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Johnson's Russia List


September 12, 2000    
This Date's Issues: 4506  4507  4508


Johnson's Russia List
12 September 2000

[Note from David Johnson:
1. The Moscow Times' Election Fraud Special Report:
3. Floriana Fossato: RFE/RL Russian Media report.
4. Christian Science Monitor: Fred Weir, Russia's nuclear 
whistleblower lands back in court Tomorrow, the high court 
revisits the 'nuclear secrets' case against Nikitin. 




8. Boris Kagarlitsky: Disasters Reveal Crisis of Putin's 

Minister of Economic Development and Trade, interviewed by 


Date: Mon, 11 Sep 2000 
From: Pete van Dyk <> 
Subject: Re: JRL 4500-MT/March Vote Falsification

Dear David,
I would like point out to your readers that the best place to see The Moscow
Times' Election Fraud Special Report is at the following URL:

Here you can read the complete text of each of the 12 reports from Russian
regions about irregularities in the vote count, and additional articles
that did
not make it into the print edition.
Best regards,
Peter van Dyk
Web Site Editor
The Moscow Times
Tel. +7 (095) 937-33-99 ext. 176
Fax +7 (095) 937-33-93



Moscow, 11th September: Russian State Statistics Committee reports indicate 
that the demographic situation in the country is unfolding according to the 
worst of the expected scenarios. 

Interfax experts drew this conclusion on the basis of statistical reports and 
forecasts made in the first half of 1998. 

Experts composed three scenarios of the development of the demographic 
situation until the year 2015. The favourable scenario relied on a slight 
rise in the birth rate, a slowdown of the death rate and growing migration 
encouraged by economic recovery. In this case at the end of 2000 Russia was 
expected to have a population of 146.2m and in 2015 - 147.2m. 

The second scenario implied birth and death rates remaining at the 1997 level 
and a slight rise in migration. In this case at the end of 2000 the country 
was expected to have a population of 145.6m and in 2015 - 138.1m. 

The most pessimistic scenario was based on an expectation of a new rise in 
the death rate and a simultaneous fall in the birth rate and in migration, 
including migration from rural to urban areas, until 2015. In such 
circumstances in 2000 Russia would have a population of 144.7m and at the end 
of 2015 - 130.3m. 

The latest statistical reports say that at the beginning of July 2000 Russia 
had a population of 145.1m, falling by 425,000 in the first half of the year. 


Date: Mon, 11 Sep 2000 
From: (Floriana Fossato)
Subject: Russian Media 

Hi David--

With the last developments concerning ORT etc, the readers of the DJList 
could be interested to know that RFE/RL has published another update of the 
Russian media empires, that could prove useful for those willing to 
understand what is going on at the moment. As usual, it is a co-production 
between myself and my Russian service colleague, Anna Kachkaeva (who last 
week accepted Berezovsky's proposal to become one of the trustees of his 
private stake). The report can be found at 

BTW, don't you find it profoundly ironic that Sergei Dorenko was not allowed 
to go on the air with his program on one of the very few occasions he 
produced something that somehow reflects reality? The text of the banned 
program is available on the internet. 


Christian Science Monitor
September 12, 2000
Russia's nuclear whistleblower lands back in court
Tomorrow, the high court revisits the 'nuclear secrets' case against Nikitin. 
By Fred Weir, Special to The Christian Science Monitor

Since coming under harsh criticism for his handling of the Kursk 
nuclear-submarine crisis last month, Russian President Vladimir Putin has 
been presenting a more open face, publicly deploring the decrepit state of 
his nation's Soviet-era military machine. During a visit to the US last week, 
the Kremlin leader appeared on CNN's "Larry King Live" to discuss the 
tragedy, and appealed for more openness and international cooperation to 
prevent future accidents. 

But whether his government has a genuine desire for such openness remains to 
be seen. 

Alexander Nikitin, the man who originally warned that the Russian Navy's 
Northern Fleet was a breeding ground for potential disasters, has been 
subjected to a five-year ordeal of prison, house arrest, and repeated trials 
on charges of treason and espionage. Despite being acquitted by Russia's 
Supreme Court, Mr. Nikitin - who held the rank of captain aboard Soviet-era 
nuclear submarines - before turning environmentalist, is now facing a renewed 
legal assault. 

Human rights experts say his ongoing troubles illustrate the painfully slow 
pace of reform in Russia's justice system, and may also signal a general 
crackdown on unsanctioned political and environmental activities. 

"One of the hallmarks of the Putin era so far has been extreme irritation 
with any independent stirrings in the courts, media, or body politic," says 
Alexei Simonov, director of the Glasnost Foundation, an independent human 
rights group. "If we had a rational system in Russia, Nikitin would be made a 
government consultant on how to prevent accidents like the Kursk. But our 
system says that anyone without the authority to speak must keep their mouths 

Nikitin was arrested in 1996 by the Federal Security Service (FSB), domestic 
successor to the Soviet KGB, after he coauthored a report with the Norwegian 
environmental group Bellona, documenting alleged nuclear abuses by the 
Northern Fleet, including throwing nuclear reactors and radioactive materials 
into the Arctic Ocean. After several inconclusive trials, he was acquitted by 
a St. Petersburg court in December. In April, Russia's Supreme Court upheld 
his acquittal in a landmark decision that slammed the FSB and the 
prosecutor's office for imprisoning Nikitin under "secret" regulations and 
trying him for violations of unpublished and retroactively applied laws. 

"Nikitin is the first person in Russian history ever to be acquitted on a 
charge of treason," says Yuri Schmidt, Nikitin's lawyer. "This precedent gave 
people hope that it is possible to win in court even when the forces of the 
state are arrayed against you. And that's why the authorities can't let this 
verdict stand." 

Tomorrow, Nikitin is scheduled to appear before the Presidium of the Supreme 
Court, a body comprising 13 of the court's 115 judges, which has the power to 
renew the investigation against him on exactly the same charges. 

In Russian legal practice, higher judges can return a case to square one if 
they are convinced the original investigation was insufficiently thorough or 
correct. Ironically, the FSB's appeal cites past improprieties and illegal 
tactics by the prosecution as reasons to go after Nikitin again. 

Nikitin takes his current predicament with grim humor. "The 
prosecutor-general's main argument now is: 'For over 4-1/2 years Nikitin's 
rights were violated.... Now we want to restore his rights. Give us back the 
case, and we will carry out a new investigation following all the laws,' " he 

Analysts say an appeal of a Supreme Court decision to the Presidium is very 
rare, and has probably been brought due to political pressure. "Certain 
people from the security services have risen very high under Putin, and they 
cannot let Nikitin's acquittal stand," says Mr. Simonov. 

The prime mover of the case, analysts say, is probably Gen. Viktor 
Cherkassov, who headed the St. Petersburg FSB when Nikitin was arrested there 
in 1996. General Cherkassov is known to be close to Mr. Putin, and recently 
was appointed governor-general of Russia's Northwest District, which includes 
St. Petersburg. "This makes us think that people within the president's 
political circle are involved in this," says Nikitin. "We are afraid that 
political influence may be exerted on the president of the Supreme Court." 

Several similar cases suggest Nikitin's plight is not unique. Another former 
naval officer, Grigory Pasko, was imprisoned for 20 months on treason charges 
after providing videotape evidence of illegal nuclear dumping by Russia's 
Pacific Fleet to Japanese journalists. The laboratory of Vladimir Sofyer, a 
nuclear scientist, was raided by the FSB last year because the lab was 
carrying out an unsanctioned study of the environmental effects of a 1985 
Soviet atomic-submarine accident in the Pacific. 

This year, the Russian Ministry of Justice announced that all nongovernmental 
organizations must register with the government or face dissolution. Several 
human rights, environmental, and antimilitarist groups were denied 
documentation, essentially making them illegal groups. "We thought that 
Russia must have solved all the big problems - crime, banditry, terrorism - 
and that the general-prosecutor's office had nothing better to do than 
monitor nongovernmental organizations," says Nikitin. "This all began with 
Putin's appearance on the horizon of power," he adds. 

Human rights workers say that if the Presidium upholds Nikitin's acquittal, 
it will not be a great victory, but will at least signal that hope is not 
lost for legal reform. "If the Presidium stands firm against this attack, it 
has a unique chance to send the past practices of Russian jurisprudence to 
the scrapheap of history," says Jon Gauslaa, Bellona's legal adviser. "If 
not, all the positive developments in the Russian legal system over the past 
decade may turn out to have been for nothing." 


Text of report by Russian NTV International television on 11th September 

[Presenter] The leader of the Communist Party of Russia, Gennadiy Zyuganov, 
held a news conference today devoted to the situation in the country and the 
position of the Communists. 

According to Zyuganov, the top priority task for the left-wing opposition is 
to make the government issue a comprehensive report on the state of the 
natural monopolies, namely, the railways, the [national grid] Unified Energy 
System of Russia, [gas giant] Gazprom, the nuclear industry and the country's 
timber and forestry industry. The leader of the Communist Party of Russia 
described the managers of these monopolies as big-time plunderers. Zyuganov 
also commented on other recent developments, including the president's 
[Putin's] foreign trips. 

[Zyuganov] Mr Putin does not have any government of his own. There is the 
government of [energy supremo Anatoliy] Chubays, the government of the Family 
[Yeltsin's clan] and the government of [business tycoon Boris] Berezovskiy, 
but there is no government of Putin. The government disregards Putin's 
instructions. Mr Putin has no television channels of his own, including the 
ones run by the government. The state channels could not even be bothered to 
show his five-minute speech at the Millennium Summit. It was just a 
five-minute speech. I see that at present Putin and his team do not have any 
real leverage on the country. If , instead of consolidating our society, they 
begin to destroy the State Duma, into the bargain, you will not even have the 
last remaining instrument of administration. 


Text of report by Russia TV on 11th September 

[Presenter] Communist Party leader Gennadiy Zyuganov today commented on the 
work of the president and the government. He told journalists that his party 
was prepared to the executive authorities in everything that was in Russia's 
national interests. And he made another important statement: the communists 
are no longer going to give electoral support to governors whom they 
previously supported. Zyuganov gave three names: Tuleyev, Rutskoy and 
Gorbenko. Here is a reportage by Marina Tumanova: 

[Correspondent] Up to now the head of the CPRF [Communist Party of the 
Russian Federation] has not been noted for his kind feelings towards the 
Kremlin and the White House. But Zyuganov's views changed after he heard the 
Russian president's speech at the Millennium Summit which made a strong 
impression on him. And today the communist leader said this: 

[Zyuganov] We shall support the executive authorities in everything that is 
aimed at increasing the country's prestige and its role, and at normal life 
and work. 

[Correspondent] This Wednesday Gennadiy Zyuganov together with other leaders 
of Duma factions is to meet Vladimir Putin. The communist leader will take 
with him a package of draft laws which he believes should be adopted as a 
priority. However, having decided to go in for a dialogue with the 
authorities, the CPRF is purging its ranks. Zyuganov stated that in future 
his party would not provide electoral support for three governors who used to 
its comrades-in-arms - Tuleyev, Rutskoy and Gorbenko. 

The communist party head surprised the press once again by criticizing the 
leading television channels for the first time, not for providing poor 
coverage of his party's work but because they allow themselves to criticize 
the executive. 

[Zyuganov] I saw the latest broadcasts and all three or four channels 
criticized the executive authorities as if they were the enemies of the 
people. All together, they flogged them mercilessly, regardless of 

[Correspondent] Zyuganov advises the Kremlin to rid itself of the influence 
of Boris Berezovskiy as soon as possible. He describes the transfer of 
ownership of ORT shares to journalists as just a show. The communist leader 
spoke today about the need to strengthen the vertical structure of power. At 
the same time he is sceptical about the possible reform of the Duma. 


Russian news agency RIA 

Moscow, 11th September: Russian President Vladimir Putin has congratulated 
tennis player Marat Safin on his convincing victory at the US Open 

RIA was told by the presidential press service that the congratulatory 
message says, inter alia: 

"You did not lose your nerve during matches with the most menacing of 
opponents and with past champions. Your brilliant and masterly play proved 
that a bright new star has risen in world tennis. And we take pride in the 
fact that today's champion is a citizen of Russia." 

The president wished Safin "more victories, happiness and the fulfilment of 
your most daring plans." 


Date: Mon, 11 Sep 2000 
From: "Peter D. Ekman" <> 
Subject: re:Lint-4505

I think I've been away from America for too long, and forgotten
how many true kooks live in the US. Bill Lint (JRL 4505,
very end) of the "Free Congress Foundation," (?) reminded me,
however, when he answered an open-ended question on
US-Russian relations in a press conference by calling
NATO "a loose cannon on the ship of Christendom."
He wants to re-create the Christendom
that existed prior to 1914, fighting Islam on all fronts.
Thus NATO was wrong bombing Serbia - it should have
apparently been bombing the Moslem Kosovars. And 
Western governments (NATO?) are wrong in opposing the
war in Chechnya - we should be helping Russia get rid of
all those nasty Moslems.
At first I was amused by the word "Christendom." I
hadn't heard it since ... I can't remember when. But Lint used it
in a political sense 4 times in a short answer.
I don't think Christendom has existed in this political
sense since the Middle Ages, since the end of the Crusades.
Even then it probably didn't include Russia, since the
Eastern and Western churches rarely recognized each other.
I suppose I shouldn't take this kook too seriously -
nobody is actually going to implement this policy. But it's
a wonderful example of how screwy America's "Religious 
Right" can be.


Date: Mon, 11 Sep 2000 
From: "Renfrey Clarke" <>
Subject: Kagarlitsky on Ostankino fire etc.

Disasters Reveal Crisis of Putin's Russia
By Boris Kagarlitsky

MOSCOW - August 2000 turned out to be a fateful month for the Russian
authorities. First there was a terrorist explosion in Pushkin Square. Then
came the sinking of the nuclear submarine Kursk, and finally, on August 27,
the Ostankino television tower caught fire.

In its own way, what happened with the television tower reflects the
overall situation in Russia. The tower was built in 1967, and at the time,
exemplified the highest achievements of Soviet technology. Most of the
industrial equipment now in use in Russia was produced in the 1960s, a
period of very successful development, when the USSR seriously rivalled the
US on the technological plane, and when its growth rates outstripped those
of the West. From the 1970s, Soviet growth rates went into an uninterrupted
decline, and throughout the 1980s the pace of technological renewal slowed.
Then, with the beginning of neo-liberal reforms, investment in replacing
worn-out equipment virtually ceased. Lacking funds for modernization, the
new owners simply ran machines into the ground, working them until they
fell to pieces. Each year, the fall in the value of Russia's basic
productive assets has been around 8 per cent. This trend has not changed
even with the economic growth that began in 1999. In the first place, most
of the rise in GDP simply reflects the increase in world oil prices, and is
not in any way linked to increases in production. Secondly, even where new
equipment is put into operation, it is simply hooked up to old equipment
which remains in use; there is no comprehensive modernization. This is what
happened with the Ostankino television tower, where new electronic
apparatus was continually fastened onto more and more decrepit equipment.
The result was that a wire simply could not carry the excessive current.

As the well-known economist Grigory Hanin has noted, if this situation
continues then within ten years "almost nothing will remain" of Russia's
economy (Novye Izvestiya, 25 Sept. 1999). Early this year, I published an
article in Novaya Gazeta entitled "Wear and Tear"; here, I predicted that
no later than autumn, Russia would run up against the problem of
technological catastrophes. Unfortunately, the prediction was fulfilled to
the letter.

As Komsomolskaya Pravda observer Yevgeniya Anisimova puts it, "We have
come too close to the threshold beyond which ungovernable processes begin.
Complex technology is about to start going berserk on a massive scale. If,
that is, the process has not already begun...." (Komsomolskaya Pravda, 29
August 2000, p. 7). Although the problem was quite obvious, the authorities
proved quite unprepared. The disaster with the Kursk revealed that the
means of saving people at great depths did not exist. The fire at Ostankino
showed that the means of extinguishing a blaze at a great height did not
exist either. The "power" ministries and the fire service, after conferring
for many hours, proved incapable of putting out the fire, which died out
when the highest television tower in Europe was completely burnt out
inside. Residents of Moscow and Moscow Province were left without
television. Numerous pager companies could no longer operate. The armed
forces also suffered. Among the systems put out of action was one named
"Caucasus", that had been used to maintain communications with the forces
in Chechnya. Back-up systems that had been prepared in Soviet times against
the possibility of a major war all turned out to be in non-operational

The television companies have lost sums equivalent to millions of dollars
due to the cancellation of advertising contracts. That is not to speak of
the equipment that was destroyed. To restore the tower to working order
will be virtually impossible, and there is no money to build a new one.
Every day while the televisison is silent, the losses of the media barons
mount, and the panic among the bureaucrats grows stronger. 

The destruction by fire of the Ostankino television tower is symbolic. For
the present-day Russian authorities, television is the main method of
political and social control over society. The inability of the country's
leaders to maintain the normal functioning of this system, which is so
vitally important for them, testifies to the depth of the regime's crisis.
For the bureaucrats in the Kremlin, it was the fire at Ostankino, not the
sinking of the submarine Kursk, that was the real catastrophe.

It is often considered that the state in Russia today is weak. This is
wrong. Our state is not weak, but irresponsible - in relation to its
citizens, and to its social obligations, which it lacks the decisiveness to
openly renounce. 

The present state corresponds fully to the economy and society we now
possess. The thesis concerning the "weakness of the state" arose out of a
comparison with the Soviet past. Yes, the Soviet state was not only larger,
but also stronger. Its strength was manifested not just in the numbers of
its tanks and rockets, but also in its readiness to attempt to solve almost
any social problem. It was this, not the work of the police and the KGB,
that made the Soviet state all-pervading. Police states existed before the
USSR, and the half-million people who were active in the Soviet state
security system by no means set a world record, even per head of population.

It is true that we are no longer a superpower. Moreover, from being an
industrially developed country (even if we did not have the world's most
efficient economy), we are turning into a classical "raw materials
appendage" of the West, into part of the periphery of the capitalist world
system. In these circumstances, it is simply absurd to demand that the
state and the government should again meet the Soviet standards (while
also, this time, guaranteeing complete respect for human rights and
freedoms). In its number of bureaucrats, in its diverse range of police and
"power" structures, and in the readiness of these structures to use
coercion, today's "democratic" Russia not only concedes nothing to the
USSR, but surpassed it long ago. It is something else again that the
effectiveness of these structures is relatively low, and that the degree of
corruption within them is appalling. This is simply inevitable under the
social and economic system we have had for the past ten years.

What Russia needs is not a "strengthening of the state", but social
reforms, structural transformations that would ensure greater equality,
that would stimulate the development of an economy oriented toward the
development of manufacturing industry instead of the export of raw
materials; that would open up access for the bulk of the population to
modern information technologies, and so forth. Such reforms, however, are
not needed by the established elites, since this would mean the end of
their prosperous existence. As a result, no-one is going to implement these
reforms, or even seriously discuss them. The powerful state machine serves
the interests of these elites, and is indissolubly bound up with them.

The paradox is that the notion of the "weak state" works to the advantage
of precisely those people who have led the country into a dead end. They
understand perfectly that they cannot bring back the past, but
"strengthening the state" means an even greater strengthening of their
power, a reinforcement of the structures and procedures through which we
are being transformed into "Upper Volta with rockets". 

>From the past, today's Russian authorities inherited not just an army, but
also a powerful propaganda system which they strengthened still further,
combining the old Soviet "brain-washing" methods with the newest American
advertising techniques. Privatising the mass media did not so much make the
media free as it subjected them to the control of a handful of "oligarchs",
most of them linked to the Kremlin. 

Putin has become the propaganda symbol of the bureaucracy, the figure-head
of the supporters of the police state. The experience of the past month has
shown, however, that in Russia the president cannot be merely a symbol and
a figure-head. He or she must also be an active politician, and in this
area, nothing is working. The difference between Russian image-makers and
Western ones lies in the fundamentally different understanding they have of
their task and role in society. Image-makers in the West do not determine
policies, and do not even formulate political slogans. Their task is to
explain to the public the essence of one or another strategy or ideology,
and to do it in better, more popular fashion. They are supposed to stress
whatever attractive traits the candidate actually possesses, while at the
same time trying to divert attention from his or her shortcomings (or to
attempt to transform these shortcomings into virtues). Image-makers in the
West stay in the background not because they act as "grey cardinals", but
because this really is their place; their role is secondary. Readers will
of course recall the American film "Wag the Dog" (in Russia for some reason
it went under the name "Swindling"). In this film, a virtual war in Albania
is contrived in order to salvage the president's ratings (the Albanian
government believes these reports, since it gets all its information from
CNN news). But even in this case, when the presidential image-maker goes
too far and demands political recognition, security force agents simply
liquidate him. 

Throughout the world, virtual pseudo-politics is of course crowding out
serious political discussion. In the US and Western Europe, this is
perceived as a sign that democracy is being degraded. In Russia, it is
welcomed as evidence that democracy has triumphed. In our country,
"political technologists" have become part of the elite, and they try to
mould the image of politicians literally out of nothing. It is not as
though "everything will turn out all right." Our society is weak. Civic
culture is undeveloped. Most importantly, there is not even a consolidated
ruling class. In place of a national bourgeoisie, we have numerous clans
and groups intertwined with the bureaucracy. There is not even an
oligarchy, but only individual oligarchs. 

In a situation like this, image-makers really do feel that they control
the situation. They understand what needs to be done better than the people
who hire them. They do not even formulate policy; they invent it. Real
events are required to serve the needs of television reporting.
Unfortunately, this is a trap not only for the hapless members of the
general population, but also for the ruling elites themselves. Try as one
might, the material world will still enforce its rules sooner or later. The
belief that everything is permitted, that the powers of propaganda are
unlimited and that there are no punishments for lying, is ultimately an

The purpose behind Putin's propaganda campaign has not been to reveal his
true identity, but to conceal it, creating an image that is not just at
odds with reality, but which to an important degree is its polar opposite.
Putin has been depicted as a "strong leader", a "resolute politician", but
he was and remains a middle-ranking bureaucrat, an eternal factotum,
completely lacking in his own will and in political initiative. If Putin
had a strong will and political ambitions, he would never have become
president. In the first place, Yeltsin never tolerated politicians with
presidential ambitions anywhere in his vicinity; as soon as he noticed that
someone had such ambitions, he immediately started grooming some rival
figure as a potential heir. Yeltsin's nose for such things was always
acute, like that of an animal. Secondly, a serious politician, a person of
strong will, would have had to answer "no" if Yeltsin last summer had
proposed that he or she become the next president - especially since this
proposition would have been made in a fashion humiliating for the candidate
and the country. Yeltsin simply entrusted Putin with the job of president,
in the way subordinates are entrusted with bureaucratic tasks. Any person
with a sense of dignity, with intelligence and boldness, would have found
the strength to refuse. Putin, as petty bureaucrats are supposed to do,
simply replied: "Yes, Mr President." Then he went on to remark on
television that if you are a soldier, you carry out the tasks that are
entrusted to you. The point of the military analogy was not clear; none of
the world's armies has ever ordered anyone to act as head of state. 

Putin's weakness as a politician has had to be covered over with arguments
about his supposed strength; his lack of self-confidence, with a propaganda
lie about his steadfastness; and his fear of the future, with a
demonstration of courage before the television cameras. It is all very much
as in Freud: to compensate for an inferiority complex, the subject
practices self-glorification.

Yeltsin at times put on a guise of weakness, playing the idiot, and this
ploy saved him more than once. The president's "weakness" merely served as
a cover for his complete civic irresponsibility; he was not really weak.
Whenever the question of power presented itself, whenever the interests of
the ruling group needed to be defended, the Kremlin leader proved
unexpectedly strong. The deputies of the Supreme Soviet felt the impact of
this in 1993.

Yeltsin understood perfectly that he would not prevail without the support
of the regional elites. The centralized government had collapsed, and in
the regions, local interest groups had coalesced; Yeltsin therefore made
continual, demonstrative concessions to the regional elites. But once
again, when the question of power arose, the regional elites (even those
that had considered themselves to belong to the opposition) lined up
beneath his banner, since they recognized that to confront the Kremlin
directly was too dangerous. The communists felt the effect of this in 1996.

The numerous oligarchs feuded with one another, and Yeltsin supported this
struggle of each against all, skilfully setting some against others, and
then acting as the highest judge, the neutral arbiter. He changed his mind,
failed to keep his word, but always did this in such a way that the
consequences were suffered by others. He was a real "prince", acting
according to the letter of Macchiavelli. 

It was only toward the end of Yeltsin's reign that this method of rule
began to break down, since he now came to be surrounded by the presidential
"family". At least formally, the "prince" was supposed to be above the
fray, but Yeltsin began showing too obvious a preference for the clan
headed by his own daughter. This destroyed the whole system of checks and
balances that he had painstakingly constructed during eight years in power.

When the Kremlin team and the oligarchs allied with them replaced Yeltsin
with Putin, they thought they had replaced an aging, increasingly feeble
autocrat with a young and energetic leader. At the same time, they wanted
this leader to be devoid of initiative in everything that might affect
their interests or disturb the existing equilibrium. But this could not be.
You cannot demand that one and the same person show diametrically opposed

In sum, the Russian elite acquired a leader who was not only too weak to
accept responsibility for his actions, but who also took all his cues from
his entourage. This did not put an end to the struggle for power and
property within the ruling layer. On the contrary, the struggle
intensified, since the feeling arose that the person who controlled Putin
controlled the country. This too proved to be an illusion. In order to rule
a country, it is not enough to provide the president with his cue cards and
write the scenarios for his television clips. Especially since, as the
events of August showed, nothing in Russia is guaranteed, even the ability
of the government to lie to the whole country over the television. For the
present regime, television channels are a thousand times more important
than good roads or even the armed forces. But here too, material reality
wins out over reality of the virtual kind.

The tragedy of the Kursk, and the official lying that followed, made the
regime so unpopular, made so obvious its inability to carry out real rather
than virtual tasks, that even the loyal press got out of control. As in the
final years of the Soviet epoch, reality is increasingly penetrating the
virtual world, destroying its harmony.

The propaganda is in crisis. The fire in the television tower merely
served to complete what began with the sinking of the Kursk. The fire was a
sort of farcical epilogue to the tragedy of the submarine. What the
supporters of the Supreme Soviet who laid siege to Ostankino in October
1993 could not achieve, somehow happened spontaneously under Putin. The
television fell silent, even the second channel, which in 1993 broadcast
from the famous "reserve studio". The physical and moral resources have
been exhausted, and the time is coming when accounts will have to be paid.

Putin does not have either Yeltsin's skill, not his experience, nor his
instinct. He tries to solve problems mechanically, while his associates,
drunk with bureaucratic intrigues, have forgotten that as well as virtual
reality and the bureaucratic division of spoils, there is also the country.

The problem, of course, is not just Putin as an individual. The whole
system of power is in crisis. The system of the economic hegemony of an
insignificant minority over the vast majority, a system which leaves no
chances for democracy, but which at the same time needs a democratic
facade. Yeltsin managed to combine the incompatible, but his time has passed. 

In substituting Putin for Yeltsin, the Russian elite has acquired a leader
too weak to become a full-blown dictator, but also too feeble and
inexperienced to play at democracy. The elite are unable either to respect
civil liberties, or to impose a dictatorship. With each day that passes,
the impotence of the regime becomes more obvious.

Russian history teaches that in our country, rulers are forgiven a great
deal. The only thing that is not forgiven in Russia is weakness. 


No. 35
[translation from RIA Novosti for personal use only]
German GREF, Minister of Economic Development and Trade, 
interviewed by Tatyana KOROTKOVA

Question: Let's talk about the new Ministry of Economic 
Development and Trade. What should it do?
Answer: It is above all a ministry of reforms. We are 
responsible for elaborating the economic policy and 
implementing it jointly with other ministries, as well as for 
monitoring results. Consequently, we are also responsible for 
correcting the current policy. 

Question: Does this mean that yours is a theoretical 
Answer: No, theory is others' business. Ours is a 
forecasting ministry that elaborates programmes and regulates 

Question: Will you also elaborate all rules of the game?
Answer: Not all of them. We cannot elaborate all rules of 
the game. This is the task of the government. We elaborate the 
ideology, the concept of economic reforms, which the government 
should discuss and approve. After that, departmental laws are 
elaborated in the framework of this concept. They are forwarded 
to us and we have the right to veto them. We can either approve 
or blackball them, if they run counter to the general economic 
ideology, or rule that they need to be amended in some way. 

Question: Your ministry was given the functions of a 
number of dissolved ministries, such as the economics ministry 
and the state committee on the North. But industries escaped 
the sphere of your attention. What do you think about this?
Answer: Escaped is the right word, because I cannot 
imagine the function of managing industry in the system of 
state power.
The less the state manages the industries, the more effectively 
they operate. It is not the state business to manage an 
enterprise. There should be either holdings or specialised 
managing companies for that. The state will only gain by 
getting rid of this function. 

Question: But much is being said today about increasing 
the role of the state, while you suggest letting the industries 
Answer: I mean a completely different thing. The address 
of the president and the government programme say that the 
state must be strong. This entails common laws, united Russia, 
a single state structure and the ability of the state to ensure 
the application of law throughout the national territory. It is 
very important, first, to elaborate the rules of the game which 
everyone would respect, and second, to make state resources 
equally available to all market operators. 
As for industries, the state should create conditions 
under which the industries would operate. Taxation, the 
procedure for registering material expenses, the elaboration of 
corresponding institutional changes, the operation of such 
institutions as banks, the capital and stock markets - this is 
the sphere the situation in which determines the size of 
investments into industries and eventually the prosperity of 
corresponding enterprises. 

Question: What will be the structure of your ministry then?
Answer: It will reflect the functional tasks set to it. 
The first block is the block of institutional reforms, the 
block that will draft all kinds of programmes, development 
concepts for the entire economy, different industries, the 
infrastructure and the like. It will be responsible for the 
legal backing of laws, that is, analyse and examine laws and 
suggest them to the government which will move them for the 
consideration of the State Duma.
This block will also be concerned with de-regulation. This is a 
tentative name for the task of determining those economic 
sectors where the share of state involvement should be revised. 
Meaning that state interference should be strengthened, or that 
norms should be revised if the interference of the state is 
The second block is responsible for macroeconomy and 
investments. It will monitor the situation and forecast the 
consequences of the choice of this or that measure of the 
economic policy, meaning the effect such measures would have on 
budgetary revenues and the profits of enterprises, on the 
overall volume of investments in the country, and so on. This 
block will also be responsible for tariff regulation and 
everything related to the elaboration of macroeconomic models 
in different economic sectors - the so-called system of 
national accounts. In addition, this block will deal with state 
The third, separate, block will tackle regional and 
socio-economic aspects of development. It will analyse regional 
development, meaning the economy and macroeconomy on the scale 
of regions and federal programmes of support to the regions. We 
also charged it with the problems of Northern territories, as 
well as everything that concerns social problems, such as 
reforms in the sphere of culture, education, health care, 
housing and the communal sphere, and so on. 
Another, fourth, independent block concerns foreign 
economic operation and trade. 

Question: What about the Centre of Strategic Studies?
Answer: There should be a clear delineation of functions 
between officials and scientists. Officials are the client. For 
example, we need a certain document, say, the second part of 
the Tax Code or something like this, to be augmented. No 
official or ministry can elaborate a requisite package of 
documents. This is too much for them. Consequently, we set the 
Centre the task of rallying a group of experts, who would 
elaborate a tax or a customs code to our specifications. 

Question: So, the Centre will be like a research 
laboratory at the ministry?
Answer: Not at the ministry, but I would say, at the 
government. Since I chair the supervisory council, we determine 
their action plan. The Centre elaborates documents, which we 
analyse and move for consideration in the framework of the 
Centre. Such hearings are held every Saturday now. 

Question: What about the status of the Centre's staff?
Answer: It is a non-profit organisation financed from 
non-governmental sources. 

Question: Let's get back to economy. Why is it said that 
Gref's reforms are more radical than Gaidar's?
Answer: You know, it is very difficult to compare the 
reforms of 1991 and the reforms of 2000. This is a completely 
different country with an absolutely different economy. If we 
compare the goals of those reforms and the current ones, they 
are the same. But the mechanism of implementing them is 
And the technological element is different, too. 

Question: Let's try to formulate these goals. 
Answer: Quite. It is the transparency and effectiveness of 
state authority, everything that concerns the state block, the 
block of reforms of the state. The development of the 
infrastructure as regards the reform of monopolies. And an 
effective tax system, of course. A system that would encourage 
the development of enterprises, rather than kill them or push 
businessmen towards hiding their profits in order to survive. 
The encouragement of the people's enterprise initiative, the 
transparency of the budget and budgetary procedures, and 
consequently a better budget and higher living standards of the 

Question: In fact, Gaidar could not carry through his 
Answer: I think Gaidar's reforms will be properly 
evaluated some time in the future. Although he held his post 
for a short time, he initiated colossal changes. It was thanks 
to him that the country has become different since 1992; we 
really started moving towards the market. 
If not for Gaidar, if we continued to move as we did 
before him, there would have been no Russia. I am convinced 
that if not for Putin, Russia would have disintegrated. This 
would have surely happened, in a year or two. Thank God there 
appeared people in that historical space of time who can move 
Russia's history in the right direction. 

Question: So, we will live by yet another programme now.
Maybe we should revive the Gosplan (State Planning Committee)? 
On the other hand, your ministry, as you describe it, looks 
very much like the Gosplan with its functions of prospective 
Answer: All countries have [departments with] the 
functions of planning. When the Gosplan was liquidated, they 
liquidated together with it the function of planning, which was 
wrong. Maybe it should have been liquidated, but a new 
department, working in accordance with the new economic system, 
should have been created in its place and have the function of 
We will try to do this, of course. For everything that 
concerns macroeconomic monitoring and forecasting, which we 
will be doing, has a major resemblance to the Gosplan. But the 
methods of regulation are different. Not the distribution of 
state investments between industries, but a tax reform, changes 
in the tax legislation, and the customs-tariff policy. 

Question: The reforms of the preceding decade are mostly 
criticised for neglect for the needs of the people. Much is 
being said about the social aspects today. But the reforms 
drafted under your guidance provide for the creation of paid 
medical services and transition to 100% payment of housing and 
communal services by the people. How can you convince the 
people that these new reforms will benefit them?
Answer: We are not going to limit the social sector. Our 
main goal is to streamline the budget's social spending. The 
idea is to cancel category privileges and to introduce 
addressee assistance. The first step in this direction has been 
made: we have cancelled income tax privileges for, say, judges, 
servicemen, labour veterans and other categories. It was wrong 
to grant that privilege. Why should not you pay taxes if you 
work in the tax police? Or if you are a labour veteran? Any 
oligarch can be a labour veteran, too. Anyone who has a service 
record of 25 years got such a privilege virtually 
automatically. As a result, the system is absolutely 
We say that we are not going to slash social expenses in 
the budget, but we also say that we cannot seriously raise such 
expenses either. The current level of social assistance is 
minimal. The volume of allocations is very low and hence the 
quality of services is extremely low. This situation can be 
changed only through the redistribution of the quotas allocated 
by the budget to social needs. To do this, we should cancel 
privileges to certain categories of citizens. We should above 
all ensure that social assistance is provided to specific 
For example, the budget provides for the allocation of 10 
billion roubles to education. If divided between all higher 
schools, the eventual sum will be 3 kopecks. The same concerns 
We must at long last decide where the money should go: to 
medicine and education, or to people. We should live by the 
principle, which is widely used in several countries: "The 
money follows the patient." What does this mean? We can try to 
use administrative methods. For example, issue instructions 
under which each staff member of a medical establishment would 
bow to patients. But the sanctions which we will have to apply 
to the underpaid staff to make them honour the instructions 
will be very strict. Instead, we should make the economic 
system work. If the patient has the money, he or she will be 
able to choose the hospital where he or she wants to get 
medical assistance, rather than be forced to go where the staff 
neglect their duties. The addressee social assistance is a 
much-used phrase. The trouble is that it has never been applied 
in practice. 

Question: I see. But how can you implement this?
Answer: We must above all create a federal database of the 
population. When we have it, we will be able to determine who 
really needs our assistance, and help them. 

Question: Who will create such a database? Not your 
Answer: In fact, we have several databases now, beginning 
in the Interior Ministry and ending in the Pension Fund and the 
Customs Service. There are about five such databases. We should 
analyse them in order to find the most complete one, determine 
a single format for it and use it as the basis for all 
departmental databases. Each department will be able to add 
specific information to this general database. For example, 
law-enforcers will add information about the people's criminal 
records (if any), and the customs service will contribute their 
own information. After that, we would be able to use it for 
anything, from pension reform to communal payments. When 
individual registration is streamlined, one can speak about 
monitoring minimum social demands in accordance with the 
minimum social standards of consumption and help those who live 
below such standards. 

Question: This is a task for the future; at least we 
cannot expect to see such a database in 12-18 months. But the 
people must see some result in order to feel changes for the 
better. We have grown sick and tired of empty words in the past 
ten years. 
Answer: First, you should remember that economic reforms 
cannot be implemented overnight. We are repaying old debts now. 
I mean the debts of the Soviet Union, the foreign debts - this 
is a third of the budget. I mean pension, wage and other 
arrears. The debts we have to repay add up to over 100 billion 
dollars. The situation is very complicated. And yet, I think 
there are certain signs of improvement in this situation. The 
consumption standards are growing and the average pension has 
been raised to 900 roubles. It has not been that big in the 
past period, and we say that it will be further raised. This is 
a realistic task.
Economic growth is registered in the country. The factories 
that idled for years are beginning to work again. Take the 
Bureya Hydro. We visited it when we went to Blagoveshchensk. 
The construction was stalled for three years, but in the past 
six months they did as much as in five years. The Bureya Hydro 
will help resolve the electricity problems of the Far East. And 
there are many more similar examples. Of course, the mass media 
can feed us with horror stories about dictatorship, the absence 
of the freedom of speech and the like. On the other hand, we 
must not expect paradise either.

Question: What about the threat of authoritarianism, 
infringements on the freedom of speech, and so on?
Answer: This is a question for you. Do you feel infringed 
upon? [Don't tell me that] those who earned their capital "by 
exclusively legal methods" suffered the problems and privations 
of the common working people and bought their private jets by 
standing at the steel furnaces. Naturally enough, they are 
concerned over the freedom of speech now. Frankly speaking, I 
can understand when Sergei Kovalev is worried over the freedom 
of speech, but when oligarchs say this...

Question: What should be the relations between the 
authorities and business?
Answer: They should be above all open. The authorities 
must do what they proclaim. This is the most important thing. 
There must be trust. If the president says there will be no 
devaluation today, everyone should believe him without a 
flicker of doubt. 

Question: Are there reasons to think differently?
Answer: And are there reasons to doubt his word? Your 
words remind me of entreaties to a young specialist. He has 
turned 70, but is still said: "You are young yet. You should 
work some more before we entrust anything to you." I remember 
what Grigory Yavlinsky said at the Davos forum. He was asked if 
Vladimir Putin would lower taxes. Here is what he replied: He 
will speak much about this, but he will not lower taxes. But 
Putin does not speak much. He had been president for only two 
months when he lowered taxes. He said we would carry the 
operation in Chechnya to the logical end, that we would not 
betray our military. 
As of now, one can confidently say that the president is 
fulfilling his obligations. He said we would carry on a liberal 
economic policy - but nobody believed him. Read the 
presidential address - everything is true, word for word. Of 
course, it is too early to rejoice yet; he has been president 
for only three months, but look how much has been done. He said 
we would move from a decentralised to a federal state, and his 
words are acquiring a practical dimension. Why do we underrate 
the importance of this? Take the Tax Code, which the State Duma 
could not approve for six years. Could we imagine that it would 
be approved within two months? Not enough time has passed yet, 
but what has been done is a good proof that the authorities 
live up to their words. Watch what happens next. 


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