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

Johnson's Russia List
#4518
16 September 2000
davidjohnson@erols.com


[Note from David Johnson:
1. The Guardian (UK): Ian Traynor, Swiss press Kremlin bribery 
allegations. $25m payoff passed through Isle of Man account, 
claims magistrate.
2. Reuters: Pro-Moscow Chechnya chief condemns troops' actions.
3. New York Times editorial: Religious Freedom in Russia.
4. Moscow Times: Mike Scollon, World Bank, IMF Set Sights on 
Russia.
5. The Independent (UK): RETURNING TO MOSCOW, VETERAN JOURNALIST 
PATRICK COCKBURN FOUND THE DARKLY FUNNY WORLD OF SOVIET TIMES 
REPLACED BY A CHAOTIC NEW ORDER. STRANGELY, THOUGH, THE SAME PEOPLE 
WERE STILL IN CHARGE.
6. BBC MONITORING: RUSSIAN EDITOR LOOKS AT DESTINATION OF PUTIN'S 
"STEAMROLLER OF HISTORY." (Vitaliy Tretyakov in Nezavisimaya Gazeta.]


******


#1
The Guardian (UK)
16 September 2000
Swiss press Kremlin bribery allegations 
$25m payoff passed through Isle of Man account, claims magistrate
Ian Traynor in Moscow and Guardian


Senior Russian and Swiss law officers began talks yesterday on Swiss claims 
that an Isle of Man branch of the Midland Bank was used to pass $25m in 
bribes to the man who helped President Vladimir Putin to power.


The Swiss federal prosecutor, Valentin Roschacher, flew to Moscow to press 
his Russian counterpart, Vladimir Ustinov, to speed up the probe.


A Swiss document given to the Russians in July, and leaked to newspapers in 
Italy and Russia this week, alleged that Pavel Borodin, the former Kremlin 
property manager who Mr Putin says recruited him into the Kremlin in 1996, 
received more than $25m (£17.8m) for awarding contracts to refurbish the 
Kremlin and other government offices.


In all, $62.5m was paid in bribes for contracts worth $492m, it is alleged. 
Mr Borodin's share - $25,609,978 - was paid into the Midland (now HSBC) 
account on the Isle of Man of Lightstar Low Voltage Systems Ltd, the Swiss 
document says. 


Mr Borodin, his daughter, Yekaterina Siletsky, and his son-in-law, Andrei 
Siletsky, had the money transferred to their accounts in Geneva, Nassau and 
Guernsey in four payments between March 1997 and August 1998, the document by 
a Swiss investigating magistrate, Daniel Devaud, alleges.


"The elements collated to date show that [Mr Borodin and 13 others] may be 
seriously suspected of using the Swiss banking system to conceal money 
obtained through crimes committed in the Russian federation," it adds.


"The above mentioned persons are suspected of taking part in dishonest 
management of state property or state interests, or of taking bribes."


The Swiss general prosecutor, Bernard Bertossa, has opened a criminal 
investigation into charges of money-laundering, it adds.


The 12-page document details the banks, their location, the account numbers, 
and the dates of the alleged transactions involved in what has become known 
as the Mabetex affair, although the Swiss authorities now call it "the 
presidential administration-Mabetex affair''.


The contracts to refurbish the Kremlin were awarded by Mr Borodin to two 
Swiss-based sister companies: Mabetex, owned by a Kosovo Albanian, and 
Mercata Trading and Engineering, run by a Russian businessman, Viktor 
Stolpovskikh, who also owned Lightstar and set up the Isle of Man account.


In January, a year after the investigation began, the Swiss issued an 
international arrest warrant for Mr Borodin. One of Mr Putin's first acts on 
becoming president on New Year's Eve was to move him out of the Kremlin, 
making him secretary of the Russia-Belarus union.


Mr Borodin denies the charges and the Russian prosecutor's office has 
exasperated the Swiss by playing for time. The unprecedented leak of the 
Swiss document on the eve of Mr Roschacher's visit to Moscow was seen as a 
mark of their frustration.


"Devaud is asking the Russians to help, but he's going a step further by 
sending them a dossier on the case which they didn't ask for. It's a bit like 
saying, look, investigate,'' said Dominique Poncet, a Geneva lawyer acting 
for Mr Borodin.


The Swiss will have difficulty bringing a successful prosecution unless the 
Russians say their laws have been broken and that the "commissions" paid to 
Mr Borodin and others were illicit. But Mr Ustinov, appointed by Mr Putin 
earlier this year, has yet to order a criminal investigation.


The Swiss document asks the Russians to say whether "the activities described 
are in breach of Russian criminal law on taking bribes and/or abusing power, 
or any other criminal laws".


Mr Borodin's office is said to have paid Mercata Trading $492m for 
refurbishing the Kremlin and the Chamber of Audits in Moscow. Mercata 
transferred $62.5m to the Lightstar Isle of Man account.


The Swiss document makes only passing reference to Mabetex, despite earlier 
allegations that its boss, Beghjet Pacolli, provided credit cards to the 
Yeltsin family in return for winning the contracts.


The Russian prosecutor's office confirmed this week that it had received the 
Swiss document, but said it would not respond to papers received by fax. Mr 
Devaud said he had sent it by fax "because of the urgency and nature of the 
case… and to speed up the investigation".


But the signs are that Mr Ustinov is under orders to block the investigation. 
In addition to the Borodin scandal, Mr Roschacher is believed to have brought 
papers on the alleged embezzlement of more than $900m in receipts of the 
Russian airline Aeroflot, and its siphoning into two companies in Switzerland 
controlled by Boris Berezovsky, the Yeltsin associate and business and media 
mogul. 


Yuri Volkov, the official in charge of the Berezovsky investigation, was 
sacked last month after returning from Switzerland with crates of documents 
on the affair, which he said would have enabled him to wind up the inquiry 
later this year. Several other senior officials in the prosecutor's office, 
including Mr Ustinov's predecessor, Yury Skuratov, were also sacked.


A man resembling Mr Skuratov was filmed by the domestic security service, 
then headed by Mr Putin, in a sex romp with two prostitutes. The film was 
shown on state television.


Mr Volkov said this week that he could prove that $580m of Aeroflot receipts 
had been siphoned off to Andava, a financial services company in Switzerland 
believed to be controlled by Mr Berezovsky, between 1996 and 1999, and that 
he knew the names of those who had stolen $35m of it.


Who, what, where and when


Swiss allegations
In August 1996 Pavel Borodin's office awarded two contracts worth $492m for 
refurbishing the Kremlin and Moscow's Chamber of Audits to the Swiss-based 
Mercata Trading and Engineering, a shell company bought in 1995 by the 
Russian businessman Viktor Stolpovskikh. Its sister company Mabetex did the 
work. Stolpovskikh also bought Lightstar Low Voltage Systems Ltd, registered 
on the Isle of Man. His two companies signed a "service agreement" in May 
1996 to handle the Kremlin contracts. Borodin's office paid $492m to Mercata, 
which passed on $62.5m to Lighthouse at a Midland Bank account on the Isle of 
Man. These were the "commissions" paid to several of the 14 suspects named by 
the Swiss investigation, including Borodin, his daughter and her husband, who 
between them received $25,609,978 in four payments to accounts in Geneva, 
Nassau, and Guernsey in 1997-98. Mabetex's boss, Beghjet Pacolli, is said to 
have guaranteed five credit cards for members of Boris Yeltsin's family. His 
bank, Banco del Gottardo in Lugano, said it had issued guarantees for them.


The Aeroflot case
Last July, Swiss investigators raided the premises of two financial services 
companies in Lausanne, Forus and Andava, said to be controlled by the Russian 
mogul Boris Berezovsky and suspected of siphoning funds from Aeroflot. 
Yeltsin's son-in-law, Valery Okulov, heads Aeroflot. Russian information 
supplied to the Swiss suggested that $600m was involved. The sum is now 
suspected to exceed $900m.


Aeroflot refused to cooperate with the investigation. The assets of the two 
firms in Switzerland were frozen. Berezovsky was barred from the country and 
the Russians issued an arrest warrant, later dropped. 

******


#2
Pro-Moscow Chechnya chief condemns troops' actions
By Andrei Shukshin

MOSCOW, Sept 16 (Reuters) - Moscow-installed Chechen leader Akhmad Kadyrov 
accused Russian troops on Saturday of unprovoked attacks even on Chechen 
villages with an administration loyal to them and warned authorities people's 
patience was wearing thin. 


Kadyrov, a former rebel leader who last year swapped sides and threw his 
weight behind Russia's latest military drive to bring Chechnya to heel, said 
popular anger at troops' behaviour could spill over into widespread protest. 


``I have to say that if it happens the people will not be to blame and I will 
have to stay with my people,'' Interfax news agency quoted him as telling 
reporters at his administration's headquarters in Chechnya's second biggest 
town of Gudermes. 


Describing attacks carried out even on communities with a pro-Moscow 
administration, Kadyrov told Interfax: ``The cases of groundless use of 
firearms against villages run by Russian loyalists are not rare.'' 


Kadyrov stopped short of predicting a mass revolt, saying protesters were 
likely to use ``peaceful means.'' 


Almost a year after Russia sent troops to restore its rule in Chechnya, the 
region remains awash with weapons. Troops who have only nominal control over 
the territory come under regular firearm and bomb attack from the 
separatists. 


Kadyrov, a Muslim cleric who led a rebel unit during Russia's first 1994-96 
Chechen war which left the region in rebel hands, has said Chechens failed 
their independence test and hailed Moscow's new onslaught last October. 


President Vladimir Putin appointed him as the head of his administration in 
Chechnya earlier this year. Elected Chechen President Aslan Maskhadov, in 
hiding in the southern mountains, has called Kadyrov a traitor and has 
ordered him to be killed. 


``I spoke openly against illegal Chechen armed groups because they terrorised 
the people,'' Kadyrov said using the usual Russian term for separatist 
rebels. ``But this same people suffers today from those on whose protection 
it counted.'' 


``TOUGH'' SEARCHES 


Kadyrov blasted Russian troops for turning to a tactic of so-called ``tough'' 
house-to-house searches which Moscow adopted after ``soft'' operations had 
failed to curb the number of hit-and-run attacks in which dozens of Russian 
die every month. 


Defence Minister Igor Sergeyev has praised the harsh measures, saying they 
allowed to trawl rebels more effectively. 


But Kadyrov said the tactic amounted to an arbitrary rounding up of innocent 
civilians. He said many of those detained later disappeared and troops rarely 
hesitated to open fire on villages run by Moscow loyalists. 


Kadyrov said for many Chechens it was a matter of stopping physical 
annihilation of their relatives and he could not predict what measures they 
could resort to. 


Interfax reported from Chechnya that Russian troops and police were engaged 
on Saturday in a combing operation south of the capital Grozny after the head 
of a commando unit had been killed by a land mine. 


It said almost all police outposts in Grozny had come under fire on Saturday 
but that there were no Russian casualties. 


******


#3
New York Times
September 16, 2000
Editorial
Religious Freedom in Russia
This year in the Russian town of Kostroma, a panel of university professors, 
local government officials, a psychiatrist, a psychologist and a lawyer met 
to ponder whether two local Pentecostal churches should be legally 
registered. After watching a video of church services, the group concluded 
that the church leaders used "psychological manipulation." The two churches 
were not allowed to register, and court proceedings are beginning to ban 
them. If this happens, their members would be able to meet in a home to pray, 
but they will be second-class religious citizens. Their community will not be 
able to distribute literature, rent or own a building, invite foreigners to 
preach or carry out other activities integral to religious freedom.


Religious repression, a hallmark of the Soviet Union, is once again occurring 
in Russia today. In 1997 Russia passed a pernicious law that denied adherents 
of many religions full freedom to worship and forced them through a 
burdensome registration process that put them at the mercy of local 
authorities, like those in Kostroma. The law was written in consultation with 
the Russian Orthodox Church, and played into the government's desire for 
central control and the unease of ordinary Russians about the explosion of 
new and unfamiliar churches and an influx of foreign missionaries.


President Vladimir Putin has modified the law. Since only half of Russia's 
religious organizations had registered by the December 1999 deadline, he 
extended it one year. But he also made it a requirement, instead of an 
option, that groups that do not register or whose applications are rejected 
be banned and lose their rights.


The Soviet Union's religious organizations could register with the government 
in 1990, but the process was pro forma and voluntary. Today, new groups 
independent of a centralized religious organization cannot register at all. 
Other groups must re- apply with a thick package of material documenting the 
history of their religion and other information.


According to the Keston Institute, a group based in Oxford, England, that 
monitors religious freedom in the former Communist world, many churches have 
been repeatedly rejected on technicalities. The United States Commission on 
International Religious Freedom, a group established by Congress in 1998 to 
advise the government, reports that minority religions have had far more 
difficulties than the Russian Orthodox Church. In the Voronezh region, for 
example, authorities moved to ban Baptist, Jewish, Lutheran and several 
Pentecostal groups — but not local Russian Orthodox organizations that
failed 
to re-register.


President Clinton and other American officials have repeatedly brought up the 
religion law in meetings with their Russian counterparts, which is 
appropriate. President Putin's support for religious tolerance is unclear. He 
should be lobbied hard to bring discriminatory Russian and local laws into 
line with Russia's constitutional guarantee of freedom of religion. 


******


#4
Moscow Times
September 16, 2000 
World Bank, IMF Set Sights on Russia 
By Mike Scollon


PRAGUE, Czech Republic -- Russia took center stage as World Bank Group and 
International Monetary Fund representatives outlined their objectives for the 
IMF/World Bank annual meetings beginning in Prague next week. 


IMF and World Bank officials say their programs during the 1990s in Russia 
were intended to stabilize Russia's economy. 


But critics, some of whom will be protesting in Prague, say the organizations 
only contributed to the nation's economic decline. 


"It is disappointing, of course, there were so many lost opportunities [in 
Russia] in the last 11 years," Mats Karlsson, World Bank vice president for 
external affairs and United Nations affairs, said at a news conference 
Friday. 


"But there is no use crying over spilt milk. You just have to go ahead," 
Karlsson said. 


In order to realize its mission statement of "Our Dream is a World Free of 
Poverty," Karlsson said the World Bank plans to use the meetings from Tuesday 
to Sept. 28 to better understand poverty, and to build up national and global 
structures to improve conditions in poorer countries. 


Karlsson said the bank's programs would aim at reducing corruption, building 
public responsibility at the national level and working globally to support 
local initiatives. He said the bank intends to contribute to an international 
effort to develop an HIV vaccine to curb the devastation AIDS has wreaked in 
Africa. 


The IMF describes its agenda as being to increase employment and living 
standards by bettering the economic welfare of its 182 member states by 
lending money, providing technical assistance, and constant surveillance of 
members' situation. 


Critics argue, however, that while economic growth would certainly help 
alleviate the pressures felt by the world's poor, the organizations' methods 
simply do not work. 


"[The IMF and World Bank] say they want to alleviate poverty by increasing 
macroeconomic stability, and that is the kind of excuse they use for cutting 
social services," said Chelsea Mosen, press spokeswoman of Initiative Against 
Economic Globalization. 


On Thursday, the Czech umbrella group of protesters began its countdown to 
the Global Day of Action, scheduled for Sept. 26, when it plans disrupt the 
meetings in a nonviolent matter. 


Czech authorities have responded by saying any attempt to shut the conference 
down would not be tolerated, and many residents and observers anticipate 
violence such as that seen at the World Trade Organization meetings in 
Seattle last year and the IMF and World Bank meetings in April in Washington 
D.C. 


Mosen said the lending organizations' actions in Russia have contributed to 
the country's economy shrinking by 40 percent as opposed to spurring growth. 


"They are the ones who created the problem, and I don't have any faith that 
they are the ones who can fix it," Mosen said. 


On Friday, the IMF executive board met to review the annual report on Russia 
compiled by the IMF. 


Russia has one of 24 seats on the board and will be represented by executive 
director Alexei Mozhin. After reviewing the report Russia will present its 
summary of the discussion and will decide if the findings will be made 
available to the public. 


******


#5
The Independent (UK)
16 September 2000
RETURNING TO MOSCOW, VETERAN JOURNALIST PATRICK COCKBURN FOUND THE DARKLY
FUNNY WORLD OF SOVIET TIMES REPLACED BY A CHAOTIC NEW ORDER. STRANGELY,
THOUGH, THE SAME PEOPLE WERE STILL IN CHARGE


When I first came to Moscow as a correspondent in 1984 I used to drive to
my office every day past a formidable skyscraper housing the Soviet foreign
ministry in Smolensk Square. Its central tower and spires, built in a style
known as Stalin Gothic, seemed an intimidating symbol of Soviet power. I
noticed also that on the patch of grass in the square below the ministry,
women were always walking to and fro, regardless of the weather. I was
mildly mystified. A friend explained the reason. Local prostitutes had
discovered that Smolensk Square lay on the dividing line between two police
districts. Each claimed the other was responsible for policing it. This
bureaucratic dispute, unresolved for years, enabled the women to ply their
trade - close to potential clients in the nearby Beograd hotel - without
fear of interference by the authorities. 


I always enjoyed Russians' genius for finding chinks in the armour of an
authoritarian state. But I did not see it as even a tiny sign that the
Soviet Union was falling apart. Indeed it was not. After the country
disintegrated in 1991 it became fashionable to portray it as being in a
state of inevitable decline throughout the Eighties. But this is to write
history backwards. It was obvious enough at the time that the Soviet Union
was like a great beached whale, not going anywhere in particular. But
ramshackle empires, be it the Ottoman Turks or Austro-Hapsburgs, can last a
long time - so long as they avoid a major defeat in war. Active dissidents
were few in number. If Mikhail Gorbachev, who came to power a few months
after I arrived in Moscow, had not tried to reform the system then there is
no reason why the Soviet Union should not be with us still. 


Nevertheless, the prostitutes in Smolensk Square were a small indication
that there was a lot more to what made the Soviet Union tick in 1984 than
edicts coming out of the Politburo. But for the moment there was no doubt
about who held power. It was the generation which had grown up under Stalin
and during the war against Hitler. This was not just true of the political
leadership, but of most positions of authority. This came home to me when I
made a discovery about the terrible state of Russian teeth. Again and again
I met Russians who had only a few fangs remaining or had replaced them with
a mouth full of gold teeth. This seemed strange. Russians take a lot of
sugar in their tea, but so do the British, without such catastrophic effects. 


There was a simple explanation. It was not that the Soviet Union was short
of dentists. It was rather that, for more than 20 years, Soviet dentistry
had been completely dominated by one Dr Anatoly Rybakov who headed the
Central Dentistry Research Institute. Unfortunately for any Soviet with a
toothache, he was a specialist in gums and not in teeth. Indeed he held
that teeth did not really matter. He prevented dentists using the type of
long-lasting amalgam employed for fillings in the rest of the world.
Instead they had to make do with a cheap plastic which fell out after six
months. For almost a quarter of a century he demoted or fired any dental
specialist who disagreed with him. The Ministry of Health, where Dr Rybakov
was well connected, ignored all protests and refused to get rid of him. 


The lifestyle of foreign correspondents did not make it easy to see into
the interstices of life as lived by ordinary Soviet citizens. We were
treated as honorary diplomats. We lived in special buildings with guards at
the gates and into which ordinary citizens could not venture. It was
comfortable enough and had the social atmosphere and conveniences of a
pre-war colony. Most foreign journalists had cooks and drivers. The worst
that could happen was to be expelled from the Soviet Union, probably in
retaliation for some Soviet journalist being kicked out of Britain. I did
not think I was in much danger. I was then working for the Financial Times
and my predecessor, Tony Robinson, had been expelled, so I hoped we had
gone back to the bottom of the list. This was fortunate since a year after
I moved to Moscow there was a mass expulsion. I remember Robin Gedye, the
newly arrived Daily Telegraph correspondent, saying to me bitterly as he
packed his cases to return to London: "I've spent three weeks here laying
new lino, exterminating cockroaches and putting together the Habitat
furniture - and they kick me out for anti-Soviet activities." 


The only staff who could not be hired locally were nannies. This led to a
curious cultural clash. At this time it was difficult for a student or
post-graduate studying Russian at a Western university to get a long- term
visa to stay in the Soviet Union. Even if they succeeded they then faced
the problem of where to live in Moscow. The solution was to apply for a job
as a nanny - for which the Soviets were prepared to issue visas - to
minister to the child of a foreign diplomat, businessman or journalist. The
result was that the highly educated nannies - more interested in Pushkin or
Chekhov than children - often found themselves working for some junior
military attache whose idea of an evening's entertainment was The Benny
Hill Show on the video. Some of the nannies became fervent born-again
Christians, taking a dim view of the spiritual state of their employers.
The nanny of one journalist took to writing religious slogans on small
pieces of paper and leaving them around the apartment. He once had the
demoralising experience of putting on his slippers in the morning and
finding in one of them a note reading: "Lord Jesus defend me for Satan is
in this house." 


The focus of the foreign journalists and diplomats was on the Soviet
leadership. We looked at the tools of power: the state, leadership and
ideology. This was reasonable enough. The secretary general of the
Communist Party and the Politburo monopolised formal power. The party was
run like an army, from the top down. It resisted all Mikhail Gorbachev's
efforts to turn it into a political party capable of mobilising mass
support. A paradox of perestroika was that Gorbachev was only able to
introduce liberal reforms by relying on the blind discipline of the party.
Only thus could he have forced the Communist Party of the Soviet Union, the
most powerful organisation in the world, in effect to commit suicide. 


This blind obedience continued right to the very end. Alexei Pankin, one of
the most astute observers of the last days of the Soviet Union, told me how
in 1990 nine ministers who ran the Soviet military industrial complex wrote
a joint letter to Gorbachev asking him to reconsider the economic policies
of perestroika. These were powerful men, who administered most of the
Soviet economy. But when it came to delivering their letter they were
paralysed by the legacy of Stalinism. One day Pankin, who had been asked to
edit the style of the letter, ran into one of the ministers and asked him
if it had been delivered. "It was given to Gorbachev," said the
all-powerful bureaucrat. "How?" asked Pankin. 


"Well," said the bureaucrat. "One of our ministers hung around for a couple
of days in Gorbachev's outer office. Gorbachev had no time to receive him.
He finally caught up with him on the way to the toilet and gave him the
letter." Gorbachev glanced at it and said he would get back to its authors.
Pankin, though not in sympathy with the ministers, was quietly outraged by
this craven attitude. He thought that the fate of 285 million people living
in the Soviet Union was too serious a matter to be settled in the lavatory.
He suggested that a better approach might be for the ministers to go to the
army general staff headquarters, call Gorbachev on the phone and say they,
together with the chief of staff, wanted to see him in 20 minutes. "You see
- he will be there in 10 minutes," predicted Pankin. 


The minister turned pale at the very idea of this forthright approach. "No,
no, no this never occurred to me," he exclaimed. "We industrialists are
loyal to our president. We will follow whatever decisions he takes." He
then backed away nervously from Pankin, having concluded that he must be an
agent provocateur, and never spoke to him again. 


It was difficult not to get caught up in the excitement of Gorbachev's
first years in office. It was, at least, interesting to watch compared to
the crushing tedium of Brezhnev's speeches. I did have a few doubts -
though less than I ought - about where it was all going. Partly because one
had to spend a lot of time trying to persuade visitors from the West that
something important was changing in the Soviet Union, and it was not just a
matter of improved public relations on the part of the Kremlin. Gorbachev's
curious personality was also an obstacle. He was an extraordinarily astute
tactician, highly skilled at manoeuvring within the upper reaches of the
party. It was less obvious that when it came to long-term strategy he was
closer to Inspector Clouseau, full of bright schemes but with little idea
where he was going. 


I had my first misgivings about Gorbachev's common sense when he started
his campaign against alcoholism in 1985. It was not total prohibition but
it made getting a drink a lot more difficult and expensive for Russians. I
remember glancing up once as I walked in the driving snow past Mayakovsky
Square in the centre of Moscow and seeing a flashing electric sign. It bore
the depressing message: "A glass of mandarin juice a day contains all the
Vitamin C an adult needs." A hundred yards away, a long, gloomy queue was
waiting patiently in the cold for a drink store to open. 


The results of the anti-alcohol campaign showed how far Gorbachev, for all
his talk of greater democracy, was from understanding how his own people
thought. The results of the drive against hard drink were often hilarious.
The Kremlin had blandly declared the Soviet fishing fleet in the Pacific
was to become dry. No alcohol was to be allowed on board. Soon afterwards,
inspectors visited one trawler and found, in one cabin, 576 bottles of
vodka intended for the second navigator's wedding. Otherwise, the campaign
had exactly the same impact as it did in the US in the Twenties: organised
crime was boosted; more moonshine was produced; the state suffered the loss
of a large chunk of its tax revenues. 


Gorbachev was also full of sound and fury against corruption. It was
discovered that the cotton minister of Uzbekistan had succeeded in
inventing 4.5 million tons of cotton and had got Moscow to pay for it. He
kept children in the fields long after the cotton was picked to give the
impression the harvest was still continuing. By this time the minister was
not even bothering to open envelopes stuffed with bribe money. He tossed
one envelope containing 40,000 roubles (pounds 1,000) into a corner of his
office, where the police found it lying, still unopened, two years later. 


What Gorbachev did not seem to have realised is that the Communist Party
barons who had ruled parts of the Soviet Union for decades were not going
to roll over when he attacked them. They got their revenge when they
dissolved the Soviet Union in 1991. The key to the present state of Russia
is that the final collapse of Communism came about because the party and
state bureaucracy did not want change. They wanted to hang on to power and
turn that power into money. By and large they have succeeded. They have
done so because there was no popular revolution in 1991. The old ruling
elite found that they could happily cohabit with the free-market reformers
by turning themselves into capitalists. 


The circumstances in which the Soviet Union fell apart are important
because they explain why Vladimir Putin, elected president in March, faces
an almost impossible task. In the immediate aftermath of the break-up of
the country the reformers launched what they themselves termed "a kamikaze
attack" on the command economy to break it up and make sure that it could
never be put back together again. They succeeded. But the reason they were
able to do so was that the officials in the state bureaucracy were the main
beneficiaries of the reforms. It is difficult to think of any historical
parallel with this mass looting of the state. Perhaps the nearest is the
dissolution of the monasteries in England in the 16th century, when the
gentry took over church lands at knock-down prices. The Soviet Union in its
final days was corrupt but there were limits to theft, or at least to its
public display. One deputy trade minister, who was finally arrested, had
been burying bundles of roubles, which he had accepted as bribes, in old
jam jars in the garden of his country cottage. 


I came back to Moscow in 1999, 14 years after I first arrived. By now the
prostitutes no longer had to walk up and down Smolensk Square in the snow
but were enjoying the comfort of the nearby hotels. There were obvious
signs of change, but also of continuity. Boris Yeltsin and Vladimir Putin,
the two presidents who succeeded Gorbachev, had won elections, however
flawed. The streets of Moscow were lined with brightly lit shops. But the
new system had retained some of the nastier aspects of the old regime. The
reformers had argued for their kamikaze effort to convert Russia from
Communism to capitalism overnight by citing the old saying: "It is
impossible to cross a chasm in two leaps." After the crash of 1998 it was
obvious that Russia had failed to make it to the far side of the chasm and
had plunged into the abyss. In just under a decade it had suffered the
worst industrial decline of any nation in history. Some 38 per cent of the
population were living in extreme poverty. "In the period since 1992, the
country's gross domestic product fell by half," writes David Satter, one of
the most compelling historians of recent Russian history. "This did not
happen even under German occupation. Russia now resembles a classic
third-world country, selling its raw materials - oil, gas and precious
metals - in order to import consumer goods." 


In one of the great ironies of history, the great leap forward towards what
the reformers claimed would be a capitalist paradise had turned into a
backward stumble into feudalism. There is something medieval about the
atmosphere of the countries which made up the Soviet Union. Leaders of the
old Communist elite have transformed themselves into dukes ruling their own
fiefdoms. It also has the insecurity of the Middle Ages, with the
beneficiaries of the break-up transferring their gains out of the country,
fearful of some future day of reckoning. 


In some ways President Putin is in the same situation today as Gorbachev
was 15 years ago, but with far less power to do anything about it.
Gorbachev tried to control the party bosses in the provinces by dismissing
them for corruption. Putin hopes to do much the same thing, relying on the
residual strength of the security forces. He has appointed seven "super-
governors" as his presidential envoys to reimpose the authority of the
centre over Russia's 89 regions. It is unlikely that they will have much
success. Local "dukes" stand at a pyramid of local interests dependent on
the provincial governor. As Gorbachev discovered, they are not going to
depart quietly into the political wilderness on orders from the Kremlin. 


The problem in turning Russia into a modern, social-democratic state is
that the so-called reformers never admitted their Faustian bargain with the
elite of the Soviet state. Putin himself is a symbol of this. He was
promoted last year by President Yeltsin and his "family" - Russians use the
word in the same sense as the mafia, meaning insiders and not just blood
relations - to prevent changes in the status quo. They were able to project
him as the strong new leader who had invaded Chechnya in the wake of the
bombings which killed 300 people in Moscow. As a political gambit it was
wholly cynical and wholly successful. 


In the aftermath of the election, Russian and Western commentators focused
on the creepy personality of Putin as an ex-KGB officer. Appearances are
against him. His cold eyes and fish-like face closely resemble the
stereotypical Russian villain in James Bond movies. But Putin's personal
failings scarcely matter. A more pertinent question is: if Putin or anybody
else pulls a lever in the Kremlin, does anything happen? Going by his first
months in office, the answer is, very little. He reigns but there are
limits on how far he can really rule. 


In the Eighties, the Soviet intelligentsia used to yearn for a "civil
society", by which they meant a society which was not dominated by an
all-powerful state. They somehow believed that Russia had a middle-class
society in embryo, much like that in the US and Britain, which would emerge
from its egg once state controls were lifted. They forgot that the rulers
of the Soviet state were also part of society. They were not going to
disappear just because the state disintegrated. In the event, they lived
on, sudden converts to the virtues of the free market, feeding, like
vultures, on the carcass of the Soviet Union. 


******


#6
BBC MONITORING
RUSSIAN EDITOR LOOKS AT DESTINATION OF PUTIN'S "STEAMROLLER OF HISTORY"
Source: 'Nezavisimaya Gazeta', Moscow, in Russian 13 Sep 00 


Will Putin, in his quest to build a strong state, ride roughshod over the
democratic acquisitions of the Yeltsin era, or will he act constructively
to create a wealthy, democratic and powerful Russia? In his attempt to
answer that question, editor-in-chief Vitaliy Tretyakov of the Russian
newspaper 'Nezavisimaya Gazeta' examined Putin's ascent to power and his
policies, thought by the author to be the "steamroller of history" inasmuch
as Putin has set out to achieve what Russia is "hungry for today, after
eight years of Yeltsinism". Follows the text of Tretyakov's article on 13th
September. Subheadings are the original's own. 


In certain Moscow political circles, let us call them close to liberal and
democratic circles, there is a kind of heavy and simultaneously ironic
perplexity hanging in the air. As if something is going wrong, is moving in
the wrong direction, towards the wrong objectives, by the wrong methods. 


All this is reminiscent of the annoyance of a very busy person who, going
out without an umbrella, gets caught in the rain. Today's rain (or for some
people, on the contrary, sun) is the consequence - the inevitable
consequence - of what went before. And tomorrow's weather will also be not
as good as one might wish or, conversely, it will be the best it could
possibly be. It will be the only way it can be in the political (forgive
me, climatic) conditions that have developed. 


On analysing the current situation with Russia's supreme power one may feel
perplexity and irritation. But you only have to look back and it will
immediately become clear how we arrived at this kind of life. 


How to assess "this kind of life", how to relate to it, whether to try to
resist it or simply go with the flow, whether to build dams across the most
dangerous turns in the current - that is another matter. 


It is this, and not the evaluation of the present state of affairs, that is
everyone's civil and political choice. 


We are in the middle, not at the end of the process 


The process, in fact, developed as follows. 


Here are the four stages - straightening out the trends and discarding the
subtleties - of Yeltsin's rule. 


1991-1993: Some people were sharing out power while others were taking
property. 


1994-1996: Those who had managed to attain power turned their attention to
property. But it turned out that much of it, the tastiest morsels, was
already in other people's hands. Property, which means the country's
financial resources too, was not in the hands of the authorities. And
although we have new authorities they have the same old habits: They are
used to controlling the whole country's money flows. 


Finding themselves in a situation that was genuinely new to them, the
authorities became despondent because they realized they had fallen into
the trap of their own reforms, which were carried out in such a way that
they themselves were left without money and so were the people, from whom
it is easy to take money (by means of taxes or simply confiscation). The
authorities realized they were left without finances and without social
support. And the elections were close at hand, where the authorities would
have no chance with neither money nor voters. 


1996. The authorities, out of a sense of hopelessness, started preparing
for a coup d'etat and the cancellation of the elections. 


But the property owners proved more constructive. They invited the
authorities to hold on to power (and save themselves, of course) without
upheavals and while observing the decencies. In exchange for even more
property. 


1996-2000. The property owners, achieving success in the elections, tasted
their own power. They (with the help of the mass media - that is important)
did what the authorities could not do and the people did not want (it is
beside the point that the people wanted the Communists even less). 


So the property owners, especially on seeing Yeltsin's decrepitude, raised
the stakes. They wanted not only property but power. As a result - as
symbols of the granting of that wish - Chubays became chief of the
presidential staff and Potanin became first deputy prime minister. More
concrete matters were decided at the level of loans-for-shares auctions. 


However, the routine management of the state (power) is not the same as
routine management of property. It turns out that it is a science and a
profession. 


As a science, this kind of management was something you needed to know; and
as a profession, it was something you had to acquire day by day. As a
profession, the pay for being in power was low, and moreover the
bureaucratic apparatus was too stiff and specific for the property owners,
who were accustomed to receiving a lot and quickly (bureaucrats even ration
out their spit a grain at a time), making decisions, and getting them put
into practice rapidly - without all those parliaments, prosecutor's offices
and audit chambers. 


And in the end the bureaucrat once again scored a victory over the property
owner, even though the latter was feeding him. He scored a victory in
everything except influence on the president and his family. 


Furthermore the authorities were still a large-scale property owner, though
many times less effective than private property owners. And therefore power
was still attractive to the property owner. 


But not directly, because the property owner had realized that he knew how
to manage enterprises and the people at them but not the nation. Except by
means of the media: the media owners and, conversely, those who did not own
any media understood that very well. 


But then once again - this accursed democracy! - an election loomed on the
horizon. 


The authorities in general (the bureaucracy) were not afraid of elections
because they, the bureaucracy, are immortal. But specific power players,
especially those in supreme power, once again became agitated, because the
situation meant there was trouble ahead. 


The property owners had to mobilize again because they understood very well
that the new authorities, if anything happened, would take the property
away just as readily as they had once handed it out. 


Therefore everyone was acting in different ways. The people were calmly
waiting for the election. Yeltsin was looking for just one person who would
not erase him, Yeltsin, as a physical and political figure. And the
property owners were operating both more actively and more disparately.
Especially since among them, by definition, competition prevails. 


Chubays, for instance, remembering that the state is, after all, the
biggest property owner, decided to cross over to the Unified Energy System
of Russia [power monopoly], where property is multiplied by power. 


Other property owners started forming parties and election movements,
choosing presidential candidates. Because they already knew that formally
there must, after all, be some kind of political, public figure at the top. 


But since parties will not get you anywhere, especially when they do not
exist in reality anyway, the process of political categorization (in the
sense that we are for Yuriy Mikhaylovich [Luzhkov] and we are for Vladimir
Vladimirovich [Putin]) took place not along the lines of parties,
ideologies, or even personal sympathies, but along the lines of the two
most powerful real mechanisms for encouraging votes - around the NTV party
and the ORT party. 


Parties, politicians, governors (the drivers of the local voting cars), and
journalists were threaded onto NTV and ORT like meat on a spit. 


The NTV party and Gusinskiy were more conservative. They chose Primakov, a
man with whom they were in direct ideological confrontation, for instance
in their view of NATO's action against Yugoslavia. But the prospect of
Luzhkov loomed behind Primakov, and Primakov was better than that. 


Berezovskiy, as always, was more radical. He had a feeling of class
distrust towards Primakov and Luzhkov, he sensed something opportunist in
them. They did not like him either, although they did like Gusinskiy for
some reason. The soul of a politician is shrouded in darkness. 


Berezovskiy (or rather, his party) searched for longer, but better. They
found Putin. Something that is of considerable importance is that he also
met the criteria of loyalty to Yeltsin personally (personally - let us
emphasize that). 


Not much time was left, and so the candidate also had to be a hero. How
could he display heroism? In combating corruption or in combating rebel
Chechnya, which everyone was sick and tired of. 


You cannot conquer corruption in Russia in three months, nor is that a job
for oligarchs (and both parties are oligarchic through and through). But
Chechnya - that is possible. 


It is said that Berezovskiy and the ORT party were fighting not for
constitutional order in Chechnya but for Putin as their candidate. 


In many respects that is true. As is the fact that both the NTV party and
Gusinskiy, in this sense, were fighting not for the rights of Chechen
civilians but against candidate Putin and for candidates Primakov and
Luzhkov. 


Individual minor politicians and major journalists could be as sincere as
they liked but the resultant line came out precisely like that. 


That is to say, the question of power in the country really was being
decided, and as a natural continuation of that in today's Russia, the
question of property. It is another matter that along the way one of the
parties also victoriously resolved the problem of Chechnya. Since that
problem proved even more significant for the country's voters than the
question of ownership was for the property owners, the winners were those
who understood what the people, not just they themselves, wanted. 


So Putin became president. 


And if we had been at the end of the process of redivision of power and
property in Russia, that is where our history would have stopped. The
longed-for stabilization that Yevgeniy Primakov publicly offered would have
arrived. 


The voter was hungry, however, not for stabilization but for a breakthrough
- both on the Chechen front and on many others. The people were hungry for
Russia to make the leap from the transitional period to some kind of new
reality. 


The Putin problem (for others) was that what the voter - society as a
whole, including to some extent the oligarchs - wanted from him was not the
declaration of the "Yeltsin era" to be the kingdom of God on earth, but a
way out of that kingdom, never mind in what direction. 


Putin realized that. Especially since that same idea had been in his own
mind too. 


The case of Putin 


Putin was invited to finish building the Yeltsin regime, to perfect it. 


But he could not do that precisely because you cannot build anything in the
middle of a river. You have to reach one shore or the other. 


Putin reached the shore that was ideologically close to him, the shore of
statehood (another man would not have been able to begin to do in Chechnya
what Putin began). 


The miscalculation with Putin was as follows: 


1) Putin did not get bogged down in Chechnya, on the whole he carried
things through to a conclusion (in a certain sense, of course); 


2) He had not been appointed secretary of the Security Council, like Lebed
in 1996; he had been elected president. Not the one who is removed but the
one who does the removing; 


3) Putin, unlike Yeltsin, proved to be a man with his own ideas in his
head, not only borrowed ideas. And young, too; 


4) Putin's old corporate ties proved stronger than the new ones, those he
acquired in the Kremlin. Because that old corporation is the System, while
the new corporation is a half-cooked broth. NTV, incidentally, sensed that
more clearly and earlier than others. That fact enabled Putin rapidly to
form, alongside the government that was not his, one that was his: in the
form of the Security Council and later the seven federal representatives; 


5) Putin, realizing that he got into the Kremlin by chance, also perceived
a kind of historic design in that chance, a kind of higher mission - to
save Russia (or even - as many people observe and, indeed, as Putin himself
has said publicly - more broadly: to save Europe from the onslaught of the
aggressive section of Islam); 


6) Putin was a contrast to Yeltsin in everything (that is why he beat those
who appeared to be other manifestations of B.N. [Yeltsin]) - and in
ideology he was frankly anti-Yeltsin. And it was this anti-Yeltsinism,
accompanied by loyalty to Yeltsin personally, which often happens in
history, that Putin was fated to demonstrate. 


An organic politician 


Putin decided to destroy Yeltsin's oligarchic regime in principle, creating
in its place an integrated oligarchy-state, combining it with the market
economy. 


All who resist must, under this model, be destroyed. And the process got
under way. A process that is perfectly natural for the Russia that Yeltsin
passed down to Putin. Here Putin is indeed not the maker of history but its
objective instrument. 


In the whole of Putin's Chechen epic - this is subjective now - this, and
only this, content and form could be traced in his actions. Here Putin is
an organic politician. He does what he himself wants and what the majority
of the country is hungry for today, after eight years of Yeltsinism. 


In a certain sense Putin's policy is the steamroller of history. 


But will it steamroller the Russian political field in general or lay a few
highways through it while leaving unchanged the democratic landscape that
has now formed? - that is the question. 


Everyone will answer that question for himself. I am more optimistic than
pessimistic, although, of course, it is not yet fully clear whether Putin
will follow anti-Yeltsinism as a dogma or develop it as a creative
doctrine, not destroying everything in his predecessor's practice. 


Recording the main features, potentialities and trends in the development
of the Putin regime will help us approach clarity. 


Main features and trends 


1. Russia remains a leaderist, Caesarist country. The entire
state-bureaucratic apparatus has always rapidly been restructured to fit a
new leader and his ideology (outwardly 100 per cent and inwardly as far as
this accords with the interests of the apparatus itself). 


Lenin, Stalin, Khrushchev, Brezhnev, Andropov, Gorbachev, Yeltsin, Putin:
On coming to power each of them imposed his will on the country. Why it was
precisely one politician rather than another who came to power at any
particular moment is another question. 


It may be said that Russia itself chooses a leader for itself on each
occasion but after having made the choice it becomes hugely dependent on
his strictly individual qualities and predilections. There is no doubt that
Putin's regime retains all the features of this leaderism, in general
failing to demonstrate any clear trend towards consciously renouncing it. 


2. The question of power in Russia has evidently already been resolved (for
the next eight years) but the question of ownership has not. The process of
the repartition of property, with its undulating development (and we still
have the land reform ahead of us,) is not being blocked by Putin and most
likely cannot be blocked, so we are drifting into the market anyway,
whatever war may be waged against individual property owners. 


3. On the other hand Putin to all appearances wants to stop the political
cold war in Russia, using his right as victor to impose his will on all
participants in this war. 


4. Henceforth political power will once again be out of the oligarchs' hands. 


5. But financial assets are distributed more evenly: for the state and
major property owners. 


6. The mass media, especially television, are the only real lever of
influence that major property owners have on Russia's policy and in the
absence of normal parties of the Bolshevik or electoral type the main
television channels are the only parties, being quasi-parties in form but
in essence party structures. 


7. The influence of the CPRF [Communist Party of the Russian federation] as
a party and in particular as an opposition party is declining rapidly. 


8. On the right flank there are no substantial party structures at all: The
influence of Yabloko is declining while the Union of Right Forces,
particularly after two of its leaders - Kiriyenko and Chubays - have
readily and even eagerly exchanged their party ideology for posts in,
respectively, the executive branch and a state natural monopoly, has turned
into what is exclusively a Duma faction. 


9. The governors as a corporation have become such a small political
quantity that their influence in the most important political processes may
be disregarded. 


10. The extent of the influence on policy brought to bear by two other
important corporations - the special services system and the criminal
community - is unclear. One may suppose that the influence of the former is
more important (because that corporation continues to function as a system)
while that of the latter is less important (since the criminal milieu is
competitive by nature). But the latter is more adapted than the former to
market relations. 


11. Putin will not turn from the path upon which he has embarked because
that could finish him as a politician and that path is inherently natural
to him as a supporter of a strong state. 


12. In the absence of a significant left-wing and right-wing opposition the
liberal television channels, whoever controls them and whoever owns them,
are the only real platform for forming the opposition that is vitally
important to a democratic country. In theory therefore the supporters of
these television channels should not lose out but in practice it will all
depend on the quantity of complaints that Putin has with regard to this
sphere. 


13. In the absence of a developed civil society and in the absence of
overtly manifested intentions on the part of the state authorities to help
build that society, the complex of the free mass media (with or without the
main television channels) remains the only substitute for this chief
counterweight to the expansion of state bureaucracy in politics and the
economy. 


14. The struggle between the state bureaucracy and a civil society and the
free mass media that compensate for that society's weakness continues; as a
result, by the beginning of next year a new watershed line will be
established between them. 


15. The task of ending the political cold war will demand from Putin, even
if he does not want it, that he end the struggle with the oligarchs as soon
as they abandon their habit of influencing the authorities directly or
through concealed attacks on the mass media. 


16. Putin has less than a year left to complete the process of
consolidating political and in part media power in the country that he has
begun. He will then have to embark on actual constructive activity,
primarily economic, moving from the dismantling of Yeltsinism to the
construction of a wealthy, democratic and powerful Russia. If Putin becomes
obsessed with the former task and does not move promptly to the solution of
the latter, he will merely perform the same kind of destructive work that
reduced to nothing all Yeltsin's good intentions and deeds. 


******