August 31, 2000    
This Date's Issues: 4485

Johnson's Russia List
#4485
31 August 2000
davidjohnson@erols.com


[Note from David Johnson:
DJ: I will be in Maine the next few days.
1. Moscow Times: Yevgenia Albats, Reform Military to Cure Nation's Cancer.
2. Interfax: OVERLOAD OF CABLES LED TO FIRE IN OSTANKINO TV TOWER - MOSCOW FIRE BRIGADE CHIEF.
3. Komsomolskaya Pravda: 133 BILLION DOLLARS HAVE FLED RUSSIA IN THE PAST SIX YEARS ALONE. (Interview with Mikhail DELYAGIN)
4. Abe Brumberg: through the glass, darkly [re Yeltsin TV program]
5. Jamestown Foundation Monitor: RUSSIAN REGIONAL DATA SHOW BROAD-BASED ECONOMIC RECOVERY.
6. Novaya gazeta: Oleg Sultanov, Fresh Eavesdropping Regulations: Bureaucrats from the FSB and Communications' Ministry are Violating Law.
7. Sarah C. Lindemann Response to Brzezinski/4483.
8. Interfax: FOREIGN INVESTMENT IN RUSSIA UP 12% IN FIRST HALF.
9. Interfax: COMPANIES THINK CURRENT BUSINESS CLIMATE IN RUSSIA IS FAVORABLE.
10. Segodnya: GOVERNMENT LOSES CONTROL OVER TELEVISION. (Interview with Sergei Blagovolin)
11. Stanislav Menshikov: ANNOUNCING PUBLICATION OF ECAAR-RUSSIA NEWSLETTER #3.
12. Interfax: RADIATION POLLUTION INEVITABLE AFTER KURSK SUBMARINE
DISASTER - PROMINENT RUSSIAN EXPERT. (Alexei Yablokov)
13. BBC MONITORING: RUSSIA'S GOOD TRADE BALANCE BASED SOLELY ON RAW MATERIAL EXPORTS - PAPER. (NG)
14. BBC MONITORING ANALYSIS: OSTANKINO FIRE CHANGES MOSCOW BROADCASTING SCENE. Editorial analysis by Gabriela Bolton of BBC Monitoring's Foreign Media Unit.
15. Interfax: RUSSIANS INVEST MORE ABROAD.] 


********


#1
Moscow Times
August 31, 2000
POWER PLAY: Reform Military to Cure Nation's Cancer
By Yevgenia Albats


In the mounting -- and rightful f criticism of President Vladimir Putin,
certain events went unnoticed that should have made headlines and for which
he actually deserves credit. Putin became the first Russian leader to
publicly acknowledge the disastrous state of the country. The nation is
deadly sick, so deadly that merely living in this country f whether in
Moscow or on the northern military base of Vidyayevo f is becoming a
struggle for survival. As August vividly showed, no one knows what, where
and when something may blow up next, but everybody expects that something
will. And for good reason.


Nine years ago, in 1991, General Viktor Ivanenko, onetime head of the KGB,
shared with me a secret letter he had written to the heads of state. In
that letter, he warned the officials that some 236 of the Soviet Union's
"high-risk institutions" (of which 189 were, and still are, located in the
Russian Federation) f chemical complexes, nuclear power stations, pipelines
for transmitting hazardous materials such as chlorine and ammonia f lacked
proper security precautions and control and might become extremely
dangerous. To date, little if anything has been done to improve the situation.


Those obyekty, or sites, in one way or another were part of the Soviet
Union's military-industrial complex or were listed in secret books as
"sites of strategic importance." The Soviet Union's best materials, best
brains and most skilled workers were used to design and build them. One of
those sites f the Ostankino TV tower f went up in smoke this week; another
sank in the Barents Sea two weeks ago.


Since the Soviet Union's collapse, Russia has been trapped in ongoing
political battles and has never done what was necessary both for the
survival of democracy and the country as a whole: reform the
military-industrial complex. This has been a fatal mistake. I wrote this in
last week's column, and, at the risk of being accused of being obsessed
with the topic, will write it over and over again: The military-industrial
complex was the backbone of the Soviet system. Dismantling party structures
and the KGB and establishing new democratic institutions were necessary,
but just the first steps in building a new nation. Preservation of the
military-industrial complex f even in such a miserable state as it is now f
means the Soviet system is still alive, whatever guise it takes. Reform of
the military is not only the beginning of real structural reform in the
economy, but will have profound political impact as well.


This much is clear: No democracy will survive, no free press will exist, if
subs keep sinking, if strategic sites keep going up in flames, and generals
keep making their capital and careers in local wars.


It took a former KGB operative f Putin f to say what he declared in early
August at a meeting of the Security Council: Reform of the military is the
first item on our plate. He acknowledged after the Kursk tragedy, "Our
armed forces should match the possibilities of the country." For that,
Putin deserves credit. Translated into simple terms, his statement means
the nation is finally ceding its desire to see itself as a superpower and
is ready to become just a regional one.


Burying the Soviet military-industrial complex will take a lot of the
obscure pro-military rhetoric that Putin is constantly espousing, hoping
that type of cover-up will secure him from the resistance of generals in
the army and industry. It will have many side effects and setbacks,
especially as regards democratic institutions, and it's our job not to let
that go unnoticed. Finally, it will take help from the international
community, regardless of its sympathy or antipathy to those sitting in the
Kremlin.


But reform of the military is a must. Cancer should be treated in a radical
way; otherwise, the body dies.


Yevgenia Albats is an independent, Moscow-based journalist.


*******


#2
OVERLOAD OF CABLES LED TO FIRE IN OSTANKINO TV TOWER - MOSCOW FIRE
BRIGADE CHIEF


MOSCOW. Aug 30 (Interfax) - The use of too much equipment led to
overload and overheating of transmitting feeder cables, resulting in the
Ostankino TV tower fire, head of the State Fire Fighting Service in the
Moscow Interior Division Leonid Korotchik told Interfax on Wednesday.
The fact that several short-circuits occurred in the cable trunk at
various levels confirms this theory, Korotchik said. The tower, built in
1967, was not designed for that kind of operation, he said. In recent
years hardware was installed "in disregard of the tower's potential,"
Korotchik said. Matters were made worse by keeping power supply to the
tower on for three hours after the fire broke out, he said.
On the other hand, the continuous cooling of the tower with water
reduced the rate at which the fire spread by a factor of 3.5, Korotchik
said. If this were not done, the tower could have "lost stability"
because of overheating, he said.


*******


#3
Komsomolskaya Pravda
August 30, 2000
[translation from RIA Novosti for personal use only]
133 BILLION DOLLARS HAVE FLED RUSSIA IN THE PAST SIX YEARS ALONE
Russia earns more money than it can absorb, says Mikhail 
DELYAGIN, director of Institute of Globalisation 


The conclusion economists have drawn from Russia's balance 
of payments for the first quarter of 2000, published the other 
day by the Central Bank, is paradoxical: the better the 
country's economy performs, more capital flees abroad. Why 
isn't our environment not friendly to capital? 

Question: What does capital flight to other countries 
threaten us with?
Answer: It bleeds our economy white. In 1994-1999 Russia 
lost, through semi-illegal and illegal channels of all sorts, 
133 billion dollars. Within the space of a mere six years the 
amount of capital that flowed out of the country was enough to 
pay off more than 80 per cent of the state's current debts. 

Question: Why are our businessmen so unpatriotic...? 
Answer: Capital is fleeing the country not because some of 
them do not like Russia. We are dominated by monopolists that 
dictate prices to enterprises for their products, above all 
energy and transport services. In this country one can at any 
moment lose one's property, falling victim to a criminal 
bankruptcy. Protecting one's rights through court is almost 
impossible.

Question: But in 1999, for example, the flight of money 
drastically slowed down.
Answer: It is because capital is scarce now. In August 
1998 the economy got a bad knock on its head and is not 
recovered yet.
To begin with, a lot of money was wiped out through 
default.
Second, capital does not creep through borders on a belly, as 
did Ostap Bender with his golden dish. More sophisticated 
schemes are used. Before the crisis they involved big banks, 
many of which also went to the wall. And last but not least, 
Russian business has found that it is profitable to work for 
the domestic market.
Factory owners are now investing money in development, not in 
assets of financial speculators abroad...

Question: According to the State Statistics Committee, the 
lion's share of foreign investments that have been coming into 
Russia recently is the Russian money that was siphoned off 
abroad in the previous years.
Answer: The State Statistics Committee records only legal 
cash flows, while capital flees mainly through "gray" and 
"black" channels. Already in the first quarter of 2000, the 
illegal outflow of capital intensified again - by as much as 30 
per cent.
Question: Why?
Answer: Business knew nothing of the future president's 
policy and the little it knew was scaring it. On the other 
hand, the Russian economy turned out to be able to absorb only 
a limited amount of new money yielded by the post-crisis rally. 
The result has been "the misfortune of being clever" - the 
extra income failing to find application was again parked in 
foreign accounts. 
The government tried to prevent this development by 
imposing stricter currency controls on foreign trade 
operations. As a result, risks of using semi-legal "gray" 
schemes to transfer money abroad increased, and capital took 
increasingly to "black" routes of escape. 

Question: Russia is introducing the world's lowest income 
tax. Will this measure change anything?
Answer: If the government acts the way Deputy Prime 
Minister Ilya Klebanov acts, who said that a 13-per cent income 
tax will be abolished in a year's time, then it will not. 
Reformers had to vie with each other in reassuring the public 
that the new policy was here to stay. And all of a sudden, 
several days after, Klebanov was publicly supported by one of 
the Tax Ministry officials. Who is to be believed?
But that is not all. A judicial reform, to judge from the 
conversation our "oligarchs" had with Putin in July, is being 
put off again. When one of them raised the question of court 
reforming, the President replied that there are now more 
pressing issues. 

Question: The talk is that flight capital should be 
amnestied.
Answer: Different countries used different schemes at 
different times. The most refined is this: you make a long-term 
deposit in a respectable bank and no one inquires about the 
source of your money unless, of course, it comes from gangland 
sources. But to enact any alternative amnesty, our state must 
be able to prove financial irregularities, something it does 
not know how. As for whistle-blowers against themselves, 
wishing to take advantage of an amnesty, there will be none 
among "honest" businessmen. Russia has few real chances of 
taking a leaf out of other countries' book. 

Question: What can realistically be done?
Answer: To root out the causes that drive capital out of 
the country. But that requires a combination of liberal reforms 
and investment in power, oil and gas production, and railway 
transport. 
The state should guarantee the key industries protection 
against political risks. The scheme is simple. In each branch 
10 to 15 major projects are selected, whose realisation is 
essential to the survival of the country's economy. And a 
guarantee fund can be provided by part of the gold and hard 
currency reserves or the Russian property abroad, which is 
still not inventoried. 

Interview taken down by Alexei MAKURIN

*******


#4
Date: Wed, 30 Aug 2000 
From: abe brumberg <ABrumberg@compuserve.com>
Subject: through the glass, darkly [re Yeltsin TV program]


The public television show on Yeltsin and last few months of Gorbachev's
reign, whose script apparently benefitted from the comments of Prof.
Herbert Ellison in his role as "general advisor," was shown on the evening
of Aug. 30. The program has too many serious errors of fact and judgement
to be passed over in silence. The section on Gorbachev demonstrates the
spuriousness and unreliability of the whole enterprise. 


Gorbie comes through as a bungler and liar, interested in tinkering with
the Soviet system only in order to improve and preserve it. His
right-wing adversaries, on the other hand, like Pavlov, Yazov and above all
Kryuchkov, are apparently honest men, for it is their version of what
transpired during the critical period of l990-91 that is given credence,
and not that of Gorbachev and friends--or for that matter of reputable
historians such as Archie Brown (whose works Prof. Ellison might one of
these days think it profitable to consult). Thjre is no attempt to show
how G's thinking ev olved over time. Of course he was a committed
Communist atr first--though as we know from numerous sources, one with
serious doubts and reservations about the system., .To show him defending
communism early in the game and not how he turned into something of a
social democrat after he unleased his policies of glasnost and perestroika
is menmdacious. 


And so Gorbachev is presented as the culprit of the assault in Vilnius in
January l991, even though there is massive evidence that Gorbachev was
decidedly against the use of force both in Lithuania and in April 89 in
Tblisi. Iindeed, the revulsion against the use of force runs like a
threrad during his entire tenure,


Though Gorbachev, later on, was blamed by some of his colleagues for going
on vacation at such a tense time (August l991), only his enemies (and the
people responsible for trhe TV show) have maintained that there was
something sinister about it. (Yakovlev's criticism of Gorbie on this
score came only later , after he had already fallen out with G.)The program
also trudges out Arkady Volsky who maintains that during the time that
Gorbachev supposedly was cut off from the outside world he, Volsky,
received a trelephone call from Gorbachev, which presumably shows that
Gorbachev was NOT cut off.. But Volsky has on several occasions proved a
thoroughly unreliable source. Kryuchkov & Co. also maintain that in 
Gorbahev hinted that if their coup succeeded, he would join them. There
is absolutely no evidence for ir--it was just a ploy of Kryuchkov and his 
pathetic co-putschists to denigrate Gorbachev further and make themselvws
look better in the process. 


G. can and has indeed been criticized for dismissing some of his more
left-oriented colleagues and appointing a series of Neanderthal men, l;ike
Pavlov and Yanaev to important positions in the government. I remember I
was in Moscows then and discussed this matter witrh various people, whol
while furious at Gorbachev, felt that this was only a temporary (if
dangerous) tactic. (I wrote a piece about this for the NYRB) . But in the
TV show G.'s turn is portrayed as a reaffirmation of Gorbachev 's genuine
political commitments--which is nonsense. Among the developments which the
program conveniently passes over is the fact that most of G 'sd left-wing 
had turned against him by that time. This does not excuse his actions, but
it adds a necessarey dimension to the "turn to the right."


To repeat, I didn't see the Yeltsin section. But if the Gorbachev chapter
is any guide, the Yeltsin one is equally tendentious and unreliable. Pity,
for: a good tv show on this subject would be most welcome.


By way of a ps, let me venture the following speculation why Gorbachev is
often presented in such negative colors: This comes, primarily, from
right-wing observers, whose assumption is that once a communist, always a
communist (kakim on byl, takim ostalsya...) Hence any talk of change is no
more than a facade, sham. 


We had seen this sort of thing before, of course: Khrushehev was another
Stalin, the Sino-Soviet schism was a piece of chicanery perpetratred on a
gullible west, glasnost was a fraud, etc. etc. I am offering this by way
of a general comment, without claiming that it necessarily characterizes
the attitude of trhe authors of and advisor to the latest tv show. But it
mightg. Auyway, it's food for thought.


******


#5
Jamestown Foundation Monitor
August 30, 2000


RUSSIAN REGIONAL DATA SHOW BROAD-BASED ECONOMIC RECOVERY. Goskomstat, 
Russia's official statistical agency, released data in early August on 
economic trends in Russia's eighty-nine sub-federal regions during the 
first six months of 2000. These figures do not include gross regional 
product data, which have not been released since 1998. But the information 
provided on growth in industrial output, retail sales, housing 
construction, real incomes, inflation and unemployment nonetheless provide 
a broad picture of regional economic trends. These figures show a 
continuation of Russia's strong economic recovery which was apparent in the 
regional data for 1999 as well (Goskomstat Sotsial'no-Ekonomicheskoye 
Polozhenie Rossii, 1999, January 2000).


Content aside, the form in which these data are presented is also 
noteworthy. Until now, regional economic data had been reported according 
to the Soviet-era taxonomy in which Russia's eighty-nine sub-federal 
regions were grouped into eleven geographic "macro regions." The data for 
mid-2000, however, group the regions into the seven federal military 
districts which President Vladimir Putin has recast as a new administrative 
structure to oversee the regional authorities. This new classification 
system, which further underscores the importance of Putin's new federal 
districts, should make it easier for the seven "governors general" to 
monitor economic trends in their jurisdictions. It could also make it 
easier for Putin to evaluate the governors' economic performance.


These data indicate that Russia's economic recovery is strongest in the 
Northwestern district, the administrative center of which is located in 
Saint Petersburg. Industrial output and housing construction in this 
district grew by 21 and 26 percent, respectively, in the first half of 
2000. These rates were more than double the national average. The 
Northwest's 6.2 percent unemployment rate was Russia's lowest, well below 
the 8.0 percent national average. Northwestern ports like St. Petersburg 
and Arkhangelsk have benefited from strong growth in shipping, while the 
extractive, timber, paper and metallurgical sectors in Karelia, Komi, 
Vologda and Murmansk have profited handsomely from the weak ruble and high 
commodity prices. By contrast, Russia's economic recovery was weakest in 
the Trans-Volga district, the administrative center of which is located in 
Nizhny Novgorod. Retail sales in this district actually declined in the 
first half of 2000, compared to the 8 percent increase recorded for Russia 
as a whole. Here rapid growth in some of the district's smaller regions 
(Udmurtia, Penza) was offset by slow growth in the larger regions (Nizhny 
Novgorod, Bashkortostan). Although it contains 22 percent of Russia's 
population and produces about a quarter of its industrial output, the 
Trans-Volga district only received 4-5 percent of Russia's foreign 
investment during 1999 and the first half of 2000. Instead, some 32 percent 
of Russia's foreign investment went to Moscow city and Moscow Oblast during 
this time.


******


#6
August 28, 2000
Novaya gazeta
Oleg Sultanov
Fresh Eavesdropping Regulations:
Bureaucrats from the FSB and Communications' Ministry are Violating Law
[translation for personal use only]


On 25 July of this year Leonid Reiman, Minister of Communication and
Computerization, signed Order No. 130 under the title: "On the order of the
implementation of the system of technical means to ensure the conduct of
operative and investigative procedures in the networks of telephonic, mobile
and cordless communication and personal radio call of general use." The
introductory part of this document is used to remind the Ministry officials
about the necessity to comply unswerwingly with the federal laws "On the
structures of FSB in RF" and "On Operative Investigative Activities".


Such a striking preamble for an instruction issued by a civil official is
soon clarified by the subsequent text of the document. Namely, the Minister
instructs telephone companies and switchboard centers of every form of
ownership and every institutional affiliation to install technical means of
eavesdropping and intercepting transmitted information. That is, as follows
from article 2.1. of this order, communication operators are obligated to
procure and install the equipment required for the activities of FSB and
other intelligence agencies, at the company's own expense.


In yet another article of this regulatory masterpiece, the Minister has
classified the procedures of installation of eavesdropping equipment in
communication networks and obligated the companies to "take measures in
coordination with the FSB of Russia to forestall the disclosure of
organizational and technical means of conduct of operative investigative
activities." The document also calls upon the Ministry officials "to take
into account" that activities "related to eavesdropping and intercepting
information from communication channels" "are being conducted by the means
of FSB or the Interior Ministry". This warning is probably designed to
discourage Ministry employees from using these devices for their own
eavesdropping purposes.


As a matter of fact, the Order No. 131 overruns "The Statute on the Ministry
of Communication and Computerization of RF" enacted by the government on
March 28, 2000. In this document, the purposes and tasks of the ministry are
listed clearly. They don't contain a single trace of the aforementioned
collaboration with intelligence agencies. Not to speak about the fact that
this is impossible to reconcile withh the constitution of Russia. Everyone
knows that we were eavesdropped first by CheKa, then by OGPU, NKVD, MGB,
KGB, AFB, MB, FSK, and nowadays by FSB. However, this is the first time that
such an outright curb on civil freedoms is being officially legalized.
Neither Reiman, nor his FSB friends have any right whatsoever to repeal or
suspend basic constitutional rights and freedoms. What we see nowadays is
the direct legalization of censorship and eavesdropping activities. This can
be defined as the reinforcement of administrative police repressions by
intelligence agencies, whose career representative is currently at the helm
of the Russian state.


******


#7
From: "Sarah C. Lindemann" <echo@mail.nsk.ru>
Subject: Response to Brzezinski/4483
Date: Wed, 30 Aug 2000 


With regard to Zbigniew Brzezinski's recent commentary in the Wall Street
Journal, I was pleased to finally see in the pages of a major US newspaper
mention of "another face" of Russia, the citizens. Having lived in Siberia
for over 8 years working to support grassroots civil society development I
can testify that, indeed, Western support targeted at the Russian people is
the most effective way to encourage the transition to a stable and just
democracy. The projects that I personally have been involved with to
support the non-profit sector in Siberia and the introduction of community
schools as resource centers for community development have yielded
extraordinary results. One of the most important aspects of our work has
been to start at the grassroots level and apply an inter-sectoral approach
which has created a trickle up effect. To give just one example of how
this works, by including government officials on grant committees we gave
them exposure to conducting open and fair competitions and over time
demonstrated the increased effectiveness of funds distributed in this
manner. When we began in 1995 all government money to NGOs was distributed
behind closed doors. Today, legal mechanisms are in place or are in the
process of being implemented for the distribution of local government money
to NGOs on a competitive basis throughout Siberia. NGO activists have been
involved in preparing this legislation and sit on the grant committees. 


My issue with Mr. Brzezinski comes in his recommendation that the best way
to support the people is through exchanges, specifically the Library of
Congress program which was, in fact, not an exchange but a trip to America.
My experience totally contradicts this assumption both in terms of
results and cost effectiveness. I have known and even nominated a
significant number of activists to take part in such trips. All of them
were already committed to supporting democracy and effectively doing so in
their communities. They returned home, said "nice trip" and continued on
with the work they were already engaged in. When I ask activists what they
need most to help support their work I have never once heard "a trip to
America". What I hear from them is they want more information, training
and financial support for their projects. 


Resources for supporting democratic transition are extremely limited and
getting more so every year. Therefore, we must make every effort to
seriously evaluate the effectiveness of every dollar spent. I do not know
how much it cost to send each of the 2,000 participants to America as part
of the Library of Congress program. I would estimate a minimum of $2,500.
For the last several years the Siberian Civic Initiatives Support Center
has conducted monthly grant competitions of up to $500 for NGOs in Siberia.
That same $2500 could be used to support initiatives such as: the
translation and dissemination of American Cancer Society material on breast
cancer self examination in Novosibirsk, training on environmentally sound
land use for residents, government and business representatives in the
Choickom Region in the Altai Republic, an informational bulletin on the
rights of repressed persons in Tyumen, a seminar on self-government in
Yst-Ilimsk, Irkutsk Oblast, a round table on disabled rights in Tashtagol,
Kemerovo Oblast and the publication and distribution of a book on citizens
rights for school children written by a lawyer/school teacher and her
pupils in Novosibirsk. 


I am not advocating eliminating all trips to America. What troubles me is
when I see experts promoting these massive and expensive travel programs as
substantive support for grassroots democratic development. Most, if not
all, of the money stays in America. If we want to invest in Russian
democracy we should, indeed, invest in the Russian people. If prior to the
decision to allocate such a huge sum of money to trips anyone had come to
Siberia and asked the people their opinion, "which would you rather have a
two week trip to America or $2500 grant for your organization", the vast
majority would say the latter. No one asked and so commentaries such as
Brzezinki's perpetuate the assumption that these programs are more
effective in promoting democratic development that in-country initiatives,
training and access to information. If our primary goal is to promote
citizen involvement in this transition process that means using our money
to provide grants which can help Russian activists respond to the needs in
their community and inspire government and business to perceive them as
equal and necessary partners, support Internet access to schools in
villages outside the main cities so they have equal access to information,
provide internships to more developed Russian NGOs by new activists,
support training on community school development etc. Don't take my word
for it, ask the Russian people, please. 


Sarah Lindemann
President, ECHO, Inc.
Open Society Institute Individual Project Fellow 


*******


#8
FOREIGN INVESTMENT IN RUSSIA UP 12% IN FIRST HALF


MOSCOW. Aug 30 (Interfax) - Foreign investment in Russia in the
first half of this year was up 11.9% to $4.78 billion from $4.27 billion
in the same period in 1999, when there was a year-on-year drop of 44.5%,
the State Statistics Committee reported on Wednesday.
Direct investments in the first six months of 2000 accounted for
37.4% of all foreign investments compared to 56.9% in the same period in
1999, portfolio investments for 1.1% compared to 0.2% last year, and the
others for 61.5% compared to 42.9% last year.
Direct investments dropped from $2.43 billion in January - July
1999 to $1.79 billion, i.e., by 26.5%. Portfolio investments increased
from $7 million to $51 million, or 7.3-fold, and the others from $1.84
billion to $2.94 billion, or by 60.3%.
Manufacturing industries accounted for the largest share of foreign
investments, 47.6% or $2.27 billion in the first half of 2000. Direct
investments in manufacturing industries totaled $802 million and others,
$1.43 billion; portfolio investments in them during that period amounted
to $45 million.
The food industry attracted $807 million of foreign investments
during that period, followed by the iron and steel industry ($380
million), the fuel industry ($286 million), the engineering and metal
working industry ($252 million), nonferrous metallurgy ($161 million)
and the logging, timber and pulp and paper industry ($142 million).
The light industry with just $3 million of foreign investments in
the first six months of 2000, housing services ($1 million), agriculture
($16 million) and the power-generation industry ($10 million) were less
popular with foreign investors.
The largest investments came from the United States ($747 million),
Germany ($540 million), the Netherlands ($528 million) and Cyprus ($523
million).


******


#9
COMPANIES THINK CURRENT BUSINESS CLIMATE IN RUSSIA IS FAVORABLE


MOSCOW. Aug 30 (Interfax) - The business climate in Russia is now
more favorable than it has been over the past five years. The Russian
State Statistics Committee came to such a conclusion after polling the
heads of the country's major industrial enterprises, the Committee told
Interfax on Wednesday.
The heads of 1,189 major companies working in 11 different
industries in 73 of Russia's regions indicated the highest business
confidence index since 1995.
Eighty-five percent of the directors polled evaluated the condition
of their enterprises as good and satisfactory. In comparison with July
2000, 15% of companies have experienced an increase in the demand for
their products, 16% of them increased the number of employees and 25%
are increasing the volume of their output.


******


#10
Segodnya
August 30, 2000
[translation from RIA Novosti for personal use only]
GOVERNMENT LOSES CONTROL OVER TELEVISION
The Ostankino television tower fire, just as the death of 
the submarine Kursk, belongs to the category of man-made 
catastrophes, which are sooner accidental than natural. Is this 
really so? Segodnya's correspondent Alexander CHUDODEYEV asked 
Sergei Blagovolin, deputy director of the Institute of World 
Economy and International Relations of the Russian Academy of 
Sciences who used to head the ORT channel for more than two 
years, to answer this and other questions.

Question: Is the television tower fire an accident or a 
natural development?
Answer: You see, I rule out that it was any kind of 
subversive act. If Ostankino is looked upon as a phenomenon, 
then everyone who has worked there for several years will tell 
you that it is a nonviable structure. In this context, the fire 
is a natural thing to happen. "Luckily," it has been only the 
tower that caught fire and not the television monster in which 
all the main Russian television channels are concentrated. A 
man-made catastrophe can break out at the latter any time, 
because it is unmanageable. Neither the government nor the 
semi-private companies are capable of managing it. The monster 
was bred by the old Soviet system. That system collapsed and 
its television baby begins dying, too.

Question: Nevertheless, the President has given a week for 
the reanimation of what you call "a monster." Answer: These are 
two different things. It is clear that a system of alternative 
television broadcasting cannot be created in a week or even two 
weeks. Even if in a couple of months the familiar faces of 
television personalities followed by soap operas re-appear on 
our television screens, this will not mean that everything is 
just fine. I am deeply convinced that the Ostankino television 
tower catastrophe should become a lesson for authorities: the 
organization of television broadcasting, which was 
characteristic of the last period in the life of the USSR, has 
outlived itself. What is expedient should unquestionably be 
restored. But I am an advocate of dividing this isolated 
television island into pieces and scattering its pieces around.
The CPSU leaders in their time explained such 
centralization by the convenience of keeping one television 
button under control just in case a certain emergency might 
happen. But that was a sly trick, because they needed that 
button to prevent anyone from saying something "inappropriate" 
and not for the fear of any catastrophe or even a war. But a 
catastrophe has happened.
However, the tower is out of order and the button does not work.
We are lucky to have the TNT and Stolitsa stations. If not for 
them, we would be out of television at all. So, I am for the 
disintegration of Ostankino and creation of a greater number of 
alternative and autonomous TV broadcasting stations, both 
government and private.

Question: Some are already claiming that the latest 
tragedies are certain symbols of the fall of the great power 
ideal, which Vladimir Putin has been trying to demonstrate. Any 
comments?
Answer: What does "the fall of the great power ideal" mean?
If the greatness of the country is defined by the number of 
warheads, the size of its army and the degree to which the 
state controls all the aspects of life, then it is "the fall of 
the great power ideal." If, however, we say that we are living 
in a country, which has every ground to be a prospering nation 
ensuring normal conditions for its citizens, then it is not. 
You see, the core of the matter is not Putin. Though I guess 
that his latest pronouncements and actions have surprised, to 
put it mildly, our people. All these recent "masked shows" and 
attacks against oligarchs are sheer foolishness. But the thing 
is that Putin as President is our last chance to prevent a more 
global catastrophe named "the fall of all Russia." The latest 
craze has been to compare Putin nearly with Pinochet, claiming 
that he is not a democrat at all. Do you really think that we 
are living in a democratic country? There are isles of the free 
press in Moscow and St. Petersburg, and that's about all. But 
democracy is not only "power for and by the people" (by the 
way, I would call what is happening to democracy in our country 
today "a day of free entry to the Zoo"). It is, first and 
foremost, responsibility of which ex-Prime Minister of Britain 
Margaret Thatcher told us in her time. This is what I expect 
from Vladimir Putin. 

Question: Do you see Putin as the President who can and 
knows how to govern Russia?
Answer: We will obviously get the answer to this question 
in a short while. It would be the easiest to answer No. Putin 
needs a team. When such a team is formed, then it will be 
possible to say of what Putin is potentially capable as the 
President.

*****


#11
From: "stanislav menshikov" <menschivok@globalxs.nl>
Subject: ANNOUNCING PUBLICATION OF ECAAR-RUSSIA NEWSLETTER #3 
Date: Mon, 28 Aug 2000 l


Dear Friends,


I am happy to announce the publication on our web-site of ECAAR-RUSSIA
Newsletter #3 (August 2000). The address is http://www.ecaar-russia.org 


ECAAR-Russia is the Russian national chapter of the international system of
associations of ECONOMISTS ALLIED FOR ARMS REDUCTION. Initially created in
the late 1980s in the US, ECAAR today has national affiliates in the United
Kingdom, France, Canada, Israel, Netherlands and Belgium, India, Japan,
South Africa, Chile, Australia and Russia. 


Newsletter #3 is in three sections. 


The first section is devoted to the analysis of the New Economic Program of
the Russian Government which has been formally adopted in late June. 


ECAAR-Russia co-chair Stanislav Menshikov comments on the "The Real Meaning
of the Gref Package" as the program is known after German Gref, the new
Minister of Economic Development and Trade who co-ordinated work on
drafting the program. 


Academicians Dmitry Lvov (ECAAR-Russia co-chair) and Alexander Nekipelov
(ECAAR-Russia Board Member) suggest an alternative New Reform Strategy
which differs from the government program on quite a few important points.


Viktor Ivanter (Russian Academy Corresponding Member and ECAAR-Russia
Board Member) who served on the Gref Commission suggests his own critical
approach in a newspaper interview under the title "Living According to
One's Needs is an Absurd Idea".


The second section presents a short summary of the principal papers
presented at the ECAAR Seminar on Russian Economic Policies held in Boston.
These are "Russia's Economy After August 1998: Was the New Policy
Successful?" by Alexander Nekipelov; "Privatisation in Russia: Is a
Retrofit Possible? by Marshall Goldman; and "New Bridges Across the Chasm:
Macro- and Micro-Strategies for Russia" by Joseph Stiglitz and David
Ellerman.


The third section contains translations of articles formerly printed in the
ECAAR-US Newsletter for the benefit of the Russian reader. These are: "Cold
Peace Instead of Cold War" -- by James Galbraith; "US Defence Expenditure
Is Larger Than in NATO, Russia and China Combined" by Richard Kaufman: 
Seminar on Kosovo: Salient Points of the Discussion and "Lessons of Kosovo
and US Defence Structure" -- paper by James Galbraith.


Concluding the Newsletter is a short summary of principal ECAAR-Russia
Activities in 2000.


As in previous issues, the text of the Newsletter is in Russian but the
contents is also available in English on our web-site under "Affiliate
Newsletters" (see main menu). Also most of the papers referred to in the
issue are available in full under "Papers" or "Forum".


The site also features SPECIAL REPORTS on:
* RESTRUCTURING THE RUSSIAN MILITARY-INDUSTRIAL COMPLEX
* RUSSIA FACING THE CHALLENGES OF THE 21st CENTURY 
* MEASURES TO RATIONALIZE THE RUSSIAN ECONOMY
* MACROPOLICIES TO MAINTAIN ECONOMIC GROWTH IN RUSSIA

You are VERY welcome to participate in our FORUM. Send your comments,
questions and short manuscripts and we shall publish them in this section.
If you have an article or paper that is just written and not yet published
elsewhere, feel free to send it to us and we will place it in the Papers
section. 


All mail to the site should be addressed to info@ecaar-russia.org.


You are free to forward this message to any colleagues you wish to keep
informed. You may want to post a notice in your Newletter and on your web
site, including a link connection to our site at
http://www.ecaar-russia.org. If you do so, please let us know.


You are also free to reproduce our materials on your site with due
reference to the source. We would appreciate letting us know of such
publications.


All my very best wishes,
Stanislav Menshikov
Co-Chair
ECAAR-Russia
Visit my homepages at: http://www.fast.ane.ru/smenshikov
http://www.globalxs.nl/home/m/menschivok
Also visit ECAAR-Russia web site at http://www.ecaar-russia.org


******


#12
RADIATION POLLUTION INEVITABLE AFTER KURSK SUBMARINE DISASTER -
PROMINENT RUSSIAN EXPERT


RYAZAN. Aug 30 (Interfax) - The waters of the Barents Sea will
inevitably be polluted with radiation after the Kursk nuclear
submarine disaster, prominent Russian ecologist and president of the
non-governmental organization Ecology Policy Center Alexei Yablokov
has said.
The submarine, which was equipped with two OK-650 water-cooled
reactors, sank to a depth of 107 meters in the Barents Sea on August
12 with 118 crewmembers aboard.
"Once they touch the submarine and open its reactor compartment -
and they cannot avoid this, as there might be dead submariners there -
radiation leakage will begin. At a medium level [the northern part of
Kolsky Peninsula coast] will be polluted, and at a maximum level it
will reach Norway," Yablokov told Interfax on Wednesday.
Although the radiation level is unlikely to prove fatal to
humans, radio-nuclides entering the sea "will accumulate in the fish
and their consumption will become hazardous for people's health,"
Yablokov said.
The scientist said he assumes that the Kursk's reactors "really
have been stopped, as the military keep saying. But this is not
enough. Even now, radiation pollution is inevitable."
"Though a chain reaction is not occurring, the pipelines could
not have remained intact after the submarine suffered such
destruction," Yablokov said. This means that radio-nuclides are
entering the Barents' water, he said.
The speed, direction and strength of underwater currents in the
area of the submarine catastrophe should be taken into account,
Yablokov said. In planning operations on evacuating the bodies of the
dead crew and raising the submarine, one should "proceed from the fact
that radiation danger exists," he noted.
Military experts must now "calculate the quantity and types of
radio-nuclides in the sunken submarine's coolant" and inform public
about it, Yablokov said. It is also necessary to know how long and how
intensively the Kursk's reactors had been operating after being
charged with fuel, since this directly influences the level of the
coolant's saturation with radio-nuclides, he said. What is more, the
submarine remaining on the seafloor long "will increase the
significance of long-lived radio-nuclides," he remarked.
The Russian Navy command's "silence" on all these issues "is only
increasing anxiety," Yablokov said. "It is our tradition: if the
military keep silent, one can expect the worst to happen," he said.


******


#13
BBC MONITORING
RUSSIA'S GOOD TRADE BALANCE BASED SOLELY ON RAW MATERIAL EXPORTS - PAPER
Text of report by the Russian newspaper 'Nezavisimaya Gazeta' on 25th
August 


Summing up the regular results of Russia's foreign trade activity for the
first half year forces us to draw some extremely ambiguous conclusions. On
the one hand, increasing the foreign trade positive balance to 32.3bn
dollars when compared to the same period of 1999 (16.5bn) cannot but make
us happy. But, on the other hand, if we analyse the causes of this almost
twofold growth we cannot but note that it is by no means associated with an
overall stabilization of the economy. On the contrary, paradoxical as it
may be, it shows Russia's extremely shaky position. 


During the past decade raw materials have traditionally been predominant in
the commodity structure of Russian exports. The sharp increase in revenues
from the sale of natural resources abroad recently makes our hope of
developing science-intensive technologies increasingly illusory and the
prospect of remaining forever a "big raw material warehouse" increasingly
real, since the "unexpected" income does not do much to encourage the
government to develop a really competitive sector of the economy. 


Indeed, the share of fuel and energy commodities, according to data from
the State Customs Committee, in the second half of 2000 was 54.8 per cent
of the overall volume of exports (during January-June 1999 - 40.2 per
cent). The volume in value terms from the fuel and energy complex increased
exclusively as a result of the high level of world prices for energy
resources. In particular, the price of oil, which for a half year now has
been near the 30-dollar mark, makes it possible for Russian bureaucrats to
joyfully report large amounts of revenue into the state treasury, but none
of them considers it necessary to note that our complete dependence on
world market conditions makes these incomes rather unstable, and our
overall economic situation - too vulnerable. 


Deliveries of metals and semifinished products occupy second place in terms
of export volume even in spite of the fact that compared to the same period
of 1999 there has been a 3.5-per-cent reduction of volume. The physical
volume of deliveries of ferrous metal decreased by 3 per cent, and exports
of nonferrous metals increased on average by 9 per cent. Meanwhile, as a
result of the 33-per-cent growth of average contract prices the absolute
income from this type of exports increased by 31 per cent. 


The picture looks much worse in other commodity groups: the proportion of
products from the chemical industry decreased by 2 per cent, machines and
equipment - by 3.5 per cent, and lumber and cellulose - by 1.4 per cent. 


Thus based on the latest indicators we can draw the sad conclusion that
even an increase in budget revenues as a result of an increase in the
overall value of exports does not make Russia a full-fledged participant in
the world market. And this situation will continue as long as the state
takes the path of least resistance, preferring to sell natural resources
rather than making Russian consumer goods and science-intensive
technologies competitive. 


********


#14
BBC MONITORING
ANALYSIS: OSTANKINO FIRE CHANGES MOSCOW BROADCASTING SCENE
Text of editorial analysis by Gabriela Bolton of BBC Monitoring's Foreign
Media Unit on 30th August 


The fire that raged in Moscow's Ostankino TV tower on 27th and 28th August
has changed the Moscow broadcasting scene. It briefly blacked out national
television stations which use the tower as a relay station, and although
transmissions to the regions were soon resumed via satellite, Moscow's 10
to 12m viewers were left with blank screens and with some radio stations
moving to different frequencies. 


The three main TV stations, the majority state-owned Russian Public TV
(ORT), the wholly state-owned Russia TV (RTR) and the private, Media-Most
owned NTV channel, all of which used the Ostankino tower to transmit their
signal to Moscow and Moscow Region, were affected. Among the other channels
affected were the Moscow channel Centre TV, TV6, Kultura TV, MuzTV, Ren-TV,
STS and M1, as well as several radio stations including Ekho Moskvy radio
on VHF. 


While the flames were still raging, broadcasters and the Kremlin started
looking for alternative ways of broadcasting to Moscow and its region. 


One initial plan was to switch all the TV channels over to the cable
broadcasting networks of the Stolitsa (Capital) and Media-Most owned TNT
channels. 


However, the plan was only partially implemented. Although the Moscow
authorities denied an earlier report that they had only allowed the
Moscow-controlled channels access to the Moscow cable network, their
suggestion that the network also be used by other TV channels remained
unanswered. 


By the morning of 28th August, the NTV Plus satellite channel was
broadcasting - free of charge - ORT programmes, in addition to the already
available NTV, RTR, Kultura and TV 6 channels. 


In the meantime, ORT and RTR started broadcasting live on their respective
web sites at www.ortv.ru and www.vesti-rtr.com, and were later joined by
some of Centre TV's programmes being streamed live on the ATV web site at
www.atv.ru. 


These were the solutions available immediately. But what are the long-term
possibilities? 


An early report said there were three TV centres from which terrestrial
broadcasting could be resumed, but only one of them, the TNT complex, was
in working order and had its own mast of sufficient height on to which
retransmitters could be attached. 


However, the Kremlin became worried about the possible advantage enjoyed by
the independent NTV, which seemed to be the least affected as it could
immediately switch over to its TNT network and continue relying on its NTV
Plus satellite service. That could be why NTV's offer to other channels to
use its airtime on TNT was not taken up, analysts believed. 


Another option to restore transmissions to Moscow and Moscow Region
envisaged the installation of numerous retransmitters on Moscow
skyscrapers, including the building of Moscow State University. The option of
launching a transmitter balloon over the capital was also considered, but
later abandoned. 


By 29th August, hopes for the Ostankino tower were rising. It was reported
that damage to the radio and TV transmitters was not as great as first
feared, and most transmitters and relay facilities remained intact. The
main problem - which had affected all television equipment - was that
feeder cables in the tower had been completely destroyed by the fire. Press
Minister Mikhail Lesin said he was convinced that the Ostankino TV tower
"will be 100-per-cent restored". He said broadcasts to Moscow would be
partially restored by the end of the week and plans for full recovery would
be submitted within seven days. 


In the meantime, speculation abounds. Will the Kremlin try to use the
opportunity to take full control of ORT and RTR? Is the resumption of
mainly terrestrial broadcasting to Moscow and its region the best option?
Or will cable and satellite distribution seize the opportunity to get a
much firmer hold? 


*******


#15
RUSSIANS INVEST MORE ABROAD
Interfax 


Moscow, 30th August: Russian enterprises' investments abroad amounted to
7.66bn dollars in the first half of 2000, 2.7 times more than in the first
half of 1999 (2.83bn dollars), the Russian State Statistics Committee
announced on Wednesday. 


So-called "other capital investments" prevailed in the structure of Russian
enterprises' investments abroad and made up 97.9 per cent of all
investment. Bank accounts made up 85.9 per cent of Russian investment abroad. 


The value of direct investments in foreign countries in the period from
January to June 2000 was 163m dollars against 467m dollars in the first six
months of 1999 (2.1 per cent of the total sum, as compared to 16.5 per cent
a year ago.) Portfolio investments amounted to 0.1m dollars. A year ago,
their volume was even smaller. 


Other investments in the first half of 2000 amounted to 7.5bn dollars (97.9
per cent of all investment) against 2.36bn dollars in the first half of
1999 (83.5 per cent). Bank accounts made up 6.58bn dollars in the structure
of other investments (85.9 per cent of the Russian enterprises' total
investment abroad), against 2.24bn dollars (79.1 per cent) in the first
half of 1999. 


Among the other types of Russian enterprises' investments, referred to
under the category of "other investment", are trade credits worth 909m
dollars against 117m dollars in January to June 1999) and other credits
worth 3m dollars (against 6m dollars last year.) 


Despite the considerable size of Russian enterprises' investments abroad,
most of them are short-term and with a period of less than three months. As
a result, the total worth of Russian investment accumulated abroad by 1st
July 2000, amounted to only 2bn dollars. At the same time, whereas foreign
investment in the Russian economy amounted to only 4.78bn dollars in the
accumulated worth by 1st July 2000, reached 30.7bn dollars. 


Of the total investment made by Russia abroad in the first half of 2000,
6.37bn dollars or 83 per cent was made in the US. The structure of Russia's
accumulated investment abroad includes 229m dollars in Liberia, 221m
dollars in Holland, 195m dollars in Iran, 144m dollars in China, 133m
dollars in the US and 108m dollars in Switzerland. 


******

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