September 19, 2000    
This Date's Issues: 4523  4524   4525 

Johnson's Russia List
#4525
19 September 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Reuters: IMF sees strong Russian growth, reforms still key.
2. AFP: IMF says it might have been more cautious in Russia.
3. AP: Putin Orders Salvage of Sunken Sub.
4. Yevgenia Borisova: Re: 4524-Borisova Interview.
5. Dmitri Glinski Vassiliev: Re: Election Fraud.
6. Los Angeles Times editorial: The World Must Not Look Away.
(Chechnya)
7. Reuters: Gorbachev to appeal to Putin over Media-Most fate.
8. The Globe and Mail (Canada): Geoffrey York, Kremlin rules Russia's 
airwaves Putin views media as threat to security, takes control of 
television channels.
9. Andrew Miller: Russian Economic Statistics.
10. CBS.MarketWatch.com: Saskia Wirth, Russia's New Economy is 
booming - or is it? 
11. Washington Times: David Sands, Berezovsky: Putin a threat to 
freedom.
12. BBC MONITORING: RUSSIAN TYCOON GIVES NEW YORK AUDIENCE HIS 
VIEW OF YELTSIN, PUTIN AND OLIGARCHS.
13. Nezavisimaya Gazeta: Dmitry Gornostayev, ABM IS A GLOBAL 
PROBLEM. Russia will move a draft resolution in support of the ABM 
Treaty at the next UN General Assembly.]


******


#1
IMF sees strong Russian growth, reforms still key

PRAGUE, Sept 19 (Reuters) - Russia's economy is set for its third successive 
year of growth in 2001, but long-term prospects depend on the country biting 
the bullet on painful structural reform, the International Monetary Fund said 
on Tuesday. 


The IMF's World Economic Outlook, a twice-yearly report on economic prospects 
around the world, forecast Russian growth of seven percent this year, slowing 
to four percent in 2001. 


Last year, in its best performance since the collapse of the Soviet Union, 
the Russian economy grew by 3.2 percent. 


``The Russian economy is continuing its rapid recovery from the financial 
crisis of 1998,'' the IMF said, noting the positive impact of the 1998 
collapse of the rouble and a steep rise in the price of oil. 


``Investment and non-oil exports began to strengthen in 1999, followed more 
recently by increased consumption and imports. Rising real wages, reductions 
in arreasrs and lessening use of barter all point to continued improvements 
in activity.'' 


But the IMF said Russia still needed to step up the pace of economic reform, 
revising bankruptcy laws, curbing barter trade and cracking down on arrears. 


``Longer-term economic prospects continue to depend on accelerating the slow 
pace of structural reform,'' the IMF said. 


``It will be important to ensure that any net revenue costs of tax reforms 
are offset by expenditure restraints, particularly as the budget is likely to 
be burdened by significant reform-related expenditures in the coming years.'' 


Russia is the IMF's largest single borrower. But the global lender repeatedly 
stopped payouts from its loans because of doubts about the government's 
commitment to reform. 


******


#2
IMF says it might have been more cautious in Russia


PRAGUE, Sept 19 (AFP) - 
The IMF on Tuesday acknowledged it maybe should have held back from extending 
financial assistance to Russia and other transitional economies and waited 
for a stronger commitment from local authorities to economic reform.


The comment came in the latest edition of the IMF's twice-yearly World 
Economic Outlook report, two chapters of which were devoted to countries 
making the transition from centralized planning to a market-oriented economy.


The IMF report released here identified Russia as among those economies where 
the shift has been less successful than elsewhere and where Fund-supported 
programs have been dogged by delays and interruptions.


It said that while a 1995 program succeeded in helping Russia reduce 
inflation and establish budget discipline, another IMF project approved in 
1996 had little impact, as structural reforms stalled and an erosion in 
fiscal restraint led to a devaluation and default in August 1998.


The report also cited problems in Bulgaria and the Kyrgyz Republic that were 
eventually resolved but said that in other cases "success has remained 
elusive."


"Arguably, in these difficult cases, a different approach might have worked 
better," the report said.


It added that while the Fund could have been "more sensitive" to the 
difficulties encountered by national authorities trying to oversee the 
transition, "in some of these difficult cases where political support for 
reforms was typically quite weak, it might have been better for the IMF to 
stand back from financing and wait for a more auspicious environment for 
meaningful reform."


The IMF suspended another cooperation agreement with Russia in September 1999 
in response to the slow pace of financial and economic reform there.


While high oil prices have so far helped Moscow do without IMF assistance, 
Russian authorities have included some two billion dollars in hoped-for IMF 
loans in their 2001 budget.


Two chapters of the IMF report are devoted to an assessment of the 
performance of 31 nations in Europe and Asia that in the last two decades 
have begun to abandon state-controlled economic organization in favor of 
private ownership of the means of production.


The 31 transition economies include the Czech Republic, Poland and other 
countries bidding to join the European Union, as well as the Baltic nations 
of Estonia, Latvia and Lithuania and southeastern European countries states 
such as Bosnia and Croatia.


Also on the list are Russia and other former Soviet republics now grouped in 
the Commonwealth of Independent States (CIS) along with Cambodia, China, Laos 
and Vietnam.


Taken as a whole, according to the IMF, the transition countries are expected 
to post growth this year of 4.9 percent, up from 2.4 percent in 1999, and 4.1 
percent in 2001.


"Both the economic structure and the behavior of consumers have undergone 
major changes, although progress has been very uneven among the participating 
countries," the report said.


"While much has been achieved, the process has turned out to be much more 
difficult than anticipated at the outset, and in retrospect it is clear that 
policies pursued in transition have not always been ideal."


The IMF in particular cited failure to recognize the need to build an 
institutional and legal infrastructure to support nascent market economies.


Authorities in transition countries had to grapple with the absence of 
"well-defined property rights, commercial legislation regulating the entry 
and exit of private enterprises, financial markets, commercial banking 
systems, open labor markets and a market-oriented system of taxation," 
according to the 


But the Fund also agreed that state socialism had left a positive legacy as 
well, notably relatively high health-care and education levels and a more 
even distribution of incomes than in capitalist economies.


In most transition countries the movement toward a market-based economy has 
been accompanied by major political transformations, the IMF noted. 
Exceptions to the trend, however, have been China, Vietnam and Laos.


The study cited a number of solid accomplishments in transition states. By 
1997, it said, only three governments -- all of them in the CIS -- 
administered more than 30 percent of the prices for basic goods.


Excessive industrialization had been modified by a growth in the services 
sector. Private sector share of gross domestic product rose to an average of 
70 percent in the EU accession countries in 1998 and 50 percent in CIS 
economies.


******


#3
Putin Orders Salvage of Sunken Sub
September 19, 2000

MOSCOW (AP) - President Vladimir Putin has decided to go forward with an
operation to retrieve the bodies of 118 crewmen who died aboard a nuclear
submarine that sank in the Barents Sea, Deputy Prime Minister Ilya Klebanov
said Tuesday. 


Some recent reports had said that the proposed operation was being delayed
because of disputes over financing, but Klebanov said after meeting with
Putin that contracts have been drafted and are expected to be signed within
a few days. 


The contracts are with the Norwegian company Stolt Offshore, whose divers
were able to open the hatch of sunken submarine Kursk after Russian efforts
failed for days. The amount of the contracts was not immediately announced. 


The retrieval effort is expected to take place in October or November,
Klebanov said, according to the news agency Interfax. The Kursk sank on
Aug. 12 after massive explosions. 


The blasts shattered the submarine so severely that divers are unlikely to
be able to retrieve the remains of sailors who were in the first four of
the Kursk's nine compartments, Klebanov said. 


Putin also has ordered that an operation be conducted to raise the wreck of
the Kursk from its resting place 350 feet below the surface, Klebanov said.
That effort is expected to start next summer. 


Interfax said the cost of raising the wreck is estimated at $45 million. No
contracts have been signed for the salvage operation, but Klebanov said the
work will most likely include Dutch and Belgian companies, Interfax reported. 


The cause of the explosions has not been determined. Russian officials say
they are focusing on indications that the Kursk collided with an underwater
object, possibly a foreign submarine. 


The United States says two of its submarines were monitoring the naval
exercises in which the Kursk was taking part but denies that either was
involved in a collision. 


******


#4
Date: Tue, 19 Sep 2000
From: Yevgenia Borisova <yevgenia@imedia.ru>
Subject: Re: 4524-Borisova Interview


Dear David,
Just a short note to say that I haven't lost faith in Russia as the 
ending of the interview with me made by Transitions Online says. The 
question was, "Have you lost faith in Russian democracy?" and I truly 
have lost it completely after my visits to several Russian regions 
where I collected a lot of evidence of election fraud. I just can't 
see the way democracy can work there with the incumbent 
administrations. But I will always have faith in the Russian people 
and the potential of this country that I deeply love.
Thank you,
Yevgenia Borisova
The Moscow Times
Tel. (7095) 937-3399
Fax (7095) 937-3394/93
http://www.themoscowtimes.com


******


#5
From: "Dmitri Glinski Vassiliev" <dmitri_glinski@mtu-net.ru>
Subject: Re: Election Fraud
Date: Tue, 19 Sep 2000 


Dear David:


There is no question that the Moscow Times has done an excellent job, and
their disappointment with the lack of attention in Russia is easily
understandable. Yet this should hardly come as a great discovery, and the
indifference to this exposure in Russia is only natural. There is simply no
one strong enough who would have a stake in questioning the outcome of the
elections. My guess is that in the West, Watergates happen less often not
because of high moral standards and incorruptibility, but primarily because
interested parties are strong enough vis-a-vis the government and have a
functioning legal system at their disposal to make large scale violations
extremely risky. In Russia, asking how the regime dares to commit such
outrage is a rhetorical question; it does simply because it can do anything
it wants. The real question to ask is why everybody else is so weak or so
dependent on Vlast that there is no real constituency for any resistance.


The rigging of the ballots as a principal ingredient of our
"democratization" is not new at all. Read the book by Stephen White et al.,
How Russia Votes, the section about December 1993 fraud in the constitution
referendum. As I remember from there, one election committee member
committed suicide, being force to choose between participating in the fraud
and losing his job. Of all the many frauds, this was certainly more
consequential than the recent one. Those looking for real turning points
should go back to the April 1993 referendum, when a country with
hyperinflation and 30% industrial decline voted 52% in support of the
government policies. This was the time when Western observers should have
been looking for fraud - but most of them, together with the Clinton
administration, were singing praise to the Father of Russian Democracy.


Now some of them angrily blame Russians for passivity and obedience.
Although any historical parallel is vulnerable, medieval crusaders were
likewise extremely frustrated with their Byzantine fellow Christians who
after centuries of oppression and looting were not that fervent in fighting
for their faith - and whose social and political fabric was ruined even
further by their catholic liberators. Poverty is a rather strong constraint
on social action. But the fresh experience of impoverishment and social
degradation is much stronger. People who have been poor for generations
usually have an inherited culture of survival. Yet in today's Russia, many
millions of those who had stable living standards in Soviet era have been
expropriated by the government and its allies at least twice - in 1992 and
1998 - and thrown out from their ways of life. This was the point when the
backbone of the nation was broken - in the moral and in the civic sense as
well. Those people were the constituency for the unfinished (and suppressed)
democratic revolution of 1991. They were severely punished for the latter
and now associate all political disobedience with the prospect of another
mass-scale expropriation. Hence their support for the Putin bargain: take as
much power as you want and let us live our private life without another
collapse. This bargain also has a very clear support in the West (see NYT
coverage of Gusinsky trip - it reads like they would be happy to see NTV
"nationalized" by security services). Is anyone around to offer a better
deal? If Moscow Times or anybody else knows, they should tell us.


Dmitri Glinski Vassiliev
IMEMO RAS


*******


#6
Los Angeles Times
September 19, 2000
Editorial
The World Must Not Look Away 


Chechnya has always resisted absorption into the Russian empire, 
beginning under the 19th century czars and continuing under the Communists 
and into the post-Soviet era. From the start, its resistance was answered by 
ruthless repression, directed without distinction against civilians and 
combatants alike. The Chechens have fought no less brutally. The renewal of 
fighting since 1994 has seen sweeping destruction and loss of life. This, in 
a general way, the world knows. Far less visible has been the unrestrained 
barbarity with which war has been waged. The true horror of the fighting in 
Chechnya lies in the details. 
Maura Reynolds and Robyn Dixon of The Times' Moscow bureau have visited 
that horror and described it graphically. Chechnya is a battle zone where the 
rules laid down by the Geneva Convention are ignored, where Russian forces 
regularly commit atrocities without fear of being held accountable by their 
superiors, where the Chechens routinely resort to torture, mutilation and 
murder of their captives. Chechnya is a no-quarter war without heroes. Each 
side demonizes the other to justify the terrible things it does. Each side 
dehumanizes itself by the terrible things it does. 
Moscow, with the approval of most Russians, fights doggedly to hold 
Chechnya to keep its access to natural resources and because it knows that if 
the Chechens succeed in breaking away, other restive peoples in the 
multiethnic country will be inspired to seek their own independence. But 
Russians also fight brutally because that is part of the Russian military 
ethos, a tradition of total war fought with every means and without moral 
restraints. The civil war that followed the 1917 Bolshevik Revolution was 
marked by almost unimaginable cruelties. And when the tide of battle turned 
in World War II, Russia repaid in kind the barbarism practiced by Germany 
after its 1941 invasion. 
Chechnya, Russian leaders insist, is an internal matter and not the 
business of outsiders. They are half right. International law does recognize 
the fighting as an internal matter, but that doesn't preclude humanitarian 
concerns about what this vicious conflict involves. Human rights 
organizations have called frequent attention to the abuses occurring in 
Chechnya, though with only limited impact. Perhaps reporting of the kind done 
by Reynolds and Dixon will help deepen those concerns. Chechens have suffered 
much under nearly two centuries of Russian rule. And Russians can't escape 
suffering themselves as they try to maintain that rule. 


******


#7
Gorbachev to appeal to Putin over Media-Most fate
By Gareth Jones

MOSCOW, Sept 19 (Reuters) - Media-Most, Russia's beleaguered independent 
media empire, appealed directly to President Vladimir Putin on Tuesday in an 
escalating row with state gas monopoly Gazprom which threatens its very 
existence. 


Media-Most, which includes the only nationwide independent television channel 
NTV, asked Putin to hold urgent talks with former Soviet leader Mikhail 
Gorbachev, who now heads a group set up by the company to monitor media 
freedoms in Russia. 


But in a fresh blow to the company, the chief prosecutor's office announced 
it had launched a probe into Media-Most's alleged breach of contract with 
Gazprom. 


``What is at stake here is not only the fate of NTV and of Media-Most, but 
also the threat to freedom of speech in Russia,'' Interfax news agency quoted 
Gorbachev as saying after his group had met in central Moscow's elegant 
National Hotel. 


The media monitoring group, formed by NTV in April as its relations with the 
Kremlin chilled sharply, issued a statement decrying ``the crude state 
blackmail'' used against Media-Most. 


The appeal to Putin followed the revelation by Media-Most owner Vladimir 
Gusinsky that he had agreed to sign over his shares to Gazprom in July in 
return for having fraud charges against him dropped and for being allowed to 
keep his freedom. 


Under the deal, Gazprom would take control of Media-Most in return for $773 
million, including $473 million in cancelled debt and $300 million in new 
payments. 


But Gusinsky, speaking on Monday in an interview for Ekho Moskvy radio, part 
of his media empire, said the deal was invalid because he had been forced to 
sign ``under pressure, at gun-point'' from the authorities. 


MEDIA-MOST SAYS KREMLIN OUT TO CRUSH IT 


Gusinsky says the Kremlin is trying to take over his media outlets, which are 
often critical of the authorities. He was briefly jailed in June for alleged 
fraud but the charges were suddenly dropped and he left the country. 


He said Media-Most had tried to negotiate to eliminate its debts to Gazprom, 
but that talks broke down ``a few days ago.'' 


The prosecutor's office said in a statement on Tuesday it had accepted 
Gazprom's call for a probe into Media-Most over the company's failure to pay 
back credits. Gazprom also accuses Media-Most managers of transferring assets 
offshore. 


``At the present time, the prosecutor's office has begun an investigation 
into this matter,'' the statement said. 


Gorbachev, whose policy of glasnost in the 1980s created a climate of 
unprecedented media freedom in the Soviet Union, said it was not clear 
whether Putin himself knew of the pressure being placed on Media-Most. 


NTV is one of the three main television networks that are by far the most 
influential sources of information in a country spanning 11 time zones. 


Of the other two main channels, one is wholly state-owned. The state owns 51 
percent of ORT, the other. 


******


#8
The Globe and Mail (Canada)
September 19, 2000
Kremlin rules Russia's airwaves Putin views media as threat to security,
takes control of television channels
GEOFFREY YORK
MOSCOW BUREAU


A relentless Kremlin campaign to seize control of Russia's top television 
channels is nearing completion, with two major channels now under state 
domination.


The third major television channel, which has resisted the Kremlin crackdown, 
is fighting a losing battle for the final shreds of its independence, 
analysts say.


The success of the Kremlin's campaign is a huge victory for Russian President 
Vladimir Putin, who has repeatedly denounced the owners of the privately 
controlled channels.


In an emotional outburst last month, Mr. Putin accused the television channel 
owners of discrediting and destroying the military.


"They're lying," he complained to the relatives of the seamen who died on the 
nuclear submarine Kursk. "They have been stealing money to their hearts' 
content, and now they are buying everyone and everything."


The Kremlin already owns RTR, one of the three leading television channels. 
But in recent months it has targeted the other two channels: ORT, controlled 
by tycoon Boris Berezovsky, and NTV, owned by media entrepreneur Vladimir 
Gusinsky.


After a series of personnel shuffles over the past month, it now appears that 
the Kremlin has captured control of ORT, the most influential channel in the 
country.


And yesterday, Mr. Gusinsky confirmed that he had agreed to sell NTV's parent 
company to the state-controlled gas monopoly, Gazprom, although he is now 
trying to cancel the deal.


Mr. Gusinsky said he had agreed -- almost "at gunpoint" -- to sell his media 
holdings to Gazprom for the equivalent of $1.14-billion to avoid the threat 
of prison after spending three days in the notorious Butyrka jail on fraud 
charges in June.


While NTV has struggled desperately to keep its freedom, observers say the 
channel has already been hobbled by the Gazprom deal and the jailing of its 
owner. The channel has muted its opposition to the Kremlin and Mr. Gusinsky 
has fled into exile in Western Europe.


"NTV has definitely been chastened," said Robert Coalson, a media analyst in 
Russia. "Its editorial content has already been affected. It has become 
quieter and more conservative."


For many years, NTV was the most independent television channel in Russia, 
criticizing the Kremlin for its handling of the war in Chechnya and, more 
recently, the Kursk submarine disaster.


But after the election of Mr. Putin this year, Russian authorities have 
repeatedly harassed and intimidated NTV. In addition to the jailing of Mr. 
Gusinsky, the channel's offices have been raided and its journalists have 
been barred from Kremlin events.


"We are free, but we are under pressure," said Mikhail Berger, 
editor-in-chief of Sevodnya, a newspaper owned by NTV's parent company.


Last week, an NTV cameraman in Chechnya was thrown to the ground by Russian 
soldiers when he tried to videotape a Chechen leader.


"It's the kind of incident we're going to see a lot more of," Mr. Coalson 
said.


The analyst cited a new Kremlin "information security doctrine," signed by 
Mr. Putin last week and posted on a government Web site, that portrays the 
news media as a potential threat to national security.


"This doctrine has been distributed to the entire executive branch of 
government, including the military, and they can interpret it any way they 
want," Mr. Coalson said. "The Kremlin is declaring open season on the media."


The new doctrine warns that foreign enemies could exploit the media as 
weapons in "information wars" to weaken Russia and to "infringe on Russia's 
interests in the global information space."


The Kremlin seems to have already captured its top media target, ORT. While 
the state owns 51 per cent of the channel, for years it was controlled by its 
minority shareholder, Mr. Berezovsky, who used his wealth to purchase the 
loyalty of its top staff.


But in a swift series of moves over the past month, the Kremlin has forced 
most of Mr. Berezovsky's allies to abandon the channel.


"The Kremlin believes it has almost captured ORT," the Moscow daily newspaper 
Vedomosti reported last week.


The newspaper, quoting a source in Mr. Putin's administration, reported that 
four of Mr. Berezovsky's top five allies at ORT have been forced to quit or 
switch their loyalties to the Kremlin.


The Kremlin's plan is to gain control of Russia's three top television 
channels by the end of this year, and it is confident that the plan is 
unfolding on schedule, the newspaper reported, quoting its Kremlin source.


******


#9
From: "Andrew Miller" <andcarmil@hotmail.com>
Subject: economics comment
Date: Tue, 19 Sep 2000 


Topic: Russian Economic Statistics
Title: Rubles and Sense


QUOTE I've been very impressed with the consistent and clear message coming 
from the current Russian leadership that they have to behave like a 
CIVILIZED country, which is a special expression used in Russia that means a 
law-based society and economy. UNQUOTE John Odling-Smee, IMF, September 
11, 2000.


For perhaps the first time in the 20th Century, Russia is experiencing 
really substantial economic growth - 6.7% in the second quarter of this 
year, a shockingly high figure given Russia's anemic past. Is this good news 
for Russia? Five years from now, those who care will be saying that, no, it 
was the worst kind of bad news.


Because the one and only economic factor that has changed in Russia and 
could be corrolated with this so-called growth (which is, of course, really 
on the recapture of lost ground) has been the currency implosion which began 
two years ago (Russia has now experienced 400% hyper-deflation of its 
ruble). This has made Russian products dramatically cheaper for 
international buyers, thereby increasing demand for them, and has produced a 
year-on June trade surplus of nearly $50 billion. Incidentally, there has 
been a marked upsurge in the price of oil which gives a marginal magnifying 
gloss to the phenomenon. The trade surplus and the price of oil - two more 
pieces of really bad news for Russia.


Both Poland and Hungary (neither oil producers) have growth rates nearly 
equal to Russia's (going deeper, Poland's industrial growth rate was nearly 
triple that of Russia, and Hungary's roughly equal, year-on June). But 
Poland has a $15 billion trade DEFICIT, and Hungary operates $2 billion in 
the red. This is because, of course, the price of their relatively shoddy 
goods has been relatively constant for the past two years, their currencies 
not having imploded.


Yet, both Poland and Hungary were able to match Russia's growth! Somehow, 
with no discount effect, each managed to produce, sell and grow.


What advantages do these two states possess over Russia? Are we prepared to 
say that Hungarians and Poles are smarter and/or harder working than 
Russians? Let us not do so.


Let us say this instead: these two countries simply have none of the 
DISadvantages that Russia offers: no war, no secret police president, no 
communist legislature, no xenophobic economic policy, no systemic 
corruption, no paranoid nationalism.


To the contrary, Poland and Hungary are forming solid partnerships with 
important world economic movers and shakers, and may soon be full-blown EU 
and NATO participants. Russia, by contrast, is courting Iraq, North Korea, 
Libya and Red China.


Not burdened by the need to artificially support the national currency, 
Poland and Hungary have together amassed nearly double the foreign reserves 
Russia has (Poland alone holds reserves 20% larger than Russia) although 
these two tiny countries combine for less than one-third of Russia's 
population.


Russian interest rates are triple that of Hungary and double that of Poland 
(the natural, investment-crushing result of increased demand for money due 
to the desire to purchase expensive foreign products with worthless rubles). 
Russia had 18.8% year-on August consumer price inflation, while Poland had 
11.6% and Hungary 9.6%. Compared to the stock market capitalization of 
either Poland or Hungary, the Russian stock market literally does not exist.


Now in Russia, in addition to compliments from the IMF, there is talk of 
replacing PM Kasyanov, a man with no credible economic training, practice or 
skills. Who will replace him? Will it be Roman Gref, the current economics 
czar and close confidant of the President? Mr. Gref has absolutely no 
economics training of any kind whatsoever (he is a law school graduate from 
President Putin's alma mater) and his resume is littered with a tawdry and 
seemingly endless list of abject policy failures in the one and only job 
he's ever had - doing what Vladimir Putin told him to do when both were 
economics functionaries in the local government here in St. Petersburg.


If Mr. Gref receives any kind of promotion, much less the PM-ship, it will 
signal the beginning of the end for Russia. In any case, anyone who reviews 
the foregoing basic economic data should be able to clearly see that a 
general economic collapse is now unavoidable in Russia, and begin counting 
the days. Anyone who invests money in Russia now will get precisely the 
return he richly deserves.


Closing, with due respect to Mr. Odling-Smee and the IMF, who I'm sure work 
very hard and diligently, they need some Russian lessons (not to mention 
Russia lessons) and I'd be happy to recommend any number of excellent 
instructors. The Russian use of the world CIVILIZED is not as Mr. 
Odling-Smee characterizes it at all. Rather, when Russians use this word 
they mean: behave in such a way as not to scare off the moronic, 
filthy-rich foreigners before they've handed over as much of their cash as 
we can carry.


Ask any Russian you know, I invite you.


Andrew Miller
St. Petersburg, Russia


PS: Source for all the foregoing economic data is the September 9 issue of 
The Economist.


******


#10
CBS.MarketWatch.com
September 19, 2000
Russia's New Economy is booming - or is it? 
By Saskia Wirth
Saskia Wirth is a reporter for CBS.MarketWatch.com in London.


LONDON (CBS.MW) -- Is Russia's Internet sector the new frontier for European 
businesses? There has been much talk about the possibilities the Internet 
offers a country whose economy is still lagging behind the West in many 
respects. But is it all hype and no substance?


In Europe and the U.S., the Internet has already completely transformed the 
way business is being done. In a country the size of Russia, many believe, it 
could provide a powerful tool to not only overcome distance, but also help 
companies to slim down excessive Soviet-style over-regulation and become more 
cost-efficient. 


Problem is, only a fraction of the 150 million Russians is online. Credit 
Suisse First Boston estimates that Russia has an Internet penetration rate of 
1 percent, and that there are about 5 to 7 million PCs in the country, 
amounting to a PC penetration rate of 3.3 to 5 percent. 


Sergey Skaterschikov is a member of the advisory board of red-stars.com, 
which provides a platform for Internet start-ups on the European emerging 
markets. He estimates that about $700 million will be poured into Russia's 
new economy this year, but thinks that the recent hype is out of touch with 
the realities of the Russian economy. 


"Russia's much talked-about Internet boom is at the moment not translating 
into anything substantial, i.e. money and profits," he said. "The Internet in 
Russia is still in its infancy. There is simply no underlying infrastructure, 
growth opportunities are slow and there is a very low Internet penetration 
rate. It will take a few more years for companies investing in Russia's new 
economy to enjoy the benefits."


What Internet sector?


One of the big question marks over Russia's New Economy is whether at present 
there is an actual market for expanding Internet services and e-commerce. 
Real wages in Russia have declined an average 10 percent a year since 1991, 
the Economist Intelligence Unit think tank found, and the average Russian 
earns about $70 a month. With about 40 percent of the population living below 
the official poverty line, credit cards are pretty rare too.


Apart from that, Russia's underdeveloped communications infrastructure is a 
mess. Even though the Russian Ministry of Communications has drawn up a 
program to boost e-commerce, lots more needs to be done. 


But Kings Millbond, head of Russian Research at Deutsche Morgan Greenfell, is 
optimistic: "Russia is undoubtedly experiencing an Internet boom. The number 
of people using the Internet is growing fast." 


Monitoring.ru, a Russian market research company, predicts that the number of 
Internet users in Russia will rise to about 11 million by the end of the 
year. The most popular sites, however, remain entertainment, education and 
news sites.


But there is clearly a lot of potential for companies planning to expand 
online services. Take the banking sector. While many Russian banks are chewed 
up by large operating costs, Guta Bank, for example, provides a promising 
exception. With about 25,000 clients profits remain relatively low, but the 
bank survived the 1998 crash reasonably well and now focuses on its Internet 
strategy. 


Guta Bank recently launched a $40 million Internet portal, one of the largest 
investments in Russia's New Economy so far, and offers a series of online 
services ranging from account management to equity trading. 


Likewise, the Russian mobile phone company Golden Telecom (GLDN: news, chart) 
now focuses on Internet access for its customers. The facilities-based 
telecommunications provider is taking advantage of Russia's economic 
difficulties to consolidate telecom and Internet businesses through 
acquisitions. 


Golden Telecom struck a deal with Cisco Systems (CSCO: news, chart), the 
provider of Internet network solutions, in June this year to improve its 
network and Internet services. "Golden Telecom is buying a lot into Internet 
businesses," said Mr. Skaterschikov. "There have been a few promising 
initiatives in the B2B and e-commerce sector, but they will not translate 
into profits over the next 24 months."


Go west


While the Russian economy is still recovering from the 1998 financial crash, 
Russia's President Vladimir Putin has long recognized the need to open up the 
domestic market to international businesses, and foreign investors are eager 
to get a foot in the door. 


But even though Russia is catching up and computer sales are among the 
highest in Europe, the Russian economy remains highly protectionist and 
vulnerable, and the government will have to introduce wide-ranging economic 
as well as legal reforms if it wants to create a business-friendly 
environment and attract more investors. 


For now, Russia remains dangerous terrain for investors. "Russia is not 
interesting for big investors," said Mr. Skaterschikov. "Businesses are 
suffering from corruption and inefficient distribution channels. Many 
companies use pirate software, and the overall business environment is very 
difficult. Entering Russia as an investor is a risk."


He's got a point. Foreign investors often struggle with red tape and bribery, 
as well as a legal system that is exposed to political pressure and vested 
interests from local established businesses.


Russia's tax system isn't doing so well either. While foreign firms are often 
harassed by tax collectors, many local businesses have made hush-hush deals 
and the government loses vast amounts of tax revenue every year - money 
urgently needed to invest in Russia's economic infrastructure. 


Lots more need to be done. "Clearly it is very early days," said Mr. 
Millbond. "A lot of people going online does not yet translate into 
e-commerce, and it will be another three to four years until that kicks off 
and will translate into profits." 


*******


#11
Washington Times
September 19, 2000
Berezovsky: Putin a threat to freedom 
By David Sands


Russian President Vladimir Putin poses a threat to Russian political 
liberties and press freedoms, powerful Moscow businessman Boris Berezovsky 
warned yesterday. 
Mr. Berezovsky, perhaps the best known of Russia's small group of 
superwealthy "oligarchs," was in Washington yesterday to tout his new 
"unified opposition" movement after publicly breaking with Mr. Putin last 
month over the new president's bid to centralize power in the Kremlin.
Mr. Putin "wants to combine all political power — executive, 
legislative, judicial — in his own hands," Mr. Berezovsky said yesterday. 
"There is no real opposition in Russia today whatsoever."
Mr. Berezovsky, who last month resigned his seat in the State Duma, the 
more powerful of Russia's two legislative chambers, charged that moves by Mr. 
Putin's government to control the country's three dominant television 
networks posed a direct threat to freedom of the press in Russia.
"Forget the words, watch the actions," said Mr. Berezovsky, who said he 
was divesting his own holdings in one of the three networks.
"Their moves mean a final end to freedom of expression in Russia," he 
said.
As Mr. Berezovsky was speaking, in Moscow media magnate Vladimir 
Gusinsky, whose NTV media empire has been the most critical of the 
government, told reporters he had been forced to relinquish control of his 
Media-MOST press empire under heavy pressure from the government.
Mr. Gusinsky, who was briefly jailed this spring on vague charges of 
fraud, said he was backing out on an agreement to sell his media companies to 
Russia's gas monopoly, Gazprom, saying he only agreed to the $773 million 
deal under pressure from Russian state prosecutors.
"I was set free like a hostage," Mr. Gusinsky charged yesterday, saying 
he agreed to the sale in June "at gunpoint." Gazprom has denied the charges 
and said the sale was negotiated in part to settle a $473 million debt Mr. 
Gusinsky's company owed to the gas company.
Mr. Berezovsky emerged as one of the most controversial of the oligarchs 
in the 1990s, with heavy political clout to match his vast holdings in 
mineral rights and other assets of the old Soviet Union. His money and 
influence are credited with helping Boris Yeltsin squeak past Communist 
challenger Gennady Zyuganov in the 1996 presidential election, and he was 
initially seen as a close adviser to Mr. Putin as well.
But Mr. Berezovsky has become one of Mr. Putin's fiercest domestic 
critics in the wake of a Kremlin-backed plan to strip Russia's powerful 
regional governors of much of their power and enhance the powers of the 
central government.
Unwinding his business affairs from his political ambitions is still 
proving difficult for Mr. Berezovsky. Several questions at yesterday's press 
briefing focused on a complicated proposal by Mr. Berezovsky to divest his 49 
percent share in ORT, Russia's top-rated television station.
Despite the grinding war in Chechnya and the Kursk nuclear submarine 
disaster, Mr. Putin remains easily the most popular politician in Russia, 
with the economy picking up and the Kremlin enjoying firm support in the Duma.
But Mr. Berezovsky maintained yesterday that the president had alienated 
the country's "business and political elites" with its government overhaul 
program, and that his high ratings in the polls could prove only temporary.
"When you look at the speed at which his popularity went up, I think it 
could go down just as fast," the Russian magnate said, accusing Mr. Putin of 
trying to establish a "quasi-Chilean" model for Russia combining economic 
liberalism with political authoritarianism.
But Mr. Berezovsky was vague about the mechanics of his proposed 
opposition movement, indicating it would not be like a traditional political 
party and that he would not be a candidate to challenge Mr. Putin in the 
future.
He said a key base of support will be Russians living abroad, including 
the large Russian emigre communities in Israel and the United States. In 
addition to talking to reporters and meeting privately with U.S. government 
and business leaders here, Mr. Berezovsky said he planned to travel to 
Brooklyn to meet with the large Russian-American community there.


******
#12
BBC MONITORING
RUSSIAN TYCOON GIVES NEW YORK AUDIENCE HIS VIEW OF YELTSIN, PUTIN AND
OLIGARCHS
Text of report by Russian NTV International television on 19th September 


[Presenter] Famous entrepreneur Boris Berezovskiy has been addressing a
Russian-speaking audience in New York. A report from Vladimir Lenskiy. 


[Correspondent] Russian politicians are a rare sight in Brighton Beach.
Boris Berezovskiy played to a packed house at the Millennium Theatre. The
writer Vasiliy Aksenov, who now lives in the USA, opened the meeting. 


[Aksenov] Here, in our capital outside the homeland, Brighton Beach. 


[Correspondent] Boris Berezovskiy was invited to Brighton by the Russian
television company TVR. The guest from Moscow talked about Russia's past,
present and future. He called Boris Yeltsin a real Russian tsar. 


[Berezovskiy] He assiduously kept the space around himself clear and did
not permit a single strong person in his entourage, again, not because he
was afraid but because he could not contemplate that anyone might compete
with him. He simply believed that everyone should receive his blessing, or
boons from the tsar. 


[Correspondent] Berezovskiy believes that Putin has made a number of
serious mistakes, one in respect of the independent press. 


[Berezovskiy] First there was the attempt to subordinate NTV and bring it
under state control. Then there was the attempt to bring Russian Public
Television under state control. As yet not a great deal has come of this,
some things have come off, many things have not come off yet. However, I
can say with confidence that if this were to succeed, the freedom of speech
issue would certainly be resolved once and for all in Russia. 


[Correspondent] Questions from the floor were direct: why had Berezovskiy
initially supported Putin, why had he not gone into opposition? 


[Berezovskiy] If Primakov had come to power, the situation would quite
simply have been irreversible. Under Putin, despite the mass of errors he
has made, the situation is still not catastrophic. I believe there is a way
out of this situation. 


[Correspondent] Speaking about the results of privatization, Berezovskiy
also mentioned the oligarchs, using the third person. 


[Berezovskiy] Well, who got the most out of this redistribution? Those whom
today we call the oligarchs, yes? They got the most. And it is they who
have fought most amongst themselves, because they were not satisfied, each
oligarch believing that the next had got more than his due and he should
have had more. 


[Correspondent] The Brighton residents listened attentively, applauding
from time to time. They couldn't quite work out why this man of influence
in Russia was addressing them in New York. Admission to the Boris
Berezovskiy evening in Brighton Beach was by ticket only. The tickets were
being given out free. There was a huge queue. Interest in this man is very
high in Brighton Beach, where he is regarded not so much as a businessman
as a Russian politician. 


******


#13
Nezavisimaya Gazeta
September 19, 2000
[translation from RIA Novosti for personal use only]
ABM IS A GLOBAL PROBLEM
Russia will move a draft resolution in support of the ABM 
Treaty at the next UN General Assembly 
By Dmitry GORNOSTAYEV

The recent address of President Vladimir Putin to the 
Millennium Summit, held in the UN headquarters in New York, 
caused major repercussions, and Igor Ivanov's speech largely 
added to and developed the president's theses. In fact, Ivanov 
put forth the guidelines of the recently approved foreign 
policy concept of Russia and did this in a way that it 
engendered interest in virtually everyone who heard about it. 
This was done mostly because Ivanov's speech was centered 
around the need to maintain and strengthen strategic stability, 
which explains the logical accent on the importance of the ABM 
Treaty. In this sense, say our sources in the Russian 
delegation in New York, Moscow expects the results of voting on 
the draft resolution in support of the ABM Treaty to be much 
better than last year, when 80 members approved a similar 
resolution, with only four countries (the USA, Israel, Latvia 
and Micronesia) voting against it. 
These positive expectations were engendered by the fact 
that in the past year Russian diplomacy moved the ABM problem 
to the international plane and created an unofficial coalition 
of states which proclaimed their rejection of the US NMD plans. 

Facets of Strategic Stability

Strategic stability as such is more than just disarmament 
and ballistic missile defence. Igor Ivanov clearly showed that 
strategic stability has several facets, several components that 
actually determine the progress of humankind and the creation 
of a new international community in conditions of 
globalisation. As the Russian minister said, "the strategy of 
survival should be replaced with a strategy of stable 
development and prosperity of humankind." 
This strategy should be based on the recognition of the 
indivisible nature of international security, the use of modern 
research and technical achievements to the benefit of the 
entire international community, and consistent rapprochement of 
the development levels of different states. "These major goals 
can be attained only in conditions of the maintenance and 
strengthening of strategic stability in the broadest meaning of 
this word," The Russian foreign minister said. 
Igor Ivanov interpreted this notion in the best possible 
manner, trying to make it understandable to states with 
different interests and priorities. Strategic stability 
includes "further consistent development of the disarmament 
process, the prevention of the proliferation of mass 
destruction weapons," "the ensurance of international 
information security and resistance to the use of the 
achievements of the research and technological revolution for 
purposes that are incompatible with general progress." Ivanov 
said strategic stability also encompasses "the strengthening of 
peace and security on all continents, the settlement of 
existing and the prevention of new conflicts," as well as 
"security and tranquillity of the civic society and the 
individual," which can be guaranteed now only by joining hands 
in the struggle against aggressive separatism, religious 
extremism, international terrorism, organised crime, drug and 
weapons trafficking.
Strategic stability also includes "all-round guarantees of 
human rights and freedoms" and the strengthening of the 
material foundation of humankind's development "the creation of 
a mechanism of collective democratic administration of 
international currency-financial and trade-economic systems," 
which should become "more rational and fair and be spearheaded 
against poverty and underdevelopment." And one more facet of 
strategic stability is "the preservation of a clean and healthy 
environment." 
Russia believes that such all-embracing strategic 
stability should be guaranteed by "the United Nations 
Organisation, a universal forum that is unique in all senses, 
which has proved in practice its central role in the regulation 
of international relations." 
It appears that the notion of "strategic stability" has 
joined the term "multipolarity" on the Russian list of 
priorities during the creation of a new world order in the 21st 
century. And this notion, as Igor Ivanov's speech showed, has a 
clear-cut structure and practical contents. 

How to Carry on Disarmament

In addition to global strategic goals, the Russian 
minister also reminded the Assembly members of international 
problems that worry Russia. When speaking about the disarmament 
process, he called for the early enforcement of the 
comprehensive nuclear test ban treaty. "By ratifying this 
treaty, we will call on those who have not done this yet to 
follow suit," Ivanov said. 
The Russian foreign minister also mentioned the problem of 
the ABM Treaty, which is probably even more important from the 
viewpoint of Russian interests than the nuclear test ban treaty.
Although President Clinton's statement on postponing the 
decision to create an NMD system diffused tensions in 
Moscow-Washington relations, the USA has not renounced its NMD 
plans. And this worries Russia, which intends to carry on 
disarmament. "We expect the USA to follow in Russia's footsteps 
and complete the process of ratification of the START-2 Treaty, 
thus paving the way to its enforcement," Ivanov said. Moscow is 
prepared "to carry on the process of nuclear disarmament, to 
progress towards the signing of a START-3 Treaty with an even 
lower ceiling of 1,500 warheads.
But this will be possible only on the condition of the 
inviolability of the 1972 ABM Treaty. Its maintenance is the 
key element of global stability, a powerful barrier on the way 
of the race for nuclear and missile weapons, as well as other 
mass destruction weapons."

More Russian Initiatives 

By the way, Russia's initiatives at this General Assembly 
will not be limited to the invitation of GA members to vote for 
a resolution in support of the ABM Treaty. It will also move 
for their consideration a draft resolution on "achievements in 
the sphere of informatisation and telecommunications in the 
context of international information security." This will help 
Russia to keep abreast of the globalisation leaders. It is very 
important that Moscow does not overlook the problems of 
informatisation and new technologies, which the previous 
Russian leaders completely disregarded, and addresses them at 
different levels of late, including the presidential and 
ministerial ones.

Sovereignty and the Rights of Compatriots 
Igor Ivanov also spoke about the Russian position of 
principle concerning sovereignty and territorial integrity, the 
notions which were put in question by the NATO aggression 
against Yugoslavia. "Neglect for these principles, just as 
military intervention launched in violation of the UN Security 
Council, no matter what humanitarian motive was used to justify 
it, undermine the pillars of the world order and pave the way 
to arbitrariness in international affairs," Igor Ivanov said. 
He also touched upon the painful for Russia problem of 
compatriots abroad. "Regrettably, today, 55 years after the 
Great Victory, it is still too early to speak about a complete 
eradication of the virus of national exclusiveness," the 
foreign minister said. "We cannot accept a situation where 
people have no right to speak their mother tongue, are stripped 
of citizenship and fired on ethnic grounds, and when fighters 
against fascism are incarcerated, while ex-fascists enjoy the 
benevolent attitude of the authorities. The OSCE, the Council 
of Europe, and the UN High Commissioner for Human Rights should 
resolutely react to such occurrences." These critical words by 
the Russian foreign minister, even though he did not name the 
guilty party, clearly describe the situation in Latvia, which 
is guilty of the aforementioned violations of human rights. 

* * * 

Foreign Minister Igor Ivanov did not limit his speech to 
the subjects we mentioned in this article. He also spoke about 
the UN peacekeeping efforts, the need to combat terrorism and 
strengthen the universal legal regime, and about cooperation in 
preventing technogenic catastrophes. 

******