September 22, 2000    
This Date's Issues: 4532• 4533 • 

Johnson's Russia List
#4532
22 September 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Moscow Times EDITORIAL: Gusinsky Can't Pick And Choose.
2. gazeta.ru: Kursk Mystery Not To Be Concealed.
3. Stephen Blank: Lieven.
4. Dale Herspring: Lieven on the Kursk.
5. Robert English: submarine hulls.
6. Carnegie Endowment for International Peace: Panel on
135 Days of Putin with Anders Åslund, Michael McFaul, Lilia 
Shevtsova, and Stephen Holmes.
7. Interfax: RUSSIAN ECONOMIC GROWTH COULD END BY SUMMER 2001 - 
ECONOMIST.
8. Interfax: ECONOMIC AIDE ILLARIONOV PROPOSES CHANGE IN 
FEDERAL BUDGET STRUCTURE.
9. Interfax: Republicans, Democrats squabble over policy 
towards Russia in run up to elections.
10. Moscow Times: Robert Coalson, MEDIA WATCH: 
Through the Looking Glass.
11. Newsday: Steve Jacobson, Decline of Russia Began Long Ago.
(re sports)]
******


#1
Moscow Times
September 22, 2000 
EDITORIAL: Gusinsky Can't Pick And Choose 


"I want it all, I want it all, I want it all, and I want it now," goes the 
popular 1980s hit by the rock group Queen. 


That anthem sounds very much like the song that tycoon Vladimir Gusinsky has 
been belting out in recent days as he scrambles to keep control of his 
Media-MOST empire. 


State-controlled Gazprom is trying to collect on $473 million in debts owed 
by Media-MOST. Gusinsky is saying that the pressure for the debt is coming 
straight from the Kremlin. 


Over the past few months, Gusinsky has shown that he wants the best of two 
worlds. 


The stocky multimillionaire spent much of last week on a public relations 
road trip in the United States trumpeting the age-old American value of 
freedom of speech as being under threat in Russia. First Amendment rights are 
as American as apple pie, and Gusinsky appeared well aware of that fact as he 
wove into his itinerary a number of visits with leading American journalists 
and politicians. 


He painted a bleak picture of the independence of his media empire being 
under fire from the Kremlin, and from the tone of Western press reports this 
week seems to have made a few friends. 


But there is another old-fashioned value in the United States that is no 
doubt regarded by Wall Street as more important than freedom of the press: 
financial responsibility. Almost any American with a credit card would 
testify that he promptly pays on his debt every month f if only to avoid 
risking his credit record and ability to get a car or house loan for the next 
seven years. 


Furthermore, no company in the United States would be able to get away with 
owing almost half a billion dollars to a creditor and refusing to pay part of 
it back. The owner of the company would be forced to come up with the cash or 
go into bankruptcy. 


Put Gusinsky and his $473 million debt in the United States and see how far 
he would get trying to fight off a creditor by waving a flag of free press. 


To be fair, Russians would no doubt lose an important independent voice if 
Media-MOST were to be handed over to Gazprom. The other two leading channels, 
ORT and RTR, have a strong pro-Kremlin stance. 


But one fact is clear and simple: Media-MOST owes Gazprom millions of dollars 
that it cannot pay. 


Gusinsky can adopt the cherished Western value of free speech in fighting for 
his media holding. But he must also fight in the same way that any executive 
would have to in the West: Make good on his bills or bow out. 


Gusinsky can't have it all. 


******


#2
gazeta.ru
September 21, 2000
Kursk Mystery Not To Be Concealed
Russian naval experts should be granted an opportunity to examine the NATO
submarines Memphis, Toledo, and Splendid from at least a 100-200 meter
distance, said Alexei Arbatov, Deputy Chairman of the State Duma’s Defense
Committee and a member of the governmental commission formed to conduct a
probe into the Kursk disaster. 
The United States refused a Russian request to examine the U.S. submarines
that were in the Barents Sea on August 12 when the nuclear submarine Kursk
K-141 sank. 


Itar-Tass news agency quoted a Pentagon spokesman saying Defense Secretary
William Cohen had turned down the request from Russian Defense Minister
Sergeyev. 


The refusal backed up one of the three chief explanations of the Kursk
tragedy ­ that it was a collision with another underwater vehicle that
disabled the Russian sub. 


Alexei Georgievich, it has been nearly a week since several Duma deputies
were delegated into a governmental commission formed to investigate the
causes of the Kursk disaster. Has work begun? 


Yes, despite the fact that the President has not yet signed a decree
allowing Duma representatives to form the commission. 


When do you expect to elaborate on the investigation? 


In accordance with the chairman of the governmental commission, we will
regularly inform the State Duma. 


We will openly discuss some matters in our meetings, while other issues
will be submitted to the Duma Council. In the course of the investigation
topics of secret military equipment may be touched upon as well as issues
concerning Russia’s relations with other nations. 


Unfortunately, the United States’ refusal to allow Russian observers to
examine two of their submarines at the NATO naval bases suggests that a
collision between the Kursk and another submarine could have occurred. 


Therefore, this investigation will touch upon rather delicate material, and
information must be sorted out carefully. 


On Wednesday the State Duma did not support Alexei Mitrofanov’s request to
the United States and Great Britain that the deputies be allowed to examine
the submarines Memphis, Toledo and Splendid. Nevertheless, the draft to
delegate members of the governmental commission will be submitted again
next week. Do you think this plan will work? 


As for Mitrofanov’s initiative, it is symbolic in nature. That request is
being submitted with the goal of provoking new mutual accusations. 


In the mean time, the State Duma’s address to the authorities of the U.S.
and Great Britain, requesting that Russian naval experts be allowed to
their bases, is pressing. The refusal received by the Russian Defense
Ministry should be reconsidered. After all, from a distance of 100-200
meters the experts will be able to determine at once whether those
submarines had anything to do with the alleged collision. 


It is unnecessary for the deputies to be present at the examination. 


What do you think of the situation concerning the salvage of the submarine
and the recovering the bodies of the dead crew? The timing of implementing
those projects is yet to be determined, and it is difficult to tell if the
Kursk will be ever lifted… 


The impression is that the government is not willing to recover either the
bodies or the sub. There is a feeling that the naval officials have a sort
of a two-year plan. They say that the bodies must not be recovered from the
sub, for that operation (cutting holes in the hull) would ruin the hull of
the submarine. 


Time will elapse, and once conclusions can be drawn from the governmental
commission it will finally be possible to begin the salvage operation. But
such a scenario is unacceptable. The authorities must be held responsible
for every promise they make, otherwise, they will loose their influence on
population. 


After all, only after the Kursk is lifted, will the true reasons for the
disaster will be established. 


What are the chances that the bodies of at least some of the crew members
may be recovered? 


First of all, one needs to realize the scale of the disaster. Remember the
Pushkin Square underpass explosion? Less than 2 kilos of explosives were
detonated. The explosion occurred in an open underpass, and still, there
were many victims…. The explosion that occurred on board the Kursk was a
thousand times more powerful and it took place in a fully closed compartment. 


Since experts agree that most of the sub was ruined by an explosion, it
will be impossible to recover the bodies of most of the crew. One should
also take into account the period of time that has already elapsed since
the day the Kursk sank. However, it is possible that some bodies be
recovered from the middle and rear compartments of the sub… 


You have already been given access to documentation on the accident
prepared by governmental investigators. As of today, what is the most
plausible official version of the Kursk tragedy? 


(Chairman of the governmental investigating commission, the vice Prime
Minister) Ilya Klebanov has suggested three possibilities: a (World War
Two) mine, a collision, or explosions resulting from a technical failure. 


>From a technical stand-point, these three ideas are considered equally
plausible. From a political point of view, the suggestion that there was a
collision with another submarine seems most likely. 


Yelena Rudneva 
*******


#3
Date: Thu, 21 Sep 2000 
From: "Stephen Blank" <BlankS@awc.carlisle.army.mil> 
Subject: Lieven


One of the virtues of working for the armed forces is that you get to learn
about military affairs from the inside and in detail, and this is a lifelong
process. Unfotunately many commentators throughout the world of
itnernational relations know little or nothing about military issues yet
still they can speak authoritatively on them. It is standard practice here
and in the Rsusian Navy not to allow the kinds of inspectioins by foreigners
that Anatol Lieven thinks we should do just in case the Russian authorities
are right about the Kursk. We should remember they initially refused help
proecisely because the Kursk was a new submarine and outfitted with new
weapons. At the same time we should not constantly be running togive Putin
and the authorities who are clearly mendacious and unconcerend about the
wlefare of their men (a truly criminal offense in any serious military
system) the benefit of every doubt whetehr it be on the Kursk or in the
creation of an authoritarian system at home, or other policies


*******


#4
Date: Thu, 21 Sep 2000 
From: falka@ksu.edu (Dale Herspring)
Subject: Lieven on the Kursk


I guess I shouldn't, but I never cease to be surprised at how little 
some people know about military hardware, yet how ready they are 
to comment on the issue.


Mr. Lieven suggests that Cohen or the US Navy should permit the 
Russians to inspect the submarines that were in the vicinity of the 
Kursk when it went down. Submarines survive by stealth, and I 
suspect those who would be sent to inspect the submarine would 
be experts in the area. Second, the Russians themselves know 
that none of these submarines were seriously damaged -- after all, 
they have satellites which I am sure tell them exactly what kind of 
shape the subs are in. I just came back from Pearl Harbor, where 
the submarines were tied up in the open, clearly visible to 
satellites. Why should we permit Russians or anyone else to 
tromp around one of the most sensitive pieces of equipment in the 
US weapons invetory. Besides, even if they did and no damage 
was discovered, I suspect that would not end the story.


The real problem is that the Russian Navy does not want to admit 
what most specialists in the field believe to be obvious -- the 
Russians were trying to test a new torpedo using hydrogen 
peroxide, which is highly unstable, and the who mess went bang.


*******


#5
Date: Thu, 21 Sep 2000 
From: Robert English <renglish@ias.edu> 
Subject: submarine hulls


Robert English
Institute for Advanced Study
Princeton, NJ


Dear David,


With regard to Anatol Lieven's recent note, which argued for US acquiescence
in Russia's request to inspect those of its submarines "accused by the
Russian Navy of collision with the Kursk," the matter may be rather more
complex than it (that is, the US Navy's obstinance) appears. At least
moreso than implied by the assertion that rejecting such an inspection on
security grounds is baseless because "we all know what the outside of a sub
looks like." 


In fact, few of us know what the outside of a modern sub looks like--except
in the most (literally) superficial sense--because many recent technological
advances in submarine and anti-submarine warfare (ASW) have been focused
precisely there, on the vessel's skin. These range from the materials and
forms that permit more rapid and, especially, quiet passage through such a
dense medium to the nature, number, and positioning of ultra-sophisticated
sensors. In other words, many of the technologies crucial to avoiding
detection while detecting the other guy--arguably, the area of the US Navy's
most important ASW advantage. It's like stealth technology to the Air
Force, except perhaps even more critical.


That said, perhaps some expert could venture an opinion on the feasibility
of an inspection that could satisfy both sides' legitimate concerns. In any
case, I can only endorse Lieven's broader point on the pervasiveness of
Cold-War attitudes that are part of the larger backdrop to the Kursk
tragedy. 


********


#6
Carnegie Endowment for International Peace
1779 Massachusetts Ave. NW
Washington, DC 20036
Russian and Eurasian Program Vol. 2, No. 5, Sept. 19, 2000


135 Days of Putin
On September 19, 2000 a panel consisting of Carnegie Endowment Senior
Associates Anders Åslund, Michael McFaul and Lilia Shevtsova as well as
Visiting scholar Stephen Holmes discussed the accomplishments of the first
several months of Vladimir Putin's presidency, reviewed the impact of his
policies and reforms, and made predictions about the future of Russian
democracy and economy. The panel was moderated by Andrew Kuchins, Director
of Russian and Eurasian Program at the Endowment.


Introduction


The discussion was started off by Andrew Kuchins underscoring the
remarkable level of activity displayed by Vladimir Putin so far: "Whether
he is throwing people in jail or being thrown by a 10-year-old Japanese
girl in a Judo match, Mr. Putin, unlike his predecessors, has been deeply
engaged in the day-to-day business of ruling Russia." The Russian
president's quick consolidation of power, his choice of an economically
reform-minded and market-oriented team of advisors as well as Putin's "very
peripatetic foreign policy" have all been hallmarks of the last few months.
Kuchins mentioned the tragic events of August -- the explosion at
Pushkinskaya square, the sinking of The Kursk and the fire in Ostankino --
and hoped for a turn for the better, signaled by Marat Safin's victory in
the U.S. Open. He then gave the floor to the panelists.


Michael McFaul: "The Thermidor Period"


Senior Associate Michael McFaul set out to outline president Putin's major
political reforms and to evaluate the previous assumptions of Western
analysts in light of the recent changes. 


Leaving the discussion of the latest economic reforms and the direction of
Russia's foreign policy to other panelists, McFaul still acknowledged that
Putin "has done more in the first 135 days than most presidents will ever
do in any country regarding economic reform changes." He also pointed out
that the dynamic of Russian foreign policy has been reversed, no longer
consisting solely of "Russia's defense and reaction to other people's
initiatives." According to McFaul, President Putin should be given credit
for this reversal, as he has removed vexing issues like START II from the
agenda and "offered alternatives to projects, such as NMD, that force
others to react."


Turning to the political sphere, Michael McFaul called the changes in
Russian political system both "radical and unexpected." He identified six
kinds of relationships, which have been affected dramatically by Putin's
rise to power. The first one is "the threat of state collapse" and the
link between Russia and Chechnya; the public perception that Chechnya will
eventually separate from Russia has essentially disappeared. Secondly, the
relationship between the president and the Duma is now fundamentally
different from the one that had existed under Yeltsin, and McFaul predicted
that we would see more initiatives weakening the Duma and political parties
in the fall. The third radical change occurred in the composition of the
Federation Council and the power exercised by this institution. Fourthly,
the center-regional relationship has been altered dramatically, as the
president has gained "the power to remove governors and dissolve regional
legislators." According to McFaul, this change has been "the biggest
setback for what little fragile democratic institutions were alive before
Putin." Changes in relations between the president and the media are also
significant and quite vivid due to high-profile cases of ORT, NTV and
Babitsky. Finally, Putin's treatment of the so-called "oligarchs" has been
very different from Yeltsin's cooperation with them.


Summarizing these six radical changes, McFaul proposed that "every major
center of autonomous political power in Russian polity that we knew twelve
months ago has been weakened as a result of Putin coming to power." He
then turned to the evaluation of the previous assumptions made by Western
experts on Russia. McFaul argued that the analysis of the balances of
power in Russia had been wrong. He posed that "we misinterpreted weak
leaders for weak political regime as a whole," that the ability of changes
at the top to shake up the whole system was underestimated, and that too
much attention has been focused on alternative power structures, such as
oligarchs and regional leaders. To that McFaul added a controversial
statement, that "we underestimated the importance of the opposition of
institutions like the Duma during Yeltsin years," which is evident now that
this institution is in cahoots with the president. In other words, during
the Yeltsin years, the analysts had wrongly "assumed a weak state and a
weak society." The recent attack on alternative political institutions,
the struggle for ownership and control of the media and the continued
domination of the stock market by two state-owned enterprises proves that
the power of the Russian state has been greatly underestimated.


The other assumption McFaul argued against was the emphasis on continuity
from Yeltsin's to Putin's presidency. Instead of looking for similarities
in either Brezhnev or tsarist periods in the Russian history, McFaul
proposed that the metaphor of "partial revolution, or Thermidor period" was
more appropriate. He pointed out that the Communist/anti-Communist divide
is now over in Russia, but, as in any other "Thermidor periods," no one is
quite sure what has replaced it. McFaul also stressed that principles and
ideology are not as important to Putin as they had been to Yeltsin.
Instead, Putin is focusing on "interests and institutions." McFaul
concluded his presentation by warning the audience against making the
assumption that "all revolutions need Thermidors."


Lilia Shevtsova: "Yeltsin's terminator" or "disciplined Yeltsinism"?


Senior Associate Lilia Shevtsova started by saying that she wanted to add
some touches to the "vivid and provocative picture" painted by Michael
McFaul in the previous presentation. Shevtsova first focused on the
"continuity vs. change" debate, and then discussed several constraints and
challenges faced by Putin and his government.


Going back to the time Putin was appointed prime minister by Yeltsin,
Shevtsova pointed out that he was very cautious and that he "tried to
remain in Yeltsin's shadow." However, after gaining legitimacy at the
elections and from high approval ratings, Putin decided that if he ever
wanted to stop being "a puppet on a string," it was time to cut the link
between Yeltsin and himself. 


To free himself from Yeltsin's inheritance, Putin first "tried to create
his own parallel structure of power," consisting of "mega-districts" and
his own envoys. He soon realized that this did not give him enough room to
maneuver. Shevtsova proposed that at this point Putin "really attempted to
make an anti-Yeltsin revolution; he began to behave as if he was Yeltsin's
terminator, trying to dismantle the major elements and principles, the
whole atmosphere of Yeltsin's elected monarchy." 


"How far has Putin gone in breaking away from Yeltsin's influence," asked
Shevtsova. First, he tried to abolish the "major principle of Yeltsin's
rule -- the atmosphere of mutual acquiescence, mutual tolerance."
Secondly, Putin attempted to do away with Yeltsin's shadow system of checks
and balances, and instead began installing an "absolutely different model
and mechanism of governance, based on rigid compliance, discipline and
obedience." The balance of power within the system has not remained
unchanged, either. While Yeltsin depended on technocrats, pragmatists and
oligarchs, Putin has tended to rely on bureaucrats. Unlike his
predecessor, who thrived on revolutionary atmosphere with its lack of
accountability and ease of administrative reshuffling, Putin wants to end
the revolutionary cycle and dislikes constant reshuffling. Shevtsova saw
another discontinuity in the president's attitude towards special services.
While Yeltsin hated using security services in politics, Putin is
certainly more inclusive: "For the first time in Russian and Soviet
history, he introduced the special services as representatives, as people
and as an institution in the political decision-making process." Lastly,
Shevtsova noted that Yeltsin used anti-Communist ideology to consolidate
power, while Putin openly "demonstrates that he is absolutely not
ideological, that he is at ease with everybody and can form alliances with
anybody, including Communists."


In other words, Putin has "demolished the atmosphere, style, rhetoric and
principles of elected monarchy, leaving only the shell intact." Through
intimidation and fear, he has achieved "absolute victory," as no rivals are
now left standing. But can this victory be the foundation of his future
sustainable regime? Indeed, Shevtsova proposed, there are many constraints
and challenges that the Russian president is already facing or will face in
the near future. One of them is Putin's limited political experience. The
second challenge is Putin's lack of a coherent team of advisors. Shevtsova
argued that there are several different teams with separate plans competing
over influence on the president. Even these teams seem "unprepared to leave
the tactics of the pre-election cycle," and thus handle issues like
administrative and legislative reforms impulsively. The third constraint
on Putin is also his ally -- bureaucracy, "the most effective gravedigger
of all Russian reforms." 


Putin is also on the verge of the fourth trap, according to Shevtsova. If
he ever succeeds in concentrating all the resources in his hands, "he would
then be omnipotent and responsible for every little mistake" in any part of
his vast country. In this situation, it is easy to lose the approval
rating and legitimacy. As Shevtsova noted, "every [Russian] politician
should be afraid of August." For Putin, this past August was the "moment
of truth." However, he did not learn his lessons, he did not understand
how to handle a crisis situation, and thus lost 12 percent in approval
rating. "We still do not know how Putin will behave when he is threatened,
weakened or failing." Shevtsova offered three alternative scenarios for
this situation: Putin could follow Yeltsin's tradition of bargains and
tradeoffs; he could introduce more aggressive means to reassert his power;
or he could turn to building institutions and consensus with society. It
is too early to make predictions on Putin's choice of policy, Shevtsova
decided.


The final dilemma discussed by Shevtsova concerned the future of Putin's
project. She argued that the president's grand approach, based on fear and
compliance, is doomed to fail and that most likely Putin would construct
something resembling "disciplined Yeltsinism" -- an elected monarchy with
authoritarian symbols or impulses. The problem, however, lies in the fact
that Russia cannot afford either the failure or the success of Putin's
project. Russia does not have any powerful democratic alternatives to
Putin's project, but if it does succeed, it "might push the society to much
tougher measures."


Ending on a positive note, Lilia Shevtsova noted that Russians have begun
to tell political jokes again. While that does seem like a partial return
to the Soviet period, Shevtsova sees it as an indicator of a "healthy
attitude towards power" and a guarantee against an order based on compliance.


Anders Åslund: "Necessary disruption"


At the beginning of his presentation, Anders Åslund, Senior Associate at
the Endowment, used several statistics to tackle common pessimistic
attitudes towards Russia. He mentioned that the IMF forecasts for Russian
GDP growth in 2000 were updated from 1.5% at the beginning of this year to
7%. Åslund argued that this "sudden economic boom" is not exclusively due
to devaluation and high oil prices. "Admittedly, Russia will have a trade
surplus of more than $50 billion this year, and a current account surplus
exceeding $40 billion," said Åslund. However, there are indicators that
reveal a much deeper economic change -- such as the 17% increase in fixed
asset investment in 2000.


Åslund believed that the current economic growth in Russia is spurred by
several "fundamental qualitative changes." First, the government has
finally decided to put its finances in order. For years, Russian
government incurred a budget deficit of around 8% of GDP a year, and "this
is what really caused the financial crash of 1998." In 2000, however,
Russia will experience a budget surplus for the first time. Government
arrears have fallen dramatically. The budget itself has improved, now
including the essential items, like heating and electricity, without which
"government agencies have to go out on their own as entrepreneurs and try
to win more money through extortion." Åslund also praised the federal
government of Russia for cutting enterprise subsidies from 16% of GDP in
1998 to 5% in 2000. The second positive qualitative change is the increase
in federal revenues, achieved at the expense of the regions. While in 1998
federal revenues made up a mere 9% of GDP, in 2000 they are going to be
close to 18%. Åslund argued that due to lack of transparency and
accountability, Russian regions are much more corrupt than the federal
government. Recalling Michael McFaul's presentation, Åslund concurred that
"we can stop talking about the extraordinary weakness of the Russian state." 


The decline in barter is the third encouraging factor in the Russian
economy. Åslund compared the barter figures for August 1998, when 54% of
all industrial transactions were in barter, to this June's statistics of
26% barter. The cause for this sharp fall, according to Åslund, is the
new-sprung demand of enterprises to be paid.


Finally, the long-overdue tax reform has finally arrived in Russia. Åslund
described it as a "tremendous" one, including the adoption of a tax code, a
flat income tax of 13% for all Russian citizens, a sharp cut in social
security taxes and a cleanup of VAT and profit taxes, decreasing
corruption. The evident increase in corporate profits this year can be
partly attributed to businesses being more honest in revealing their
profits, a logical outcome of the tax reform.


At this point Åslund delved into the reasons behind the qualitative changes
described above. He proposed that the "hero of the story" was the
financial crash of August 1998. It was only then that "the federal
government realized that it could no longer fool around with an unrealistic
budget, a mass budget deficit and a generally corrupt system." The crash
also discredited the regions, which gave subsidies to local loss-making
enterprises. Another positive consequence was the political and financial
weakening of oligarchs and the realization of business management that they
had to change their "business as usual" tactics. Åslund used the example of
LUKoil and YUKOS starting to push for product-sharing agreements after the
crisis. Enterprises also started to realize that bankruptcy is a real
danger, and demanded pay for their output. Finally, Russia became a much
more open economy and exporters gained momentum due to falling exchange rates.


Thus, Åslund argued, August 1998 was "exactly what Russia needed, however
awful that sounds." It delivered the necessary shock to the whole system,
"shaking up the old paradigm, the old elite and causing a necessary
disruption." The crash also "took money out of the hands of the most
corrupt -- oligarchs and regional governors," and brought less corrupt
manufacturers to the fore. Lastly, anti-market thinking disappeared after
the crash, and Russia "has come to the consensus similar to that in Poland
of 1992."


But what role does Putin play in the economic progress? Åslund admitted,
"as you might have noticed, he is not very prominent." However, Åslund was
not concerned about Putin's political intrigues. Calling him a "superb
politician" and a "strategic opportunist," Åslund compared Putin to
Clinton, Blair and Schroeder. Putin "thrives on success, thrives on the
wave of economic growth." He has a very strong "liberal economic team,"
consisting of Kudrin and Gref, and he has pushed through legislation on tax
reform and regional accountability, at the same time reducing the influence
of "parasitical oligarchs." Åslund acknowledged that there are still
fundamental problems in Russian economy, concerning the bank system and
companies like Gazprom. "We should not think that corruption and
kleptocracy that Communists left behind would just go away, but you can
hardly get more done in the last two years than was actually done,"
concluded Åslund.


Stephen Holmes: "Prisoner in a maze"


Visiting scholar at the Endowment Stephen Holmes opened his presentation
with a bold statement: "In my opinion, the future of constitutionalism and
the rule of law in Russia is just as obscure as the future of the economy
and any other aspect of Putin's regime." Mentioning the current drafting
of a new Russian constitution, Holmes posed several questions about Putin's
objectives and capabilities -- does he want to decriminalize the economy,
and if so, can he do it? Holmes described the Russian president's
conception of law as "unusual," turning to Putin's statement that "if
Babitsky wanted to be treated according to Russian law, he should have
obeyed Russian law." Holmes remarked that consequences of this
presidential perspective on law are still unknown.


Holmes noted that the disparate views of the panelists represented the two
basic schools among observers of Russia. The first are the supporters of
Putin regime, those who "hope for economic liberalization"; the second
group fears political authoritarianism and, therefore, opposes the Russian
president's tactics. However, Holmes suggested that the three previous
presentations were based on the idea of Putin's break with the Yeltsin
regime. Disagreeing with Michael McFaul, Holmes proposed to "look for
different kinds of continuity, the ways in which a change at the top is
unable to shake up the system."


Holmes went on to claim that "it is just as difficult to create
authoritarianism as it is to create democracy, especially in the absence of
a gripping ideology." However, in Holmes's opinion, this is not due to the
power of the democratic forces in Russia, but is instead the result of both
"the vastness of problems facing the central power" and "the disproportion
of means and ends." Holmes argued that no leader can "simultaneously
decriminalize the economy and eliminate corruption in the public sector."
He also pointed out the problem of maintenance of Soviet infrastructure,
highlighted by the Ostankino fire in August. "No conceivable economic boom
can produce the wealth necessary to halt the decay of the infrastructure,"
he maintained. Hence, Holmes predicted, "Putin's regime will preside over
the continuing collapse of the Soviet Union and the decay of the system."
As for the weakness of Putin's tools, Holmes focused on disorganization
within the Russian bureaucracy, with all its "ministerial duplication,
fragmentation and unclear chain of command." To prove this, he turned to
Putin's negotiations between the military heads of conventional and nuclear
forces. "He acted not like a boss, but like a broker," commented Holmes.
The squabbles between the Ministry of Finance and the Central Bank, between
the Ministry of Foreign Affairs and the Ministry of Defense also reveal
Putin's inability to discipline the bureaucracy and break away from
Yeltsin's inheritance. Thus, on a power spectrum between Stalin and
Gogol's "revizor" (inspector) Holmes labeled Putin "a prisoner in a maze." 


What this "prisoner" was able to accomplish is to "poison the relations
between the Kremlin and all the Yeltsin-era elites, including financial
oligarchs, gubernatorial leaders, Moscow city government and heads of
natural monopolies." Concurring with Lilia Shevtsova, Holmes anticipated
Putin's need to replace the estranged elites. As the Russian president
lacks loyal disciplined followers, Holmes predicted that Putin would simply
pick other vassals. The same applies to the governors -- they are not
"shrieking" after the federal reform because they believe that Putin has to
rely on them. In fact, Holmes pointed out that "despite the reform, he has
not touched a single governor."


Another aspect of president Putin's 135 days in office, his "war on
critical media" deserved our attention as well. Holmes suggested that
Putin's previous training had led him to believe that to he was "making the
state stronger by making it more illegible" and that he could "run the
country better if no one criticized him." Indeed, Putin has a
"pathological and self-destructive need for secrecy." However, Holmes
maintained that the observers of Russia exaggerate Putin's break with
Yeltsin in this sphere, too. He claimed that "free media under Yeltsin had
not served to make Russian elite publicly accountable," and thus Putin was
not destroying an instrument of accountability. Holmes argued that the
same applied to the Duma, which was transfigured from "pointless
opposition" to "opportunistic servility."


To conclude his presentation, Holmes made several predictions. He expected
to see more of "politics of intrigue, rivalry and betrayal inside the
organs of executive power throughout the country." Holmes also anticipated
that Putin would not do much to help the poor, beyond talking about it,
while the "socially unaccountable elite continues to ignore the interests
of the effectively disenfranchised citizens." As for the anti-corruption
campaign, Holmes maintained that such a project in a weak state has always
meant "selective use of anti-corruption laws by one party against another;
providing use of law instead of a rule of law." 


Question and Answer Period


The presentations were followed by members of the audience addressing
questions to the panelists. Michael McFaul and Stephen Holmes debated the
classifications of Russia as a strong or a weak state and Putin's regime as
democratic or authoritarian. Lilia Shevtsova addressed the question about
The Moscow Times report on election fraud by confirming the awareness of
the Russian public about this issue and regretting the weakness of civil
society in Russia. The panelists discussed the state of the Russian
military. Finally, Anders Åslund responded to questions about Putin's
treatment of oligarchs by proclaiming that we are seeing "the wave of
dubious businessmen disappearing into the past."


Summary by Victoria Levin, Junior Fellow with the Russian and Eurasian
Program.
CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE
1779 Massachusetts Avenue, NW
Washington, DC 20036
Phone 202-483-7600
Fax 202-483-1840
www.ceip.org


******


#7
RUSSIAN ECONOMIC GROWTH COULD END BY SUMMER 2001 - ECONOMIST


MOSCOW. Sept 21 (Interfax) - Russian economic growth could peter
out by the summer of next year if the slowdown seen in recent months
continues, the Russian president's economic adviser said on Thursday.
GDP dynamics indicate that growth is slowing by 1.5 to 2 percentage
points every quarter, Andrei Illarionov told a news conference. In the
first quarter GDP rose 8.4% year-on-year, in the second quarter this
figure dropped to 6-7%, and in the third quarter, according to
preliminary forecasts, GDP will grow 5% year-on-year.
"If this trend continues, it is possible that the rate of economic
growth could fall dramatically in the first half of next year, and that
growth could stop by the summer," Illarionov said.


******


#8
ECONOMIC AIDE ILLARIONOV PROPOSES CHANGE IN FEDERAL BUDGET STRUCTURE


MOSCOW. Sept 21 (Interfax) - Presidential Economic Aide Andrei
Illarionov has said he believes it expedient to change the federal
budget structure.
It would be right "to have two parts, a budget of current spending
and revenues and a budget of capital significance," Illarionov said at a
news conference at the Interfax main office on Thursday.
The current budget should be based on a conservative forecast for
oil prices, and all extra revenues from a higher oil price should be
channeled into a fund for long-term development in Russia, he said.
The aide proposes that the extra revenues be used for paying the
domestic and foreign debt and financing the transition from a
distributive system of pensions to an accumulative one.


******


#9
Republicans, Democrats squabble over policy towards Russia in run up to
elections
By Interfax observers Igor Denisov and Alexander Kruglov


MOSCOW. Sept 21 (Interfax) - It has become apparent that if
Republican George W. Bush wins the November presidential elections, the
U.S. policy towards Russia will be almost completely revised.
A 209-page report by Congressional Republicans on the U.S. policy
vis-a-vis Russia accuses the White House, controlled by rival Democrats
for eight years, of missing the largest foreign policy opportunity
since the end of World War Two.
The report says that, while the Clinton Administration supported
the development of a market economy in Russia, it turned a blind eye to
corruption in high places. Washington spent tremendous amounts of money
to support the Russian Cabinet and emphasized relations with specific
personalities instead of establishing closer ties with Russian
legislative bodies, the report says.
The publication of the report at this particular moment is hardly
accidental. The Republicans are obviously troubled by the increasing
popularity of the Democratic candidate, Vice-President Al Gore, who is
supported, according to the latest polls, by 57% of Americans.
On the domestic front, the Democratic Administration is firmly
entrenched in the U.S. finances and economy having been consolidated
over the last eight years, entailing an improvement in living
standards. In foreign policy, however, Clinton made quite a few
miscalculations in the Middle East, in the Balkans and with Russia. So
the Republicans are striking where it hurts.
The U.S. public has been flooded with various rumors of rampant
corruption in Russia, "the Russian mob's" scams abroad and scandals
such as the one involving the Bank of New York. True, the BONY scandal
has revealed no evil plans nurtured by Moscow, but Russia's name has
been tarnished.
The report mentions Gore's refutation of the CIA memorandum about
millions of dollars that then Russian Prime Minister Viktor
Chernomyrdin allegedly kept on accounts abroad. Understandably, the
report targets Gore with his presidential ambition rather than Russia's
struggle for democracy or the U.S. policy towards Moscow.
"The Russian card" is played against Gore for obviously tactical
reasons, a Republican electoral victory would lead to a change of
emphasis in the U.S. policy towards Russia.
Condoleezza Rice, 45, an adviser to George W. Bush, who is pegged
as his future national security adviser, believes that the IMF should
terminate aid to Russia until that country puts its house in order.
The Russians receive money and carry out no reforms, Rice told the
British Sunday Times newspaper recently. Russia must do a lot before
even thinking of IMF aid, she said.
The newspaper quotes Rice as saying that the West pumped over $15
billion into Russia after the collapse of communism. Corrupt officials
have presumably remitted billions of dollars to offshore accounts, she
said. Instead of following in the footsteps of European democracies,
Russia shows signs of authoritarian rule, Rice argued.
According to Rice's public statements, Russia should not be under
any delusion about the ABM treaty. If they win the presidential
elections, despite Russia's objections, the Republicans will deploy a
national missile defense system that will be larger than that which the
Clinton Administration has put on ice.
Things are not that straightforward, though. Historically, it was
under George Bush, Sr., that the U.S. Administration did so much to
establish partnership relations with Russia following the
disintegration of the USSR. Chicken legs are colloquially referred to
as Bush's legs in Russia even now.
In effect, the level of Russian - U.S. relations today resulted
from the joint efforts of the Republicans and Democrats. The latter
seem to be deeply offended by the report.
The Administration responded nearly instantaneously. White House
press secretary Joe Lochhart has said that not only did the Democratic
Administration weaken the Soviet Union's nuclear shield, it
precipitated its end as a country.
The exchange of broadsides over the Russian issue is bound to
intensify as November 7, the date of the presidential elections,
approaches. Bilateral relations being not as good as they used to be,
new irritants such as the detention of Edmond Pope on charges of
espionage in Russia add to differences in approaches to global affairs.
Still, top Russian leaders take the electoral battles over the
Russian issue in their stride. Interfax' sources in high places have
made it clear that they regard the United States as one of Russia's
"largest and most important partners" and are prepared to work with the
man the Americans vote for.
Russian experts in U.S. affairs know the advantages and
disadvantages of either outcome of the elections. "If Gore wins, that
will be fine because we know him well and there will be continuity. If
Bush does, this will also be fine. Even in Soviet times, strange as
this may seem, Republicans have been easier to deal with. Even though
they are conservatives, they are pragmatists," one expert has said.
Each president, American or Russian, makes his own imprint on
politics. While Russians do not know yet what kind of America they will
be dealing with, the Americans are dealing with a new Russia now. Are
all U.S. political figures aware of this in the heat of electoral
battle?


******


#10
Moscow Times
September 22, 2000 
MEDIA WATCH: Through the Looking Glass 
By Robert Coalson 


Russia is a through-the-looking-glass kind of country. The type of place 
where virtually overnight someone like Boris Berezovsky can become a staunch 
defender of freedom of the press. A place where Sergei Dorenko, arguably one 
of the most odious and irresponsible people in public life today, can become 
an anti-censorship icon. A place where in the course of just a few months 
someone like Oleg Dobrodeyev can go from being the widely respected director 
of the nation's only nonstate national television network to personally 
sitting in the broadcast truck in Vidyayevo while President Vladimir Putin 
meets with relatives of seamen from the submarine Kursk and overseeing the 
maintenance of the president's image for state television. 


What is black today becomes white tomorrow, and vice versa. 


Nonetheless, I am still constantly amazed when these things happen. Some of 
the most reliable sources of this amazement are discussions with journalists 
about some of the most fundamental questions determining the environment in 
which they work. Frankly, when I hear some of the things they say, it really 
makes me wonder if we are communicating at all. 


For instance, I recently had an exchange with Alexei Novikov, a lawyer who is 
also the editor and publisher of a private newspaper in Saransk called 
Shestoi Nomer, about the existing law on the mass media. I approached Novikov 
with the suggestion that, as a lawyer, he might take it upon himself to 
suggest changes to the law that would benefit privately owned newspapers. 
Much to my surprise, he responded to me that "the existing law is one of the 
very few in our country that has proven its effectiveness and sensibleness." 
He said that no modifications were needed, quoting the Russian proverb "ot 
dobra f dobra ne ishchut," the equivalent of "if it ain't broken, don't fix 
it." 


However, what Novikov said next was truly astounding. "I have worked as an 
editor for 10 years," he went on. "For the first five, I edited a 
state-subsidized paper, and for the last five I have been co-owner and editor 
of a private paper. I can say from experience that the existing law on mass 
media completely satisfies me, except for a few small gaps. I would only add, 
though, that state subsidies to the media corrupt editors and journalists and 
lead to unfair competition and unprofessional disputes between publications." 


Even after I pointed out to him that these two positions seem to be in direct 
contradiction with one another since the existing media law is the basis of 
the state press, Novikov continued to argue both sides. After a few more 
minutes, it became clear to me that he simply was not capable of imaging a 
scenario in which a state-controlled press did not feature prominently. 


Such discussions often boil down to a debate over whether the private media's 
main problems are political or economic. And when the question is phrased 
this way, one also runs into some rather bizarre statements. At a recent 
round table of media professionals and experts in St. Petersburg, I heard a 
number of statements that really made my ears perk up. 


"All the mass media are dependent on the authorities," said activist Yury 
Vdovin, "and this is the source of the lack of freedom of speech. This 
situation can be corrected by creating a normal economic environment for the 
mass media." Maybe this is a chicken-and-egg question, but resolving it is 
crucial if any real change is to be made. Unlike Vdovin, I don't see how 
economic solutions are going to solve a fundamentally political problem. In 
fact, I don't even see how such solutions can be effectively undertaken 
without the precondition of resolving the political questions. 


A journalist from a private paper at the round table continued Vdovin's 
theme. "In the last year, our newspaper has undergone eight tax inspections, 
as well as inspections from a number of other social funds. In short, they 
are trying not merely to extract taxes but to undermine the economic 
foundation of the paper." 


Did she view this as a political or an economic problem? "It would be good if 
we could just find people who would be willing to invest money in the 
creation of independent publications," was her solution. It seems to me that 
investment is not something one finds, but something one attracts. Is the 
current law on mass media or any of the revisions being discussed in the Duma 
really capable of doing that? 


Robert Coalson is an independent media analyst based in St. Petersburg. 


*******


#11
Newsday
September 17, 2000
Decline of Russia Began Long Ago
By Steve Jacobson


SURELY THERE are people out there who gloat over the plight of the Red 
Olympians from the old Evil Empire. Unprintable Commies! Actually, I miss the 
Soviets. In a way, I feel sorry for them. 


The real Big Red Machine that was the pride of a nation is reduced to 
begging. A Soviet rocket got the giant space station up there, and in "Space 
Cowboys," we saw the new Russia couldn't afford to keep the clock wound. Then 
the real submarine was lost because Russia couldn't pay for maintenance when 
Pushkin came to shove, and was too ashamed to ask for help. 


I used to chat with a Russian journalist named Kukushkin-Vsevolod is his 
first name, but he was just Kukushkin-at the Olympic press center in 
Barcelona and Albertville, and years ago, he told me this was happening. He'd 
been head of sports for Tass and most recently of RIA, which is like AP. He 
wasn't an enemy. He needed a meal and his conversation was full of the irony 
and bitter humor of a Russian novel, one part vodka and three parts tears. 
"May I tell you a story?" he would begin. 


He said he still had a hole in the dashboard of his Lada where the radio used 
to be. "What for to put in a new one?" he said. "To feed them? No." At least 
his son had replaced the battery under the hood for the equivalent of $150. 
He learned that on the phone from Moscow, a costly proposition in itself. 


Who stirs the throb of competition for us now? At Barcelona in '92, instead 
of the bold red of the Soviet team, the new temporary Unified Team wore 
apolitical green. 


Maybe you don't miss a bitter enemy, and surely the world is better without 
the threat of nuclear firestorm. Hockey players on each side gave it an extra 
zetz in the corner when the Americans played the Soviets, but world peace 
didn't hinge on the outcome and they knew it. 


Freedom wasn't destroyed when the Soviet basketball team, coached by Alexandr 
Gomelsky with his burlesque Russian grandpa accent, beat the Americans in 
Seoul in '88. Gomelsky referred to "my guys," and thanked the NBA for help. 


John Thompson, the American coach, grumbled that we gave so much help they 
beat us. So we sent the original Dream Team to regain our pride. 


Winning the hockey in '80 was real gold because it was beating those *!#@ 
Commies. Kukushkin told of the young sportswriter's burden of covering that 
embarrassment. 


"We mentioned a couple of mistakes by our defense and the Americans were 
lucky," Kukushkin recalled. "That's it, just a few sentences." In the 1960s, 
he recalled, a veteran party writer told him about covering a 100-meter race 
between John Kennedy and Nikita Khrushchev. "John Kennedy was winning and we 
puzzled how we will write this," Kukushkin said. "It was determined we will 
write, 'It was a great race between two presidents. Mr. 


Khruschev was second. Mr. Kennedy was the guy who was second-from-last.' 
"That was our instructions from the Oval Room. Now the only instructions are, 
'Please try to save money."' At Albertville, lining the road to the skating 
center were piles of uniform coats and tunics and insignia of Russian 
generals being sold for dollars or pennies. In the press room was a 
journalist who had heard that Russian religious icons were of value in the 
West and had brought one that essentially was a worthless piece of tin. I 
don't think he found a buyer. 


With freedom baffling the country, Russian coaches and athletes were 
searching the West. The great harvest had failed and people were waiting for 
150 million chickens from Canada. Kukushkin suggested, "better, please, take 
2,000 Russian students and teach them." Journalists were in Albertville with 
little money, false promises of more and an hour's time each day donated by 
Belgian telephone. Kukushkin phoned home and his wife said a thief had been 
interrupted stealing one of his tires, so now the tire was in the apartment 
and the car-with the radio gap in the dash-was standing on three tires and a 
block. 


"People lost their ideals; they do not know what to believe," Kukushkin said. 
"Our grandparents lost God; religion was prohibited. The middle generation 
had the Communist Party with the ideals of good society-so, so, so. 


They lost that. The new generation has no God, no party; what they have is 
all crazy music groups and rusty metal. 


"Gertrude Stein is once writing about a lost generation. I'm 50; I still have 
time to work and create something. What about people 60 who realize they 
lived here and their life was just a waste: What for did I live? Just to 
sniff, eat and sleep? It hurts." My friend never minded a free meal or a 
sweater from an official U.S. 


sponsor. I bought lunch a few times, the expense accountants may have 
noticed. 


>From home, I sent a package of artificial sweetener and sugarless jelly for 
Kukushkin's diabetic father. 


At Atlanta, I was told, "Kukushkin not here." John Jeansonne tells me there's 
no Kukushkin at Sydney, either. Too bad. I'd send my regards. 


******