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Johnson's Russia List


August 18, 2000    
This Date's Issues: 4463 4464

Johnson's Russia List
18 August 2000

[Note from David Johnson:
1. AP: Sunken Russian Sub Has Hole on Side.
2. Moscow Times EDITORIAL: Putin Robs 118 Men of Four Days.
3. Edward Lucas and sub accident.
4. Toronto Globe&Mail: John Helmer, POLITICS CLEARER THAN RESCUE 

5. Christian Science Monitor: Fred Weir and Scott Peterson, 
Sunken sub and the 'new' Russia. Official statements on this week's 
sub disaster have the familiar ring of Soviet-era disinformation.

8. Izvestia: Today is the Second Anniversary of Default and 

9. The Economist (UK): Where worlds collide. Geography should make 
the Caucasus rich and happy. History and politics make it poor and 
miserable. Russia’s willingness to try to change this will be the 
first big test of President Vladimir Putin’s foreign policy.

10. Reuters: Putin's image suffers jolt in submarine disaster.]

Sunken Russian Sub Has Hole on Side
August 17, 2000

MOSCOW (AP) - The sunken submarine Kursk has a ``terrifying hole'' on its 
starboard side, a top Russian official said Thursday as new underwater film 
indicated that an explosion wrecked the vessel and sent it plunging to the 
sea bottom in seconds. 

Deputy Prime Minister Ilya Klebanov said most of the nuclear submarine's 118 
crewmen were likely in the damaged section of the vessel, suggesting they had 
no time to escape. 

Russian rescue efforts over the past three days have failed to reach the 
crippled submarine, which is trapped 354 feet down in the Barents Sea. Rescue 
teams from Britain and Norway cannot get to the site until the weekend. 

Russian theories about what befell the vessel on Saturday range from the 
explosion to a collision with a ship to contact with a World War II mine. 

The Russian navy said the new film of the stricken sub suggested that an 
explosion had hit the Kursk and that the vessel is sinking into the mud of 
the sea bottom. 

Klebanov said experts reviewing days of rescue efforts to save the Kursk 
believe the submarine hit ``a huge, heavy object.'' 

``A rather big part of the crew was in the part of the boat that was hit by 
the catastrophe that developed at lightning speed,'' Klebanov told reporters 
in Murmansk, home of the Russian Northern Fleet. 

The film showed enormous damage to the forward half of the submarine, 
including the conning tower, that would have sent the vessel to the bottom in 
seconds, navy officials said. The control room where most of the crewmen work 
is below and adjacent to the conning tower, suggesting many sailors would 
have had no time to escape - to a more secure part of the vessel or perhaps 
even from the craft entirely - when the submarine went down. 

U.S. officials speaking on condition of anonymity said American submarines 
monitoring Russian navy exercises when the Kursk went down detected two 
explosions at the time. The second explosion was much larger than the first, 
the officials said. 

Russia's slow, confused and often-contradictory response to the disaster has 
brought a wave of criticism at home. The accident was not announced until two 
days after it happened and relatives of crew members learned of the sinking 
not from the military but from television. 

For those loved ones, the wait has been brutal. With little reliable 
information, people trade thirdhand reports and listen desperately - and 
religiously - to the radio, hoping for anything that will give them hope. But 
they have terrifying ideas about conditions below the water. 

``They are cold now, and have no lights,'' said Vyacheslav Olnev, a Murmansk 
factory worker who served on a submarine. 

Murmansk's St. Nicholas church has held special services to pray for the 
crew. Worshippers light candles in front of icons. 

Ludmila Milyutina, whose son Andrei is aboard the Kursk, said that when she 
called a government hot line for information on the disaster, she was told 
``Go to Murmansk and ask journalists.'' 

Russian rescuers continued their agonized efforts Thursday to reach the crew, 
whose status is unclear. Russian officials have repeatedly given 
contradictory reports of whether rescuers had detected any signs of life from 
within the Kursk. 

High-tech foreign teams whose help was requested only a day before began a 
painfully slow trip that won't get them to the disaster scene before the 

Russian Navy deputy chief Adm. Alexander Poboi said there could be enough air 
aboard the Kursk for the crew to survive two to three weeks. But oxygen 
equipment could have been destroyed or damaged and Klebanov said ``there have 
been no sounds for quite a long time'' from inside the Kursk. 

And in another somber assessment, Prime Minister Mikhail Kasyanov said the 
situation was ``close to catastrophic.'' 

The Kursk can carry up to 28 torpedoes and anti-submarine missiles, each with 
warheads weighing up to 1,000 pounds. An explosion involving even a few 
torpedoes would have caused catastrophic damage, officers said. 

Russian officials have said the Kursk carried no nuclear weapons. 

Rescue capsules have been trying for the past three days to link up with the 
submarine, but were again driven back again Thursday by racing currents and 
swirling sand in the inky darkness. 

Interfax news agency quoted navy spokesman Capt. Igor Dygalo as saying the 
ship's sinking into the mud ``does not significantly impact the rescue 
operation.'' The submarine is leaning at a sharp angle, which also impedes 
rescue work. 

After resisting Western offers of assistance for days, Russia on Wednesday 
turned to Norway and Britain. But it took almost a full day after that for a 
Norwegian ship carrying a British rescue mini-submarine to set sail and it 
was not expected to arrive until late Saturday. A second ship carrying 
Norwegian divers was expected to arrive Sunday. 

The Pentagon said Thursday that Russia has not responded to Defense Secretary 
William Cohen's offer to provide U.S. military assistance to the Kursk. Cohen 
made the offer in a letter delivered Tuesday, and President Clinton repeated 
it in a telephone call the next day with Russian President Vladimir Putin. 

The Russian navy refused to confirm the reports from U.S. officials about two 
explosions. Officers did say, however, that a single explosion in the torpedo 
compartment at the front of the submarine apparently caused the Kursk to 
sink. A likely scenario was that one torpedo exploded, setting off a much 
bigger explosion of other torpedoes. 


Moscow Times
August 18, 2000 
EDITORIAL: Putin Robs 118 Men of Four Days 

How could President Vladimir Putin continue his vacation in the resort of 
Sochi? And how could he wait days before finally accepting offers of foreign 
help f help that will now take days more to arrive? 

By hiding in sunny Sochi, Putin has disappointed many who thought he would be 
a different sort of leader than Boris Yeltsin f more vigorous, more visible, 
more decisive. One side of a job like the presidency is the ceremonial and 
the symbolic. The nation wants to see leadership. Putin had no problem with 
that when it was in his interest, and he indulged in campaign stunts like 
flying a jet fighter to Chechnya for fun. Where is the jetwinging him to 
Moscow, or Murmansk? 

Far more damning has been the president's disdain for outside help. The Kursk 
sank Saturday morning. The government knew by Sunday, and admitted as much 
publicly on Monday. It took until Wednesday evening, however, before Putin 
finally, grudgingly, took the British and others up on offers of assistance. 

It seems it will take about four days for the Brits to get their team in 
place. By Wednesday, the Russians had exhausted all of their possibilities; 
had the Brits been invited on Sunday, they could have been on hand this very 
Wednesday, just as the Russians were finally stymied and while there was 
still hope. Instead, it took Putin four days to swallow his misguided pride f 
and now the British rescue team will arrive only after another four days, 
this Saturday. 

In other words: Putin has robbed those 118 men of four extra days. 

If the British on Saturday successfully open the hatch to a submarine of 118 
dead men f men who were alive and tapping on the hull on Wednesday f then 
those deaths can be directly attributed to the president's arrogance. 

And so the nation, enraged, is finally awakening to the tragedy of the Putin 
presidency. He spoke of his "historic mission to sort out the Caucasus" f 
while the Pushkin Square blast reminds us he has instead obtained for Russia 
20 more years of terrorism. He promised to "liquidate the oligarchs as a 
class," and then sat down with 21 of them in the Kremlin around a table, as 
if they were all equals, and promised them they could keep their stolen oil 
fields and nickel deposits. He has dabbled in diplomacy with a half hour 
visit to North Korea f and been praised by moronic Western leaders as 
"brilliant" for doing so f only to have Kim Il Jong announce that Putin 
misunderstood his talk of missile disarmament, that it was "a joke." 

A joke indeed. One we are stuck with until at least 2004. 


Date: Thu, 17 Aug 2000 12:46:37 -0400
From: "edward lucas" <> 
Subject: From Edward Lucas

Just a quick mid-holiday note from the depths of Somerset: 

The Kursk could do for Putin's Russia what Chernobyl/Chornobyl did 
for the post-Brezhnev Soviet Union. It highlights a) the mismatch 
between imperial industrialised-country aims and third-world means 
and b) the inability of the system to respond to crises in an honest, 
open, and flexible way. 

In a way it is even more damaging because the limited free press in 
Russia has raised public expectations, as has 15 years of more-or-
less reform and openess to the outside world. And here they are, 
letting 100-plus people die because nobody is prepared to admit that 
they need help (reminds me a bit of the way Russians mend cars, 

So how will Putin spin it?

One way would be to purge the brass-hats. ("I'm shocked, shocked, to 
find that the upper ranks of the navy are full of bone-headed 
xenophobic paper-pushes--they all seemed so nice when I was visiting 
them the other day"). If he needs any fuel for a shakeup in the armed 
forces, then this is it.

Secondly, he could use it as an argument for spending (even) more 
money on the military. 

Thirdly (and what I thought initially)they could blame foreigners 
(collision, for example), but in current circs that would be 
stretching it even by Kremlin standards of desinformatsiya.

More optimistically (never my problem) it could be the start of a big 
rethink about Russia's place in the world and way of doing things. 

Anyway, it will be interesting to see how the Kremlin manages to do 
any of this now that Berezovsky is on the other side. Perhaps they 
will manage quite well, in which case his influence/manipulative 
skills will prove to be less central than we thought. 

Finally, I haven't seen any hint so far that the cause was anything 
but an accident. What about sabotage? For those who accept 
that "they" are capable of blowing up hundreds of innocent people in 
blocks of flats to engineer the political results they want, 
presumably sabotaging a torpedo before a naval exercise wouldn't be 
too difficult.

However, I shall have more idea of what's going on when I return to 
Moscow in ten days.

By the way, my Caucasus three-pager is in the Economist this week. 
I'll send it out eventually, but those of you able to access the web 
edition, or even buy the paper in the traditional way, may enjoy the 
table which should annoy everybody in that region more or less equally

Edward Lucas
Moscow correspondent,
The Economist.


Date: Thu, 17 Aug 2000 
From: "John Helmer" <> 

The Toronto Globe&Mail, August 18.

>From John Helmer in Moscow

There is an old Russian saying that between life and death, there is no room 
for a flea to jump.

This has been the problem facing Kremlin leaders, the Russian Defence 
Ministry, and the Naval Command from the moment the "Kursk" submarine crashed
into the seabed, in stormy waters of the Barents Sea. If many, if not most of 
the crew were killed in those first minutes; and if the vessel's emergency 
life-support and evacuation systems were crippled, dooming the other 
survivors, what chance was there of salvaging life from death?

Through Thursday, none of the rescue operations being mounted by several 
Russian submersibles was able to answer those questions, or to verify whether
anyone is alive on board the "Kursk". None of the sophisticated 
Russian and American listening devices in 
the surrounding waters has been reported as detecting sounds of life.

The Russian naval command spokesman, Igor Digalo, denied US reports that 
more than half the crew is dead. But he offered no evidence that they are 

Russia's Prime Minister Mikhail Kasyanov's grim face told his cabinet 
ministers more than his words, when he announced there was no change in the 
news to report from the submarine, "nothing negative; unfortunately, nothing 
positive". But Kasyanov added ominously: the situation is "close to 
catastrophic." That word, a Kremlin source told The Globe&Mail, means 
"Kasyanov knows there are many dead."

Through the day, the Russian media have focused on the improving weather, 
lower swells, and slower currents that have made the rescue work dangerous
so far unsuccessful. But visibility on the sandy seabed is still very poor.

"True submariners never lose hope," a Russian naval representative said in 
Brussels before meeting British and Norwegian counterparts to discuss joint
rescue efforts.

Russian experts said the severe angle of list of the "Kursk" on the seabed 
has made the task of locating the emergency hatch more problematic. The 
despatch of the British LR-5 -- never before used in real rescue conditions 
and unlikely to arrive before Saturday -- promises more manoeuverability 
around the stricken vessel. But if noone is alive, the assistance will be in 
vain. And if all 118 submariners are dead, who is to blame?

The answer has major political consequences, inside the Russian armed forces, 
and inside the Kremlin as well. For this reason, the politics of the "Kursk" 
have already begun to surface more clearly than the submarine's fate, 
signalling what rivals of the current Defence Minister, Igor Sergeyev, and 
critics of President Vladimir Putin, hope will be the outcome of the disaster.

Sergeyev, a veteran of the missile forces and appointee of ex-President Boris 
Yeltsin, has been keeping his distance from the drama; he has given no live 
interviews, or answered reporters' questions. Sergeyev's staff did release 
Thursday a statement, suggesting the cause of the accident was external to 
the submarine.

Russian sources no longer hint at the possibility of a brush with a US 
submarine. There have been many such incidents, but none with the
damage caused to the "Kursk". The local regional governor, Yury Yevdokimov,
Wednesday the Barents Sea is alive with World War II mines, and one of them 
could have detonated against the bow.

Another theory is that the "Kursk" collided with an ice-breaker, as the 
submarine rose towards the surface.

Each of these theories places responsibility for the accident on human error 
at the scene, absolving the higher command of fault, but placing a 
question-mark over Navy claims to its share of the defence expenditure 
increase which the Kremlin has promised for next year.

Vice Admiral Yegor Tomko, a retired Naval Command officer, dismissed each of 
these theories, pointing out that the periscope was working at the surface, 
and would have detected a ship, even if the sonar operators were asleep at 
their monitors. He added that the boat hull is much too strong to crumple and
open as it has, if hit by another vessel, or a 60-year old explosive. 
According to Tomko, it is far more likely there was an accident in the 
submarine's torpedo room, with one warhead detonating the others.

The force of an internal explosion was enough, he said, to destroy the 
command deck, the escape module, the emergency command-and-control systems, 
and kill most of the officers and crew.

"Small human errors can have catastrophic consequencces," a former 
presidential press spokesman told The Globe&Mail. "Just look at what a 
40-centimetre strip of metal on the runway in Paris did recently to the 

"But today in Russia, there are many who will try to capitalize politically."

A Kremlin source said the timing of the accident could not have been worse
the Navy, as different factions within Russia's armed forces command are 
fighting for President Vladimir Putin's favour. "This could trigger a purge 
of the Navy," the source told The Globe&Mail, "like the one that has already 
begun at the Defence Ministry." 

Sergeyev is fighting to hold on to his job, and until now, he appeared to be 
losing to arch-rival, General Antoly Kvashnin, chief of the General Staff.

The president has also kept his physical distance from the disaster,
on holiday beside the Black Sea. Putin, who drew television cameras when he 
cruised on board another North Fleet submarine several weeks ago, has placed 
Deputy Prime Minister Ilya Klebanov, head of the Russian military-industrial 
complex in visible charge of the rescue operation for the government.

Behind the scenes in Moscow, Klebanov is being quietly challenged by rivals 
for control of Russia's multi-billion dollar arms export business. On 
Wednesday Klebanov reported to Putin, and on Thursday he flew to 
Severomorsk, the submarine base on the Arctic coast. He has said almost 
nothing, except to blame the poor weather for the failure of the rescue 
vessels to link up with the "Kursk".

Boris Berezovsky, once the powerful financier of ex-President Yeltsin 
and now a bitter opponent of Putin, has used his Moscow daily 
newspaper, Nezavisimaya Gazeta, to put the president in the firing-line for
happens next. Kremlin sources see this as revenge for Putin's 
so far successful attempt to eliminate Berezovsky's control of Russian state

"Russia is suffering as a naval power," the newspaper editorialized. "But it 
will suffer more if the operation to save the 'Kursk' ends in failure." The 
editorialist did not discuss the possibility that nothing may
save the crew from death.

Moscow radio station Ekho Moskvy -- owned by Vladimir Gusinsky, another sworn 
enemy of Putin -- has conducted what it claims was a telephone poll of its
audience, asking the question, "Is the situation of the 'Kursk' a blow to the 
reputation of Vladimir Putin as the commander of the Russian armed forces?"
Votes were counted as people called in. According to Ekho Moskvy, the station 
switchboard received 3,270 callers; 76% agreed with the criticism of Putin.

Two months ago, Gusinsky was arrested and briefly imprisoned on charges of 
embezzlement. Although he was released, and the charges dropped, he left 
Russia to live in Gibraltar, and reportedly agreed to sell his media assets
the Kremlin-controlled Gazprom corporation. Gusinsky, one of Russia's 
notorious oligarchs, called Putin a dictator.

"He is also getting his revenge out of the Barents Sea," a Kremlin source 

Christian Science Monitor
AUGUST 18, 2000 
Sunken sub and the 'new' Russia
Official statements on this week's sub disaster have the familiar ring of 
Soviet-era disinformation.
Scott Peterson 
Staff writer of The Christian Science Monitor 
and Fred Weir ( 

Pessimism is a popular pastime in post-Soviet Russia. But the array of 
contradictory - and often completely wrong - "official" statements about its 
nuclear-submarine tragedy are reminding many Russians that old habits die 

President Vladimir Putin had promised to pull Russia out of the decade of 
malaise that has defined the post-Soviet era. But even as oxygen supplies 
dwindle on board the Kursk and the Russian Navy continues frantic rescue 
efforts - joined by the British and Norwegians after Russia refused outside 
help for five days - analysts are pondering the event's significance for the 
"new" Russia.

Virtually every official statement about the tragedy has been changed later 
or proved wrong, in the same way that bad news was handled during the 
cold-war Soviet era.

Is this a deliberate coverup, in the old Soviet pattern? Or is it sheer 
incompetence preventing Russia's crumbling military from telling the straight 
story about the failure of one of its most modern nuclear submarines?

"As usual, it is a bit of both," says Andrei Piontkovsky, director of the 
independent Center for Strategic Studies in Moscow. "This is the Soviet 
tradition, when political expedience is much more important than the lives of 
our servicemen. This is the most unpleasant aspect of all.

"The Putin government just seems to return to this pattern of thinking," adds 
Mr. Piontkovsky, noting Mr. Putin's background as a former KGB agent and the 
secretive "professional instincts" of security officials everywhere.

"[Putin] is absolutely insensitive to the plight of these people," he adds. 
"He doesn't feel that something extraordinary is going on."

Initial reports - spun as truth from named officers or anonymous Navy 
"sources" - held that the submarine sank after a collision on Sunday, and 
several senior officials early on declared the chances of rescue slim.

Untrue reports

Russians then were buoyed by less-than-accurate reports that a rescue unit 
had been successfully lowered to the submarine, and was providing air and 
fuel. The crew also was reported to have communicated by banging on the wall 
of the sub - a point that American surveillance craft in the region can't 

And, at first, there was the apparent good news that there were no casualties 
and that two nuclear reactors aboard had been shut down. Officials said the 
air supply - first estimated to last only until today - would not give out 
completely until Aug. 25.

"As the extent of the human tragedy becomes clearer, the extent of deceit 
that accompanied the Kursk disaster has also been exposed," notes Pavel 
Felgenhauer, a military expert, writing in the English-language Moscow Times.

"In the past, Russian [and Soviet] officialdom traditionally suppressed facts 
about nuclear disasters, and bad habits die hard," Mr. Felgenhauer adds. "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" 
about compromising submarine and nuclear secrets.

The 500-foot Oscar-class submarine was meant to be unsinkable, like the 
Titanic, and some analysts say that it is unlikely that the sub would have 
gone to sea, even for a training exercise, without some nuclear weaponry on 
board - though Russian officials have denied its presence.

"I don't think secrets matter so much, because all these 'secrets' are well 
known to the Americans," says Piontkovsky. "It is a question of prestige, and 
so-called pride is most important."

Questions were on the lips of many Russians, as they read headlines about the 
likely failure of further rescue attempts and speculation that all 118 
sailors aboard (early reports had lower figures) may have been killed when a 
torpedo-tube explosion on Saturday caused much of the ship to flood.

Not telling the full story was a hallmark of Soviet times, when 
Kremlinologists found significance each time senior figures were airbrushed 
out of official portraits; or tried to break the barrier of silence that 
loomed when top officials were taken ill or died.

Generals from Afghan days

"From the very beginning of this accident, officials were lying, because 
these Soviet generals still dominate the military," says Valentina Melnikova, 
a spokeswoman for the Soldiers' Mothers' Committee that during the year-long 
Chechnya campaign has pressured the government to be honest about combat 

"They are unable to confess to the 'enemy' that they are unable to act, or to 
do anything with the submarine," she says, noting that many medal-bedecked 
senior officers were up-and-coming during the rule of Communist dinosaur 
Leonid Brezhnev and fought in the USSR's failed invasion of Afghanistan 
during the 1980s.

"That's why the military ideology is just the same as it was in the Brezhnev 
era. Nothing has changed," she says, adding with finality, they will delay 
the truth "forever."

A Soviet submarine reportedly carrying a nuclear payload sank in the Pacific 
Ocean in 1968. The US recovered some of the bodies, though the Soviets are 
believed to have refused to accept them - or to accept that they were theirs.

During the first Chechen war, 1994 to 1996, disinformation was common - 
including the example of one unit that was forced to fill out vacation 
requests, and was then sent to Grozny. Many were killed in an attack that 
officials at first denied ever took place. 

The example of Russia's second Chechen war - conducted under Putin's reign 
and still popular among many Russians - has hardly been an example of 
openness. Just as the official Soviet figure of 14,000 dead in the 
Afghanistan war is certainly too low, so is the official figure released for 
the Chechen conflict.

The Mothers' Committee estimates that the official figure of 2,500 Federal 
troops killed in Chechnya reflects only half of the 5,000 they believe were 
killed there.

"Up to now in Chechnya, every soldier missing in action is included in the 
list of deserters, though many were captured by the Chechens," Melnikova 
says. "They also don't include hospital deaths or suicides, so the real 
number is twice as high."

Fiddling with such figures - or the "official" stories that mix fact with 
fiction about the submarine disaster - will be no consolation for the trapped 
sailors of the Kursk. But that such contradictions persist in the age of 
Putin takes some back to the 1970s, when the following joke about Brezhnev 
and Napoleon was prevalent:

Former Soviet leader Brezhnev takes the French general to a military parade 
at Red Square. As the tanks and missiles thunder past, Napoleon reads a copy 
of Pravda, the Communist Party propaganda mouthpiece.

"You see?" Brezhnev told Napoleon, waving at the modern arsenal, "if you had 
weapons like this, you never would have lost."

"If I had newspapers like this," Napoleon replied, holding up the newspaper, 
"no one would have ever known that I lost."



Moscow, 17th August: The maximum Internet audience in Russia, including those 
who have used the web at least once, has surpassed 9.2 million, head of the 
Internet agency Andrey Milekhin told a Thursday [17th August] 
news conference in Moscow. 

The agency is predicting that if current audience growth dynamics continue 
the total audience will soar to some 11m by the end of the year and the 
weekly audience to 3.5m. 

The Russian search system Yandex says the Russian segment of the web has 
136,552 servers offering 21,342,582 documents with a combined volume of 231 


Text of "DX Club" report via Voice of Russia web site on 16th August 

Here is Russia's electronic-media-political system (excluding regional media 
holding companies and publications): 

Boris Berezovskiy - television channels ORT (small share holding but decisive 
influence) TV-6 (26-37 per cent of the shares) and also, possibly Nashe Radio 
(Our radio) (the former NSN radio). 

Vladimir Gusinskiy - television channels NTV, NTV Plus (analogue and digital) 
the TNT television network, radio Ekho Moskvy. 

Yuriy Luzhkov - the television channels Centre TV, Teleekspo, the cable 
channel Stolitsa [Capital], REN-TV (credit provided by Bank Moskvy and TV-6 
(shared with Boris Berezovskiy and the LUKoil company), the former M-Radio 
and the cable radio Govorit Moskva! [Moscow calling!] 

Vladimir Potanin - radio Europa plus and, obviously its "financial appendage" 
Radio Retro. 

Aleksandr Smolenskiy - the television channel ORT (he is the formal head of 
the bank consortium) 

The Gazprom company - via the Gazprom-media holding company - the television 
channel NTV (30 per cent of the shares with weak influence: Gazprom was 
forced to buy these shares during Boris Yeltsin's election campaign for 120m 
dollars), ORT (three per cent, according to some reports, transferred to 
Berezovskiy, perhaps, to manage), the regional satellite network AST, the 
regional broadcasting system based on the Prometey producers firm; Otkrytoye 
radio [Open radio]. 

The LUKoil company - the television channels TV-6 (finances the TSN news 
service, the former channel 31 (now M1) (shared with Sergey Lisovskiy), 
REN-TV (finances the expansion of the network, according to some reports owns 
75 per cent of the shares of that television channel) 

Independent Media (manager - Derk Sauer, among the owners are foreign 
investors and the Menatep bank with 10 per cent of the shares.) Russkoye 
Radio [Russian radio]. 

Alfa-TV (Alfa-group and Sergey Lisovskiy) - the television channels MuzTV and 

Sergey Lisovskiy (President of the association of regional television 
broadcasters) - the former channel 32 television channel (now M1, the size of 
his share-owning is unknown) 

State media - VGTRK (controlled by the central executive authorities) - the 
television channels RTR, Kultura, the Meteor-TV cable project; radio stations 
Radio Russia, Mayak, Yunost, Orfey etc. 

According to the SMI.RU Internet agency, this is the current Russian 
electronic-media-political system. It is strange that for some reason there 
is no mention of Voice of Russia in the last paragraph. 


Russia Today press summaries
August 17, 2000
Today is the Second Anniversary of Default and Devaluation

Two years ago, an economic revolution took place in Russia. The government 
announced that it was defaulting on its short-term bonds (GKO) and soon after 
the national currency greatly devaluated. As a result of this, the old 
financial system collapsed and was replaced by the new one. The latter looks 
much more attractive, though.

The first ones to feel the consequences of the August 1998 crisis were banks 
and their depositors, who lost their money. Bank directors referred to the 
government, saying: "the state does not pay us, so we cannot return your 
deposits". However, investigation proved that banks only lost two per cent 
their assets from the default - they had sold ruble state bonds long before 
the crisis. But this was enough for all large financial institutions to 
collapse within a couple of weeks.

One should pity depositors, but not the banks. Before the crisis, the 
situation was such that no one knew where the line between the Finance 
Ministry ended and MENATEP bank started. It was a system that sucked money 
out of the state budget and was absolutely abnormal.

Now, for the first time in the history of the new Russia, a yearly budget was 
passed that does not have deficit. The economic situation has definitely 
improved, because devaluation of the ruble revived whole branches of 
industry. After imported goods grew too expensive, they were substituted by 
domestically produced. This does not only concern consumer goods - for 
example, gas monopoly Gazprom intends to buy pipes in Russia.

Another consequence of the August 1998 shock was consolidation of Russian 
businesses - in metallurgy, machine building and communication sectors. On 
the whole, Russia managed to overcome the crisis by this summer - the daily 

There are parts left, where big business is still intermingled with 
government too much. Moscow City is one example of this. For instance, no one 
knows where huge revenues from construction in Moscow go. But Moscow Mayor 
Yury Luzhkov is begging the state government for money.


The Economist (UK)
August 19-25, 2000
[for personal use only
Where worlds collide 
Geography should make the Caucasus rich and happy. History and politics
make it poor and miserable. Russia’s willingness to try to change this will
be the first big test of President Vladimir Putin’s foreign policy 

THERE are more than 3,000 kilometres (1,800 miles) of international borders
in the Caucasus. Only the smallest, the 9 km stretch between Azerbaijan’s
Nakhichevan province and Turkey, is truly friendly. The two countries
understand each other linguistically, economically, politically and,
increasingly, militarily. A former adviser to the Azeri president has even
suggested a confederation, creating a short cut for Azerbaijan into NATO
and, eventually, the EU. 

There should be that kind of closeness, and carelessness about formal
sovereignty, everywhere in the Caucasus: both between the three former
Soviet republics of Georgia, Armenia and Azerbaijan, and with their
neighbours: Russia, Turkey and Iran. Russian is a common language across
much of the region; there are common cultural heritages (Christian,
Persian, Ottoman and Soviet) and common economic problems and
opportunities. The Caucasus is—or should be—a splendid transit route
between east and west, north and south, for goods, money, people and ideas. 

For energy firms, the Caucasus is a way out for the oil and gas around the
Caspian Sea. Proven reserves are estimated at 18 billion-35 billion
barrels—about as much as America and the North Sea combined. This could
rise threefold if a big new find off the Kazakh coast proves as promising
as results announced in July suggest. 

But most borders in the Caucasus divide rather than unite. Armenia and
Azerbaijan are still technically at war. Turkey blockades Armenia in
sympathy. Russia keeps a tight grip on its southern border. Iran is chilly
to Azerbaijan, Georgia to Armenia. Even when political ties are cordial, as
with Georgia and Azerbaijan, physical ones are not. Roads are bumpy and
narrow, railways slow and squalid. Customs offices in all the region’s
countries are notorious for stealing time and money from travellers. The
easiest flight connections are via Moscow or Istanbul. 

This is surprisingly disappointing. After the Baltic states of Estonia,
Latvia and Lithuania, the three republics of the Caucasus seemed to have
the best chances of all the other inmates of the Soviet prison when
communism started collapsing. Georgia was the former Soviet Union’s
favourite wine maker and tourist destination; Armenia had high technology
and a large, rich, influential diaspora; Azerbaijan had oil, agriculture,
and the helping hand of Turkey. All had been independent before, after
1918, if only briefly. Unlike Soviet creations such as Moldova, each had a
national cultural identity. 

But while the reinvented Baltic states have returned happily to Europe, the
three countries of the Caucasus have suffered a miserable decade of war,
bad government, isolation and impoverishment. In Georgia, a wrong-headed
nationalist government and Russian-backed separatists in the provinces of
Abkhazia and South Ossetia fought two disastrous civil wars. Armenians
fought and won a war for their Nagorno-Karabakh ethnic exclave in
Azerbaijan. Oil wealth in Azerbaijan stayed in the pockets of the ruling
elite. Living standards all across the region have plunged relentlessly. 

The most pathetic example is Abkhazia, once (give or take a few
cockroaches) the Côte d’Azur of the Soviet Union. By its own account, it is
a success story. “Every hour of every day works in favour of independence.
Poverty is the mother of invention. Abkhazia has huge possibilities,”
intones the president, Vladislav Ardzinba, rattling off Soviet-era
nut-production statistics to underline his point. But his country is one of
the most depressing sites on the Eurasian landmass. Uniquely for a
self-described capital city, Sukhumi has no Internet connection, no mobile
phones, and no hotel of any kind. In one day of the civil war in 1992, it
lost all its main cultural buildings—equivalent to a terrorist attack in
Washington destroying the Library of Congress, the Smithsonian and the
Kennedy Centre. Nobody has tried to rebuild them, or the ghostly city’s
many other ruins. There is practically no work, no money, no hope, and
seemingly no effort. The airport is littered with bits of crashed planes.
Nobody bothers to clear them away. 

For all its rulers’ bombast, Abkhazia exists on Russian sufferance. Without
Russian military help, the Abkhaz, who made up less than a fifth of the
pre-war population, would have lost the civil war. Russian energy keeps it
ticking over now, just. But apart from the rulers and their thuggish
security people (who live well enough) almost everyone who can leave has
done so, either as refugees to Georgia, or as economic migrants to Russia.
That leaves, essentially, the old, sick, handicapped, lazy, or drunk. The
only decent jobs in town are working for the earnest foreign soldiers at
the United Nations mission, which monitors the Russian-run peacekeeping
forces. Cynics pun that these forces are actually piece-keepers, protecting
the Kremlin’s real interest in its former empire: Abkhazia’s 180 km of
Black Sea coastline. 

Abkhazia is a concentrated example, but the same cocktail of bad
government, spite-thy-neighbour and poverty poisons life in the rest of the
Caucasus. South Ossetia, another Russian-backed puppet state that survives
on the money it makes, more or less illegally, from a tunnel leading
through the Caucasus mountains to Russia, is a bit less isolated but still
poor. Nagorno-Karabakh is richer, a kind of political Disneyland for the
Armenian diaspora whose donations support it. But it has little to show for
its military success. The resulting breach between Armenia and Azerbaijan
practically cuts the Caucasus in half. 

Couldn’t they get along? 

The political and military stalemate disguises an economic and social
catastrophe. Public health services are collapsing; a tuberculosis
epidemic, for example, is raging unchecked in Azerbaijan’s jails. People
are voting with their feet. Western diplomats estimate that fully 2m people
have emigrated from Armenia since independence—more than half the
population. According to the same figures, Georgia and Azerbaijan have each
lost around a fifth of their population (1m and 1.5m people respectively).
It is the best people who are going: “The DHL minority—decent, honest,
law-abiding—is the most endangered in the Caucasus,” quips Alex Rondeli, a
Georgian analyst. 

There is no shortage of clever solutions for this mess. A Brussels
think-tank, the Centre for European Policy Studies, has just produced a bag
of ingeniously cooked fudge*—including, for example, the creation of a
South Caucasus Community, based on “modern European models of shared
sovereignty, interdependence and multi-tier (sometimes asymmetric)
governing structures.” Translated, this means, for example, a common
passport for all three countries, a lot of foreign money (including for
Russia’s southern fringe) and a security pact backed by big outsiders. 

The reaction has been cool so far. Azerbaijan and Georgia want the victors
to back down before becoming friends. Armenia and the puppet states would
like the status quo entrenched. But places like Taiwan, Puerto Rico,
Northern Ireland, Montenegro and Hong Kong show how far formal sovereignty
and independence can be fudged when politics or convenience require, even
if the result is not always happy. At a practical level, an American
expert, Paul Goble, has suggested an ingenious territorial swap in which
Armenia would give Azerbaijan a corridor to its exclave of Nakhichevan, in
exchange for Azeri concessions on Nagorno-Karabakh. Armenia is cool towards
this, because it would cut off access to its only friendly neighbour, Iran.
But a senior official says that with outside monitoring, some sort of
corridor would be worth discussing. 

Peace making has shown little progress. The best news is that only a
handful of people get killed each year. Political leaders do talk to each
other: the Armenian and Azeri presidents will meet again this Friday,
August 18th, in Yalta at a regional summit. Georgia made a huge concession
recently by referring to Mr Ardzinba as a “president”. But even such
limited steps are risky. Hundreds of thousands of refugees in Georgia and
Azerbaijan see the separatist leaders who drove them from their homes as
criminals and traitors, not partners in peace. The victorious sides believe
only independence saved them from extermination by their neighbours. There
has been almost no preparation of public opinion for peace deals, which
would strike many as sell-outs. Some suggest that the mysterious killing of
Armenia’s prime minister in October last year was a (so far successful)
attempt by hardliners to sabotage a tentative peace deal with Azerbaijan. 

Certainly there seems little reason for any of the weaker parties to back
down on their own. If there is going to be bad government, most people’s
inclination is to prefer their own. Abkhazia is depressing. But if you are
Abkhaz, returning to the unpredictable, corrupt, ethnocentric and perhaps
vengeful rule of the Georgian government probably looks even worse. 

As poverty increases, so may instability. Georgia’s most miserable region
is Armenian-populated Javakheti, where the main employer is a large Russian
military base. Azerbaijan has a large ethnic minority, the Lezghin, on the
border with the volatile Russian republic of Dagestan. Latent territorial
claims abound. Those who blame Russian meddling for the conflicts fear it
is only a question of time before shooting starts again. 

The long-term way out of this must involve the creation of well-governed,
prosperous countries that people want to live in, not leave. That is a huge
task. The Baltics aside, no state in the former Soviet Union works well.
Communist rule is not the only culprit. The Caucasian virtues of family
loyalty and extravagant hospitality are not those from which transparent
and accountable bureaucracies naturally spring. The governing elites set
such a bad example that no ordinary citizen feels inclined to pay taxes or
obey laws. 

The short-term fix is external pressure. Russia could make its proxy states
accept a fudged deal on independence by turning off the energy tap. The
West could push its allies, Georgia and Azerbaijan, to be more flexible;
and Turkey to open its border with Armenia. Turkey might also look more
kindly on visitors wanting to make informal contacts, rather than deporting
them, as happened recently to one delegation. And America could be less
twitchy about talking to Iran. 

On Russia’s toes 

Although all sides pay lip service to high-flown 21st-century notions of
peace-making and conflict-resolution, the real story is an old-fashioned
geo-political tussle. Russia’s spies and soldiers see the Caucasus as their
backyard. They may grudgingly accept that their formal sovereignty is over,
but they do not want to be squeezed out of the region in the way they were
from the Baltic. In May, a top Russian military planner, General Leonid
Ivashov, said American involvement in the region was “risking an
explosion”; he threatened counter-measures if Georgia and Azerbaijan
continued to flirt with NATO, and said Russia would like to keep two
military bases in Georgia indefinitely. 
The biggest argument is over Russia’s Vaziani base near Tbilisi, which
Georgians see as a menace: it helped the leader of an unsuccessful coup
escape to Russia in 1995. Russia has promised to leave by July 2001; it has
already started to pull equipment out. But the senior Russian commander in
the region, General Nikolai Andreyev, said in July that the base’s future
status has yet to be decided—adding also that the neighbouring airfield
would in any case keep working. 

There are other ominous hints about Russia’s future policy towards the
former captive nations. Next door, in Central Asia, the Kremlin has in the
past year successfully re-established its geo-political clout by playing on
fears of Islamic insurgency. It is taking a much tougher line on dividing
the Caspian Sea. And it talks nastily to Georgia and Azerbaijan about their
supposed support for rebels across the border in Chechnya—something both
countries sharply deny. There has been an odd campaign in Armenia to join
the Russian-Belarussian Union, a mysterious entity which, if it ever gets
off the ground, looks likely to become a Moscow-dominated confederation not
entirely unlike the old Soviet Union. 

One particular sign of the Kremlin’s intentions may be the growing use of
Russian passports, now handed out to practically any former Soviet citizen
who wants one. This is creating substantial numbers, one day perhaps even a
majority, of Russian citizens in Abkhazia, South Ossetia and Javakheti, and
thus a lobby for ever-closer ties with Moscow. A linked policy may be the
threat to impose a visa requirement on Georgians and Azeris—something that
would hurt both countries, given the huge role that working and trading in
Russia still plays in many people’s lives. 

Pessimists believe that Russian policy has changed little since 1816, when
a Russian officer recommended: “Maintain a continuous state of dissension
among their diverse nations and never forget that their unity could be
fatal for us.” From a paranoid, zero-sum viewpoint in Moscow, this still
makes perfect sense. If, eventually, a rich, stable Georgia were to join
the EU (and assuming Russia cannot) it would further highlight the dismal
results of two centuries of Russian colonialism on the other side of the
Caucasus mountains. Optimists, among them Georgia’s President Edvard
Shevardnadze, take a different view, believing that Mr Putin may show signs
of seeking an accommodation with various parties in the Caucasus: even
including, in due course, the Chechens. 

Yet the West is taking no chances on Mr Putin’s mood, and is trying to
build up Georgia and Azerbaijan to withstand the Russian squeeze. Although
both have recovered from the nightmarish anarchy of the mid-1990s, there is
little else to boast about. Extraordinary corruption in both countries
drives away foreign investors. Georgia is still chronically unstable, while
Azerbaijan’s political system is frozen rigid by the Machiavellian
77-year-old president, Heidar Aliev. Russian influence, particularly
economic, remains strong in both countries, while disappointment with the
West increases. 

A second big flaw with western policy is that the Armenian diaspora hampers
aid to Azerbaijan, and encourages it to Russia’s main ally, Armenia. A huge
amount of American aid goes to Armenia. The Council of Europe, a
Strasbourg-based talking shop, wanted to keep both Armenia and Azerbaijan
out until they had made peace. Then diaspora pressure, via America, pushed
successfully for Armenian membership. As a result, Azerbaijan, with its
muzzled press and rigged elections, is to be let in too, making a mockery
of the formal criteria. 

Western policy in the Caucasus has been so unsuccessful so far that some
even doubt its sincerity. Maybe all the talk about civil society and good
government is misleading. Perhaps western energy firms prefer weak corrupt
states, safe for oil wells and pipelines, rather than headstrong
democracies that may start worrying about the environment, or their own
citizens’ share of the cake. 

That is probably too cynical. Western efforts in all three countries to
build civil society, educate young people, beef up security and retrain
bureaucrats are patently well-meaning, if sometimes optimistic (paying for
an American lawyer to head the new securities commission in Georgia is one
particularly valiant example). And there are still grounds for hope. Every
year of independence does entrench statehood, at least for those people who
stay to enjoy it. The new oil discovery in the Caspian means that the
American-backed plan to build a new pipeline across the Caucasus, creating
an export route independent of Russia, looks less wobbly and over-ambitious
than it did before. A joint gas pipeline route to Turkey for Azeri, Turkmen
and Kazakh gas is also planned. Co-operation on coal and steel was the
foundation of the European Community; oil and gas could play the same role
in the Caucasus. 

The ultimate responsibility lies with Russia. If President Vladimir Putin
truly wants prosperous, strong, independent neighbours, then the Caucasus
is the place to prove it. If he wants to play the geopolitical games of the
past, then the West will block him as far as it can. The result of that
will be more of the same: a depressing, and dangerous, stalemate. 

ANALYSIS-Putin's image suffers jolt in submarine disaster
By Peter Graff

MOSCOW, Aug 17 (Reuters) - Vladimir Putin's carefully constructed reputation 
as an action man is what made him the most popular Russian leader in years. 

Since being catapulted into the Kremlin he has flown a supersonic jet, thrown 
a Japanese judo expert and, as many recalled this week, ridden on a 

But suddenly, with an actual national disaster unfolding at the bottom of the 
Barents Sea, he has puzzled and disappointed his countrymen with his inaction 
-- becoming all but invisible. 

Putin, holidaying on the Black Sea coast, has clearly fumbled by failing to 
address the nation for five days while the nuclear submarine Kursk lay on the 
sea floor, the fate of its 118-man crew unknown. 

Worse, he ordered the navy to accept foreign help nearly three days after it 
was offered. With oxygen on board the sunken vessel rapidly dwindling, the 
delay could cost lives. 

It remains to be seen whether Russians will quickly forgive the man they 
elected only five months ago, or whether the sinking of the Kursk will mark a 
turning point in his career. 


Russians are genuinely upset. Bold red letters splashed across a tabloid's 
front page caught the mood. 

"Last night the sailors on the Kursk fell silent," declared Komsomolskaya 
Pravda after officials said there were no longer signs of life on board. "Why 
has the president been silent?" 

It listed some of the president's activities over the past five days, which 
included sending birthday greetings to an actress and naming ambassadors to 
Chile and Jamaica. 

"Why on earth did he think it was possible to keep mum for five days while 
the entire nation has spent those days consumed by only one thought -- will 
they be saved or won't they?" 

The blow to the president's public image is real, according to Yevgeny Volk, 
an Moscow-based analyst with the Heritage Foundation think tank. 

"The credit of confidence he has received in March is evaporating," he said. 
"I think this will have a really very significant negative impact on his 


But Putin's popularity has defied countless doomsday predictions in the past. 
With each setback in the war in Chechnya, Western pundits have written that 
public opinion could soon turn against him. They have been wrong. 

Oksana Antonenko, a research fellow at the International Institute of 
Strategic Studies in London, said those who predict a sharp swing of opinion 
against the president may be underestimating him again. 

"Obviously this is a much more grave situation, because people are beginning 
to ask questions they haven't before. But people still understand that there 
are no alternatives to Putin," she said. 

"He still has the opportunity to use this disaster to his advantage by 
pressing harder for military reform and using it to make much needed changes 
in the military leadership. 

"He can come up with a frank assessment and say, 'Look, our navy and military 
are in such a state, we need to carry out reforms," she said. 

If the Kursk rescue ends in disaster, there will be plenty of blame to be 
shared. A slick Kremlin propaganda machine will be working overtime to make 
sure as little as possible sticks to the commander in chief, said Pavel 
Felgengauer, an independent defence analyst. 

"The Russian press, or at least a large part of it, is controlled by the 
Kremlin, and they'll try to play down the story, or they'll turn a finger on 
some kind of obscure admiral that nobody cares about and try to extricate 
Putin," he said. 

"Of course any real public figure in the West would not have been sitting 
somewhere on the beach while in a submarine more than a hundred people were 
just dying. 

"In the West, though, maybe such actions would have killed a politician. 
Russia is different." 


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