transparency
and the fair and equal treatment of all investors. Without it, small
businesses cannot survive and entry by new enterprises and exit by
noncompetitive enterprises are delayed. We need to support entrepreneurs
because they are the lifeblood of an economy; they provide new ideas and
stimulate new momentum.
A strong investment climate will also encourage investors, both foreign and
domestic. Foreign investors have a special role to play. Their money f
especially if it is directed to roads, railways and the restructuring of
large industrial companies left over from communist days f can relieve the
often severe strain on public finances.
Even more importantly, it can provide a helpful demonstration to other local
businesses, because the money comes bundled with know-how, technical and
Next year the EBRD will celebrate its 10th anniversary. In 2001, it will be a
more experienced and greatly matured institution that has made a significant
difference to the transition in this area of the world, turning the business
ideas of thousands of managers and entrepreneurs f for example, the ideas of
bakers in Bulgaria, shop owners in Russia and steel plant owners in
Kazakhstan f into reality. But there are still thousands more to be helped
over the next 10 years.
We are not alone in this effort. We are part of a team of international
financial institutions f such as the World Bank, the European Investment Bank
and the International Financial Corporation f that together are making a
tremendous difference in the region. The EBRD is certainly ready to deepen
this cooperation and ensure we all continue to play our unique roles in tune
with each other.
There is no blueprint for how transition should work. Instead, we are f
together with the countries in which we operate f defining each and every day
the rulebook that scholars will look back on in time and analyze.
Over the first 10 years of transition, we have redefined history. And,
although we don't perhaps realize it just yet, we are already defining
Financial Times (UK)
August 5, 2000
[for personal use only]
Putin sets his sights on the military
INTEREST GROUPS RUSSIAN PRESIDENT OPENS A THIRD FRONT
By Andrew Jack
Vladimir Putin, Russia's president, appeared to open a third front in his
battle against powerful interest groups this week when six generals lost
their jobs in a reshuffle signalling a far broader shake-up in the armed
After tackling the powerful grip of Russia's 89 regional governors, and the
excessive political influence of a handful of mighty business "oligarchs",
the military seems to be the latest focus of his attention.
Mr Putin has taken many commentators by surprise with the speed and
ambition of his decisions since his inauguration in May.
He has pushed through proposals giving him the power to replace governors
accused of violating laws and their influence over the Federation Council,
the upper parliamentary chamber, has been diluted.
Separately, a series of high-profile investigations has been launched over
the last few weeks against companies linked with the country's leading
oligarchs, most powerfully highlighted by the brief detention in jail in
June of Vladimir Gusinsky, the media magnate.
If Mr Putin is now beginning seriously to target the military, it could
prove one of his most explosive actions to date. The 1m-strong former Red
Army is demoralised and has lost much of its Soviet-era influence, but it
remains a powerful political and economic force, weakened by internal
Speculation has been rife that Igor Sergeyev, the defence minister, may be
sacked, given that some of the six dismissed military bosses were close to
him. There are even suggestions that he could be replaced by a civilian
close to Mr Putin.
"It wouldn't surprise me if he is gone within the next two months," says
Pavel Felgenhauer, a defence analyst, but he cautions that some of the six
generals were in any case approaching retirement, few were very senior and
not all were particular allies of Marshal Sergeyev.
What is clear is that there is a strong internal division in the armed
forces between those close to Marshal Sergeyev, who advocate the continued
priority given to Russia's expensive but world-class strategic missile
system, and Anatoly Kvashnin, head of the general staff, who has called for
greater emphasis on conventional land forces.
Mr Felgenhauer predicts further sackings as a result of the conflict in
Chechnya, which has taken more lives, lasted longer and proved less
conclusive than predicted.
Meanwhile, a new line of attack against the army emerged yesterday with the
news that four other generals are under investigation in relation to the
disappearance of Pounds 300m in military funds. The case, begun at the
start of this year, coincides with Mr Putin's decision to reinstal security
officers into the armed forces accountable to him.
Against this backdrop of fresh activity, some are beginning to question how
far Mr Putin has neutralised the challenge posed by the first two interest
groups - of governors and oligarchs - before attempting to deal with a third.
The administration's "war on oligarchs" gathered pace in June and July,
with inquiries by the tax inspectorate and general prosecutor's office
against a number of big companies led by politically influential
businessmen. Yet there has been less action than noise.
All charges were later dropped against Mr Gusinsky, and a key figure in a
separate investigation into his group was released from custody this week.
Some investigations against the Lukoil oil group and Avtovaz carmaker have
also been abandoned recently.
"No-one expected that he could destroy Yeltsin's system of power so quickly
and effectively," says Andrei Ryabov, an analyst with the Carnegie Moscow
centre. "Creating a new political and economic system is more complicated.
He will face conflicts from within his own coalition."
The Russia Journal
August 5-11, 2000
Media moguls maneuver
Results could alter face of Russian TV
By ERIC HELQUE
State wants to take control of ORT and independent NTV.
If the world of Russian television has often looked like the repeated
adventures of a couple of high-profile, politically influential oligarchs,
this time, the outcome could be dramatically different.
NTV’s Vladimir Gusinsky and ORT’s Boris Berezovsky are back at the front of
the media news but, if President Vladimir Putin has it his way, they
could soon be out again, and for good.
According to the Russian press, quoting Kremlin insiders, the state has
made it clear to both of them that it wants to gain control over their
channels, quite possibly ousting them in the process and stripping them of
much of their political influence.
It all started when Berezovsky-controlled daily newspaper Kommersant wrote
early last week that Gusinsky was negotiating sale of his Media-MOST
holding, which controls NTV, to the firm’s state-controlled creditor, gas
giant Gazprom. Shortly after that, Berezovsky told Kommersant and Vedemosti
that he was prepared to sell his shares in ORT to the state.
"If this comes through, it will reinforce state control over TV news
coverage and restrain the oligarchs’ political influence," said Boris
Timashenko, a senior official with the Glasnost Foundation.
Over the years, Gusinsky whose NTV is the only private Russian national
TV channel and Berezovsky who has effective control over ORT, Russia’s
most-watched TV channel have experienced changing relationships.
They were allies during the 1996 presidential election, when both helped
get Boris Yeltsin re-elected. But they later became bitter foes, especially
since Berezovsky’s ORT was instrumental in securing then-Prime Minister
Vladimir Putin a pro-government State Duma in the December 1999
parliamentary elections and then substantially helping him win election as
Russia’s president in March.
At the same time, Gusinsky’s NTV chose to oppose Putin and has been airing
fairly critical coverage of the Chechen war, along with a satirical
political puppet show, "Kukly," which features a Putin puppet that
reportedly infuriates the Russian president.
Many observers say NTV’s opposition to the Kremlin is the real reason why
Media-MOST’s headquarters were raided by armed and masked tax police in May
and why Gusinsky was briefly jailed at the infamous Butyrskaya Prison in
June — an event that saw Berezovsky mildly defend his archenemy.
But now, while observers say their positions are somewhat different, both
face the prospect of having to relinquish their channels or, at the very
least, strike compromises with a government they had so far managed to
Early in the week, Kommersant, quickly followed by most Russian newspapers,
wrote that Media-MOST, which is heavily indebted to state-owned gas giant
Gazprom, had entered negotiations with Gazprom’s media arm Gazprom Media.
The object of these talks, according to Kremlin insiders quoted by Russian
newspapers, was for Media-MOST to hand over its shares to Gazprom, probably
eliciting a change in Media-MOST’s leadership.
This was immediately refuted by Media-MOST, which claimed that such talks
never took place and that selling Media-MOST, or NTV, was totally out of
the question. According to an NTV journalist, who asked not to be named,
NTV General Director Yevgeny Kiselyov also held a meeting with NTV
journalists Tuesday to tell them nothing of the sort was contemplated.
According to the journalist, the prospect of a sale to Gazprom Media had
tremendously worried NTV journalists, especially so since Gazprom Media
salaries are said to be far below NTV paychecks.
Moreover, NTV’s editorial staff had already been destabilized by the fact
that, since last February, about 10 journalists have left NTV to go over to
state-controlled RTR, Russia’s second television channel, which offered
them either higher salaries or better career opportunities.
And in spite of Media-MOST’s denials, several media observers believe talks
between Media-MOST and Gazprom did take place, if not necessarily for the
gas giant to buy the media holding, at least to exert pressure on Gusinsky
to become less anti-Kremlin.
"NTV will probably stay private, but it is very likely there will be a deal
with the government so that NTV drops its anti-Kremlin stance and becomes
neutral, especially on hot topics such as Chechnya or the president’s
image," said Sergei Markov, director of the Center for Political Studies.
The NTV source also said that such a deal, whereby NTV would not raise
subjects that are embarrassing for the Kremlin, was a possibility.
A ‘first step’
"Exerting pressure on Gusinsky so that NTV becomes more neutral will
certainly be a first step for the Kremlin," concurred Alexei Samokhvalov,
director of the National Research Center on Television and Radio. "However,
in a second step, the state might try to buy a control pack of NTV shares."
Berezovsky, who, newspapers reported last week, had also entered
negotiations to sell his stake in ORT, shares one common point with nemesis
Gusinsky: He is also heavily indebted to the state. However, in many
respects, his position is also quite different.
First, ORT is officially a public television channel, which, Markov said,
should make the state’s attempt to regain full control over it more
legitimate in the public’s eye. Then, he was once a prominent member of
former President Boris Yeltsin’s entourage, the so-called "Family," and,
until recently, fully supported Putin’s actions.
But, most of all, Berezovsky never made any secret of the fact that he had
entered negotiations with the state, which he confirmed last week.
Moreover, he has publicly said that he was willing to sell his shares, even
adding that he had had enough of ORT.
That is, at least, until very recently. On Thursday night, he apparently
changed his mind and declared in an ORT interview that, since the state
also wanted to take control of NTV, he had just decided not to sell his ORT
But whether that is to be taken entirely seriously is questionable,
observers say. Did Berezovsky really decide not to sell, or does he want
more money for his shares? Berezovsky’s frequent shifts often leave even
seasoned media observers perplexed. So, for instance, did the fact that he
recently put his daughter as well as anchorman and close ally Sergei
Dorenko on the ORT board in a move that was seen as a reinforcement of his
control over the channel, before saying he wanted to get rid of it.
"With Berezovsky, every move is tactical; you cannot really analyze what he
does," Markov said. "It is difficult to understand his psychology,"
In any event, the state’s desire to get control over all national TV
channels is in little doubt, observers say. If the government gets its way,
experts say there will be consequences for the running of TV in Russia, the
level of transparency in political life and the fate of the oligarchs.
"If this happens, it will be a step backwards, back to the times when there
was only one television station, state-controlled," said the Glasnost
Foundation’s Timoshenko. "This control will probably not extend to the
written press, where the state will continue to tolerate diversity and
criticism. But TV is the medium that has the greatest audience."
However, observers believe state control will be exerted in a rather
flexible way. "The state will not necessarily behave in a harsh way; there
won’t be any real repression, but it will make sure TV channels stay
dependent by controlling their financial incomes, as well as threatening
not to renew their licenses and to subject them to tax controls,"
According to Markov, the state will allow some flexibility regarding news
coverage on TV, except for really crucial political matters, where it will
impose its own views. "More importantly, the government will be able to do
its own propaganda on TV and to prevent its opponents’ views from getting
across. That may be very important when it wants to implement unpopular
reforms, like housing and pensions reforms."
Finally, the government’s attempt may have serious consequences for the
oligarchs themselves, who would be deprived of an important means of
influencing political decisions.
A ‘niche’ under Yeltsin
"The oligarchs had a niche under Yeltsin, when institutions were privatized
to private interests, but now, the government’s message to the oligarchs is
‘make money on the markets, not in politics,’" Markov said. "By taking
their TV stations, or by neutralizing them, the government is taking the
oligarchs away from the political scene, back into the purely economic arena."
But Samokhvalov said he believed Berezovsky and Gusinsky could adapt to
these new rules. "Berezovsky is trying to create a political structure that
would focus on regional leaders, who he thinks have the real power now; so
he is less interested in trying to influence central government. As for
Gusinsky, he has spent years building up NTV and Media-MOST, which are a
tremendous commercial success, and he is trying to implement a strategy to
preserve this structure, possibly by making compromises; possibly, later,
by trying to sell some shares to foreign investors."