August 17, 2000    
This Date's Issues: 4461 4462

Johnson's Russia List
#4461
17 August 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Moscow Times: Pavel Felgenhauer, Cover-Up in Sub Tragedy.
2. Reuters: US sees no life signs on Russian sub, offers help.
3. Reuters: Russia sub mishap spotlights crumbling forces.
4. Interfax: BRAIN DRAIN ONE OF PROBLEMS OF RUSSIAN SCIENCE - 
PUTIN.
5. MSNBC: Galina Kovalskaya, The Chechnya trap slams shut. 
An entire generation runs the risk of never seeing the end of 
conflict with Chechnya.
6. Moscow Times: Catherine Belton, Lessons of Aug. 17 Crash 
Not Learned.
7. Krasnaya Zvezda: RUSSIA: ENTERING NEW CENTURY. (Interview
with Gleb PAVLOVSKY)
8. Washington Times: David Sands, U.S. effort to secure nuclear 
material called lax.] 


******


#1
Moscow Times
August 17, 2000 
DEFENSE DOSSIER: Cover-Up in Sub Tragedy 
By Pavel Felgenhauer 


The nuclear submarine Kursk of the Oscar-2 class f the largest attack 
submarine ever built f is lying on the floor of the Barents Sea, and hopes 
for a successful salvation are fading rapidly. But as the magnitude of the 
human tragedy becomes clearer, the extent of deceit that accompanied the 
Kursk disaster has also been exposed. 


The naval authorities first reported a "malfunction" aboard the Kursk this 
Monday, adding that the sub went under Sunday. But it soon became apparent 
that the accident actually happened before noon last Saturday and the 
authorities were trying to cover up for two days before going public. 


After misleading the public about the time of the accident, naval "sources" 
began to tell other yarns: That the vessel did not sink but "descended to the 
ocean floor," that "contact with the crew was established," that "air and 
power are being pumped from the surface into the ship," that "everyone on 
board is alive," that "the vessel's two nuclear reactors have been shut down" 
and so on. 


Actually, none of the above was fully true, and the authorities were either 
guessing or deliberately misinforming the public. 


No air or power was supplied to the sub from the surface at all; this report 
was completely unsubstantiated. No true "contact with the crew" was 
established either. The sonar operators of Russian warships near the sunken 
Kursk were picking up some noise coming from below, which was interpreted as 
distress signals being sent by crew members marooned somewhere inside the 
hull of the Kursk and tapping on the walls of their compartments with iron. 
The noise indicated someone aboard was alive, but no further information was 
provided. The signals were faint, and the navy did not know what exactly had 
happened aboard the Kursk, how many sailors survived, whether they were 
wounded and in what part of the huge ship the survivors were hiding. 


The Kursk went down like a rock. There was no distress signal, and the crew 
did not manage to float its satellite communication beacon. The navy did not 
know for certain that the crew actually shut down Kursk's two 190-megawatt 
nuclear reactors. There were no obvious signs of a reactor meltdown or 
explosion at the sight of the wreck, so it was assumed that the reactors had 
shut down automatically when the disaster occurred. 


Still, the Kursk is now a ticking time bomb. The two reactors will eventually 
leak merely 100 meters below the sea surface, polluting Barents Sea 
fisheries. But an attempt to retrieve the reactors or salvage the sub may in 
fact facilitate a spill of radioactivity if the ship or its reactor 
compartment break up during a botched rescue attempt. What may be worse is 
that, if the navy has lied so much about the Kursk, information it provides 
in the future will not be taken at face value. 


In the past, Russian (and Soviet) officialdom traditionally suppressed facts 
about nuclear disasters, and bad habits die hard. But the total confusion in 
statements after the sinking of the Kursk may also be explained by a fit of 
panic that hit the military-industrial establishment. 


The Oscar-2 subs were considered "unsinkable," as Igor Baranov, the ships' 
chief designer, told reporters this week. One Oscar-2 sub carries enough 
firepower to destroy an entire U.S. aircraft/carrier group or a large sea 
transport convoy in one fell swoop. In a war with the West, Oscar-2 subs (of 
which 16 were built) would have been deployed to cut NATO in half by severing 
the transatlantic sea link. The hull of an Oscar-2 has 10 separate waterproof 
compartments and was designed to be able to float even after a direct torpedo 
hit. 


The only thing the navy managed to do four days after the Kursk went down was 
to send a submersible to take pictures of the damaged hull. Naval commanders 
were largely waiting for the crew to save itself by either floating the ship 
or abandoning it in special suits. The admirals rejected the idea that an 
Oscar-2 sub could simply pop and go with its crew apparently killed or 
disabled almost instantly. Western offers of aid were also put aside so that 
NATO could not acquire precise information on how to sink the "unsinkable" 
sub. The navy did manage to make the Kursk into a mystery ship, but to the 
detriment of its crew. 


Our admirals know too well that disclosing secrets to the West may easily 
land them in the clink, while risking sailors' lives most likely will not. 


Pavel Felgenhauer is an independent, Moscow-based defense analyst. 


******


#2
US sees no life signs on Russian sub, offers help
By Tabassum Zakaria

WASHINGTON, Aug 16 (Reuters) - U.S. surveillance has detected no signs of 
life on the Russian submarine stranded on the ocean floor in the Arctic 
Circle since it sank on Saturday, an intelligence official said on Wednesday. 


President Bill Clinton called Russian President Vladimir Putin to repeat that 
the United States stood ready to help in trying to rescue survivors among the 
118 sailors trapped in the stricken nuclear submarine Kursk, the White House 
said. 


After the call the Russian navy said Putin had given the order "to accept 
help wherever it comes from", but White House officials said no request for 
assistance had been made to Washington. 


The U.S. intelligence official, speaking on condition of anonymity, said U.S. 
surveillance indicated the submarine sank while conducting exercises in the 
Barents Sea because of two explosions on board, the second much bigger than 
the first. 


"We've seen no evidence of, or heard no evidence of, survivors on the 
submarine. We don't know whether anyone survived the initial incident or not, 
but we see no evidence that would tell us anyone did," the official told 
Reuters. 


The official said this did not rule out the possibility of survivors. 


"It's just that we haven't any information which would lead us to believe 
that there is radio communications or that there is banging on the hull," the 
U.S. official said. "The situation does not look good and our sympathies are 
with them." 


In Moscow, Interfax quoted Deputy Prime Minister Ilya Klebanov as saying the 
trapped sailors -- who early in their ordeal were reported to be banging on 
the hull -- had now stopped doing so. 


"There is no sign of life, but from this it is not necessary to conclude 
something terrible," he said, adding that the crew might be resting to 
conserve energy as air ran out. 


Russia, which initially did not accept offers of foreign assistance, formally 
requested help from Britain and Norway on Wednesday. 


U.S. officials said Moscow may at first have been reluctant to accept outside 
help because of pride, or because it did not realize how difficult the rescue 
operation would be, or for fear that foreign powers would gain too much data 
about the Kursk. 


The U.S. intelligence official would not say how information about the 
Russian submarine had been collected but said the United States had not 
detected radio communications or banging on the hull since the Kursk went 
down. 


Two U.S. submarines were in the area when the Russian submarine sank, and the 
U.S. Navy ship Loyal which gathers underwater acoustic data was about 250 
miles away. These vessels were probably involved in gathering information 
about the Kursk. 


U.S. officials have said the Russian submarine did not collide with any U.S. 
vessel. 


The U.S. Navy has two deep submersible rescue vessels based in California. 
They are designed to be lowered into the sea and attached to the escape hatch 
of a submarine to carry sailors to the surface. 


******


#3
ANALYSIS-Russia sub mishap spotlights crumbling forces
By Charles Aldinger

WASHINGTON, Aug 16 (Reuters) - The plunge of one of Russia's top attack 
submarines to the bottom of the icy Barents Sea has thrust an international 
spotlight on the collapse of a once-proud and fearsome Cold War military. 


No matter what the cause of the sinking of the Akula Class submarine Kurst, 
the accident was another signal of major corrosion over more than a decade in 
an armed forces which is now but a shadow of itself before the Soviet Union 
collapsed. 


Analysts estimate that Moscow's military now struggles on a budget of only 
about $5 billion in hard currency a year compared to nearly $200 billion in 
the early 1980s when a knife-prow Soviet Navy ranged the seas and thousands 
of frontline tanks were ready to roll. 


The active Russian military of just over one million troops is plagued by 
desertions and avoidance of mandatory conscription. Senior officers concede 
that troops go for months without pay, even as the United States helps pay to 
cut up docked and rusting Russian subs under arms reduction treaties. 


Most Russian pilots get little regular training because advanced warplanes 
are expensive to fly and maintain, according to Larry Korb, a former 
assistant U.S. defence secretary now with the Council on Foreign Relations in 
New York. 


'TIP OF THE ICEBERG' 


``This was one of their best submarines,'' Korb told Reuters. ``It's a good 
example of problems sparked when you're trying to pretend to be a great 
power. If you send a new but poorly-maintained car on the road and you don't 
teach your son or daughter to drive it, you're going to have problems.'' 


``The embarrassment in Chechnya was just a tip of the iceberg,'' said John 
Wolfsthal, a defence expert with the private Carnegie Endowment in 
Washington. 


``They are having constant problems, both in terms of personnel and high-tech 
equipment, which is very expensive to operate and maintain. Russia is selling 
weapons worldwide, including good warplanes to China, to make money for 
defence,'' he said. 


President Vladimir Putin has promised to concentrate on revitalising the 
military and is actively pushing to reduce the country's expensive nuclear 
arsenal to devote more funds to troop pay and conventional weapons. 


``But that won't happen anytime soon,'' said Wolfsthal. ``The military 
depends on the Russian economy, and it could take decades for Russia to get a 
viable armed forces back in place.'' 


After the Kurst went down over the weekend following what might have been an 
accidental explosion by a torpedo, Russian newspapers painted a picture of an 
ill-equipped Navy pushed beyond its limits and politically pressed to uphold 
the nation's honour. 


NO BACKUP BATTERIES? 


Kommersant, a respected daily controlled by businessman Boris Berezovsky, 
said the Kurst left base for a major naval exercise without backup batteries, 
which were being hoarded for a different exercise. 


Berezovsky has become increasingly critical of Putin, and the newspaper said 
a navy team made its first nuclear submarine rescue training exercise in 
eight years last year. 


Many analysts in the United States worry that the situation with the Russian 
military is getting so bad that the armed forces cannot defend the country's 
borders. But Philip Zelikow, a military specialist at the University of 
Virginia's Miller Centre, said ``Russia's borders have never been less at 
risk than they are now because nobody is going to invade.'' 


``The tragedy of this incident is that it was designed to be a show of major 
muscle by Russia's remaining top Navy units -- and chiefly for internal 
consumption,'' Zelikow told Reuters. 


``The irony is that now every Russian eye is trained on what is going on at 
the bottom of the Arctic.'' 


The Kurst mishap was only the latest in a half-dozen Russian submarine 
accidents in the past 15 years, including the collision of a nuclear missile 
sub with a U.S. attack submarine in 1993. 


In 1989, a Soviet Mike class nuclear-powered attack sub sank off northern 
Norway with the loss of 42 lives after a fire on board. The submarine 
Komsomolets was armed with two nuclear torpedoes. 


******

#4 
BRAIN DRAIN ONE OF PROBLEMS OF RUSSIAN SCIENCE - PUTIN


SOCHI. Aug. 16 (Interfax) - Russian President Vladimir Putin is
discussing the problems of and prospects for science in the country with
members of the Russian Academy of Science.
Opening the meeting, which is currently taking place in the Dagomys
complex near Sochi, Putin stressed that "the Academy of Science is a
unique scientific institution unmatched in the world."
"Members of the Academy of Sciences head large research centers, which
make an important contribution not only to the development of science,
but also to the development of the country's economy, industry, defense
and security," the president said.
At the same time, Putin noted the problems that Russian science is now
facing, first of all, insufficient funding. "For a long time, scarce
funds, which were allocated on paper to the development of science, were
provided; however, science did not receive them. In the course of the
last year and a half, the situation has changed, and the funds allocated
in the budget are being fully directed to science, but this is not
enough," Putin said.
Among the problems faced by science, the Russian president also named
"the aging of science and the brain drain." Over 30 thousand Russian
scientists work abroad, he said. "But they leak information not only to
other countries, but also to other economic sectors inside the country,"
Putin stressed, recalling in this connection that the average wage in
the sphere of science is 15% lower than in industry.
"There are many reasons for this. During the Cold War, huge sums were
allocated to military science. Today, innovative activity in the country
is very low. Only 5% of companies are actively applying the newest
scientific achievements," Putin said, adding that in developed countries
up to 80-87% of companies make use of the most recent achievements in
science.


****** 
#5
MSNBC
August 15, 2000
The Chechnya trap slams shut 
An entire generation runs the risk of never seeing the end of conflict with 
Chechnya 
ANALYSIS
By Galina Kovalskaya
ITOGI/NEWSWEEK 
Galina Kovalskaya writes for Itogi, Russia's leading weekly news 
magazine and a joint-venture with Newsweek. Steven Shabad translated this 
report.


Aug. 15- I know there is no subjunctive mood for history, but again 
and again I'm nagged by the thought: What if Chechen rebels led by Shamil 
Basayev and Khattab hadn't gone into Dagestan last year, sparking the current 
Chechnya crisis? 
Relations between society and the army, between the government and the
news 
media, would have gone in a different direction — a lot would have been 
different. 
SUPPOSE BASAYEV had lost his leg a little earlier or Khattab had 
contracted cholera or something. A Chechen friend of mine who lives in Moscow 
(he's a fierce anti-separatist, but his favorite nephew is a Basayev man) 
told me how his nephew followed Basayev absolutely everywhere -- to the 
conflict in Nagorny Karabakh, to his hostage bonanza in Budyonnovsk -- but 
suddenly did not go to Dagestan. "Some reflex kicked in," my acquaintance 
said. What if this reflex kicked in for others as well?
We would be living in a different country now. Maybe with a different 
leader, maybe with President Vladimir Putin, but he still would have been a 
different leader, because he would have had to win over the electorate with 
other methods and other promises.
Relations between society and the army, between the government and the 
news media, would have gone in a different direction -- a lot would have been 
different. Because there would have been no war. There is a popular viewpoint 
that the war became unavoidable after the autumn apartment bombings in Moscow 
and Volgodonsk, which killed nearly 300 and terrorized society. Of course 
not. Whoever arranged the bombings was just making sure. After Dagestan the 
war was already inevitable. 

WHAT BANDITS DO
There seems to be no one to blame. It's silly to blame Khattab or 
Basayev and their brethren; it's their job, it's what bandits do. All of the 
players in the process acted strictly within the framework of their 
capabilities and their own logic, the only kind accessible to them. Everyone 
was right in their own way, and, step by step, the country was sucked into 
the war as though it were a funnel, into a terrible trap from which there is 
no apparent way out yet. It's just that our security structures are organized 
in such a way that they can either surrender or fight. We have no nonmilitary 
security response in reserve to meet challenges from bandits or terrorists.
But there is something for which undeniable blame must be assigned to 
the Kremlin, the security heads and the part of the government that 
participated in planning the Chechen operation, as well as all of Russian 
society. It is the couldn't-care-less attitude toward the Chechens. Not 
toward those who went into Dagestan, but toward those who lived at home, 
tended sheep and sold roasted sunflower seeds.
Yes, of course, there is no war without innocent casualties. But it is 
untrue that nothing could be done. It was quite possible to allow people to 
leave -- not to dart out stark naked from under the bombs, but to calmly walk 
away or drive away. None of Russia's political or military interests would 
have suffered if the planes, before dropping bombs, had scattered leaflets 
throughout the republic with a clear explanation of how Chechens loyal to 
Russia should behave so as not to endanger their life and health.
But somehow no one thought about the people in Chechnya, including the 
Russians who remained there, no one took them into account. 

HISTORY REPEATS ITSELF
A year has passed since we started fighting, and everything has turned 
out the only way it could turn out. Just as in the 1994 - 1996 war, Russian 
troops have managed to take over a large portion of Chechen territory. Just 
as then, they were unable to take over some of its mountain areas. But then, 
there is no point in taking them over: it's an impossible task to control the 
mountains there in a way that the rebels cannot move around in them.
The federal forces stumbled exactly where they did in 1996, thinking, 
"Well, we've occupied Chechnya, so what do we do with it now?"
Now a guerrilla war starts, and no one in Russia, no one in the world, 
knows how to fight guerrillas. You have no rear, no secure zone. Problems can 
erupt anywhere, rebels can attack at any moment. It would be a very good idea 
to make friends with the local population -- after all, only the Chechens
know 
the truth about the rebels. But in order to be friends, it's necessary to 
trust the Chechens, and how can they be trusted if the guerrillas come from 
among them? How many times have great powers and empires, great armies that 
were no match for ours, had trouble dealing with these problems? 
The old scenario is being repeated almost exactly: roadblocks are 
again becoming sites for collecting bribes, and detention camps are becoming 
a place of punishment, of dealing with people the commandants dislike, a 
torture chamber - anything but a place where interrogations are conducted to 
determine who is a rebel and who isn't.
Just as in 1994-1996, a day doesn' go by without rebels shooting up 
an army column or post. Just as back then, from time to time large squads of 
them go into some community that has long been considered on the Kremlin' 
side, then depart, and the residents become the target of Russian artillery 
fire and "tough clean-ups."
Each provocation is followed by punitive measures, which in turn leads 
to a natural replenishment of rebel fighters with relatives of the punitive 
forces' victims and an increase in the number of noncombatants who sympathize 
and are ready to help the guerrillas. 
Right now everyone from ordinary Chechens to Russian soldiers is 
saying that the rebels plan to come to Grozny in mid-August to mark the 
anniversary of their victorious assault on the city in 1996, which was 
followed by the Khasavyurt truce. It may be mid-August or late August, or 
maybe in September, but the rebels will come to Grozny for sure. No one will 
stop them, because if an army stands still instead of moving, it loses its 
combat readiness. 
NO CULTURE OF SUICIDE
One thing that didn't exist in the first Chechen war was kamikaze 
suicide fighters. Moscow-backed Chechen leader Ahmad Kadyrov once said that 
there has never even been a hint in Chechen culture of a cult of suicide or 
self-sacrifice.
As far as I could tell during the first war, the Chechens were 
exceptionally brave fighters and were not afraid of being killed in battle, 
but the supreme act of valor was still to destroy the enemy while staying 
alive yourself. The suicide fighters evidently appeared under the influence 
of the Middle East extremists. It is hard to overestimate the danger of this 
factor. Fortunately, for understandable reasons, there aren't a lot of 
suicide fighters. But the very fact that they can appear at any time and 
anywhere makes a soldier fear every Chechen -- somebody may look just like a 
woman or a little boy, and then boom-you're ripped to shreds with them. 
The most important and tragic difference -- and one the country and the 
world don't seem to have fully grasped yet -- between this war and the 
previous one is that this time Russia won't leave Chechnya. It's absolutely 
impossible to leave vanquished again: the national consciousness will simply 
not be able to digest such a humiliation, and the army will more likely rise 
in revolt than acknowledge another defeat. It's impossible to win there, and 
we can't leave, either. What will happen? The same thing that is happening 
now. Russian soldiers and Chechens will go on dying every day in Chechnya.
Society has become almost inured to this already. Soon it will become 
completely inured, and such trifles as another attack on an army column will 
no long even be included in the daily news reports. Army commanders will make 
another attempt to divest themselves of responsibility for Chechnya by saying 
that the army has done its job, so now let the Ministry of Internal Affairs, 
the police, in essence, go to work. But the law-enforcement people will 
convincingly prove that fighting is breaking out first here, then there, and 
fighting, as is well known, is the army's job. 

DECADES OF WAR
This will drag on for years and decades. Well, Russia cannot get 
accustomed to fighting in the Caucasus for decades. Mothers in Ryazan or 
Novosibirsk who see their sons off to the army will wail over them as if they 
are dead, while in Chechnya the teenagers who are running through the 
mountains with the rebels today will grow up into professional guerrillas, 
and new boys will be born who will know from the time they are in diapers 
that when they grow up, they will go into the mountains so that, like their 
older brothers, fathers or uncles, they can kill Russian soldiers.
There is only one hope: suppose something comes of Kadyrov's current 
efforts to stop the federal forces' atrocities against the local population 
and thereby break the vicious circle of violence and hatred, to protect and 
feed the Chechens and cut off the rebels from their source of support.
It still won't be possible to defeat them completely in the immediate 
future, but at least there will be less blood and fewer casualties. But then, 
this hope is essentially illusory, and we mention it only because it is 
frightening to be left completely without hope.

****** 


#6
Moscow Times
August 17, 2000 
Lessons of Aug. 17 Crash Not Learned 
By Catherine Belton
Staff Writer


It's been two years since the spectacular currency crash and debt default 
that ransacked the banking system, wiped out savings and sent foreign 
investors flying out of Russia swearing they would never touch the country 
again. 


It's been two years in which prime ministers have toppled three times and an 
enfeebled President Boris Yeltsin bowed out in favor of a little known former 
KGB operative, Vladimir Putin. 


But after two years, the nation's balance books are now looking rosy. Oil 
dollars have rained in as world oil prices soared. The trade surplus has 
climbed to $27.5 billion for the first half of this year, aided by an 
exchange rate that keeps out imports. And the devaluation-fueled boost to 
local manufacturers has produced a surge in gross domestic product that 
reached record levels at 3.2 percent last year, while official predictions 
are nodding toward 5.5 percent for this year. Foreign investors are once 
again sniffing around Moscow. 


Foreign investors have said they are encouraged by Putin's moves so far after 
a year and a half of stagnation on economic reform following the crisis. They 
have nodded approvingly at steps to lower the tax burden on business, to 
bring economists with a liberal track record into government and at the 
adoption of an economic action plan firmly aimed at freeing up the economy 
from over-regulation by the state. 


"It's different this time," said Scott Blacklin, chairman of the American 
Chamber of Commerce. "Before the crisis, all of us were somewhat fooled by 
the artificial buoyancy of the pre-1998 years. But now þ there is a more 
sober optimism compared to the rampant enthusiasm of the not so distant 
past." 


But even if the Putin regime aims for a new era of political stability and 
much-needed structural improvements to boost economic growth further, many 
observers are already steeling themselves for the next crash. 


Beneath the sound macroeconomic statistics driven up by high world oil 
prices, analysts say that without far-reaching structural change, which 
requires a major attack on vested interests, the economy is just another big 
accident waiting to happen. 


Analysts warn the devaluation-driven boomlet is already petering out. 
Worrying signs of an overstrong ruble and a hike in inflation are already on 
the horizon. Others point to the banking sector as an unruly vector that 
might pull things apart. 


"The banking sector is a big time bomb waiting to go off," said Kim Iskyan, 
banking analyst at Renaissance Capital. 


"What happened after the crisis set the worst possible precedent for the 
sector," he said. "When crisis hit, bank chiefs believed they were going to 
be saved by the state and they have no reason now to believe anything 
different. 


"If things go belly up, they know that they can either move assets elsewhere 
or wait for the government to step in and bail them out," he said. "There is 
no incentive not to engage in risky operations if you know the government 
will bail you out. The only difference this time is that there's less poison 
around for banks to play with like the GKO market." 


In the two years since the banking meltdown, only two major banks, Inkombank 
and Menatep, have been officially bankrupted. Even then, most of Menatep's 
business had already been transferred to sister structure Menatep St. 
Petersburg, owned by the same Mikhail Khodorkovsky-controlled Yukos group. 


Other institutions that on paper should have been wiped out by the crash also 
just ended up with a different sign over the door. Uneximbank moved business 
to Rosbank; Rossiisky Kredit's owners created Impeksbank; and SBS-Agro's 
owners swiftly set up a new establishment called First Mutual Credit Society. 


The banks owners deny that any assets were transferred in the process. 


Private depositors and corporate creditors, meanwhile, are still waiting for 
payback on billions of dollars lost in the dead banks as restructuring 
agreements are still being cranked out. Other zombified banks were allowed to 
go on surviving courtesy of the state printing presses as the Central Bank 
poured tens of billions of rubles in stabilization credits into accounts in 
vain attempts to keep afloat what were seen as "socially important" banks, 
like the chief channel for crediting the agricultural sector, SBS-Agro. 


Now, the Central Bank will be lucky to see a 1 percent return on those 
credits under a debt-restructuring agreement being hammered out for SBS-Agro. 


"If somebody stood up and started to demand to know where all the money in 
Rossiisky Kredit or Uneximbank has disappeared to, if there were real 
investigations into how their assets ended up in bridge banks and if the bank 
owners were tarred and feathered as a result, then that would be a real step 
forward for the banking sector," Iskyan said. 


"There has to be a real break between the government and the financiers that 
run the banking system. So far there has been no sign of that," he said. 


Oleg Vyugin, a former first deputy finance minister and one of the architects 
of the government's new economic plan, also warned on Wednesday there was a 
need for real change in the banking sector. 


"Supervision of the banking sector is still very weak, capitalization is 
still low, management on the whole is still very bad," Vyugin said. 


"As soon as the current excess liquidity dries up, that danger is bound to 
become apparent," he said. He said that could happen whenever the trade 
surplus began to fall f a process he said was inevitable because the ruble 
was bound to strengthen further and lower the barriers for more imports. 


However, Vyugin, who is vice president of Troika Dialog, said the new 
government was determined to improve the banking sector. But he said ultimate 
responsibility lies with the Central Bank, which is in charge of supervising 
the banking system. So far, however, its track record is not great as it has 
allowed "bridge banks to be created and assets to be transferred," he said. 


He said, however, that one lesson the government had learned well from the 
August crash was to follow a tighter budget policy to create a surplus and 
not rack up the huge deficits of the pre-crisis years. 


But he warned that economic growth could already slow down next year as the 
ruble strengthens against the dollar and the economy loses its competitive 
edge. This could cause the government to back off. 


"The government might not be so quick in introducing structural change that 
is going to have a negative impact on society," Vyugin said. "That means 
reforms to close down ineffective enterprises, to reform the utility sector 
and raise tariffs for energy and electricity, and to target housing subsidies 
only at those most in need might be watered down." 


Analysts warn that Putin has to move fast, otherwise policy changes and bills 
like the recent plan to reduce regional leaders' powers and the measures to 
lower the tax burden will not pass through the State Duma so easily. 


"Just like Yeltsin, Putin will become hostage to infighting within the 
Kremlin if he doesn't move quickly to decide what he wants to create in place 
of the Yeltsin regime," said Andrei Ryabov, a political analyst at the Moscow 
Carnegie Center. "That means crisis could be just around the corner." 


******


#7
Krasnaya Zvezda
August 12, 2000
[translation from RIA Novosti for personal use only]
RUSSIA: ENTERING NEW CENTURY
What kind of state, after all, do we live in and what kind 
are we going to build? What is the purport and essence of the 
latest reforms of state authority and state system of Russia?
What is expecting us in the near and foreseeable future? We put 
these and other urgent questions agitating our readers to Gleb 
PAVLOVSKY, a leading Russian political scientist and adviser to 
the head of the presidential administration of the Russian 
Federation.

Question: Mr Pavlovsky, our first and perhaps main 
question is: how would you describe the present stage of 
Russian statehood?
Answer: Your question is global, but the answer to it is 
simple: today we are witnessing its restoration. The new 
Russian statehood was proclaimed a mere ten years ago. Russia 
has just embarked on self-determination. There is still no 
consensus in society on what the Russian state should be like. 
Understandably, we have no precedents - there has been no 
democratic state in Russia before. We had the Russian empire 
and the Soviet Union, very different states known well in 
history, but none of them can serve as a model for us, 
especially since both ended poorly - with a revolution and a 
collapse. Now, following two state crashes within one century, 
a new state-building team has to raise practically from scratch 
a firm and effective state system where ordinary people can 
live freely and safely and which they can govern. We see 
emerging on the world scene a new and restored Russia which 
will have friends, allies and neighbours and, if necessary, 
will cope with its enemies. 
All the previous ten years of Russian statehood should be 
acknowledged as revolutionary. Within a short period of time 
everything was changed radically: property relations, the state 
system, even borders and name of the state. A democratic 
revolution had taken place. Today society is only starting to 
implement the tasks for the sake of which the population made 
all these sacrifices. The destructive phase of the 
revolutionary era is left behind. An era of restoring the 
Russian state is beginning and is to last. 

Question: The trouble is that the institutions of freedom 
and democracy created as a result of this revolution have been 
hijacked by non-constitutional groups and groupings, so-called 
State-2, that is by shadow economics and politics. 
Answer: But where are these permanent institutions? There 
were only signs and plates. Any state institution in the 
revolutionary era looks like temporary props. But the 
revolution lasted longer than expected, and people have begun 
against their will to accommodate themselves to these makeshift 
structures. And then it emerged that constitutional signs 
concealed private fiefs in the state apparatus. 
Formally, we have a constitution. But everything is 
functioning in a way different from what is put down in the 
constitution, everything is done as "always". Take the Federal 
Assembly: there is an upper house, there is a lower house. Here 
deputies and there senators carve up the budget. It all looks 
as a well-regulated family, but where is the budget? The budget 
is practically non-existent. The state is impoverished, but 
everyone sees that we are not that poor as it appears on the 
face of it.
So money goes. But where? There appear to be free mass media, 
but they do not tell us what concerns people most, because 
journalism is now paid propaganda. 
Newspapers wrote about enterprise budgets going into the 
shadow sector. But that is an infinitesimal proportion. The 
bulk that sank into the shadows was the federal budget. Money 
allocated by the federal budget escaped the control of federal 
authority and formed the budget of the shadow quasi-state.
Citizens' money was used to develop a non-constitutional 
structure for running the country. 
Russia's first president Boris Yeltsin had no time, for 
example, to look into local politics in the regions: governors 
are loyal to him and control the population? All right, let 
them govern further. Mass media tycoons support him 
politically? Fine, let them do whatever they like with 
television channels. That was the approach of a revolutionary 
which he actually was.
Revolutionaries are not interested in permanence, what they are 
interested in is the pace at which old things are demolished 
and in the taking over of command heights ...
And the absence of the state, what does it mean? Those who 
have money at hand agree with those who wield power and decide 
all matters. And those who command the press and television 
explain to the masses that this is democracy. In that way 
several hundred people take possession of state power. The 
might of shadow politicians is the result of our lingering in 
the interim and temporary stateless condition. 
And the Chechen Republic, from my point of view, is the 
extreme case of what I have said. Here what was brewing 
throughout the whole of Russia erupted into a catastrophe.
Vladimir Putin was right when he said last autumn: whatever you 
put your hand to in this country proves to be another 
"Chechnya." 


Question: But what could be undertaken now by the 
President, by authorities to dismantle this system? Does he 
have tools for scrapping shadow politics and economics? 
Answer: The first step is the hardest. All in all, in four 
months since the elections, a number of blows have been struck 
against the old system, it has been compromised, and principles 
of a new policy are being laid down, and I would even say of a 
new Russia. It was not accidental that the blow was struck 
against several critical nodes of the old system.
Quasi-strategists reproached the President for fighting on 
several fronts at once, but as we see the tactics proved to be 
strategically vindicated. Putin did not allow others to detain 
him "on the far approaches" to new policy, did not let the 
opponents of the new line to band together and gain strength. 
To my mind, now he should proceed further, without any delays. 
To be sure, to restore statehood requires restoring 
control functions. It is necessary to protect the state's 
control functions. This was done at the very outset by creating 
federal districts, because the entire former shadow structure, 
that same State-2, is tied to the Soviet 
administrative-territorial system.
Because the budget and all the diversified network of 
embezzlement and public troughs were bound up with it. And when 
the new level appeared, it proved beyond the reach of the old 
corrupt structures. Accordingly, this level began setting up 
district prosecutor's offices and monitoring bodies, and these 
are to an extent protected against pressure from shadow 
structures. If anything, they are better protected than other 
bodies of authority, since they are directly subordinated to 
the President and are outside old corrupt links. This offered 
an advantage in strengthening federal authorities and its 
credibility locally. State power has returned to localities 
abandoned by Soviet authority ten years ago, leaving a legal 
vacuum. 
Then comes the function of law, finding in conflict 
situations who is right and who is not - and compelling those 
who are not. A legal method in case of failure leaves the 
chance to go to court and restore an infringed right. And what 
if the court is poor and local authorities, sometimes just 
local OPG bodies, pay for its maintenance?
Second, I consider it politically important to exploit 
further the early successes on the economic front. And here the 
economic reform is of cardinal significance - there is now a 
position from which the state may request businessmen, any 
citizens and organisations to observe its standards. The law 
has become enforceable. This is very important, since 
unenforceable standards undermine state power, diluting the 
border between an honest person and a criminal. It was with 
good reason that the "war" in the Federation Council over old 
financial privileges was hush-hush. Real power is always 
financial power: render unto Caesar the things that are 
Caesar's.
We are also seeing restoration of mass media. We are 
always complaining that the state exerts pressure on 
independent media.
But the problem lies elsewhere - society in Russia has been 
corrupted no less than the state, and things are the worst in 
mass media, where this public institution is corrupt through 
and through. 
I think that Vladimir Putin in the first political quarter 
of his presidency has avoided the main opening danger. He 
prevented the formation of a systemic shadow opposition, which 
our authorities have always faced as soon as they attempted to 
touch State-2: plans are only afoot but there is already some 
opposition - counter propaganda, compromising materials, and 
public politicians with ready-made texts distributed among 
them... This time they failed. The enemy were unable to muster 
forces, they were dispersed and thrown back. 

Question: You mentioned information coverage of the 
state's activities, something discussed by the President at a 
Security Council meeting. But in addition to that, I will again 
quote you, to build a strong and compact state requires 
effective intellectual support. 
Answer: It seems to me there is no separate problem of 
intellectual support for state building. The President sets 
this problem in a real context - national security. In general 
I dislike branch-specific notions: information security, 
economic security... Security is one, but threats to security 
may be many.
More often than not they are combined and the question is posed 
as simple as that: is the country able to cope with complex 
threats or is it only ready to take on habitual ones, such it 
already has dealt with in the past? Another reason why the army 
is fighting terrorists in Chechnya is that in the past the 
capital's political elite decided to treat the terrorist 
enclave in the Caucasus as a minor problem and to come to grips 
with other and more "convenient" opponents. When a state's 
elite lacks an understanding of real threats and the will to 
parry them the country is defenseless. In this sense 
information and intellectual support become, properly speaking, 
an aspect of the state's security.
I think the problem of new personnel is now nearly a 
central problem for us. So who is the bearer of the intellect? 
These are people. People who are in the right place at the 
right moment.
These are personnel. When a country is threatened, it is late 
to rush into the street and look for helpers - people must be 
on their jobs. We keep repeating all the time that Russia is a 
country of smart and capable men, but we do not look for them, 
while our television screens feature smug and gray-haired 
masters of ceremonies.
In principle I believe that in the near future there will 
be two lines of external pressure on Russia. Under one scenario 
an internal opposition will be imitated. By using the remnants 
of old shadow structures, it will be constantly modeling 
excuses for external interference. 

Question: On the Byelorussian pattern?
Answer: The most disastrous is Yugoslavia's. Obviously the 
former central leadership was to blame, which let the situation 
go its way to such an extent that it was no longer impossible 
to tell between internal affairs and international problems. 
The result was a mixed bag of semi-independent states. And this 
mixed bag was invaded by external forces. The Byelorussian 
pattern is potentially dangerous by its hint at the Serb one. 
It is dangerous not even in an opposition fully dependent upon 
external backing, but in it producing an argument that entire 
state authority is unlawful. It is an international "bomb" 
planted under national security.
Movement in this direction could be seen in this country 
last year. There was already talk of federal power not being 
fully legitimate in general. Such things always have the same 
kind of ending: self-appointed "representatives from 
localities" gather together and state that they are the 
vehicles of sovereignty... This opens scope for big-time 
international play. 
To my mind, Putin a year ago saved the situation literally 
at the last moment. What are the implications of doubts in the 
center's legitimacy given armed resistance in a province? When 
on your territory it is not clear whether a state exists or 
not, which besides shows a certain international financial 
activity, and you now negotiate with it and now fight it, then 
one day your neighbors will stop tolerating it - and 
interfere... And there will be an international conflict on a 
part of your territory.
Solution of that problem could not be postponed any longer.
Kosovo and Chechnya parallels had been drawn on a massive 
scale. 

Question: The last war in Chechnya provided a kind of 
point of departure for building up a new Russian state. What 
place in it is allotted to the army? What kind of army does 
Russia need today and will need tomorrow?
Answer: When Putin came to power, Russia's national 
security was in a shambles. And not because an army of an 
aggressor came within our boundaries. Today we need not expect 
a war in the old meaning of the word: tank thrusts or occupying 
troops riding motor-cycles...
These past days we marked a grim anniversary - capture of 
Grozny by bandit groups in August 1996. It was also a 
well-calculated modern military political operation of the 
enemy.
A combination of guerilla techniques, counter propaganda and 
international misinformation. Seven hundred militants were set 
the task of occupying certain points and keeping them as long 
as was necessary, meanwhile a massive propaganda campaign was 
launched, drawing on some politicians here in Moscow. That is, 
alas, no secret. Actually, the strike at our forces was dealt 
relying on our own resources, our political communications.
Without suffering defeat, the army was compelled to pull out, 
and Russia went through an unheard-of humiliation as a state. 
And what if financial, information and military strikes 
will be synchronized? Russia has already come under combined 
attacks from within and from without. The international 
discrediting last summer, the so-called banking scandal, was 
synchronised with an attempt at internal destabilization. Some 
people imagined that Russia's internal affairs ceased to be 
controlled by the federal centre, and it was then decided to 
"use Yugoslavia as a test case." The centre reacted 
instantaneously, and they beat the retreat. But it was only a 
trial balloon, a test, the first check of our system of 
defences. In principle any spot may be vulnerable, any aspect 
of the national infrastructure. Imagine that a financial attack 
has been mounted against a country, combined with a massive 
disruption of the Internet. In parallel some one initiates a 
sort of "empty saucepan march," an ethnic conflict, rail 
warfare, or something of the kind... Modern competition in 
economics and military conflicts are designed to be 
pre-emptive, to gain time when the enemy turns your internal 
communications into his own, your national resources into a 
menace to your own security. Any healthy aspect of society can 
be taken advantage of by the enemy to destroy it... 
International terrorism, it will be recalled, emerged on the 
basis of law-governed societies and uses the qualities of 
democracy - openness and freedom of information and the 
strength of public opinion. Terrorism is a machine for exerting 
a total pressure on the state system, with a knowledge of how 
it operates. This is, if you like, an intellectual weapon, and 
intellectual challenge to our future.
In the world today there is a mass of non- and semi-state 
structures capable of concentrating fighting facilities, 
finances and communication resources to strike at some or other 
governments. We see this in all spots of the globe, and in 
particular in what Putin described as an arc of instability 
along our southern borders. And what is this arc of 
instability? It is a vacuum left on the Cold War battlefields. 
A chain of weak states on over-populated territories packed 
with modern weapons and asocial youth. 
The first attack on the state has been repelled, and 
people able to meet the modern challenges have been called up 
by Russia.
For the first time in ten years we have a national consensus on 
security. This has created conditions and approaches to 
well-considered building up of a contemporary Russian army. 
This is a worthy intellectual task for the Russian military, 
state and business elite. But as a matter of fact, I am not a 
military expert myself. 

Interview taken by Igor YADYKIN, Krasnaya Zvezda 


******


#8
Washington Times
August 16, 2000
U.S. effort to secure nuclear material called lax 
By David Sands


U.S. efforts to help Russia protect its huge stocks of nuclear 
bomb-making materials have languished because of tight budgets, bureaucratic 
restrictions and a lack of focus from top-level Clinton administration 
officials, a new report concludes.
"This is an issue that should be at the top of the U.S.-Russian nuclear 
agenda," said report co-author Matthew Bunn, a former adviser to the White 
House Office of Science and Technology Policy and now a researcher at Harvard 
University"s Belfer Center for Science and International Affairs.
"I suspect, though, that there's been more time spent at high-level 
U.S.-Russian meetings on trade in chicken parts than on nuclear material," he 
said.
The collapse of the Soviet Union brought with it a severe deterioration 
in security controls on the plutonium and highly enriched uranium used to 
supply Russia's still-huge nuclear missile arsenal.
In the episode most recently made public, Russia's security forces in 
December 1998 arrested a group of conspirators trying to steal 40 pounds of 
weapons-usable materials from one of the country's largest nuclear weapons 
facilities.
Although a joint U.S.-Russian program to secure the weapons-grade 
material stocks has been in place for six years, the bulk of the work is 
still to be done, including a basic accounting of how much material must be 
protected and how many labs have been made secure.
But budgets for the Department of Energy (DOE) programs dealing with 
Russian nuclear stocks have not grown to match the expected new demands, the 
report concluded, while relations with Russian energy officials have 
deteriorated and access to sensitive Russian sites has declined since 1996.
With Russia set to decommission even more nuclear warheads in the coming 
years, the danger that unaccounted nuclear material stocks could be acquired 
by international terrorists or a rogue regime such as Iraq has only 
increased, the study's authors contend.
"If the programs today don't work and this material falls into the hands 
of terrorists, the next nuclear disaster coming out of Russia will be much 
worse than what's going on with the submarine in the Barents Sea," said 
Kenneth N. Luongo, a study co-author and former senior adviser to the 
secretary of energy on nonproliferation issues.
A DOE spokeswoman, speaking on background, noted yesterday's report 
praised a number of U.S. government nonproliferation programs, including one 
with Russia's naval nuclear forces.
"There's no higher priority for this department than securing these 
nuclear materials," the spokeswoman said, pointing out that funding for 
protection and control of Russian nuclear material had gone from $15 million 
in 1994 to $150 million this year.
Mr. Luongo said the joint U.S.-Russian program has had some successes 
but had lost much of the momentum built up in the program's early years. 
Experienced DOE personnel left the program, and the issue faded from the 
nation's newspapers, he said.
Diplomatic missteps — including a 1999 DOE decision to cancel a number 
of new contracts under the program in a dispute over access to sensitive 
Russian weapons labs — have also created resentment in Moscow.
Mr. Bunn called the cancellation of the contracts a "blunder of colossal 
proportions."
But the DOE spokeswoman said the cancellation reflected a "conscious 
decision to only spend our money on projects where we feel we have sufficient 
access to ensure the work is being done properly." Talks are under way with 
Russian energy officials about reopening the sealed labs and renewing the 
contracts.
The report, produced for the Russian-American Nuclear Security Advisory 
Council, recommends putting the control of Russia's nuclear material at the 
top of the U.S.-Russian security agenda; increasing the funds, personnel, and 
coordination of U.S. agencies involved in the effort; enhancing lab-to-lab 
contacts between U.S. and Russian scientists; and encouraging Russia to 
improve its regulation of nuclear facilities while consolidating stocks in a 
few well-monitored sites.


******

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