September 16, 2000    
This Date's Issues: 4517  4518   

Johnson's Russia List
#4517
16 September 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Moscow Times: Boris Kagarlitsky, Nostalgia for Soviet Period.
2. Reuters: U.S. rejects Russian request to examine subs-Tass.
3. Reuters: UN rights boss says Russia must respond on Chechnya.
4. Reuters: Swiss accuse Russian prosecutors of foot-dragging.
5. Stanislav Menshikov: SHOULD WE REJOICE ABOUT OIL PRICES?
We May Have an Economic Kursk on Our Hands.
6. Stephen Blank: re Ekman/4513.
7. From Edward Lucas.
8. ORT: INTERVIEW GRANTED BY UES OF RUSSIA BOARD CHAIRMAN
ANATOLY CHUBAIS TO HERE AND NOW ORT PROGRAM MODERATOR ALEXANDER 
LYUBIMOV.
9. Garfield Reynolds: re 4515/Jerry Hough.
10. Bloomberg: Russia Files Suit Against Tobacco Industry Over 
Smoking Damages.
11. Moscow Times: Anna Badkhen, Moscow Residents Haunted By 
Fear. (re apartment bombings)] 


******


#1
Moscow Times
September 16, 2000 
Nostalgia for Soviet Period 
By Boris Kagarlitsky 
Boris Kagarlitsky is a sociologist. He contributed this comment to The Moscow 
Times. 


This fall, the army will induct draftees who don't remember the days of 
Leonid Brezhnev. Yes, 15 years have passed since the beginning of 
perestroika. The Soviet era has slipped away. For most of us, the Soviet 
Union is our biography. For our young people, it is history. 


But even those who lived most of their lives during the Soviet period have 
adapted to the changes. In 10 years, the nation has seen the birth of a new 
society. It's not a question of whether it's better or worse than the old 
society; the answer to that question depends on what social group you belong 
to. Besides, society has been living according to its own rules for a long 
time now. The transition is over. 


During the early 1990s, some people tried to break out of the mold of Soviet 
life; others tried to return to it. The struggle was a victory for the 
"democrats," a triumph that included the shooting of parliament. The 
privatization of 1993-95 radically changed society's economic and social 
structure, its values and orientation. But after the Soviet way of life was 
totally routed, Russia f like all of Eastern Europe f was paradoxically 
smitten with nostalgia. 


The past elicits nostalgia precisely when we feel that the past is 
irrevocably gone. This distance allows us to better evaluate past 
achievements; past grievances slowly fade. After all, it's always pleasant to 
speak well of the dead. 


But the longer we're separated from the Soviet period, the more difficult it 
is for our rulers to blame their failures on the past, to complain about the 
"bad inheritance" from Soviet forebears. Against the backdrop of today's 
Russia, much of our Soviet heritage doesn't look half bad, and the nostalgic 
mood has only exacerbated the feeling of dissatisfaction with life among most 
Russians. 


In the beginning of the new period, the authorities tried to fight this 
nostalgia. Then they did an about-face, using nostalgia as their own weapon. 
Such ideological acrobatics might seem strange at first glance. In the early 
1990s, when government property was being seized and distributed, the 
nation's elite needed an overarching ideology. It was easier to grab 
factories and oil industries if it was being loudly announced that all these 
factories f and the economy as a whole f cost nothing. 


But now that the pie has been carved up, radicalism has been replaced by 
conservatism. Now they're saying that what was seized must be protected, that 
society must be taught respect for authority, power, order. All that was 
conservative and authoritarian in Soviet culture is back in vogue. 


The paradox here is that the reformers are thus appealing to the worst 
qualities of the Soviet experience, to what actually led to the superpower's 
demise. Derzhavnost' is now in vogue. They're remembering the "big 
battalions" and the "strong hand." And at the same time, the authorities are 
trying not to think about the more attractive features of Soviet society, 
particularly in its early, heroic period f relative (i.e. in relation to the 
bureaucracy) equality and the possibility of those lower on the food chain to 
forge a brilliant career. 


The society that developed during the 1990s inherited much from its 
predecessor. We have maintained a complex system of state security, nuclear 
missiles and that horde of generals f who now have fewer soldiers. We have 
maintained a system of generally accessible education and free health care. 
And at a time when all that was Soviet was called awkward, dangerous and 
outdated, many journalists explained to us that our system of education was 
no good, because innumerable hours were spent studying the history of the 
party and Marxism-Leninism. That criticism was accurate, but for one point: 
Soviet education was in fact superb. And hundreds of thousands f perhaps 
millions f of our compatriots showed they could make it on the international 
labor market, amazing their Western colleagues not only with their splendid 
knowledge, but also with their surprising ability to adapt to any conditions, 
which a Western person f despite all his market orientation f wasn't taught 
either at school or the university. 


Today's Russia has also preserved from its Soviet past a diffuse system of 
social security and corporate solidarity in the work place. A society has 
formed that bows to the free market while just as insistently declaring the 
need for defending social guarantees. These guarantees, which ensure only the 
lowest level of survival, are nonetheless real. People are not yet being 
evicted from their apartments, and, for the most part, individuals are not 
having their electricity and heating turned off, which the majority of the 
population and entire regions are unable to pay according to market prices. 


This combination of "market elements" and "social guarantees" is perhaps the 
main characteristic of the "Russian model" that has developed over the last 
decade. And this combination is as necessary as it is inevitable. Because for 
the privatizers to proceed unhindered in their seizure and distribution of 
everything that is truly valuable, the rest of society must be guaranteed at 
least a minimal existence. If not, the situation could easily have spun out 
of control, which was demonstrated by the small civil war during the fall of 
1993. 


In the last seven years, people have already forgotten these unpleasant 
events, and today a new wave of liberal reformers is poised to "correct 
Russia." The economic plan presented by German Gref, the economic development 
and trade Minister, should eliminate the incongruity between freedom in the 
market and social guarantees. And this will happen f naturally f at the 
expense of social guarantees. In short, they're trying to finish what Yegor 
Gaidar started. 


A Tax Code has been adopted that favors the rich and guarantees that fewer 
state resources will be spent on the poor. A new Labor Code is in the works, 
one that would reduce to a minimum various benefits for employees, allow 
companies to lengthen the work day to up to 12 hours, and complicate the 
creation of independent labor unions. 


Meanwhile, Anatoly Chubais, head of Unified Energy Systems, triumphantly 
promises to put an end to moderation on social issues; this fall, he has 
begun to turn off heat and electricity of debtor enterprises f cities, 
maternity hospitals, kindergartens. The foundation for this was laid a year 
ago, when the republic of Chechnya was cut off. This winter, they may turn 
off the whole country. 


In essence, the year-2000 liberals plan to break the post-Soviet model just 
as radically as the Soviet model was smashed in 1992-93. Today's rulers are 
convinced that all of this will happen without particular problems because, 
after 10 years of "democratic changes" in this country, there is practically 
no opposition. There are various political parties, yes, but no true 
political opposition. In waving the banner of nostalgia, the authorities are 
counting on their ability to consolidate everyone, to sell the Communists on 
a market economy and to finally inoculate liberals with the mentality of 
derzhavnost'. 


Those in the Kremlin think that Soviet rhetoric will enable them to sell 
nearly any policy to the public, regardless of its actual content. Television 
advertises packaging, not a product. This is just as true in politics as it 
is in commerce. 


But this docility of society is illusory; the trust of the people toward the 
authorities has a limit, as the Kursk submarine disaster demonstrated. 
Politicians' nostalgic speeches should pacify the public, but their speeches 
mask a totally different reality. And neither the president nor the 
television can do anything about this f nor do they plan to. Old words must 
serve new purposes. In the final analysis, the heirs of the Soviet KGB are 
protecting "the sacred right of private property," and in Chechnya the Soviet 
generals are defending "Christian values." We've come full circle! 


It's all the same closed-mindedness, the almost officially proclaimed 
mistrust of foreigners, the cult of discipline. The liberal intelligentsia 
recognizes these familiar features and is horrified. But there's no return to 
the past. The new is being dressed up in the clothing of the old. And people 
usually try to hide what is repugnant. But old Soviet forms and words ring 
hollow. They're a masquerade, a facade. 


The coming to power of the "second-wave reformers" or liberal-derzhavniki 
signals the end of Soviet nostalgia. A pining for the past is no longer 
sincere; it has become an instrument for political propaganda. But any 
propaganda sooner or later loses its effectiveness, eventually eliciting 
repulsion. In this country, one indicator of a crisis in propaganda has 
always been the political joke. Friedrich Engels said that, when it laughs, 
humanity bids farewell to its past. The Soviet Union perished to the 
thunderous guffaw of its own citizens, although many people soon regretted 
their jocularity. 


Soviet society chuckled at the falsity of the official system, showing the 
censor's inability to deprive people of freedom of thought f and freedom of 
laughter. Today, on the heels of Soviet rhetoric and propagandistic Cold War 
cliches, we're returning to the joys of the political joke. By the way, have 
you heard the official explanation for the Ostankino fire? It burned because 
it was hit by another television tower f a foreign one, of course. 


******


#2
U.S. rejects Russian request to examine subs-Tass
By Ron Popeski

MOSCOW, Sept 16 (Reuters) - Russia's Itar-Tass news agency said on Saturday 
the United States had refused a Russian request to examine two of its 
submarines that were in the Barents Sea when the nuclear-powered Kursk sank 
last month. 


In a dispatch from Washington, Tass quoted a Pentagon spokesman as saying 
that U.S. Defence Secretary William Cohen had turned down the request from 
his Russian opposite number Igor Sergeyev. 


``William Cohen already gave Marshal Sergeyev a reply in which he explained 
that he did not feel it was necessary or appropriate to allow such an 
inspection to take place,'' Tass quoted the spokesman as saying. 


No one was available at Russia's Defence Ministry to comment on the report or 
confirm that such a request had been made. 


Russian investigations into two explosions which preceded the sinking of the 
Kursk during manoeuvres in the Barents Sea have suggested a number of 
possible scenarios. 


These include collision with another submarine or a World War Two mine, an 
explosion on board or the impact from a missile fired from another vessel. 
The United States and Britain have ruled out collisions with their vessels in 
the area at the time. 


The Russian cabinet minister heading the government's inquiry, Deputy Prime 
Minister Ilya Klebanov, defended official handling of the disaster in 
parliament on Friday. 


He said errors in providing information during rescue efforts was not 
deliberate, but statements made ``in the heat of the moment without enough 
analysis.'' 


The commander of Russia's Northern Fleet told Russian reporters in the 
northern port of Murmansk on Saturday that the navy had told no lies in 
dealing with the sinking. 


``Not a single lie was told by the navy and top officers during the active 
phase of rescue efforts,'' Tass quoted Admiral Vyacheslav Popov as saying. 


Popov said hypotheses had been raised which later proved false. But 
everything had been done to help save the 118 seamen. 


The navy initially said rescuers were in contact with the crew and that 
tapping was heard from the vessel. But officials now say nearly all the crew 
died in the immediate aftermath of the accident and there was never any 
contact with them. 


FLEET COMMANDER SAYS NAVY HOPED UNTIL THE LAST 


``As a submarine specialist I knew that no one could have been alive even on 
the day following such a disaster,'' Tass quoted Popov as saying. ``But we 
wanted to believe that someone might have survived. And we kept on with the 
(rescue) work.'' 


A Russian mini-sub is to travel to the site of the accident next week and 
work to recover the bodies of the seamen is to start next month. A debate has 
been launched on whether to raise the submarine itself next year. 


Private NTV television showed the wife of the submarine's commander, Irina 
Lyachina, arriving in the southern Russian city of Kursk, after which the 
vessel was named, to discuss offers by local authorities to re-house 
relatives of the dead. 


Russian media drew attention after the disaster to the living conditions of 
impoverished families of submarine crews in a closed town near Murmansk. 


``First, we have to pay decent salaries instead of the miserable ones they 
get now,'' Kursk regional governor and former Russian Vice-President 
Alexander Rutskoi told NTV. 


``A trolleybus driver in Kursk gets more than a submarine commander. This is 
dreadful. And you don't think our political leaders know this? Of course they 
do.'' 


******


#3
UN rights boss says Russia must respond on Chechnya

GENEVA, Sept 15 (Reuters) - United Nations human rights chief Mary Robinson 
on Friday called on Russia to respond more credibly to allegations of 
violations in separatist Chechnya, including executions and torture. 


Robinson, in a speech to an informal session of the U.N. Commission on Human 
Rights, also urged Indonesia to protect 120,000 East Timorese refugees as 
well as aid workers in West Timor from militia who killed three U.N. staff 
last week. 


She singled out Sierra Leone, Colombia and the Yugoslav province of Kosovo as 
hot-spots where major violations continue. 


Russia's delegation was expected to take the floor to respond to Robinson's 
speech to the main U.N. rights forum. 


Its 53 member states held a one-day session in Geneva to assess progress 
since the annual meeting last March-April. At the time, the forum adopted a 
resolution calling on Russia to establish a national commission of inquiry on 
Chechnya -- the first time it had ever rebuked a permanent member of the U.N. 
Security Council. 


``I will inform the General Assembly that my chief concern remains that there 
be a credible response from the Russian authorities commensurate with the 
scale of the allegations of serious human rights abuses in Chechnya,'' 
Robinson said. 


``...I continue to be deeply concerned about reports of serious human rights 
violations in Chechnya and (am) convinced of the need for these to be 
adequately addressed,'' she added. 


Robinson pointed out that three independent U.N. investigators -- on 
executions, torture and internally displaced persons -- had yet to receive 
invitations from Russia, although they had asked to carry out fact-finding 
missions. 


The U.S.-based Human Rights Watch called on the Commission to ``expose and 
condemn Russia's failure to investigate gross abuses of human rights in 
Chechnya.'' 


``Five months after the adoption of a U.N. resolution that called for the 
establishment of a national commission of inquiry on Chechnya, Russia has 
made no meaningful progress towards accountability for abuse and has actively 
blocked U.N. rapporteurs' (investigators') access to the region,'' said 
Joanna Weschler, Human Rights Watch's representative to the United Nations. 
``The Commission can't drop the ball on this one.'' 


The New York-based watchdog group said in a statement the Russian government 
had ``failed to launch a credible and transparent justice process'' in the 
breakaway region, where Russian forces and rebels have fought a nearly 
year-old war. 


On Sierra Leone, Robinson endorsed the Security Council decision to set up an 
independent special court to try perpetrators of violations. She also called 
for establishing a Truth and Reconciliation Commission there as soon as 
possible. 


******


#4
Swiss accuse Russian prosecutors of foot-dragging
September 15, 2000

BERNE (Reuters) - Swiss federal prosecutors accused their Russian 
counterparts Friday of dragging their feet on high-profile criminal cases, 
and demanded assurances that evidence gathered by the Swiss was actually 
being put to use. 


In a strongly worded statement released after Swiss attorney general Valentin 
Roschacher visited Russian investigators in Moscow, Swiss authorities voiced 
doubt that Russia was pursuing the cases as strenuously as it should. 


But they said Russia's chief prosecutor Vladimir Ustinov had pledged action 
and still wanted Swiss assistance. 


The statement said the talks had focused on two criminal investigations for 
which Switzerland has granted extensive legal assistance to Russia. 


One centers on allegations that business and media mogul Boris Berezovsky was 
involved in the skimming off of up to $600 million in hard currency revenues 
of the Russian state airline Aeroflot through two Lausanne-based companies, 
Forus Services SA and Andava SA, both of which have denied any wrongdoing. 


Berezovsky, who was close to former president Boris Yeltsin but has, like a 
number of fellow tycoons, quarreled with current president Vladimir Putin, 
has denied the allegations, calling them political. 


The other probe centers on two Lugano-based companies, Mabetex and Mercata 
Trading, which prosecutors accuse of paying millions of dollars in kickbacks 
to Kremlin officials to secure lucrative contracts to refurbish Russian 
public buildings. 


INVESTIGATORS REPLACED 


Swiss prosecutors have already indicted five people in the affair and issued 
an arrest warrant for alleged money laundering against a former top Yeltsin 
aide, Pavel Borodin, who has denied the charges. 


``In recent weeks and months, the Russian Attorney General's office has on 
various occasions replaced the person heading the investigation of important 
cases supported by Swiss legal assistance,'' the Swiss statement said. 


``In particular, the recent decision to remove (special prosecutor Nikolai) 
Volkov from heading the so-called Aeroflot case shortly after his working 
visit to Switzerland led to uncertainty and disappointment among Swiss 
criminal investigators.'' 


It said Volkov's departure had sent signals that made the Moscow meeting 
essential: 


``It was necessary to clear up if and to what extent Russia was still 
interested in extensive legal assistance granted by Swiss federal authorities 
and thus in efficient prosecution in these areas.'' 


It said the Swiss had made clear they were ready to keep providing legal 
assistance, but that they expected the Russian side ``to show that they use 
evidence gathered by Switzerland in their cases, in order to restore fully 
the trust that is needed for international cooperation to function well.'' 


It said Ustinov had assured his Swiss counterparts that the cases in question 
would be investigated efficiently and that Moscow still needed and wanted 
Swiss help. 


******


#5
From: "stanislav menshikov" <menschivok@globalxs.nl>
Subject: SHOULD WE REJOICE ABOUT OIL PRICES?
Date: Fri, 15 Sep 2000 


"MOSCOW TRIBUNE", 15 September 2000
SHOULD WE REJOICE ABOUT OIL PRICES?
We May Have an Economic Kursk on Our Hands 
By Stanislav Menshikov


The current oil crisis in some European countries raises the question as to
whether high oil prices are good for Russia. After hearing so much about
the current economic boom being based predominantly on the petrodollar
bonanza, should one slide into euphoria observing Brent skyrocket or, on
the contrary, panic at the slightest prospect of falling prices? The
government says not to worry because lower prices will not hurt us too
much. The implication is that any foreseeable price range above $18-19 will
be OK. But somehow this is not a case for much jubilation.


One thing is certain: Russian oil companies are bound to earn an extra
rich profit this fall. Every barrel sold in world markets at $30 or higher
will yield a net profit of $10 to $12 or more. This adds up to at least
$4-5 billion in half a year, equal to 3-4 per cent of GDP. Part of the
extra dollar revenue will go into the federal coffers. Parliament experts
estimate these extra collections at anywhere between 70 and 130 billion
roubles. Sounds good. Extra dollars are always welcome. But the real
problem is how they are being spent. 


One possible useful way is for oil companies to increase capital investment
into their own industry, modernise equipment, open up new oil fields,
expand refining and pipeline capacity. Despite high oil prices the state of
the Russian oil industry is not good. Ten years ago the Russian Federation
produced more than 500 million tons of oil per annum. It now pumps up only
300 million tons, a drop of 40 per cent. The industry has obviously
deteriorated, yet oil barons (a few well known oligarchs among them) walk
around like heroes with their noses high up. Company accounts are doctored
so carefully that nobody on the outside, including the government, can tell
exactly what their profits are and how they are used, particularly how much
of them are being stashed away abroad. Recently Siboil invested in
aluminium. But not in oil! 


The government should be interested not only in collecting taxes from oil
concerns, but inducing them to invest more domestically. Taxes could be
reduced on the condition that the extra money is productively invested.
Every extra $1 million invested could well generate more wealth to the
country than an extra $1 million collected in taxes. When oil prices are
low, oil concerns have a legitimate excuse to refrain from investing. But
when prices are high there is no such excuse. Today is the time to invest,
not tomorrow.


The immediate reaction of the oil companies, however, is to ship more oil
abroad, sell less domestically. This tends to bleed the oil market dry
inside the country creating shortages and triggering higher domestic
prices. The government is trying to keep oil supplies high enough by
introducing minimum quotes for oil sold domestically. This has brought
angry protests from the IMF which deplores any anti-market rationing. And
oil companies are finding ways to detour government barriers which turn out
to be not very effective. 


The net result is higher prices for energy in general because gas prices
follow oil prices and these two sources of energy together account for 80
per cent of the nation's total output of primary energy. Nearly 40 per cent
of that is being exported which leaves precious little for the domestic
consumer. Every year since 1990, the country has been consuming less and
less energy. When overall GDP was falling or stagnant this was not so
perceptible. Today, in a growing economy, energy shortages are boosted by
high world prices and stagnant domestic energy production and thus help
create a powerful internal engine generating general inflation. The only
rational solution is more energy production which in turn is possible only
if more capital is invested into the industry. 


In a normal market economy high prices should automatically lead to more
investment. In Russia, this mechanism is apparently not working. The
government can help restore it to normalcy by devising an adequate energy
policy. The last serious discussion of this subject in the government
dates back to last spring when it was delayed until autumn due to
politicking around the former fuel minister. Autumn has arrived, but there
is no sign that the topic is on the urgent agenda. In the meantime, all
principal actors in the energy industry (the new fuel minister, Gasprom,
RAO UES, oil companies) are acting independently, without due co-ordination
and often at cross purposes. This absence of common perspective and
purposeful action is far more worrisome than the level of world oil prices.


Ask the premier or president today why this is so, and they will reply that
too many other important matters are on their minds, including the budget.
But if energy prices explode and high inflation stops economic growth the
budget will founder and sink like that unfortunate submarine. We certainly
do not need an economic Kursk, do we? Yet some signals are pointing in that
direction.


*****


#6
From: "Stephen Blank" <BlankS@awc.carlisle.army.mil>
Subject: Ekman/4513
Date: Fri, 15 Sep 2000


This is in response to Peter Ekman's statement that that the Kursk tragedy
should be reported differently than it has been. I'm afraid this won't
wash. While Ekman is right that the Russian media did quite well, the fact
is not that Putin reponded rather quickly but rather it wasthe media that
forced him and the mendacious time-servers who make up his retunue to and
the high command to make a response or rather series of responses. For
their troubles, as plenty of stories make clear, the media is going to be
subjected to further repression and we are not going to get to the bottom of
this story. Unfortunately this case is more black and white than others
might be. The lying continues and the investigation will be like all the
others in which no concrete results can be found. The same goes for the
Mabetex and relted Swiss corruption stories. The fact is that we are
getting police capitlaism in Russia and unless Western governments and
professionals tell the truth and raise the price for Putin of his policies,
the repressions will go on. As for the Kursk report, to excuse the pun, it
will be deep-sixed if it has not already been. And though I do not
generally agree with Professor Cohen's views, he's more right than wrong on
the media here which got it wrong throughout the past decade as did the
U.S. government


******


#7
From: "edward lucas" <esl@economist.com>
Date: Fri, 15 Sep 2000 12:55:08 -0000
Subject: From Edward Lucas


A Belarussian patriot in the US has denounced me in an internet
discussion group for being wildly pro-Russian. Ouch!!


Actually, I did want to write this week about Russian neoimperialism
in the "near abroad" (bivshye poraboshonnye naroda is the word 
we use at this desk thank you very much), but the tax revolt in
Western Europe squeezed me out of the Europe section. Next week, 
perhaps. And my depressing visit to a toy factory ("we aren't here to
sell them, we are honest production people" said the managing 
director) also got shunted by the sensational news that the two
mobile phone companies in Moscow had had chunks of their 
frequencies nabbed by the government (see story below).


The news that the communications ministry had changed its mind, at
least for now, came just too late for this week's edition. If they 
completely backtrack and restore the frequencies, the point will be
that although the bureaucracy is Russia's biggest stumbling block, 
and not properly controlled by the government, its mistakes can be
remedied given enough publicity and pressure. (What you do when 
you don't have the Norwegian government and loads of influential
foreigners on your side is another matter). 


And if MTS and Vimpelcom end up losing their frequencies (and not
being properly compensated) then it shows that this lot are 
indeed no better than their predecessors.


I am still trying to puzzle out what is happening with the seven
super-regions. Aushev came out with a blistering attack on the North 
Ossetian leadership, demanding presidential rule and denouncing
Kazantsev for not helping solve the prigorodny refugees' problems. I 
suppose an optimist would say that this is a sign of the vibrant and
pluralistic political life in the Russian provinces.


It is absolutely baffling to me that there has been so little
response to the Moscow Times's brilliant report on election-rigging.
I wish I 
had had the time (truthfully: the energy) to do the legwork. The
Russian press seems to have completely ignored it, and there's hardly 
a hue and cry going on in the West either. I often say that it is one
of the big shortcomings of the Russian political system that 
scandals just fizzle out, without the press, politicians, bureacrats
or the public getting exciting about wrongdoing. It's painful to see
it happening when western institutions (like election monitors) are
involved. Watch this space (but don't hold your breath).


One rare bit of good news: in my village, which I have always felt
was populated by solid, soviet-minded, apolitical, deeply loyal 
ex-nomenklatura types, the locals have formed a pressure group to
protest against the building of (yet another) dacha complex in one 
of the last bits of virgin forest. They actually blocked the Rublevka
for a few minutes on Sunday, marvellously annoying all the crooks 
and spooks in their shiny black cars. 


I can't write about it in the Economist because a) I'm personally
involved and b) I have already mentioned my home village and the 
Rublevka in articles on agriculture, driving manners and
infrastructure, which is probably enough given that it is barely a
millionth of 
Russia's population. But it is touching to see how they keep raising
the Rb3000 necessary to hire a lawyer and to go to court (where 
they get fobbed off each time) and it almost brought tears to my eyes
to see my neighbour, a retired paratroop nco, bellowing at a 
gaishnik ``what do you mean we can't block this road? You block it
every time Putin wants to get into town!''. 


Sadly, I think the protest is doomed: there are millions of dollars
at stake, and the local "law enforcement" organs (you can leave out 
the word "law" and just call them "enforcement" as far as I'm
concerned) are heavily--and I mean heavily--on the developers' side. 


On that happy note, have a nice weekend.
Edward


The usual reminder: 
All comments, feedback, criticism etc are very welcome at
esl@economist.com


To subscribe to this weekly mailing, send an e-mail to 
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two-week trip to a fascinating but depressing part of the world, 
send an e-mail to
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To read the original Putin: Magician, Mouse or Monster (now three
months old, and you can have a good laugh at what I got wrong) 
send an e-mail to
edwardlucasputinmmm-subscribe@egroups.com


******


#8
TITLE: INTERVIEW GRANTED BY UES OF RUSSIA BOARD CHAIRMAN
ANATOLY CHUBAIS TO HERE AND NOW ORT PROGRAM MODERATOR
ALEXANDER LYUBIMOV
(HERE AND NOW ORT PROGRAM, 21:30, SEPTEMBER 12, 2000)
SOURCE: FEDERAL NEWS SERVICE


Moderator: Today men of the 98th Ivanovo Paratroop Division
established control over the transformer substation in the village
of Novye Talitsy in the suburb of Ivanovo to ensure the division's
uninterrupted power supply. For those who have not heard me, this
has happened not in Chechnya but in Ivanovo. Also in Ivanovo region
yesterday soldiers of a Strategic Missile Force division
established control over another transformer substation to ensure
that they are supplied electricity.
Yesterday missilemen, today paratroopers. A week ago the
management of RAO UES announced that non-payers would have their
power supply cut off. Here and Now we have the Board Chairman of
RAO UES of Russia Anatoly Chubais.
Good evening, Anatoly Borisovich, besides the Strategic
Missile Force and Airborne Troops there are also other services of
the Armed Forces. Whom have you already switched off or planning to
switch off? It would be good to know where we stand now.


Chubais: In all instances, even when the Defense Ministry is
involved, we intend to act strictly within the framework of the
existing legislation. This means, in particular, that only those
facilities of the Defense Ministry cannot be cut off that have been
given power supply quotas. It is here that we have the main
hitches, I regret to say. The absence of quotas creates conflict
situations, including those mentioned by you.


Q: What reaction did you expect of the military, a different
one?


Chubais: And what reaction did you expect of the power
suppliers, a different one? I think that power suppliers have the
right to expect their work to be remunerated. For lamps to be
burning in this studio and for millions of viewers to see your
program electricity is needed. For this fuel is needed. As you
know, there is no chance of buying it for nothing. We can buy it
only for money. For fuel oil we must pay 100 percent in cash,
moreover, we have to make advance payments for it. The situation
with coal is not easier.
It happens that things are overdone. When facilities of the
Strategic Missile Force that are really on combat duty are switched
off, this, indeed, is wrong. Incidentally, I sent a special
telegram prohibiting such things even regardless of the situation
with payments.
As to Ivanovo. The press wrote mostly about the settlement,
the utilities. But that is a totally different thing. And it is
wrong to treat that situation differently, to claim that our power
suppliers have undermined the defense capabilities of our country.


Q: I am trying to understand the situation. In any case the
people who live in barracks and eat in the mess room in Ivanovo,
and have had their power supply cut off and have now used force to
restore power supply, they cannot solve the problem of payments.
The people who deal with such matters do not live in barracks.


Chubais: Yes, this is so. But the matter is that when month
after month the power suppliers are insisting that this question 
be solved and nothing is done to solve it... Incidentally, this was
the case in Ivanovo, in that division that you mention. Total power
consumption by that division in the first eight months of this year
amounted to 18 million rubles. But so far they have paid only one
million. Month after month they are using free of charge the
electricity generated by us. There is a limit to everything.


Q: Perhaps the White House should be switched off? And not a
mess room.


Chubais: I checked. The White House staff is regularly paying
its bills.


Q: But the crux of my question is different. Kasyanov reacted
quite toughly to the stoppage of power supply to that unit of the
Strategic Missile Force. I believe you will arrive at some
solution, but the matter is who decides whether to pay or not to
pay? After all, the people who live in the barracks do not know how
such matters are solved. You know, Kasyanov knows. He has the money
to pay for electricity in his office and it is probably right that
the White House is not switched off. But let us then say the full
truth, how much money is to pay for electricity and decide how to
distribute it. If this money is not enough.


Chubais: There is a very concrete answer to this question. I
regret to say that even this year although the budget as a whole is
being made healthier the situation is as follows: while the Defense
Ministry, for instance, is expected to use electricity to the sum
of 18 billion rubles in the course of the year, the budget of the
Defense Ministry allocates for this only 10 billion rubles. It is
a perpetual problem, I mean aligning needs with allocations.


Q: So the problem is bigger than just with the military in
Ivanovo.


Chubais: Yes. When government discussed on Thursday
preparations for the winter, we raised the question very
persistently and government heeded us. It additionally allocated 6
billion rubles to fill this gap.
But government is only beginning to face this problem. We have
a big country. It will take quite some time to introduce order
everywhere.


Q: Has anybody paid its bills during the past week?


Chubais: I would say, with terrible intensity. You can't
imagine what has happened with payments during the past two-three
months. A really historic precedent was set... 


Q: Do you mean the railways have also paid? 


Chubais: Yes, the railways have paid and recognized their
arrears, the military are beginning to pay. Debts to the power
industry were growing annually during the past ten years by
15-20-60 percent. For the first time ever debts not only have not
grown but have dropped. During the past three months for the first
time ever debts to the power suppliers have started declining. This
is a fact.


Q: Marvelous. The problem of the year 2003 was discussed in
the Duma today. In our studio we have also spoken much about this
problem in connection with the Ostankino Tower and so on. We
discussed this also with Minister Adamov in connection with the
stoppage of power supply to Beloyarka and Mayak.
Is our infrastructure in which no investments were made for
many years really in such a state? Is it really on the brink
already? It is said that the year 2003 is going to be that brink.


Chubais: There is also another aspect to this problem.


Q: Of course, because money is also needed.


Chubais: We really are in a situation when the wear and tear
of our company's fixed assets exceeds 50 percent. This is a
critical figure. The service life of a whole number of crucial
generating capacities in our company has already reached 50 years,
60 years. In fact, a third of all electricity in our country is
generated by turbines which were designed in 1938. It is absolutely
clear that the entire infrastructure is in critical need of
renewal. No miracles are possible. What we need is a restoration of
normal order of payment for what has been done. 


Q: Very good. I often speak about money here, including with
you. This season I decided to start speaking about brains. I think
that the level of political and economic management is crucial. I
can imagine regions where electricity is going to be cut off soon.
Most likely, Primorye Territory. 
It is very difficult to explain to people the situation with
the fixed assets, arrears and so on. What people need, really, is
a solution of this problem. They need electricity and heat supply.
Who is responsible for this in our country? I feel sorry for you,
but it is up to you to resolve this.


Chubais: You know, apart from the stark emotions connected
with concrete facts of power cuts, we also have a trend, A trend
that became very clear during the past half a year. The power
industry is beginning to restore its normal financial mechanism.
People are beginning to pay us, the gas, coal and oil industries
that demand payments from us are beginning to get money from us,
inside the power industry the normal payment of wages is beginning.
In our company we have reduced wage arrears three times. We have
achieved a 100-percent level of payments into the Pension Fund.
Nothing of the sort existed in the power industry in the past ten
years.
We have trebled our payments into the federal budget. We are
helping to make it healthier. For this reason I will tell you that
the situation is by far not a hopeless one. I mean despite the
concrete grave events that happen every day and have to be
resolved.


Q: I will ask not about money but about ideas, about brains.
For some reason, whatever we accomplish in this country we
accomplish with a tremendous effort. Why this perpetual strain? 


Chubais: We have a job to do, we have work to do, including
work by our general directors, the management of RAO EUS of Russia.
In the course of our work we have to overcome resistance and in the
course of our work we do make mistakes. But if we speak of the aim
that we are setting ourselves, this is the only way of doing the
job.
It is definitely necessary to restore order. You produce a
kilowatt of electricity, you sell it, this means that you must be
paid its price. If this put in place, everything will be in order.


Q: Thank you very much. People should know what to prepare
for, including in the year 2003. I must say you sounded quite
optimistic.


*******


#9
Date: Fri, 15 Sep 2000 
From: "GARFIELD REYNOLDS, BLOOMBERG/ NEWSROOM:" <GREYNOLDS1@bloomberg.net>
Subject: re: 4515; Jerry Hough


I had to respond to Jerry Hough's despicable smear against the Moscow Times, 
which he says is no more reliable than the English language press of the
1970s. 
So, he is trying to say that MT is sposnored by the Russian state. As someone 
who spent two years working at MT, putting up with increasing government 
pressure and obstruction as repressive attitudes , I find Hough's assertions 
insulting and ludicrous. They are especially inept coming less than a week 
after MT's stunningly detailed expose of the election fraud we all knew 
happened but hadn't seen so thoroughly documented. 

As for the aimed at foreigners crack I'm not sure why that is a problem.
After 
all, if we're talking about JRL readers, or the overwhelming majority of the 
world who don't live in Russia, then they presumably prefer to read a paper 
that is ''for'' them -- i.e. written in a way that is reasonably clear for 
people who don't know much about Russia. And of course, more than half of
MT's 
readership is Russian, how else would it survive on a commercial basis,
which i 
can assure Hough it does, from my own knowledge. And MT certainly provides
more 
detailed, intelligent and accurate coverage of Russia than most of the
Western 
press corps. It is also of course, false to simply dismiss the admittedly
cowed
and often corrupt Russian press as simply controlled and/or afraid. As
someone 
who reads the Russian papers every day, I can assure JRL readers that there
are 
a few glimmers of truth that get through -- sometimes in the Gusinsky press, 
sometimes even in Berezovsky-controlled Kommersant. And the yellow press like 
Novaya Gazeta, Sovershenno Sekretno and Versiya often come out with very 
worthwhile coverage, even if it is sensationalist and poorly sourced -- but 
then plenty of Western coverage of Russia is similarly poorly sourced. And of 
course, it is very unwise to rely on any one or two media sources for
coverage 
on almost anything -- witness the sycophanticly pro-police Western coverage
of 
Seattle WTO last year, or the West's coverage of NATO's unnecessary war
against 
Yugoslavia last year, which predictably failed to bring Kosovo the peace and 
security it promised -- especially something as complicated and opaque as 
Russian politics. Yours, Garfield Reynolds, journalist, Moscow.


******


#10
Russia Files Suit Against Tobacco Industry Over Smoking Damages

Miami, Sept. 15 (Bloomberg)
-- Philip Morris Cos. and other U.S. tobacco companies were sued by the 
Russian government, which is seeking reimbursement for what it's spent on 
health care for smoking-related illnesses. 


The suit was filed in Miami-Dade County Circuit Court, the same court where 
Florida smokers were awarded $145 billion in punitive damages against the 
tobacco industry in July. Russia's claims, filed in August, were later moved 
to federal court. 


Russia is seeking punitive and compensatory damages, claiming the tobacco 
industry is negligent and has conspired for years to hide the health risks of 
smoking. It also contends the country has suffered economic losses as a 
result of a reduced workforce. 


``Apart from the actual physical and health damages caused by Big Tobacco's 
products and misconduct, the economic damages suffered by (Russia) are 
equally alarming and staggering,'' the suit claims. ``In Russia, the 
government has expended substantial amounts of money to aide those suffering 
from tobacco-related injuries.'' 


The suit was described as ``goofy'' by Michael York, a Philip Morris 
spokesman. 


``Of all the countries on earth, Russia has the hardest time with the 
facts,'' he said. Cigarettes there ``had been owned by the state. It was 
almost impossible for Russian citizens to smoke anything other than Russian 
cigarettes.'' 


The Florida smokers' case, known as the Engle class action, has also been 
moved to federal court, at least temporarily. A federal judge will hear 
arguments Nov. 7 on whether to return the two-year-old case to the state 
court. 


Cigarette makers claim the $145 billion award would bankrupt them if it 
stands. A final judgment in the case would require each tobacco company to 
post a $100 million bond while appealing. 


Philip Morris shares fell 25 cents to 27.19 in trading today; R.J. Reynolds 
Tobacco Holdings Inc. shares fell 69 cents to 32.13; Loews Corp. fell 75 
cents to 83.88; British American Tobacco Plc shares fell 44 cents to 11.25, 
and Vector Group Ltd. shares fell 38 cents to 19.63. 


******


#11
Moscow Times
September 16, 2000 
Moscow Residents Haunted By Fear 
By Anna Badkhen
Staff Writer


Editor's note: This is the second in a two-part series looking back at the 
apartment building blasts one year ago. 
- 


Yekaterina Martynovskaya, 59, was about to go to bed when Emergency 
Situations Ministry rescue workers rang the doorbell, told her to grab her 
documents and rush downstairs. They said there was a bomb threat in her 
northwest Moscow nine-story apartment building. 


Martynovskaya's neighbors also grabbed their belongings Monday evening. Some 
took their pets to the street. A musician from a downstairs apartment ran out 
clutching her violin. 


Martynovskaya spent a while turning the electricity off in her apartment f "I 
don't know why," she now says f before rushing out dressed in a bathrobe and 
gripping her purse. 


The bomb threat proved to be a false alarm, but for Martynovskaya and the 
residents of the 48 apartments in her section of the building, the evacuation 
was like Babylon revisited. 


Last year, a series of explosions rocked the country, killing over 300 people 
in Moscow and other cities. And while the explosions remain unsolved, for 
Martynovskaya and many other Muscovites life will never be the same again. 


Moscow's 8.5 million people live in fear. 


"I use public transportation and I use the metro, but I must confess that 
every time I go [into the metro] something inside me tightens up," says 
Varvara Kolmogorova, 32. "And the Pushkin Square blast" f which last month 
killed 12 people; a 13th victim died this week f "did not make me feel 
safer." 


That fear may be exactly what the attackers wanted. Terrorists in any 
country, be it Israel, Britain or Russia, all have a common mission: striking 
fear into people's hearts, says Boaz Ganor, director of the Israel-based 
International Policy Institute for Counter-Terrorism, or ICT. 


"Physical damage is no more than a tactical problem from a national point of 
view," Ganor says. 


In the past 20 years, there were no more casualties in Israel from terrorist 
acts than a year and a half of local car accidents, according to Ganor. 


"Terrorists try to influence the political process by aiming at the 
psychological effect," he says. "They maneuver public opinion in a very 
sophisticated way. Unfortunately, no one is doing anything about it on a 
governmental level, no one is trying to tackle this psychological effect." 


The two-year-old institute focuses on the prevention of terrorism-induced 
panic by educating Israeli soldiers and high school students and teachers. 


Anti-terrorist groups and mental-health workers worldwide agree that there is 
a link between the number and frequency of terrorist acts and the level of 
fear experienced by the public of terrorist acts and the level of fear 
experienced by the public. 


"If events like [last year's apartment bombings] reoccur, the anxiety 
increases," says Dmitry Dyachkov of the emergency psychological assistance 
center at the Emergency Situations Ministry. The center works closely with 
rescue workers and victims. 


There also seems to be a tie between fear and the type of people being 
targeted in attacks, says Brian Houghton, director of New York-based 
Terrorism Research Center. 


"Attacks on soldiers and police have less of an effect compared to attacks on 
civilians and especially on women and children," Houghton says. "The more 
heinous the attack, the greater the feeling of fear or dread." 


The panic is also "related not so much to the level of destruction þ as to 
the length of time living in the risk zone," says Pyotr Timoshenkov, a St. 
Petersburg psychiatrist. 


The fear of terrorism is very similar to post-traumatic stress disorder, he 
said. 


"Muscovites live in þ an area under threat, [and] the threat of a trauma is 
in itself a trauma. This is often overlooked," Timoshenkov says. 


When traumatic events reoccur, he says, the panic increases. 


In order for the panic to subside, it is important to deal with the stress in 
a proper and timely manner, mental health workers and anti-terrorist groups 
say. Mass media are one of the major collaborators with public panic, they 
say. 


"The more the mass media continues to show deaths or torn-up buildings, the 
more fear there is," says Dr. Robert Vincent, Oklahoma state deputy 
commissioner for health policy and a professor of psychiatry at Oklahoma 
State University. He researched the psychological impact of the 1995 bombing 
of the Murrah Federal Building that killed 168 people. 


"We don't want to censor the media, but the coverage of events like this one 
must be well thought out, particularly by a powerful medium like television," 
Vincent says. 


Timoshenkov and Dyachkov agree, but say media coverage may have a therapeutic 
effect if it avoids describing or showing catastrophic scenes and 
concentrates on the coverage of the investigation. 


Dyachkov added that it is important for television stations not to provide 
the audience with contradictory information. 


Russian television stations launched a series of programs this week dedicated 
to the anniversary of the apartment bombings. All of the programs show the 
ruins of the bombed buildings and some broadcast interviews with families of 
the victims. 


Such interviews are a big no-no, mental health workers say. 


Newspapers were more subtle in their coverage of the anniversary. "Part of 
the mass media did a reenactment of last year's panic," says Boris 
Kagarlitsky, director of the Moscow-based Institute for Comparative Politics. 


Even if there are no more explosions, Mucovites' fear, if only subdued, will 
always remain. 


"People will never forget about these explosions," Dyachkov says. "They may 
forget something, but they þ will always remember the horror." 


"Children and youth who hear and see the devastation of terrorism on 
television can be robbed of innocence and filled with a sense of fear that 
can linger throughout their childhood and into their adult lives," TRC's 
Houghton says. 


The fear in Oklahoma City only subsided two or three years after the bombing 
f and even then, it has not disappeared, according to Vincent. 


"People in this community believe that vulnerability is more real than in 
communities that have not had such experience," Vincent says. "Communities 
don't return to normal." 


******