August 8, 2000    
This Date's Issues: 4445•  4446   • 

Johnson's Russia List
#4445
8 August 2000
davidjohnson@erols.com


[Note form David Johnson:
1. BBC MONITORING: RUSSIAN SAVINGS BANK RESTRUCTURES ITSELF TO 
OUTWIT IMF.
2. Reuters: IMF relations with Russia off to good start-Koehler.
3. gazeta.ru: Kremlin Prepares Duma Reform In Deputies’ Absence.
4. Moscow Times: Igor Semenenko, Oligarchs Feeling Kremlin Squeeze.
5. Reuters: Putin signs revolutionary Russian tax overhaul.
6. RFE/RL Security Watch: Victor Yasmann, THE ROOTS OF PUTIN'S 
ATTACK ON MEDIA FREEDOM.
7. The Russia Journal: Otto Latsis, We don’t need another Stalin.
Putin revives ties with Russia’s Soviet allies.
8. Carnegie Non-Proliferation Project: Russia's Missile Assistance 
to Iran.
9. Financial Times (UK): ARTS: Papa, what if they hang you for this?: 
Was Dmitry Shostakovich Soviet Russia's loyal son or a secret subversive, 
who compromised with Stalinism only in order to survive? Vladimir Ashkenazy 
argues that the west's refusal to appreciate the composer's dilemma 
symbolised its failure to apprehend the nature of the most murderous regime 
in history.
10. smi.ru: Defense Minister to be Ousted, Again? 
11. Reuters: French lawyers threaten to seize Putin's plane.
12. Zavtra!]


*******


#1
BBC MONITORING
RUSSIAN SAVINGS BANK RESTRUCTURES ITSELF TO OUTWIT IMF
Text of report by Russian newspaper `Kommersant' on 29th July 


Yesterday Sberbank president Andrey Kazmin announced that his bank is
embarking on the largest reform in its history. The number of Sberbank
regional banks will be cut from 69 to 18, and the largest of them,
Moskovskiy Bank, will simply disappear. This makes the IMF-ordered audit of
Sberbank currently being done by PricewaterhouseCoopers absolutely pointless. 


Theoretically it has been known for some time that Sberbank Rossii [Savings
Bank of Russia] intended to reduce the number of its regional banks. Moves
along those lines were indicated in bank plans extending out to 2005.
However, the fact that it decided to start the restructuring now and
complete it "over a period of from three months to one year" puts a
completely new spin on what is usually a routine event. Such rapid
restructuring can more likely be attributed to political rather than
economic considerations. 


The reason is that currently a supplementary audit of Sberbank by
PricewaterhouseCoopers is being carried out at the IMF's insistence. The
IMF's intentions in doing so are well known; it is seeking to prove
Sberbank's inefficiency and monopoly status in order to recommend that it
be dismantled. 


However, the restructuring begun by the bank makes that audit absolutely
pointless. After all, by the time that decisions begin to be made using it
as a basis, Sberbank will have become a totally different bank.
Consequently, IMF recommendations or criticisms of it will simply no longer
apply. 


Judge for yourself. In the course of mergers among Sberbank's regional
banks their number will be reduced from 69 to 18. Moreover, the largest of
them, Moskovskiy Bank, will be eliminated. In its place Sberbank will
create a department within its main office structure to work with branches
in Moscow. That department will be headed by Gennadiy Soldatenkov,
Moskovskiy Bank's manager. "The existence of two administrative structures
is a luxury in terms of managing the branches in Moscow," Kazmin said,
explaining this decision. 


Sberbank's reform is being carried out with the consent of the country's
leaders, whom the IMF had in fact intended to approach with its proposals.
"We have the go-ahead from the president and the government," stated
Kazmin. "But just don't get that confused with instructions from them. This
decision was solely up to senior management and the bank's board of
directors." 


Meanwhile, it was not deemed necessary to inform the IMF of the plan. In
response to a Kommersant question as to whether or not the monetary fund
had been informed, Sberbank's president said: "This is a matter for the
stockholders, not for the IMF. If that esteemed organization is such a
strong proponent of competition between banks, well, we're increasing our
competitiveness." 


*******


#2
IMF relations with Russia off to good start-Koehler

WASHINGTON, Aug 7 (Reuters) - Relations between the International Monetary
Fund and Russia are off to a good start with the new leader of the country,
the global lender's chief said on Monday. 


"I do think we have a good start with (Russian) President (Vladimir)
Putin," IMF Managing Director Horst Koehler said at the National Press
Club. "We need to see more implementation of the good ideas." 


Putin, a former KGB spy, took office New Year's Eve when then-president
Boris Yeltsin resigned. 


The IMF chief said Russia, the fund's biggest borrower, has reduced its
debt to the international lender to $12 billion now from $20 billion at the
peak of a financial crisis in 1998. 


Koehler said an IMF team will head to Russia next month to discuss what
more must be done to extend the country's recovery from recession after it
devalued its currency and defaulted on some of its debt in August 1998. 


"I hope that we make further progress with them," he said. 


The Russian economy is projected to expand up to five percent this year
after growing 3.2 percent in 1999, largely due to higher revenues from
energy and commodity exports in recent months and the 1998 devaluation of
the rouble. 


"My judgment is stick to the assessment that this is a great country,"
Koehler said. "So don't humiliate this country. On the other hand, don't be
euphoric." 


Part of the IMF's mistakes in the past was being "too euphoric," he said.



*******


#3
gazeta.ru
August 7, 2000
Kremlin Prepares Duma Reform In Deputies’ Absence
The Kremlin could not have chosen a more advantageous time to introduce its
plans to reform the state Duma. In August and September all the deputies
are taking their well-earned holidays. The restructuring of the lower house
will immediately be implemented on two levels; changes to the law ‘on the
election of deputies and the introduction of a bill ‘on parties.’ 


Viktor Zorkaltsev, head of the Duma committee on the affaires of public and
religious organizations, and member of the communist faction in the Duma,
has said that the law on political parties could be adopted by the end of
the Duma’s autumn session. The committee members from the pro-Putin
faction Unity are currently working on the text of the bill, the aim of
which is not being kept secret: “The necessity of forming a political
system in Russia in which 2 or 3 political parties would dominate,
preferably only 2“ 


Obviously one of those parties would be Unity, and the second, most likely
the Communist Party. However, should a constructive opposition movement
emerge by the winter, the Kremlin would not object and the communists could
be elbowed from the forefront of Russia’s political scene. 


Zorkaltsev says the revised law on elections to the lower house will
probably include a clause stipulating that parties require more than the
current %5 in order to gain seats in the Duma and have their deposits
returned. Also it is expected that the bill will contain regulations
whereby a political party will require 10,000 signed up members in order to
register as an official party permitted to stand in elections. 


The Kremlin handed the bill ‘on the election of deputies to the State Duma’
a while back already but the deputies have, quite understandably, not been
in a hurry to amend it and put it to the vote. According to the draft
legislation, the existing balance of 50% party candidates and 50%
independent candidates, would be redressed to favour the latter, which
would lead to the localization of the Duma elections. The number of
so-called party seats would be reduced to 150 from the current 225. 


It is not surprising then that the Union of Right Forces (SPS) and Yabloko
factions have announced that they are preparing their own version of the
draft bill according to which the percentage of seats reserved for party
representatives would be increased to 70% and only 30 % would remain for
independent regional representatives. 


According to Yabloko spokesman Dergei Ivanenko, “Increasing the number of
independent regional representatives would lead to the Duma being dominated
by candidates totally dependent on regional rulers or shady half-criminal
capital. We have already witnessed such a scenario.” 


Elena Ogorodnikova, staff writer 
*******


#4
Moscow Times
August 8, 2000
Oligarchs Feeling Kremlin Squeeze
By Igor Semenenko 


The government began an offensive earlier this summer against leading
businessmen, questioning their privatization deals, accusing them of tax
evasion and even putting one of the tycoons behind bars.


But the campaign quickly fizzled out as charges were dropped or thrown out
in court. What began as a cavalry charge against business empires developed
into quiet bargaining between the state and the private sector over taxes.


This may suit the Kremlin just fine.


"Our task is not to put business behind bars, but to force it to pay
taxes," tax police director Vyacheslav Soltaganov said last week, Interfax
reported.


Tax evasion cases were opened last month against No. 1 oil company LUKoil
and top carmaker AvtoVAZ, but neither held up.


The Prosecutor General’s Office said Thursday that federal tax police had
no grounds to seek hundreds of millions of dollars from AvtoVAZ and ordered
the investigation dropped. Tax authorities had accused the company of
producing 280,000 cars with the same identification number in 1996 to avoid
taxes.


The Moscow arbitration court threw out the bulk of the case against LUKoil,
Itar-Tass reported Friday. The oil company was accused of underpaying its
taxes by 760 million rubles ($27.4 million), but the court said the tax
authorities’ investigation had to be confined to only 5 million rubles of
this amount.


In the most high-profile case, embezzlement charges were dropped late last
month against Media-MOST owner Vladimir Gusinsky, who had spent three days
in Butyrskaya Prison. Neither the prosecutor’s office nor Media-MOST
offered a full explanation, which led to much speculation in the press that
Gusinsky had reached a deal with the Kremlin.


Although the cases have fallen apart, they may have served their purpose in
getting the oligarchs to cough up more money for government coffers. 


As leading businessmen were preparing to meet with President Vladimir Putin
for a roundtable discussion July 28, Vladimir Potanin — who had been
accused of rigging a privatization auction for Norilsk Nickel to the tune
of $140 million — said the oligarchs must change their ways.


"We should say to people: ‘You think we were bad, but we want to be normal
and socially acceptable.’ Let us promise we will all pay our personal taxes
and let us also show how much money we spend on sponsoring culture," the
Financial Times quoted Potanin as saying in an interview.


Prosecutors’ accusations against Potanin over the 1997 privatization of
Norilsk Nickel — made in a letter to him telling him to pay compensation or
possibly face charges — apparently have not been pursued.


The roundtable with 21 businessmen, which concluded with statements of good
intent on both sides, has led to the creation of an advisory council of
entrepreneurs, the government reported Monday. 


The council is to be chaired by Prime Minister Mikhail Kasyanov, who will
discuss pending economic issues with representatives of the business elite. 


While the government promises to pay heed to business leaders, it also
wants them to pay more taxes.


The day of the Kremlin roundtable, the Finance Ministry questioned the
amount of taxes paid by the country’s top oil companies, saying they owed
hundreds of millions of dollars to the federal budget.


For example, Sibneft was reported to have paid 49 rubles ($1.80) in taxes
per each ton of extracted crude, about one-third of that paid by
Surgutneftegaz and Sidanko.


Tellingly, the attack on the oligarchs was carried out when the president
was pushing through his legislation to restrict the powers of the regional
governors.


"The idea was to isolate the tycoons during the tug-of-war with the
governors," said Andrei Ryabov, a political analyst with the Moscow
Carnegie Center.


The oil companies are not the only ones the government is pressuring to pay
its taxes. Kasyanov said last week that Bashkortostan had begun making
federal tax payments on time for the first time in years.


At the same time that it is cracking down on business, the government is
building a cushion of reserves that could be used in case oil prices tumble.


"I think the Central Bank’s gamble with the ruble and the attempts to
squeeze more tax payments are interrelated," Ryabov said.


The Central Bank’s tight foreign exchange policy has led to real ruble
appreciation of 8 percent so far this year. Inflation was up 11.5 percent
from January to July, while the ruble depreciated by only 3 percent over
the period. 


In the past, the government used to cut deals with major companies like
Gazprom and LUKoil on the quiet when it needed additional funds, but
Putin’s administration has developed a new mechanism to put pressure on
businesses.


"It remains to be seen, however, whether this is the beginning of a lasting
peace or simply a temporary truce," NIKoil brokerage said in its weekly
report Monday, referring to the government’s decision to put its crackdown
on hold.


******


#5
Putin signs revolutionary Russian tax overhaul
By Peter Graff

MOSCOW, Aug 7 (Reuters) - A beaming President Vladimir Putin signed his 
ambitious tax overhaul plan into law on Monday, telling a meeting of Russian 
cabinet officials that the act was ``the most important event in the 
country's life.'' 


The second chapter of the tax code, which Putin signed, completely revamps 
Russia's tax collection system and forms the centrepiece of his market reform 
strategy. 


``I would like to thank all the members of the government who made a 
significant contribution in drawing up the code and pushing it through 
parliament,'' Putin said. 


He said the finance ministry would unveil its draft budget for 2001 next 
week. 


Russia's stock market has soared since the tax bills sailed through 
parliament last month, handing Putin a decisive victory. 


The former KGB spy has combined a pro-market economic blueprint with tough 
talk about shoring up the power of the state since taking office on New 
Year's Eve when president Boris Yeltsin resigned. 


Yeltsin had failed conspicuously in numerous attempts to pass reforms to the 
Byzantine, often contradictory tax code, which investors long described as 
one of the main impediments to doing business legally in Russia. 


The new code will slash income taxes to a flat 13 percent, simplify and 
reduce payroll and pension fund taxes, and reduce a much-vilified tax on 
turnover that businesses have been forced to pay on revenues whether they 
turn a profit or not. 


Eric Kraus, of Moscow's NIKoil brokerage, described the new code as ``the 
greatest experiment in supply-side economics since the end of the 
Reagan-Thatcher years.'' 


The goal, above all, is to end rampant tax evasion among businesses, which 
have complained for years that they would go bankrupt if they followed the 
old laws to the letter. 


It will also contribute to Putin's main political goal of increasing central 
authority by decreasing the control that regional bosses have maintained over 
tax revenues. 


Many had predicted that the regional leaders would try to hold up the tax 
bill when they voted on it last month from their seats in parliament's upper 
house, the Federation Council. 


But Kraus said that in the end ``they figured that if they vetoed it they 
would get back a bill that was even worse.'' 


The tax changes take effect next year, and analysts say it may be months or 
years before the impact is fully felt. 


*******


#6
From
RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC
RFE/RL Security Watch
Vol. 1, No. 3, 7 August 2000
Security, Corruption and Foreign Policy in Russia and
the Post-Communist Region


THE ROOTS OF PUTIN'S ATTACK ON MEDIA FREEDOM
By Victor Yasmann


Russian President Vladimir Putin's current campaign
against independent media outlets has its roots in Russia's
national security information doctrine. That document,
drafted by the Presidential Security Council and approved
by Vladimir Putin at the end of June, represents a serious
challenge to the still fragile independent mass media of
the Russian Federation. Despite its breadth--the 40-page
document covers everything from the development of the
national telecommunications market to questions of
intellectual property--the new doctrine is united by a
single idea: the need to increase governmental control over
the flow of information by establishing a legal basis for
such control.
This unusual document was prepared by people whose
careers dispose them to conceal and manipulate information
rather than to make it public. More than 90 percent of the
staff of the Russian Security Council consists of former
KGB generals. And they co-opted for the preparation of this
document the seven administrators of the newly created
superdistricts, five of whom have military and intelligence
agency backgrounds.
While nominally committed to freedom of the press and
the prohibition of censorship, the document includes
language which appears to subvert these general principles.
According to the newly approved doctrine, individual
Russian citizens currently face a number of threats from
the media including "use of the mass media for restriction
of the human right for the freedom of conviction," "the
propaganda of mass culture based on a cult of violence and
values in violation of norms accepted by Russian society,"
and "the misuse of freedom of information" by the media.
Russians, the document continues, face even greater
threats from abroad, including "the activity of foreign
states, international terrorist and other criminal
entities, organizations, and groups directed at
infringement of the interests of the Russian Federation in
the information sphere, reduction of state influence on the
life of society, and diminishing economic ability of the
state to protect the lawful interests of citizens, society,
and state in the informational sphere," and even "growing
dependence of the spiritual, political, and economic life
of the country on foreign information structures."
Such sweeping statements perhaps portend a darker
future for media freedom in Russia, but the doctrine's
first fruits have begun to appear already. On 22 June, for
example, Putin signed an amendment to the press law which
bans "the dissemination and propaganda" in the mass media
and computer networks about "methods and techniques of
preparation, production, acquisition, and use" of illegal
drugs and their precursors. While many may welcome this
effort to fight the scourge of drugs, they may be less
pleased by the precedent it sets to fight the freedom of
the Russian media.


*******


#7
The Russia Journal
August 5-11, 2000
We don’t need another Stalin
By Otto Latsis 
Putin revives ties with Russia’s Soviet allies.
Not only has President Vladimir Putin taken on board former Prime Minister
Yevgeny Primakov’s idea of reviving ties with old allies of the former
Soviet Union, he has gone even further.


Putin recently met with the Libyan foreign minister and announced his
intention to visit the North African state. Just before that, a
representative of another totalitarian regime, Iraqi Foreign Minister Tariq
Aziz, paid a visit to Moscow. A few days before the Iraqi visit, Putin
surprised the West by heading for the G-8 summit in Okinawa via a route
that took him through China and North Korea. In September, Putin plans to
combine his trip to the millenium summit in New York with a visit to Cuba. 


A year and a half ago, when Primakov spoke of a Russian-Chinese-Indian
alliance in response to U.S. arbitrariness in the Balkans, the idea met
with a cool reaction from politicians and was mocked in the press. Putin’s
plans, on the contrary, are being taken seriously, as could be seen by the
reception he was given in Okinawa. 


It’s not hard to identify the reasons for such different reactions to what
look like similar approaches. Primakov was too direct, talking of an
alliance, while Putin prefers the term cooperation. But even more important
is that Primakov’s Russia was weak and dependent on the very West that
Primakov was busy trying to challenge, while Putin’s Russia can pay its own
debts and thus deal with any of its partners on an equal footing.


The two politicians’ domestic policy ideas also look similar. Primakov
wanted to strengthen the role of the state, and Putin talks of the same
thing. But Primakov was unlucky. With the exception of the left, public
opinion was unnerved by his strong state leanings and rejected them. Putin,
on the other hand, is moving toward his objective of reinforcing the
"vertical of power."


Does this mean that Putin is just a more successful version of Primakov? By
no means. Some of the methods are the same, but the aims are different.
Putin is looking for magic jet-powered boots, whereas Primakov preferred to
plod along quietly. Putin wants to speed up economic reform, approving
German Gref’s economic program and getting the Tax Code through the Duma,
while Primakov sought to stall reform.


But can such different aims be reached with such similar methods? Or, put
more bluntly, will Putin’s methods work? The archaic methods of Soviet
politics aren’t the only weapon in Putin’s arsenal ­ he has shown that he
can also be a modern politician. But the political school of the Brezhnev
or Stalin era casts its shadow over him, and not just in his foreign
policy. Democratic public opinion in Russia is more worried by the Kremlin
administration’s attempts to restrict freedom of the press than by Putin’s
contacts with the odious regime in Pyongyang.


The Russian Pinochet has become something of a fashionable idea among the
Russian liberal intelligentsia. This is the dream of a "strong hand,"
someone who would lead Russia to prosperity through a period of
"temporarily restricted democracy." The problem is that it is an impossible
dream, not just because restrictions on democracy are never temporary, but
because they hinder rather than help economic and social progress. 


For the last three months, the Russian economic mini-miracle has been
shadowed by an ominous cloud. The economy is still growing quite fast, but
not as fast as it was at the beginning of the year and not at the rate
forecast for all this year plus the next. This is not just by chance. It is
confirmation of economists’ fears that there is no solid foundation to
support this growth. 


High oil prices are keeping export earnings buoyant, making it possible to
follow an independent foreign policy. But the low inflation, weak ruble and
low prices for the goods and services of natural monopolies ­ factors that
have driven the economic growth of the last year and a half ­ are coming to
an end. 


A real breakthrough in reform requires a clearly set out social contract
with the population, which will have to adapt to living by market laws for
everything from paying their rent to raising labor productivity. This will
require sacrificing the modest remnants of "socialism" in favor of genuine
prosperity. Only if this is done will it be possible to say that Russia has
successfully modernized. But Stalin-Brezhnev methods won’t work here.


*******


#8
Date: Mon, 07 Aug 2000
From: Justin Anderson <janderson@ceip.org>
Subject: Proliferation Brief 22: Russia's Missile Assistance to Iran


The latest brief from the Carnegie Non-Proliferation Project. 


PROLIFERATION BRIEF 
Vol. III - No. 22 August 7, 2000 


Russia's Missile Assistance to Iran 


On July 15, Iran successfully tested its medium range "Shahab-3" missile.
The first test missile in 1998 exploded after launch. Russia is suspected
of aiding the Iranian program. The following exchange between American,
Israeli and Russian experts, dated January 1999, is excerpted from a
chapter in the new book Repairing the Regime, edited by Joseph Cirincione.
To view the table of contents and complete chapter, please visit
<http://www.ceip.org/programs/npp/regimetoc.htm>www.ceip.org/programs/npp/re
gimetoc.htm. 


The Honorable Robert Gallucci is the Dean of Georgetown's School of Foreign
Service and the U.S. State Department's special envoy for ballistic missile
and weapons of mass destruction proliferation. These are his personal views. 


"In 1997, the issue of Russian entities’ assistance to Iran in the area of
ballistic missiles found itself prominently featured on the agenda of the
Gore-Chernomyrdin Commission." 


"Through this process, the United States made demarches to Russia about
activities that the U.S. officials observed, and shared information and
intelligence about interactions between Russian entities and the Iranian
ballistic missile program. For one full year, from the summer of 1997
through the summer of 1998, the process achieved steady progress . . . " 


"Later in 1998, however, this progress came to a halt, as measured by both
input and output. In terms of input, the export groups and technology
groups that were supposed to meet following the Moscow summit in September
1998, really have not met effectively. The investigation of those nine
entities that was launched with such optimism in July 1998 has not produced
any real results, such as a conclusion that anyone acted inappropriately or
illegally; there has been no prosecution. On the output side, in the
summer of 1998, Iran tested its so-called Shahab-3, a medium-range
ballistic missile (MRBM). Many of the problem cases that the United States
had identified as much as a year ago continued, while some new cases of
assistance were identified. " 


"What is the significance of Russian-entity assistance in the Iranian case?
. . . Russian assistance was extremely important in shortening the amount
of time in which the Iranians would be able to develop, manufacture, and
deploy their own MRBMs, and do so presumably with some improvement in
quality. Continued Russian assistance will allow not only for the rapid
deployment of the Shahab-3 but also for the Iranians to move onto
intermediate-range and intercontinental ballistic missiles." 


The Honorable Robbie Sabel is the Deputy Director General, Department of
Arms Control and Disarmament at Israel's Ministry of Foreign Affairs. 


"For the Shahab-3 to enter Iran's arsenal, the missile has to be produced
in usable quantities. Iran is not yet in a position to do so. The missile
has to be completely reliable. Iran has not yet developed it to this
stage. The missile will, presumably, be adapted to carry nonconventional
warheads. This has not yet been done, and requires sophisticated
technology. All these additional refinements require in the foreseeable
future, outside help. That help can only come from Russian companies and
entities. 


"At present, Russian companies and entities continue to provide assistance
to the Iranian missile development project and to the development of an
Iranian nuclear infrastructure. The U.S. government has devoted
considerable efforts in trying to persuade the Russian government to
prevent such proliferation. Russian colleagues acknowledge their awareness
that it is not in Russia's interest to see Iran with long-range missiles
equipped with nonconventional warheads. Yet, is Russia doing everything in
its power to prevent such leakage of technology, know-how and material? 


"The Russian Government is not making such an all-out effort. There may in
fact be elements in Russia that believe there is economic and even
strategic gain in such deadly trade. Despite the acknowledged internal
problems of the Russian government, proliferation could be prevented if the
will existed. If the Russian government reached the conclusion that such
proliferation is a dire threat to Russia, the leakage would be prevented.
Instead, there is an opposite trend, and the much-publicized trip of
Russian minister Adamov to Tehran appears to be flaunting nuclear ties
rather than limiting them." 


Dr. Viktor Mizin heads the office for U.N. Peacekeeping and Sanctions at
the Russian Federation's Ministry of Foreign Affairs. 


"It is interesting that the Russian official reaction moved from official
denial from the Ministry of Foreign Affairs and Mr. Chernomyrdin, to
reluctant recognition, and then to reports of the successful apprehension
of some Iranian spies that contacted Russian missile manufacturers. 


"The problem is, how does one stop this process? The logical answer is to
improve existing export controls. Unfortunately, as the recent revelations
show, export controls in Russia are not operational. The problem is
enforcement, enforcement, and enforcement. 


"So the emphasis should be placed on providing more competent personnel on
export control services, equipping them with state-of-the-art technology,
ensuring the real time exchange of data and information from Moscow to
custom checkpoints. Also, another problem is the bureaucratic wrangling.
Russia needs a governing body to oversee export controls. 


"Finally, a significant part of the proliferation problem is the people.
The major threat is that Russian specialists will flee abroad because they
are unemployed at home. One possible solution is the development of a
joint U.S. Russian project that could employ these Russian specialists.
For example, many years ago President Yeltsin proposed that the United
States and Russia developed what was termed a 'Global System of
Protection,' that is, an antiballistic missile or another sort of space
tracking system. … Another project that was discussed was the employment of
Russian missile scientists in joint commercial efforts, similar to efforts
in the nuclear sphere. American companies could employ the best and
brightest Russian missile engineers and foremen, thus preventing them from
fleeing to proliferant countries." 


To order Repairing the Regime, call 1-800-634-7064 or visit
http://www.routledge-ny.com The book is also available in bookstores and at
http://www.barnesandnoble.com, and at http://www.amazon.com


CARNEGIE ENDOWMENT FOR 
INTERNATIONAL PEACE 
1779 Massachusetts Avenue, NW 
Washington, DC 20036 
Phone 202-483-7600 
www.ceip.org/npp 


*******


#9
Financial Times (UK)
August 5, 2000
[for personal use only]
ARTS: Papa, what if they hang you for this?: Was Dmitry Shostakovich Soviet
Russia's loyal son or a secret subversive, who compromised with Stalinism
only in order to survive? Vladimir Ashkenazy argues that the west's refusal
to appreciate the composer's dilemma symbolised its failure to apprehend
the nature of the most murderous regime in history


When Stalin made his famous denunciation of Dmitry Shostakovich in 1936,
was the composer ever in serious danger of being sent to the Gulag? The
answer, had Shostakovich not immediately complied with the Communist
party's directive to write only music acceptable to the masses, is yes: and
even more certainly so had he talked freely about the inner content of his
music. 


Ironically, such was the arbitrariness of communist power that, even as a
"good boy", he might still have perished along with tens of millions of
innocent Soviet citizens caught up in the most devastating terror history
has ever known. But Stalin evidently decided otherwise: to use the already
famous composer as a vehicle for Soviet cultural propaganda aimed at the
naive West. 


As a result, some western musicologists have persuaded themselves that,
during the late 1920s and early 1930s, Shostakovich was "perhaps Soviet
Russia's most loyal musical son" - a claim (proposed by the American
scholar Richard Taruskin) for which there is no proof. 


In truth, Shostakovich must have sensed that it would be dangerous to go
against proletarian musical ideology, and that, in order to be able to
function as a composer, he must to some extent be seen to pay his dues -
something he did by composing his two "Party" symphonies, No. 2, To October
(1927), and No. 3, The First of May (1930). 


However, starting with the Fifth Symphony of 1937 (entitled, at the
"suggestion" of an anonymous journalist, A Soviet Artist's Creative Reply
to Just Criticism), he developed an uncannily efficient system of
alternating pieces of music for official consumption with music which spoke
from his inner being, occasionally combining the two in a highly creative
musical code. 


But this was barely perceived by western opinion, which formed an
unflattering image of Shostakovich as a conformist, a civil servant eager
to please the authorities. Even his great symphonies came in for
condescending comments. Such epithets as "crass", "vulgar", and
"old-fashioned" prevailed in western musicology - a negative attitude
reinforced by the postwar trend in music championed by certain composers
who tended to deny the priority of the artist's inner world. 


Now, 25 years after Shostakovich's death, the debate about his image - and,
consequently, about the message that his music contained - is gradually
dying down. Nevertheless, I find it fascinating to trace its origins and
directions. Had the west, guided by Soviet propaganda, not thought of
Shostakovich as a "loyal son" of the Soviet Union, this controversy would
never have arisen. 


We who lived in the USSR knew beyond doubt what Shostakovich had to do in
order to survive and to compose his great music. When, in 1979, a young
Russian musicologist published a book - Testimony: The Memoirs of Dmitry
Shostakovich, as related to and edited by Solomon Volkov - we all believed
that at last the world would understand the true state of affairs. But we
were too optimistic. Many western "experts" rejected the new image
presented in this book, of a man deeply contemptuous of the Soviet system,
most of whose life was a constant tug-of-war with the Soviet state.
Whatever their real reasons may have been, some of these experts
self-righteously persist in holding on to the "loyal son" concept to this
day. At the same time, their superficial knowledge of the Soviet Union, and
consequent failure to understand how the 


Soviet system worked, undermine their credibility. 


To be more specific: the first western article denouncing Testimony and its
new image of Shostakovich was written by Laurel Fay, an American
musicologist and representative of the music publishers Schirmer, who was
then researching Soviet music in Moscow. (Her principal contacts appear to
have been the USSR Composers Union and VAAP, the Soviet copyright agency
dealing with all royalties, which was effectively run by the KGB.) 


Fay mentions Shostakovich's inscription on a photograph, given by him to
Volkov, which includes the following words: "A reminder of our
conversations about Glazunov, Zoshchenko, Meyerholtd - D.S." In Fay's view,
this represents a "precise reference to the limited content of their
conversations". But did she really expect that Shostakovich would provide
explicit evidence of his feelings about the Soviet regime, and of his
tortuous life? When I showed this paragraph to some of my Russian friends,
they laughed. Had that photograph, or the manuscript of their
con-versations, fallen into the wrong hands, it is easy to imagine what
would have befallen the composer and his family. 


Fay confirms her lack of understanding of Soviet reality by writing that it
was Shostakovich's "rotten luck" that he picked "the 'wrong' folk" as his
inspiration for the song-cycle From Jewish Folk Poetry (1948). Does she
really imagine that he could have been stupid enough to write this cycle in
the midst of a horrendous wave of anti-Semitism (initiated from the top of
the Soviet power structure) without knowing precisely what he was doing?
Using a folk text was his only possible way publicly to support the
oppressed. (Speaking from my own experience: during that time I was told in
my music school that I would be excluded from a school concert unless I
added to my usual surname my ethnic Russian mother's maiden name; hence I
played under the name of Ashkenazy-Plotnov. Such was the depth of official
anti-Semitism.) 


Laurel Fay is not alone in misunderstanding the reality of the conditions
under which Shostakovich lived. Richard Taruskin claims that the composer
took no risks in his Thirteenth Symphony, citing the fact that Shostakovich
used the already printed poems of Yevtushenko. Does he not remember that
the great conductor Mravinsky was afraid of conducting this work and that,
under official pressure, two successive soloists dropped out before the
first performance? 


Only the firm stance of Kirill Kondrashin (against the wishes of the
Central Committee) saved the premiere, which he was able to conduct, having
had the foresight to prepare another bass-baritone as understudy. Need Dr
Taruskin be reminded that the poem "Babi Yar" had been denounced in the
Soviet press in 1961, shortly before Shostakovich used it in this symphony?
In any case, it was the power of its music which made the Thirteenth one of
the strongest indictments of the Soviet system, and that was the real risk
Shostakovich took. 


Do we still need to remind the over-comfortable and gullible west what our
life in the USSR was really like? We had to control our every move, watch
every word we said. We had no recourse to justice, even in the 1960s and
1970s. We had no right to foreign travel. Had the great Solzhenitsyn
publicly stood up against the Soviet state in the 1930s or 1940s he would
have been quickly eliminated. Instead, in 1974, he was simply thrown out of
the country. I myself was coerced by the KGB into inform-ing on foreign
students at the Moscow Conservatory. Pretend-ing to be unable to carry out
this task to their satisfaction, I was soon dismissed. (I was also
officially threatened with a total end to my career, unless my Icelandic
wife - read "capitalist" in Soviet parlance - took up Soviet citizenship.) 


Fortunately for Shostakovich, his medium was not words but music - the only
art form which could make it possible for him to express his message
publicly. Even so he had to defend himself constantly against possible
retribution from the authorities. 


When, at a press conference at the Edinburgh Festival in 1962, a western
journalist asked him if it was true that the Party's criticisms had helped
him, he nervously replied, "Yes, yes, yes, the Party always helped me - it
was always right, it was always right". When the journalist left,
Shostakovich turned to Rostropovich, who was present, and said, "Son of a
bitch! Doesn't he know he shouldn't ask me such questions - what can I
possibly say?" 


The need to protect oneself was something all of us who had to survive in
the Soviet Union understood. Such understanding is rare among western
music-ologists. Taruskin, for example, asserts that Shostakovich is
unworthy to be considered as a dissident as compared with Solzhenitsyn, who
(he claims) "despised" the composer. When I told Solzhenitsyn this, he was
"indignant" and authorised me to publish the following statement: "I never
despised Shostakovich - on the contrary, I understand that he had to make
compro-mises with the Soviet authorities in order to save his art. I admire
many of his symphonies, in particular Nos. 5, 7, 8, and 9." Rostropovich,
too, recently told me that he had no doubt that Shostakovich hated the
Soviet system. Rudolf Barshai, conductor of the first performance of the
Fourteenth Symphony, stated that Volkov's Testimony should be considered
100 per cent correct. 


The composer's son Maxim has likewise endorsed it as true and accurate, and
his sister Galina agrees. This is only the tip of the iceberg - dozens of
testimonies from the Soviet Union confirm the authenticity and veracity of
Volkov's book and, consequently, the view of the composer as something
quite the opposite of a "loyal son". Thus the pendulum of credibility
inevitably swings towards those who knew Shostakovich well and who, in
their own lives, experienced similar pressures. 


But there are also voices of a deeper perception in the west that I do not
wish to ignore. The British journalist Ian MacDonald's book, The New
Shostakovich, contains a stimulating and inspiring view of Shostakovich's
life and work, written by someone who seems able to identify with the
composer as if he himself had lived in the USSR. Elizabeth Wilson, in her
substantial and well-researched book Shostakovich: A Life Remembered,
presents the reminiscences of Shostakovich's important contemporaries,
re-affirming the validity of Testimony's view of him. 


What of the music itself? I would like to quote from the British writer
J.W.N. Sullivan's remarkable study of Beethoven: "The most valuable states
(of consciousness) . . . that music arouses are those that spring from the
richest and deepest spiritual context. We are immediately aware, with great
compositions of this kind, that the state of consciousness expressed by the
composer is the result of certain perceptions and experiences. So far as we
can recognise the emotion communicated to us, we can say something of the
conditions it, as it were, presupposes . . . Such states . . . are the
fruits of countless experiences as realised and co-ordinated by the artist,
and they enter into the very texture of his spiritual being". This is the
most convincing formulation of what music means to me - and it is my deep
belief and conviction that Shostakovich, in his spiritual context,
delivered to us his experience of a life of anguish and despair. 


Shostakovich did not want to be what is commonly understood as a hero. Had
he been openly heroic, he would sooner or later have perished. Yet he was
well aware of the risks he faced. I asked Maxim Shostakovich if it was true
that he had whispered in his father's ear during one of the rehearsals of
the subversive Eleventh Symphony, "Papa, what if they hang you for this?"
He confirmed that this was so. All the more appalling that, in The New York
Times, a certain critic recently called Shostakovich a "mediocre human
being", dismissing the Eleventh Symphony as "pure patriotism and
storytelling". This shows, yet again, the inability (or reluctance) of so
many western commentators to understand what Shostakovich saw as his
mission in life. 


In fact, Shostakovich acted heroically within his chosen medium, saying in
music what was absolutely unthinkable to say in words and managing, against
all the odds, not only to survive but to leave for posterity great music of
shattering intensity and quintessential spiritual and musical validity. We
do not have to infuse every note of his music with extra-musical
connotations, but we need to understand what he endured in his life - the
inhumanity, moral depravity, and hopelessness which the Soviet system
inflicted - all of which he amalgamated into the spiritual context of his
music (along with, need it be said, a good measure of irony and black
humour). As with the Eroica, in which Beethoven gives us an expression of
eternal value based to a great extent on his own personal crisis,
Shostakovich sublimated his personal experience to the level of
universality. For that, we should be eternally grateful. Vladimir
Ashkenazy's recording of Shostakovich's 24 Preludes & Fugues Op.87 (Decca
466 066-2) was awarded the 2000 Grammy for Best Instrumental Soloist
Performance (without Orchestra). Shostakovich is a featured composer at
this year's Proms. 


*******


#10
smi.ru
August 7, 2000
Defense Minister to be Ousted, Again? 
"Izvestia" says Defense Minister Igor Sergeyev may be ousted and replaced
by Iliya Klebanov, a vice premier supervising the military industrial
complex. An open conflict between Defense Minister Igor Sergeyev and chief
of the General Staff Anatoly Kvashnin who are in deep disagreement over the
military reform issues might be the pretext for such decision. Igor
Sergeyev declined the General Staff's plan to reduce Strategic Missile
Forces. He argued that would cause the Russian Army's collapse and
threatened to resign. Although he and his opponent Kvashnin were summoned
to the Kremlin and announced there were no more causes for further dispute,
the hidden conflict has smoldered ever since. Earlier this week, "Segodnya"
and "Profil" magazine argued the only way to settle the conflict was to
oust both defense minister and chief of the General Staff. At the same
time, much attention has been given to the Kremlin's alleged plan to
appoint a civilian to the post of defense minister. Among many candidates,
Ilya Klebanov was mentioned most often as the most likely candidate. He is
an expert in defense matters, he knows the situation in the armed forces;
also, he belongs to "the Piter's team", the RF President is affiliated
with. Igor Sergeyev's stature waned when 10 generals closely connected with
him were ousted last Monday.


Comment: Besides Iliya Klebanov, "Izvestia" names other candidates for
defense minister: deputy secretary of the Security Council Col.-Gen. Alexei
Moskovskiy, a Security Council man in charge of the military industrial
complex; former minister of commerce Mikhail Fradkov, an experienced expert
in arms exports. At the same time, "Izvestia" remarks, it is likely "if the
President has to make his decision in near future (the media refers to
mid-September) he would prefer to choose the least evil and would preserve
the status quo". Russia has long needed a civil defense minister. Since the
top brass has elaborated the military reform concept, the reformers have
been trying to do favors to whatever forces they came from. Unfortunately,
nobody among those who can claim to be the next defense minister (including
Iliya Klebanov) holds a fully unbiased point of view on the reform. They
all are experts in particular military areas. So, rumors about Sergeyev's
imminent ouster remain just rumors.


******


#11
French lawyers threaten to seize Putin's plane
By Crispian Balmer

PARIS, Aug 7 (Reuters) - Lawyers representing a Swiss company said on Monday 
they would demand the seizure of Russian President Vladimir Putin's plane 
when he visits France in October as part of their battle to recover alleged 
debts. 


The Swiss trading firm Noga, which says Moscow owes it $63 million for unpaid 
oil-for-food contracts, obtained a legal order in May freezing Russian 
diplomatic accounts in France. 


Lawyers for Russia appealed against that move on Monday and the Paris court 
said it would give a verdict on August 10. 


Whatever the ruling, Noga lawyers said they were set to widen their legal 
assault and go after all state Russian property abroad -- including Putin's 
jet. 


``Of course we are going to follow this route,'' lawyer Antoine Korkmaz told 
Reuters following the appeals session. 


``In principle it would be possible (to get the plane impounded) so long as 
Putin doesn't use a private, hire plane or else land in a French military 
airbase,'' he added. 


Last month, Noga briefly succeeded in impounding the Russian tall ship Sedov 
during a French regatta. However, the boat was later released after a court 
ruled that its owner was a Russian university and not liable for state debts. 


Noga alleges that Russia has failed to honour 1991 and 1992 contracts, which 
specifically waived all diplomatic immunity in case of a dispute. 


Lawyers representing Moscow told the court on Monday they did not know about 
the debts, but said the initial contracts were signed when Russia still fell 
under the jurisdiction of the old Soviet Union structure and thus had no 
embassies of its own. 


WOULD NOT RENOUNCE IMMUNITY 


``It is clear that the Russian federation never wanted, could or dreamed of 
renouncing its diplomatic immunity for its ambassadors,'' lawyer Daniel Guyot 
said. 


``If we accept the unthinkable reasoning of Noga, we would allow a private 
company to shut down an embassy. This has never been seen in the 
international community,'' he added. 


The Russian embassy in Paris has admitted that since its accounts were 
blocked it has struggled to make ends meet. 


The Noga legal saga has put further pressure on Franco-Russian relations, 
which were already tense thanks to stiff criticism from Paris to the on-going 
war in Chechnya. 


``This has had very bad consequences for our bilateral relations,'' said 
Kiril Gevorgyan, deputy director at the Russian Foreign Ministry's legal 
department, who was in Paris for the two-and-a-half hour appeals hearing. 


Putin has pointedly left France off his previous visits to Europe, which have 
taken him to Britain, Germany, Italy and Spain. Last month he announced that 
he would finally come to Paris in October, but made clear he was only doing 
so because the French held the rotating presidency of the European Union. 


The French government, embarrassed by the Noga law suits, has acknowledged 
that it is giving legal advice to the Russians. 


On Monday, a lawyer representing the French state advised the appeals court 
to unblock the diplomatic accounts. He made a similar plea in the original 
May hearing. 


Noga's lawyers accused Russia of bringing pressure to bear on France, and 
said that if the appeal went against them they would take the case to the 
highest court in the land. 


Noga is also pursuing Russian assets in Luxembourg, Swiss and U.S. courts but 
the case has moved more rapidly in France. 


*******


#12
wps.ru press summaries
Zavtra!


PUTIN PURSUES A PRO-AMERICAN POLICY


According to experts of the Den security service, Vladimir Putin has gained
total victory on all fronts. This statement is supported by the Federation
Council's self-sacrifice, Yury Luzhkov's having given up resistance, and
the support for the Kremlin displayed by the Fatherland-All Russia and
Yabloko Duma factions. The Union of Right Forces controlled by Chubais is
also displaying its loyalty to Putin. Along with these events the "worship
of oligarchs" has taken place, and Berezovsky and Gusinsky have hastily
left the country. The list of Putin's victories also includes the absence
of intensive actions of Chechen separatists on the eve of and during the
Okinawa summit. All these facts are giving the Kremlin carte blanche to
freely choose its policy. However, Russia's dependence on the West has not
lessened. This is proven by the super-monetarist economic program issued by
the government and docilely accepted by Parliament. Putin's patriotic
rhetoric helps him promote the pro-American policy aimed at strengthening
Russia's position as "America's regional ally."


Zavtra, No. 31, August 2000, p. 1


PUTIN PROTECTING CHUBAIS


According to our sources in the Kremlin, Vladimir Putin has personally
canceled a strategy for dismissing Anatoly Chubais that had been developed
by the Presidential Administration. According to the same sources,
Alexander Voloshin has not given up hope of gaining control of Russian
Joint Energy Systems (RJES) by promoting Chubais and replacing him with a
"reliable figure" like Fedorov. It is planned to appoint Chubais either to
the post of prime minister or the chairman of some new presidential
structure. This model of action is connected with the fact that the
undercover intrigues of the director of the presidential administration
were disclosed by Chubais, who told Putin about them right after his return
from Japan.


Zavtra, No. 31, August 2000, p. 1


CLINTON MADE PUTIN RELEASE GUSINSKY


According to our sources in Tokyo, during the meeting between Putin and
Clinton, the American president supported the actions of the master of the
Kremlin, but demanded that Putin release Vladimir Gusinsky from detention
within three days, which Putin obediently did. Furthermore, Clinton
persuaded Putin "not to take drastic steps" in order not to play into the
hands of George W. Bush.


Zavtra, No. 31, August 2000, p. 1


FREEDOM COST GUSINSKY $350 MILLION


According to our source in a private security service, right before leaving
Russia, Gusinsky signed documents transferring the ownership of the
controlling interest in NTV to Gazprom and other creditors of Gusinsky's
firms. Freedom cost Gusinsky approximately $350 million. According to the
same agreements, Malashenko and Kiselev will retain their positions.


Zavtra, No. 31, August 2000, p. 1


RUSSIAN TYCOONS'S PROPERTY TO BE GIVEN OVER TO U.S. TRANSNATIONAL CORPORATIONS


According to our source in Kremlin circles, the agenda for the meeting with
tycoons was developed mostly by Vladimir Putin himself. His main aim was to
make the rich financially support the current power hierarchy. Vladimir
Putin made in clear at the meeting that it is necessary for tycoons to be
on good terms with him and share their money voluntarily; otherwise they
may be deprived of everything. This is connected not only with the
necessity to pay a lot of foreign debts but also with Putin's promise given
in Okinawa that all the property of Russian tycoons will be given over to
American transnational corporations.


Zavtra, No. 31, August 2000, p. 1


RUSSIAGATE TO START


According to our sources in London, the financial situation on world
markets will not considerably change until the middle of October. Prices of
raw materials and energy will tend to grow. This should lower the
competitive potential of Europe and Japan compared to American goods, and
the high prices of gasoline at the American market will be called a
consequence of the policy of the Democrats. Moreover, in the middle of
September the Republicans will spread rumors about the connection of the
Clinton-Gore Administration with Chubais' group, which will cause a
Russiagate scandal. This scandal will guarantee the victory of George W.
Bush in the presidential election.


Zavtra, No. 31, August 2000, p. 1


NEW CONSTITUTION TO BE ADOPTED


According to our sources in the Presidential Administration, a meeting of
Putin's confidants has been conducted in the Kremlin. The meeting was
devoted to changing the government system in the Russian Federation. In
particular, participants of the meeting discussed the terms of convocation
and work and the staff of the Constitutional Assembly for approval of the
new Constitution and a referendum on it "no later than March 2001." The
draft Constitution stipulates a radical boost in presidential power,
implying abolition of the Duma and all the current political parties.


Zavtra, No. 31, August 2000, p. 1


*******