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Johnson's Russia List


April 15, 2000    
This Date's Issues: 4458   

Johnson's Russia List
15 August 2000

[Note from David Johnson:
1. Reuters: Russians battle to save sailors trapped on sea bed.
2. Christian Science Monitor: Fred Weir, Russian prestige sinks 
with sub. The stranding of one of Russia's newest, best-equipped 
nuclear vessels may force military rethink.


4. Toronto Sun: Matthew Fisher, Jittery Muscovites are living on 
the edge.

5. Toronto Sun: Matthew Fisher, Down and out in the new Russia.
A backwater dacha makes a fine refuge from the roller-coaster Russian 

6. Moscow Times: Konstantin Preobrazhensky, The Wrong Sorts of 

7. AFP: The saint formerly known as "bloody Nicholas"
8. Luzhkov’s Response to Berezovsky.
9. Kremlin: Shift in Power Politics.
10. Reuters: Optimistic World Bank releases $250 mln to Russia.

12. AP: Negotiators Close to Nailing down a Limited Clinton 


Russians battle to save sailors trapped on sea bed
By Peter Graff

MOSCOW, Aug 15 (Reuters) - Rescuers battled worsening weather through the 
Arctic night into Tuesday in feverish efforts to save 116 sailors trapped in 
a crippled Russian submarine lying for nearly two days at the bottom of the 

Interfax news agency said conditions had sharply worsened during the night, 
with heavy winds and choppy seas in the area of the disabled nuclear-powered 

Naval teams had hooked up a diving bell to provide oxygen and power to the 
crew who on Sunday were forced to turn off the reactor on the vessel, the 
Kursk, one of Russia's most modern submarines, and let it drift to the 

Mini-submarines circled the crippled vessel 150 metres (500 ft) beneath the 
surface of the Barents Sea and were surveying its hull to determine the 
extent of the damage. They had managed to make contact with the trapped crew. 

Officials on Monday gave conflicting signals over the chances of saving the 
crew or recovering the craft. 

Navy commander, Admiral Vladimir Kuroyedov, who heads the rescue operation, 
made clear he was not hopeful. 

"The chances for a positive outcome are not very high," Tass quoted him as 
saying. Kuroyedov did not specify whether he meant the fate of the submarine 
or its crew. 

But other officials sounded upbeat. 

"The situation is serious, but according to the command of the Northern Fleet 
its rescue teams have enough resources to deal with the issue without turning 
to others for help," Tass quoted the fleet's command as saying. 


Moscow has not said whether it will attempt to raise the Kursk or try to 
evacuate the crew. Both the United States and Britain have offered help which 
has not so far been accepted by Moscow. 

The United States has two Deep Submergence Rescue Vehicles which can conduct 
rescue operations in depths of up to 610 metres (2,000 ft) and evacuate up to 
24 crew members at a time. 

Britain has put a deep search and rescue submarine on standby. 

A large fleet of Russian surface vessels is anchored above the crippled 
submarine, with the aircraft carrier, Admiral Kuznetsov, serving as a base 
for helicopters. 

There were conflicting reports about the cause of the accident, with some 
officials suggesting the submarine may have been involved in a collision, but 
others saying a malfunction or blast on its bow had sent it to the bottom. 


"Preliminary results of an external observation of the submarine using deep 
water apparatus...does not confirm the theory of a collision with an 
unidentified object," Tass said. 

It said its source was an official at a defence firm taking part in efforts 
to rescue the stricken submarine. 

"He (the source) did not exclude the possibility that the damage to the nose 
section of the sub was caused by an explosion in that section," Tass said, 
adding that its source had not said what could have caused such a blast. 

But the agency also noted it had earlier quoted an official with Russia's 
Northern Fleet as saying a collision perhaps with a foreign submarine was 
considered the "key version." 

There were also varying reports about the condition of the crew, with some 
suggesting there may have been injuries or deaths when the submarine went 

The Kursk, one of eight giant Oscar-2 class submarines in the Russian fleet, 
was commissioned only five years ago and represents the height of Russia's 
nuclear submarine technology. 

Russia has said the crippled submarine poses no threat to the environment. It 
was carrying no nuclear weapons and the reactor that powers its engines has 
been shut down. Norwegian officials said there was no sign of a radiation 

The vessel went down during training exercises on Sunday, about 85 miles (137 
km) from its base in the port of Severomorsk. 


Christian Science Monitor
August 15, 2000
Russian prestige sinks with sub
The stranding of one of Russia's newest, best-equipped nuclear vessels may 
force military rethink. 
By Fred Weir, Special to The Christian Science Monitor

The stricken nuclear submarine trapped on the sea bed above the Arctic Circle 
was the pride of Russia's nuclear forces and a symbol of its hope to maintain 
nuclear parity with the United States. No matter how the accident plays out, 
it is seen as a major blow to Russia's prestige and may force the country to 
scale back its ambitions as a global military power. 

Russian Navy ships yesterday were at the scene, but the prospects for a 
rescue appeared difficult. The Kursk, an Antyei-class attack submarine with 
107 crew members on board, lay on the floor of the Barents Sea in water more 
than 150 feet deep. One Norwegian report put the vessel more than 450 feet 

Russian Navy commander Admiral Vladimir Kuroyedov said the Kursk apparently 
had been involved in a major collision and sustained serious damage. 

"Despite all the efforts being taken, the probability of a successful outcome 
from the situation with the Kursk is not very high," Mr. Kuroyedov told the 
ITAR-Tass news agency. Russian television earlier reported water had gushed 
through the torpedo tubes and flooded the front of the vessel. 

The Kursk was taking part in military exercises, the largest the Russian Navy 
has conducted in years, at the time of Sunday's accident. 

The Russian Defense Ministry said the Kursk was not carrying nuclear weapons 
and insisted its two reactors had been shut down safely. There was no danger 
of hazardous radiation leaks into the surrounding Arctic ecosystem, a 
ministry spokesman said. 

Russia's aging cold-war-era submarine fleet has been dogged by accidents - 
the consequence of Soviet technological corner-cutting in its race to keep up 
with the US - and the collapse of funding, morale, and discipline since the 
demise of the USSR in 1991. But the Kursk was one of the Russian Navy's 
newest ships, commissioned in 1995 and intended to demonstrate Moscow's 
continuing claim to great-power status on the high seas. 

In April, President Vladimir Putin spent a night on the Karelia, a ballistic- 
missile sub from the same naval base, Severodvinsk on the White Sea, and 
praised the submarine fleet as the mainstay of Russia's nuclear deterrent. 
"Russia needs armed forces, and the Northern Fleet is one of their main 
elements," Mr. Putin said. 

On Friday, the Kremlin Security Council decided to make deep cuts in Russia's 
strategic nuclear arsenal in order to fund other branches of the fraying and 
cash-strapped military forces. But experts say the accident with the Kursk - 
however it plays out - will stand as a stark warning to Russian military 
planners to scale down their ambitions in the future. 

"This is one of the best and one of the newest models, and what happened is 
an accident that was bound to happen because of lack of proper finances," 
says Vladimir Urban, a naval expert with AVN, an independent military news 
agency. "In the past the submariners were the elite, but now the professional 
level is much reduced." 

The Kursk, planned in an age when the Soviet Union was striving to match the 
US on the high seas, is a giant some 500 feet long, 60 feet wide, and 
displacing 24,000 tons of water when fully submerged. "This is the biggest 
attack submarine ever built, and it was the great hope for the Russian Navy 
to maintain its superpower image," says Pavel Felgenhauer, an independent 
military expert in Moscow. 

"The Kursk is so large it has a sauna, a swimming pool, and quarters for 
pets," he says. "You cannot blame this accident on the usual causes of 
Russian naval disasters - age and technological backwardness." 

The Antyei-class submarines, known in NATO terminology as Oscar-2, were 
designed to attack American aircraft-carrier groups. They are capable of 
carrying 24 underwater-to-surface cruise missiles and a battery of heavy 

Experts warn that the crew faces extreme danger from power blackouts, oxygen 
shortage, and possible radiation leaks. "The perennial problem in the Russian 
Navy is poor training, bad morale, and nonexistent discipline," says Mr. 
Felgenhauer. "Crews of these ships often spend their time ashore foraging for 
food instead of performing vital maintenance. 

"We may claim to be a great power, but the truth is we can barely afford to 
change the light bulbs in these ships, much less keep them running properly," 
he says. 

A study by the environmental group Greenpeace found the Soviet Navy suffered 
at least 121 accidents with its nuclear submarine fleet between 1956 and 
1991. These included a nuclear-armed submarine that caught fire and sank in 
the Atlantic, some 600 miles from Bermuda, in October 1986. A Russian 
scientist later revealed that some of the ship's nuclear warheads broke open, 
leaking deadly plutonium into the ocean. 

In 1989, a nuclear-powered sub, the Komsomolets, sank in the Barents Sea near 
Norway, killing 42 of its 69-man crew. The ship's reactors are cited by 
environmental groups as a "ticking time bomb" in the fragile Arctic 

Since the collapse of the USSR, the Russian Navy has experienced repeated 
accidents with its aging submarine fleet, including collisions at sea, power 
failures, and on-board fires. 

"The basic problem is that the Soviet Union tried to keep up with the United 
States by cutting corners with technology," says Mr. Felgenhauer. "That is 
the unwieldy legacy of the entire Russian nuclear establishment. 

"It is sadly easy to predict many more accidents of this type," he says. 

*Material from the wire services was used for this report. 



ST. PETERSBURG/OSLO. Aug 14 (Interfax-Northwest) - Experts from the
Norwegian Bellona environmentalist organization Igor Kudrik and
Alexander Nikitin have said that the most likely cause of the accident
on the Russian nuclear submarine Kursk in the Barents Sea on Sunday was
the leaking of sea water. "Evidently, the crew failed to cope with the
situation," they told Interfax on Monday.
Nikitin, a retired naval captain who served on a submarine, said that he
fully trusted the official statement that the submarine's reactor has
>been shut down. "The most important and dangerous thing is to save the
lives of crew members," he said.
Bellona said a similar accident occurred with a Pacific Fleet submarine
off the coast of Kamchatka on July 24, 1983. The crew of a KA-429
(Charlie-1 class) perished trying to independently rise to the surface
from a depth of 60 meters.
Nikitin said it was difficult to use the rescue boats of the Northern
Fleet, to which Kursk belongs. "The only thing on which much now depends
is the capacity of the accumulators to generate and supply the stricken
sub with air," he added.
Quoting the Norwegian Defense Ministry, Kudrik said that the submarine
was discovered at 69 degrees 40 minutes Northern latitude and 37 degrees
35 minutes Eastern longitude in the Barents Sea.
So far, the Russian side has not asked Norway for assistance.
Surface ships and rescue vessels have left Severomorsk, the Northern
Fleet's main base. Helicopters will fly to the site of the accident.
Fleet commander Adm. Vyacheslav Popov is personally in charge of the
rescue operation.


Toronto Sun
August 13, 2000 
Jittery Muscovites are living on the edge
Sun's Columnist at Large

MOSCOW -- When this sprawling, brawling capital gets anxious, so do I. 
It is one thing being menaced by the little thugs with brush cuts who think 
they run the city, or the big thugs in $3,000 suits being driven in black 
Mercedes-Benz sedans adorned with little blue flashing lights who actually do 
run the city. Or did, at least, until Vladimir Putin became president five 
months ago and began to push the pushers around. 

But bombs are different. Whether their cause is political, as is the case 
with the Chechen separatists, or avarice, as is the case when gangsters try 
to settle accounts, bombers strike at random. They don't much care who gets 
blown up as long as their message is delivered. 

Tuesday's Pushkin Square rush-hour bombing in an underground passage near 
Red Square has the entire city on edge, just as a spate of apartment bombings 
on the dowdy outskirts of this city did last summer. 

While out to dinner the other night, one of those at my table received not 
one but three telephone calls from her mother, asking if she was all right 
and demanding precise details about what route she planned to take home and 
exactly when she would arrive. 

From the proverbial babushkas who sit gossiping in every courtyard to the 
showy New Russians forever yakking on their cell phones, all conversations 
just now seem to begin and end with talk of the bombing. Where were you when 
it happened? When was the last time you were in Pushkin Square (a popular 
meeting point for lovers, friends and business acquaintances)? 

Such palaver inevitably turns to "Whodunnit?" 

A few Muscovites speculate the bombing is the dark work of the secret 
police, using any outrageous pretext to enhance their already immense powers. 
Many admit the possibility it might be part of a turf war between 
"biznismen." And almost everyone spits out that they're convinced the attack, 
which killed eight and maimed dozens, is the bloody work of the Chechens, who 
have for centuries resisted the imperialist swagger of the czarists, 
Stalinists and would-be capitalists who have ruled the Kremlin. 

Moscow's police, who are famously adept at taking petty bribes and inept at 
almost everything else, failed to make even one arrest stick after last 
year's apartment bombings. Like them, I have my suspicions but no proof about 
who was responsible for those savageries and the Pushkin Square bomb, which 
was apparently left in a small shopping bag in front of a kiosk selling 
theatre tickets. 

The odds of getting hurt in such attacks are minuscule, but like most 
Muscovites, I have been spending a lot of time lately wondering about my 
personal safety. When I leave the tiny flat that I rent in the south of 
Moscow and enter the public transport system I am on the lookout for any 
package that does not seem to have an owner. 

This isn't as easy as it sounds. Moscow has 10 million souls and most of 
them still cannot afford to own a car. Huge numbers of people use the 
overtaxed bus, tram and subway system to get around. Almost every one of them 
is carrying a satchel full of books or papers or packages with food for their 
evening meal and their next breakfast. 

Although I probably shouldn't do so, I keep an eye out for swarthy men who 
look as if they might be Chechens. Singling them out is stupid. There is no 
proof Chechens have done any of this. Having been to the northern Caucasus, I 
also know that many Chechens are as pale and fair-haired as the Slavs. 

As terrifying as these attacks have been, my unspoken fear is that one day a 
shopping bag or a briefcase that gets left behind in the centre of some city 
- it could be Moscow, Tel Aviv, Beirut, New York or Toronto - will not 
contain a couple of pounds of TNT or plastic explosives, but a nuclear 

Someone's perverse idea of heaven will become a living hell for tens of 
thousands of people and will terrorize millions more. 


Toronto Sun
August 14, 2000 
Down and out in the new Russia
A backwater dacha makes a fine refuge from the roller-coaster Russian economy 
Sun's Columnist at Large
OBYAKOVO, Russia -- Standing under the stars late one night last week outside 
his dacha after a lot of vodka and barbecued pork, my friend Valeri excitedly 
pointed out Ursa Major and Ursa Minor and wondered whether the sky looked the 
same where I grew up in northwestern Ontario. 

After years of talk, Valeri had finally invited me to his country house about 
40 minutes outside Moscow. The hitch was that it had been a mess, but had 
finally been entirely rebuilt last year. 

The dacha was a magnificent two-storey pine structure with lots of windows 
and a long balcony that would be the pride of any Canadian in cottage 

Perestroika and glasnost and the gangster capitalism which followed have been 
a mixed blessing for Valeri and his wife, Marina. 

Both had done fairly well for a couple without connections to the so-called 
elite which were spoiled rotten during Leonid Brezhnev's now exalted Golden 
Age of Stagnation. 

Valeri, who was raised by his mother after his father died during the first 
two months of the war against Nazi Germany, got a PhD in theoretical 
mathematics and a prestigious job as a professor at Moscow State University. 
Marina, whose father had a good war, which in the Russian context is to say 
he survived, was an interpreter with the trade ministry and, as such, 
occasionally got a much coveted trip to the West. 

Many careers 

After Mikhail Gorbachev was pushed out by Boris Yeltsin and history, Valeri, 
who is 59, briefly drove his Lada as a "private taxi," then he imported 
women's coats from Canada. He made a lot of money as a manager for a firm 
which imported foreign tires and, for a while, at least, stayed on good terms 
with the men who run the protection rackets that are a feature of Russian 
business life. 

When business suddenly evaporated after the crash of 1998, and the crooks and 
the tax collectors swindled what little was left, Valeri dabbled briefly as a 
salesman in pyramid schemes and as an adviser to Russians wishing to emigrate 
to Canada. But these businesses soon went sour, too. 

In the space of a decade, Valeri's salary rocketed from $50 a month to $6,000 
a month and then down to zero. That's how he had ended up with so much time 
to fix up his dacha with modern wiring and plumbing. 

Marina, who turned 50 last week, became a private English teacher during 
Yeltsin's presidency. For a while she also made very good money, but the 
crash hit her hard, too. Where she got a couple of thousand dollars a month 
teaching English to the children of New Russians two years ago, she is now 
lucky to make $400. 

The couple's refuge from Russia's economic roller-coaster is an old community 
of 35 dachas tucked behind a bankrupt box-making factory near the main 
highway from Moscow to Minsk. Unlike many of the dacha communities which ring 
Moscow, which ooze crazy money and arrogance, Kobyakovo is very much the 
unostentatious, idyllic backwater so often described in Russian literature. 

In Kobyakovo, there are no generals, no academy members, no former diplomats 
and no former senior Communist party members. So in Kobyakovo there are no 
heavily guarded compounds, no satellite dishes, no bodyguards, no 
Mercedes-Benz sedans and no sense of noblesse oblige. 

Usual anecdotes 

Conversations in Russia that begin before dusk, end at 5 in the morning and 
are fuelled by generous quantities of vodka, inevitably cover a lot of 
ground. There were the usual "anecdotes" such as the old one about Russians 
needing to own three cars because the first was always in for repairs, the 
second was its replacement and the third was for spare parts. 

There was talk about the merits of dacha-grown garlic, potatoes and 
cucumbers, the presence nearby of hedgehogs and wild boars and which wild 
mushrooms were safe to eat. There were also fascinating descriptions of 
various protection rackets involving shops, street prostitutes and illegal 
Moldovan and Ukrainian construction workers. 

The relative merits of cheap Russian and cheap Korean cars were discussed as 
were plans to soon build an indoor toilet. Valeri figured he'd have the time. 
Despite his fabulous education, his employment prospects are so dismal he's 
actually considering taking a job as a night watchman for $100 a month. 

"We love the fresh air and the space and the quiet here," Valeri said just 
before turning in for the night. "But we also love it because this is the 
only place we can go where criminality doesn't touch our lives. Nobody and 
nothing bothers us here." 


Moscow Times
August 15, 2000 
The Wrong Sorts of Security 
By Konstantin Preobrazhensky 
Konstantin Preobrazhensky is a retired KGB colonel. He contributed this 
comment to The Moscow Times. 

With the blast at Pushkin Square Aug. 8, which killed 12 and wounded dozens 
of others, the Chechen war has come to Moscow. 

But, alas, the nation does not have the wherewithal for fighting terrorism, 
although the security services have enormous manpower at their disposal. The 
police, along with armed Interior Ministry units, number about 1 million; the 
Federal Security Service, or FSB, employs tens of thousands of personnel. But 
they don't seem to be of much use. The police are corrupt and incompetent and 
the FSB does not have experience in fighting terrorism. Nevertheless, the 
security services are compensating for their lack of ability through a 
campaign of nationalist, anti-Chechen rhetoric. 

Last Tuesday's blast happened in central Moscow, not far from the Kremlin, an 
area of town always full of police f dozens of both uniformed and 
plainclothes officers. Their job is to nab thieves and make sure that no one 
leaves a bag lying around that might contain a bomb. 

But this huge force discovered its impotence on the day of the blast. And 
this is the contingent on which President Vladimir Putin has placed hopes for 
effecting reforms in the country's economic and political life, for 
instituting some kind of "order." But I'm sure the security organs will 
remain just as ineffective in this instance. As usual, there's something they 
won't do f or forget to do. 

The Aug. 8 blast occurred very near the site of last year's blast, in the 
downtown shopping center right by the Kremlin. In light of this fact, we 
should re-evaluate the blasts of last year, including the explosions in two 
Moscow apartment buildings. 

A year has elapsed, and not a single new word has been added to the initial 
investigation into those blasts. The Chechens were blamed for those bombings, 
too, although without supporting evidence. As a former intelligence officer, 
I am wary of the fact that the investigation has no informational basis. 

Over the last year, the authorities have demonstrated a desire to be silent 
about the investigation. And readers will remember the strange incident that 
occurred last September in Ryazan: The local FSB either found sacks with 
explosives in an apartment building in Ryazan f a city notfar from Moscow f 
or they themselves put them there. It was also reported that sacks with 
explosives were found at a military base near Ryazan; the explosives were 
similar to those used in the September apartment building bombings. 

This led many to think the bombings were not the work of the Chechens but of 
highly placed bureaucrats in Moscow who wanted to buttress Putin's popularity 
and fuel anti-Chechen sentiment. 

Many sources assert that highly placed generals in the Defense Ministry had 
an interest in reigniting the war in Chechnya and that they could convince 
Putin of their ability to deal with the Chechen fighters through powerful 
military pressure. But would this have been wise of Putin? After all, those 
in the KGB are not well-disposed to the army. The KGB continually followed 
the army's moves, knew all its weaknesses and was informed about the 
incompetence of certain generals and their tendency toward corruption. If 
Putin bowed to the generals, that indicates he is a weak rather than strong 

In the days after the Pushkin Square bombing, the press showed its lack of 
independence. This was evident on some TV news programs, which have become 
mouthpieces for militarist propaganda. Commentators intoned, "Criminal 
investigators in the FSB think. þ" Their announcement was delivered with a 
note of respect that made the uninformed listener understand that FSB 
criminal investigators would surely solve everything. 

This, though, made me laugh f after all, the criminal investigative units of 
the FSB are its Achilles' heel. Why? Because the KGB, the FSB's predecessor, 
was never engaged in such criminal investigations. The KGB sent unfortunate 
souls to prison without any evidence of their criminality, which at the time, 
of course, was completely unnecessary. Again, the FSB has no experience with 
criminal investigations, just as it has no experience in fighting terrorism. 

The FSB's compensation for its lack of experience in this area was made clear 
when it alluded to the "clearly Caucasian appearance" of the alleged 
perpetrators f a propaganda attempt at inflaming nationalist hysteria. But 
what does that description f "clearly Caucasian appearance" f mean? There are 
hundreds of peoples who live in the Caucasus, and many of them have red hair 
and blue eyes. But there's another issue at stake here: The FSB knows that 
real Chechen terrorists use ethnic Russians, Ukrainians and other Slavs to 
carry out terrorist acts. And if that's the case, then our nation's security 
services are signaling beforehand that they won't be able to find the 
perpetrators of the Aug. 8 attack. 

So now Moscow finds itself at the mercy of Chechen terrorists. The Aug. 8 
blast was probably a test. If the war in Chechnya continues, explosions in 
Moscow will also continue. Isn't it better to stop the war and sit down at 
the negotiating table? I hope the Aug. 8 explosion will serve as the 
beginning of a massive anti-war movement in Russia. 


The saint formerly known as "bloody Nicholas"

MOSCOW, Aug 14 (AFP) - 
Even his supporters admit that his life was anything but saintly.

"Bloody Nicholas", as the Soviet regime dubbed him after his death, was by 
general consent inept, irresolute, autocratic, anti-semitic, complaisant, 
dominated by his wife and a leading contributor to the misfortunes that 
befell both his family and his country.

Now Nicholas II, emperor of all the Russias, has been canonised by the 
Russian Orthodox Church in a decision that could cause deep divisions among 
the faithful. 

The Orthodox Patriarch Alexis II had warned that canonisation of Russia's 
last tsar, if granted, could only come about because of the manner of his 
death and not because of his actions.

The execution of the Russian royal family in the cellars of the Ipatiev House 
in Yekaterinburg was indeed the stuff of myth, all the more potent for the 
secrecy with which generations of Soviet authorities surrounded it. 

On July 17, 1918 the tsar Nicholas II, his wife Alexandra, their five 
children and some of their servants were placed against a wall by Chekists, 
the Bolshevik political police, and shot. 

Those who did not die outright were finished off by bayonette. Their bodies 
were doused in acid to prevent identification and then dumped in a common 

The fledgling Soviet regime had no difficulty tarring a reputation already 
deeply tarnished by years of misrule marked by repression and indecision. 

Succeeding his father as tsar on November 1, 1894, Nicholas married the 
strong-willed German-born Alexandra three weeks later and fell totally under 
her sway. 

A believer in the divine right of kings, he dismissed as "senseless dreams" 
the aspirations of ministers and liberal deputies for more democratic forms 
of government. 

Having agreed under duress to create a representative council, the Duma, in 
1905, and concede a few civil liberties, he did his best to render the 
reforms meaningless and continued to rule as an autocrat. 

He moreover patronised right-wing groups that sanctioned terrorist methods 
and disseminated anti-semitic propaganda. 

His rule was punctuated by events such as the massacre at Saint Petersburg on 
January 22, 1905, when army troops fired on workers during a 100,000-strong 
demonstration, or the massacre of striking workers at a gold-mine at Lena, in 
Siberia in April 1912.

He stood by while his wife came under the spell of the charismatic monk 
Grigory Rasputin, allowing the court to fall into disrepute amid rumours of 
debauchery and corruption even as the country slid into war. 

Oblivious to the growing gulf between the ruling group and public opinion, 
overruling and frequently dismissing his best ministers, Nicholas assumed 
command of the war effort but succeeded only in creating a power vacuum 
filled by the empress and her advisor Rasputin. 

By the time riots broke out in Petrograd (as Saint Petersburg was then known) 
on March 8, 1917, Nicholas had few remaining supporters. 

The government resigned, and the Duma, supported by the army, called on 
Nicholas to abdicate. A few days later he did so. 

Detained at Tsarskoye Selo by the provisional government which planned 
initially to send them to England, Nicholas and his family were removed to 
Tobolsk in Siberia and then, in April 1918, to Yekaterinburg in the Urals.

There, as anti-Bolshevik "White" forces approached and appeared set to rescue 
them, the royal family's fate was sealed. 


August 14, 2000
Luzhkov’s Response to Berezovsky 
On Saturday, August 12, Moscow Mayor Yuri Luzhkov eventually went on the
defensive against the Interior Ministry’s investigation committee and Boris
Berezovsky’s daily paper Kommersant, which reported that thirty criminal
proceedings had been instigated against City Hall officials. 
On Wednesday, August 9, the Interior Ministry sent a letter to the Mayor of
Moscow Yuri Luzkov informing him that criminal proceedings have been
lunched against thirty city hall officials on charges of abuses of power
and corruption. 

On Saturday, Luzhkov claimed that there was no need to worry about the
corruption charges against the Moscow authorities for “there are only two
well known names on the list of the accused.” They are the Moscow
Registration Chamber Chief Igor Alexandrov and the deputy chief of the
finance department Lyudmila Lazkova. 

Luzhkov said that it was in the interests of the Moscow authorities that
investigations and court hearings be carried out the sooner the better:
“Only the courts are authorized to establish whether those implicated in
the criminal proceedings are guilty or not.” Yuri Luzhkov added that the
fact the Interior Ministry’s letter to the Mayor was published proves that
it was a blatant PR move and, “a lot of political actions have failed in
the courts.” 

Mayor Luzhkov accused Kommersant Daily of instigating a scandal involving
the Mayor’s Office. “The Interior Ministry’s letter landed in the hands of
Kommersant,” said Luzhkov, “and it (the newspaper) belongs to
Mr.Berezovksy.” Luzhkov alleged, “The Interior Ministry continues its
policy of cooperation with Berezovsky.” 

On Saturday Yuri Mikhailovich Luzhkov assured the press that he would, in
any case, scrutinize the Interior Ministry’s letter: “The Moscow
authorities seriously look into any signal from the law enforcers and
consequently draw strong, serious conclusions.” 

Gazeta.Ru asked Kirill Kharatyan, the deputy chief editor of Kommersant
Daily, for his comments. “It is true, Berezovsky does own the paper,” he
said, “and that’s all.” According to Kharatyan, since joining Kommersant he
had “never met nor talked with Berezovsky,” for the tycoon “never
interfered with the publication’s media policy.” 

As for Berezovsky’s ties with the Interior Ministry, mentioned by Luzhkov,
the deputy chief editor said he had never heard anything suggesting that
such ties exist. 

When asked whether the newspaper intended to respond to Luzhkov’s
statements, Kharatyan said he saw no point, for the Mayor’s words were
nothing but unsubstantiated allegations… 

Mila Kuzina 


Kremlin: Shift in Power Politics
August 14, 2000

Deputy Prime Minister Viktor Khristenko has announced that the Kremlin is
considering transferring authority over petroleum agreements involving
foreign investors from the Energy Ministry to the Economic Development and
Trade Ministry. 

The agreements are important because they are the primary vehicle for
foreign investment in Russian oil. And in the context of Moscow politics,
the move signals continued consolidation of economic policy under the
Kremlin. The next step is likely to be an overhaul of the country’s complex
restrictions on exports of oil. 

Production Sharing Agreements (PSAs) grant foreign investors tax breaks and
shares of a field’s production as well as profits, in exchange for
technology and funds to develop Russia’s petroleum industry. Among the most
significant PSAs are several projects on Sakhalin Island in the Russian Far
East involving Royal Dutch/Shell, Exxon-Mobil and Marathon Oil. 

Vague Russian laws, however, have hamstrung these agreements and the Putin
government shows increasing interest in revitalizing them. On Aug. 1,
President Vladimir Putin himself charged Trade Minister German Gref with
drafting new laws intended to increase the efficiency of the agreements,
according to Interfax. On Aug. 9, Gref’s working group recommended that the
ministries switch roles. Gref has hinted that the president will enshrine
the decision in a decree. 

While of immediate concern to foreign energy companies, the changes also
mark a significant shift in Kremlin power politics. First, Gref’s star is
rising. There have been running battles among many members of the Kremlin
administration over the depth, reach and tempo of Putin’s economic reforms.
The fact that Putin personally directed Gref to hash out the details of the
PSAs ­ which will probably result in them falling under his control ­
indicates that Gref is steadily attaining power within Putin’s inner circle. 

Gref is gaining a larger role in the economy overall. He is already the
mastermind behind Putin’s relatively pro-market hybrid economic plan and
sits on the boards of directors for Aeroflot, Gazprom, Svyazinvest,
Transneft and Unified Energy Systems ­ some of Russia’s largest firms.
Gref’s view of a laissez-faire economy, maintained with powerful central
oversight, is steadily gaining influence. 

Second, placing the PSAs under Gref, an advocate of more
investment-friendly policies, should increase the attractiveness of the
Russian economy to foreigners. This is a long term ­ and essential ­ plank
of Putin’s economic development platform. While Energy Minister Alexander
Gavrin certainly did not work to restrict oil development, Gref is far more
investment savvy and boasts more political heft. He should be able to make
the PSAs operational much more quickly. 

Stripping authority over valuable foreign investment away from the Energy
Ministry, as well, probably marks the beginning of the end for that
particular bureaucracy. Already, energy issues are scattered between the
Federal Energy Commission and the energy, natural resources, and finance
and tax ministries. 

Gref likely next step is to radically redesigning Russia’s complex export
restrictions. After all, it means little if Russia pumps more oil but
cannot export it at a profit. Current restrictions require Russian oil
firms to supply domestic markets at a steep discount by restricting access
to the international market. This promotes energy security, but at the cost
of encouraging inefficiency. 


INTERVIEW-Optimistic World Bank releases $250 mln to Russia
By Peter Henderson

MOSCOW, Aug 14 (Reuters) - The World Bank 1/8IBRD.UL 3/8 announced on Monday 
it had made a $250 million loan payment to Russia late last week, and praised 
reforms to the pension system and coal sector, two of the most opaque areas 
of the economy. 

Vadim Voronin, deputy head of the Bank's Moscow mission, told Reuters coal 
sector efficiency was increasing and Russia could get the final $150 million 
of another loan to help arrange sell-offs and cushion their social effects by 

Japan would add a matching $150 million, he said, and all of the untied 
credits would go straight to the budget. 

The pat on the back is especially valuable to Russia since the International 
Monetary Fund, the World Bank's sister organisation, still has its programme 
to Russia on hold. 

Russia's economy has boomed over the last year or so but the government is 
facing searching questions as to whether it is making the economy leaner and 
meaner or simply luxuriating in high world prices for its main exports, 
energy and metals. 

"Basically they fine-tuned the overall legal arrangements as well as the 
practical ones in the pension system," Voronin said in a telephone interview, 
explaining the $250 million payout, the last under a Social Protection 
Adjustment Loan. 

Another untied $50 million tranche of the so-called second coal loan could be 
paid by early autumn with the final $100 million tranche of that programme 
paid by the end of the year. 


Pension reforms included increasing monthly minimum pensions to 410 roubles 
($15) in February from 234 roubles in early 1999, collecting 97 percent of 
planned contributions and selecting an auditor to delve deeper into the 
system, normally seen as a semi-autonomous fiefdom and object of major 
political battles. 

The goal is transparent management and sustainability, Voronin said. 
"Basically we expect that the audit will provide a plan of action." 

Coal sector reform was also on schedule, with privatisation on track and 
loans to support and retrain workers from the downsized sector finding their 
target, he said. 

A first coal loan was heavily criticised for being granted with inadequate 
supervision over how it was spent. 

Voronin said productivity was rising, with fewer companies producing more 
coal. Russia is rich in the fuel, and foreign coal experts say the sector 
could be profitable if slimmed down, overcoming its reputation as a basket 
case and social disaster. 

By the time the last $100 million was paid, probably this year, 45 percent of 
the industry would have been privatised and another 10 percent scheduled for 
auction, Voronin said. 

He predicted the sector could be completely restructured and subsidies ended 
by 2003. 

The outstanding question for Russia and the World Bank concerns a $1.1 
billion third Structural Adjustment Loan, bogged down by Russia's spotty 
progress on weaning the economy off non-monetary barter and on other 
macroeconomic reforms. 

Voronin said major companies like national power utility UES <EESR.RTS> and 
the railways, had substantially raised cash receipts, but gas giant Gazprom 
<GAZP.MO> <GAZPq.L> was at a bare 34 percent. 

Voronin noted other progress, like tax and budget codes legislation, but said 
the government might simply want to scrap the programme and start again. The 
answer would probably be clear by late September or early October, he said. 


BBC Monitoring
Source: `Nezavisimaya Gazeta', Moscow, in Russian 12 Aug 00 

Today it is already hard to see what Russia's first president, Boris Yeltsin, 
had in mind a year ago when, expressing the wish that the whole country make 
[Vladimir] Putin its choice as future president, he described him as the 
continuer of his, Yeltsin's, ideas. In just 100 days as president, with the 
100th day falling on Monday 14th August, Putin has left nothing remaining of 
the policy which was pursued in his second term as president by Boris Yeltsin 
and his entourage, most of whom have been bequeathed to Putin and have not 
greatly suffered from his arrival in the Kremlin. Perhaps all continuity has 
been confined to the fact that the majority of Yeltsin's corps of officials 
kept their jobs under Putin. Those who were dismissed for various reasons 
will hardly take offence at the president - virtually all of them have been 
found a place in the new power setup, albeit in a different capacity. 

As to the rest, Putin is Yeltsin's opposite rather than his follower. 
Russia's first president was renowned for the famous phrase he addressed to 
the governors: "Take as much sovereignty as you want." His "successor" has 
launched a federal reform aimed at the maximum centralization of power. He 
began by introducing the institution of plenipotentiary representatives who 
keep track of the regional leaders and coordinate their work ... and he ended 
his 100 days with a draft budget in which the governors are left with just 30 
per cent of tax receipts, with the remainder going to the centre [Moscow]. 

Substantial differences can also be observed between Yeltsin and Putin in the 
nature of their attitude towards the oligarchs. Admittedly not by choice, but 
at the 1996 presidential election Yeltsin accepted aid from representatives 
of big business and spent the whole of the next four years "paying his dues". 
Putin ... did not allow the oligarchs to take part in his own election 
campaign to the extent they would have liked and consequently minimized his 
dependence on representatives of big business... 

The two presidents' economic policies, if we are talking about the Yeltsin of 
the post-default period, can hardly be called identical. It is true that in a 
certain sense Putin has been lucky. The good world market situation, the 
domestic quiet and the production growth after devaluation created favourable 
conditions for reforms. Yeltsin did not manage to do this for a number of 
political reasons: the frequent replacement of prime ministers who simply did 
not have the time to elaborate a clear-cut economic line, and other concerns 
connected with the search for his successor as president. Putin, when he 
combined these two "posts" - of prime minister and successor - was in general 
indeed a continuer of Yeltsin's course. In the period when he was head of the 
cabinet, the economy was virtually left to take care of itself. Close 
attention was focused only on the social sphere because of the approaching 
elections, and the payment of wage and pension arrears and the promises to 
increase payments to budget-funded workers were ensured through this same 
favourable market situation, largely secured thanks to Yevgeniy Primakov, one 
of Putin's predecessors as prime minister. 

However, after Putin moved to the Kremlin even the most out-and-out liberals 
were surprised at the degree of economic freedom which the head of state 
wanted to see in the still-embryonic 10-year project for Russia's 
development. The result was a sharp reduction in taxes as of January next 
year, attempts to seriously liberalize the customs duty system and the 
rejection of a number of unfeasible social commitments... 

Nor are the two presidents alike in their work methods. Yeltsin often quite 
deliberately brought the domestic political situation to a point where it 
could be described as critical. But on each occasion he successfully overcame 
it - you only have to recall the unsuccessful attempt to impeach the first 
president. Putin clearly regards this as redundant, defining life in "First 
Person" as "really such a simple thing". 

Yeltsin-style personnel policy was a skilfully structured system of checks 
and balances, a characteristic example of which was Viktor Chernomyrdin as 
prime minister with Anatoliy Chubays and Boris Nemtsov as deputy chairmen of 
the government... Putin, to judge by the present government and presidential 
staff, prefers to minimize personal and indeed interclan rivalry, clearly 
defining each person's place in the system he is structuring... 

The personified policies, so to speak, of Yeltsin and Putin, are also 
different, but for objective reasons this time. Both the Federation Council 
and the previous Duma had a grudge against the first president because he 
devoted little time and attention to them and only a few people had access to 
Yeltsin. Under Putin the Kremlin has become a "Palace of Soviets". It seems 
only the lazy have failed to be received by the president... 

It is clear that the series of consultations with the governors and the 
frequent meetings with the Federation Council head during the country's 
political reform are a kind of tribute of respect to his [Putin's] adversary, 
only instead of fists there is explanatory work and the attempt to persuade 
people that he is right. It is not out of the question that the same old 
scenario is being used with the State Council, on whose creation a "broad 
public debate" has been declared: The Kremlin politely listens to everyone, 
knowing in advance what decision will be made. 

The methods used by the two presidents in international politics and 
especially as regards the CIS are far from identical... 

One way or another what has happened in the 100 days of Putin's presidency, 
irrespective of how we assess his actions, has enough content to suffice for 
an entire presidential term. The aims of the reform which the new authorities 
are setting themselves are normal and even noble. There are no guarantees 
that the chosen methods are the only correct ones or that the goals 
themselves will not change in the process of implementing these reforms... 

So far the correctness of everything Putin is doing, to judge by his 
popularity ratings, is being taken on trust by the public, perhaps because 
the new president is simply someone different. In the end, VVP [Vladimir 
Vladimirovich Putin] as head of state will be assessed by the economic 
indicator of the same name [VVP - valovoy vnutrennyy produkt in Russian - 
meaning GDP]. 


Negotiators Close to Nailing down a Limited Clinton Legacy
August 14, 2000

WASHINGTON (AP) -- American and Russian negotiators will meet this week to 
try to nail down modest arms-control agreements that could give President 
Clinton a bit of a legacy that has escaped him over two terms. 

For decades, every president has taken big strides toward reducing the 
dangers posed by nuclear weapons, but Clinton has come up short. Among his 
problems: a skeptical Republican-controlled Congress and delay in Moscow in 
approving the landmark START II treaty. 

A global treaty to ban nuclear weapons tests was rejected by the Senate last 
November, and the Foreign Relations Committee chairman, Sen. Jesse Helms, 
R-N.C., has said any arms-control pact Clinton negotiated in his final months 
would be "dead on arrival" in his committee. 

On top of that, last spring, the Senate amended a defense spending bill to 
deny Clinton authority to make unilateral reductions in nuclear arms. 

Still, the Clinton administration has not gone out of the arms-control 
business, despite the congressional restraints and the president's delay in 
deciding whether to approve a limited missile defense system. 

Beginning Wednesday, and with the clock ticking, U.S. disarmament specialist 
John Holum and Yuri Kapralov, head of the Russian arms-control directorate, 
will meet in Geneva, Switzerland, on ways to improve strategic cooperation 
between their two countries. 

Even while disagreeing on a missile defense system, Clinton and Russian 
President Vladimir Putin decided in June at a summit in Moscow to find ways 
to cooperate to lower nuclear tensions. 

One of the projects to be taken up in Geneva is sharing techniques to provide 
early warning of missile attack, with a joint center to be established in 

Russia gave its approval to the proposition at the Moscow summit and the aim 
now is to implement the program. 

A second project, proposed by the Clinton administration, would devise ways 
to warn each other that a test missile or a space rocket has been launched. 
The objective is to allay misunderstanding and concerns and to avert a 
dangerous response. 

Also on the table for consideration at Geneva is a joint U.S.-Russian project 
known as Ramos, which is designed to improve sensors in early warning 

Joint exercises in missile defenses also will be discussed, two U.S. 
officials said in describing the Holum-Kapralov meetings. And, they said, the 
administration had proposed working in Geneva on parts of a text for a new 
START III treaty to reduce U.S. and Russian long-range nuclear warheads. 

The START II treaty, concluded in January 1993 by President Bush, established 
reductions to 3,000 to 3,500 warheads on each side. Ratified by the Senate 
and finally, this year, by the Russian parliament, it has yet to take effect. 

Putin held a pivotal defense meeting in Moscow on Friday. According to 
Russian press reports, he decided to shrink the Russian arsenal to 1,500, a 
level proposed by Russia for the START II treaty but rejected by the Clinton 
administration as too low. 

The United States has suggested a ceiling of 2,000 to 2,500 warheads. 

Clinton administration officials said they were unable to confirm the press 
reports, which if accurate would mean Putin had sided in a policy dispute 
with the chief of the Russian general staff, Gen. Anatoly Kvashnin, and 
against Defense Minister Igor Sergeyev. 

The cash-strapped Russian government apparently is unable even to build up to 
the ceilings imposed for some weapons in the START II treaty while 
dismantling the powerful missiles outlawed by the pact. 

Money saved by unilateral reductions could be used to build up conventional 
land, sea and air forces, as urged by Kvashnin. 



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