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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

September 24, 2000    
This Date's Issues: 4535ē 4536 ē 

 



Johnson's Russia List
#4535
24 September 2000
davidjohnson@erols.com


[Note from David Johnson:
1. The Independent (UK): Fred Weir, Triple disaster to 'destroy Russia 
in 2003' says Duma commission.

2. The Russia Journal: Andrei Piontkovsky, President Clintonís Putingate.
An acerbic dissection of the Kursk tragedy, and the whirlpool of media 
disinformation that followed.

3. The Washington Post: Jim Hoagland, The 'BS' Factor.
4. Steve Wegren: Russia land reform.
5. Robert Bruce Ware: Re: Blank-Herspring-English on Lieven JRL # 4532.
6. Jerry Hough: Re: 4534-Tainted Transactions Debate.
7. The Russia Journal: Ekaterina Larina, Media war only gets muddier.
Revelation of secret agreement confirms long-standing rumors.

8. Chicago Tribune: Colin McMahon, RUSSIA FAILS TO USE ITS SMARTS TO 
BUILD UP COMPUTER INDUSTRY.

9. Los Angeles Times: Nina Khrusheva, Homo Sovieticus. (re Putin)] 


******


#1
The Independent (UK)
24 September 2000
Triple disaster to 'destroy Russia in 2003' says Duma commission 
By Fred Weir in Moscow 


A sunk submarine, a burning television tower and nuclear-plant shutdowns
have given Russia a disastrous summer, but that may be just a tiny
foretaste of the blizzard of catastrophes feared in 2003. 


The prediction comes, not from Nostradamus, but a Russian parliamentary
commission hastily assembled to plan for the nightmare foreseen by leading
experts. "Russia is afflicted by three fundamental destructive trends,
which will converge in 2003 to accelerate and magnify all our problems,"
says Viktor Opekunov, an MP with the pro-government Unity party and a
member of the commission. 


Topping the list is Russia's sagging infrastructure, which is said to be
collapsing fast. Experts say roads, bridges, railways, the electric power
grid, oil pipelines, housing stock and military security systems are all
exhausted and increasingly hazardous to health. 


Russians were horrified last month when the supposedly unsinkable submarine
Kursk went down with all hands during war games in the Barents Sea. Then
Ostankino Tower, Europe's highest structure, a wonder of Soviet
engineering, caught fire and burned out of control, knocking out television
transmission for days. 


Electric power blackouts in several Russian regions this month have led to
emergency shutdowns at military bases and several nuclear-power plants. Two
weeks ago the head of the huge, secret Mayak reprocessing plant in the Ural
mountains said his staff's "near-military" vigilance had prevented serious
trouble after a power-grid failure. 


"We live amid the functioning relics of the Soviet age, as if in a museum,
and no one is building anything new," says Alexander Yashin, deputy chair
of the parliament's industry and construction committee. "The point of
massive, self-sustaining breakdown is approaching within three years. 


A study by the Russian Academy of Sciences in 1998 has found that
investment in basic infrastructure in the Nineties was barely 25 per cent
of the 1989 Soviet-era level. The Ministry of Economics estimates that
Russia over the next 20 years needs about five times its annual gross
domestic product to modernise its infrastructure. 


But in 2003, Russia's external debt will balloon, leaving even less money
in government coffers ≠ and there will be a demographic crisis. For more
than a decade, low birth rates and a sharp post-Soviet rise in early deaths
has led to a dramatic imbalance in the ratio between pensioners and the
working-age population. There are three workers for each pensioner, but if
nothing is done the figures could be reversed within 20 years. 


******


#2
The Russia Journal
September 23-29, 2000
SEASON OF DISCONTENT: President Clintonís Putingate
By Andrei Piontkovsky
An acerbic dissection of the Kursk tragedy, and the whirlpool of media
disinformation that followed.
Col. Vadim Solovyev, chief editor of Nezavisimoye Voyennoye Obozreniye
(Independent Military Review) is one of Russiaís most respected and
genuinely independent military analysts. He confirmed this well-deserved
reputation during the tragic events in the Barents Sea this August. On Aug.
23, declared a day of national mourning for the sailors on the Kursk,
Nezavisimaya Gazeta published an article by Solovyev called "Tragedy
multiplied by lies," in which he wrote bitter but necessary words about the
hypocrisy, willingness to lie and indifference shown by the countryís
military and political authorities during the tragedy. 


In particular, he wrote: "The analysis of why the submarine sunk is veering
off toward the same old set of past stereotypes. As a background to the
tragedy, the hypothesis of foreign designs comes up with repeated
persistence ≠ everything being blamed on an unidentified object discovered
near the Kursk.


"But how can a foreign submarine have lain on the sea bed alongside the
stricken Russian submarine and then disappeared without a trace? Defense
Minister Marshal Igor Sergeyevís answer is a baffled shrug of the shoulders
≠ who knows? NATO denies the possibility, the British indignantly demand to
see proof. But the Defense Ministry canít provide any proof. It all looks
plain silly when military exercises were taking place and there was enough
military technology in the region to keep foreign submarines or any other
underwater object under constant surveillance.


"Itís hard to imagine which naive citizens such an experienced military
official is targeting in his explanations. If an unidentified object was
discovered near the Kursk, then why was this kept silent for 10 days? Weíll
probably never know the real answer, but we will be left with the firm
conviction that in keeping the public informed, the military officials
treated us like fools, alternating pure fiction with official half-truths,
hiding things and twisting facts to suit their favored version." 


Only in mid-September in an article called "Vladimir Putin and Bill Clinton
struck a deal" did Solovyevís paper cast doubt on its initial assessment of
the version that a collision with a NATO submarine caused the Kursk disaster. 


In part, the article read: "Most serious analysts agree with the view that
only a collision with a foreign submarine could have provoked such a
disaster. The dominant version of the tragedy in the Barents Sea fully
places the political and military-technological responsibility on the U.S.
side.


"There are some grounds to think that during the days following the
tragedy, the Russian and U.S. presidents had a telephone conversation in
which they concluded a unique sort of political deal.


"Almost no one knows anything of the content of this 25-minute long
conversation, but the fact that soon afterwards the U.S. rather easily, it
seems, renounced the idea of deploying a national missile defense system,
suggests this decision was undoubtedly discussed with the Russian side."


So who was this author who entered into such a ruthless polemic with
Solovyev on the pages of his own paper? Read the authorís name attentively,
it was Vadim Solovyev himself. What made such a reputed analyst change his
views so radically, and at precisely the same time as several other papers
and TV stations, as if on command, reproduced this absurd version in almost
exactly the same terms? (Most detailed, complete with references to a
high-placed source in the secret services was the account from Moskovsky
Komsomoletsí golden cesspit, A. Khinstein).


It is absurd, not because a collision is impossible in principle, but for
the reasons set out in Solovyevís first article, above all, because had
there been a real collision, it wouldnít have given rise to a version, but
would have been an indisputable fact noted by the dozens of hydro-acoustic
services (Russian, U.S., British, Norweigan) carefully monitoring the
maneuvers in the Barents Sea. There would have been no need, then, for all
these cunning operations aimed at getting the public to believe the
collision version. It would have been enough to make public the results of
the acoustic spectral analysis.


As for the political side of the legend ≠ Clinton striking a deal on
missile defense with Putin ≠ that's on the other side of good and evil.
That the U.S. president could take a major national security decision based
on a deal struck with the Russian president, behind the backs of Congress,
the public and the press, is something that only spin doctors ignorant of
how the American system functions could have dreamed up. They were
transposing their homegrown ideas on political tussles and battles to
international relations. To use their terminology, Clinton and Putin
obviously "gave the issue a good thrashing through." But if this is so, and
Putin agreed to keep silent in exchange for Clintonís giving up national
missile defense, then why are Putinís special information services so
aggressively keen to spill the beans? Clinton, it would seem, has landed
himself in a rotten affair and got himself into bad company. Sooner or
later, heís going to find himself having to react to the snowballing legend
in Russia of his deal with his friend Vladimir.


(Andrei Piontkovsky is director of the Center for Strategic Research.)


******


#3
The Washington Post
September 24, 2000
[for personal use only]
The 'BS' Factor
By Jim Hoagland


When Republicans launched a partisan broadside against Al Gore for his 
dealings with Russia this past week, they erected a weak pillar to support 
their most damaging charge: Gore kept himself "deliberately uninformed" about 
corruption and other problems that would have undermined Bill Clinton's 
Russia policies. 


The specifics in the report of a House GOP group headed by Rep. Christopher 
Cox do not prove that assertion. They do portray Gore and his national 
security adviser, Leon Fuerth, giving confusing and at times seemingly 
contradictory explanations of what the vice president was told about Russian 
corruption and when he was told it.


But the unproven specifics are less important than the general implicit 
question that rises from the 209-page Cox report: How do intelligent, 
experienced people such as Gore, Fuerth and the architect of Clinton-era 
Russia policy, Deputy Secretary of State Strobe Talbott, become prisoners of 
the policies they create?


That question is hardly confined to these three. The inability or refusal of 
government leaders to listen to new, independent information that challenges 
their policies is the most important failing in every capital I have observed 
in 35 years of government-watching. New developments are systematically 
interpreted to conform to existing premises, almost never to challenge them.


Gore was guilty of a broader and less dramatic policy sin, which Cox styles 
as "failure to make a mid-course correction" as the political situation 
changed in Russia. I recall hearing him describe Russia's economic and 
political stability in such glowing terms in a toast to then-Prime Minister 
Viktor Chernomyrdin that the Russian then rose to describe his nation's 
deepening problems in detail for the American audience.


This was not long before Chernomyrdin would be dumped by Boris Yeltsin, and 
the Russian economy would start its nose dive.


But like any campaign document, the Cox report goes for the jugular. It 
suggests that Gore sought to intimidate the CIA into not reporting on 
evidence of corruption involving Chernomyrdin and other Russian officials. 
Exhibit A, and the weak reed Cox leans on, is the "BS" memo.


Bear with me a moment. Political campaigns are often full of it, but rarely 
does the word take center stage. The necessity for explicitness became 
apparent when I was told by the vice president's national security adviser 
without equivocation on Wednesday that "there is no bull---- memo." So excuse 
my French.


The New York Times reported on Nov. 22, 1998, that Gore had returned a CIA 
report on Chernomyrdin and corruption with that barnyard epithet scrawled 
across it. Gore declined to comment then.


On July 16 this year he muddied the water on NBC's "Meet the Press." Gore 
seemed to me to deny that any such report had ever been made to him--"Never 
happened," he said in response to an admittedly ambiguously worded question. 
Gore then attacked the report mentioned in the question "as a very sloppy 
piece of work." He may have meant to deny only writing on it.


This caught the attention of Cox and triggered congressional subpoenas to the 
CIA for a document with the BS-word or the equivalent scrawled on it and/or 
other documents that would have been used in the briefing of Gore described 
in the New York Times.


The CIA responded on Thursday, saying it found no annotated document but did 
find five documents that might have been the source of a Gore corruption 
briefing. Classication problems will prevent two of them being given to 
Congress.


Gore gave the Boston Globe a telephone interview on July 24 containing a 
description of what probably happened: "The sentiment ascribed to me was a 
fairly accurate description of what I thought of that particular document." 
In a Globe article published Aug. 13, Gore confirmed that he had made the BS 
comment verbally and added: "Somebody may have written it on my behalf."


Washington's first assumption was that "somebody" would have been Fuerth. But 
he flatly denies it--he does not even attend Gore's CIA briefings--and he 
said again Wednesday (as he had told me in July) that he has "reason to 
believe that the document never existed," despite the vice president's words 
seemingly to the contrary.


We are by now in classic Washington territory that beckoned the Cox group: 
The importance of the original policy disagreement over Gore's warm embrace 
of Chernomyrdin in the face of CIA criticism of the Russian has been eclipsed 
by questions of credibility and truth-telling--in short, of cover up, even if 
on a minor scale.


Fuerth told me of the CIA search finding no annotated document at almost the 
same time on July 24 that Gore spoke to the Globe. Gore's office says Fuerth 
had not had a chance to tell Gore of the CIA conclusion. On the BS factor, I 
think Gore either mispoke or was a victim of timing.


But Gore has been a major figure in an administration that has made an art of 
telling some of the people some of the truth some of the time, to keep 
scandal at bay. Mix-ups or misspeaking allowed to remain on the record can 
only fan suspicions that Gore might continue that Clintonesque pattern. That 
in turn can only damage his candidacy, and ultimately any Gore presidency.


******


#4
Date: Fri, 22 Sep 2000
Subject: Russian land reform
From: "Steve Wegren" <swegren@mail.smu.edu>


Agriculture and agrarian policy have moved to the limelight under Putin.
The new president has made the revival of agriculture a top priority after
years of neglect, and during his short tenure he has already begun to move
aggressively to undo the damage from the Yeltsin years. As a result, there
are significant changes underway in agrarian policy and land reform.
Regarding agrarian reform, the Russian government is considering a "new
approach" and a "new strategy" to agrarian reform. In July 2000, a special
program entitled "Basic Directions of agrofood policy to 2010" was
considered by the government. This program was designed to replace the
previous program, "The Federal Special Purpose Program for the Stablization
and Development of the Agroindustrial Production during 1996-2000," which
had been largely ignored and ineffective. 


The new program posited three broad tasks: (1) to develop and strengthen
market conditions in the rural economy; (2) to stabilize food production,
even with limited state resources; and (3) to achieve the first two tasks
in the shortest time possible. In outlining the program, Minister of
Agriculture A. Gordeev indicated that limited state support would be
concentrated on the most effective farms, while the treatment of
chronically unprofitable enterprises "requires a different solution." The
countryside needs modernization, and therefore the government will work
towards attracting investment. And Gordeev spoke of the need to change
rural social policy, freeing agricultural enterprises from expenditures
associated with social services and rural infrastructure. 


The most urgent, highest priority goals of agricultural policy consisted of:
(1) improving the financial status of agricultural enterprises which would
allow them to expand production, and towards this end the government will
write off several billions of agricultural debt and postpone repayment of
billions more; 
(2) using tariff policy "to ensure the income growth of domestic food
producers," and allowing domestic producers to compete with foreign imports; 
(3) regulating the grain market, using "the entire arsenal possessed by the
government," including customs and tariff regulation, commodity
intervention, and, using state orders, commodity purchase intervention.


Concerning land reform, it appears that a land code may at last be
forthcoming this fall, although the land code in and of itself will not
solve the problems inherent in Russian land reform. A reading of the
Western press, even the leading newspapers, makes it is obvious that there
is a great deal of ignorance about land reform; and that which is not
known is misunderstood. My intent herein is to add clarity to Russian land
reform with the hope that your readership will benefit. I will start with
some of the most basic issues about which there appears to be systematic
confusion, and then will move to what we can expect in the future.
Agricultural land accounts for the majority of land transactions, and so I
will focus on that. For a very informative article on the urban land
market, I refer your readers to Voprosy ekonomiki, no. 8, August 2000, pp.
98-110.


Does private ownership of land exist in Russia, and what are the rights of
disposal of land?


Yes, private ownership of land exists. Government resolutions from December
1991 and Presidential decrees issued in October 1993 and March 1996 form
the current legal basis for land privatization and land transactions. In
addition, the 1993 Constitution (Article 27) permits the private ownership
of land, as does the 1994 Civil Code (Articles 260 and 261). Based on these
legal acts, land deeds were distributed to land owners--owners of land
shares in former collective farms, individual private farmers, private plot
operators, collective gardeners, etc. The issuance of land deeds codified
ownership and allowed for the purchase and sale of land. 


The Russian government estimates that some 450,000 land transactions take
place annually, and some observers maintain that an equal number of
transactions go unreported to escape taxes. Market transactions dominate
the land market. Market transactions consist of purchases from a local
government or the purchase of land from an individual, that is, market
transactions involve a monetary exchange. Non-market transactions involve
no exchange of money and include land transferred as a gift or inheritance.
Second, most land transactions involve very small plots of land. Market
transactions between individuals for small-scale agricultural use dominate
land transactions, and the size of the land plots being sold are very
small. In 1998, for example, land transactions between individuals for
private plots averaged 0.23 hectares, and for collective gardening, 0.07
hectares.


Can agricultural land be bought and sold?


Yes, but there are the restrictions on the sale of agricultural land. Land
shares (rights to land plots without actual distribution of physical land
plots) held by farm members may be sold or leased, but the stipulation is
that they first must be offered to other members of the farm, and the land
must continued to be used for agricultural purposes.


Privately-held land, for instance by private plot operators or private
farmers, may be sold to anyone, with the stipulation that land must be used
for agricultural purposes. This seemingly innocuous condition has been the
primary obstacle to the passage of a land code since 1994. 


What are the factors limiting the land market?


There are several elements constraining the land market, which explains why
land reform has had such negligible social and economic effects on Russian
society to date.


(1) There is very little elite or popular support for an unregulated
agricultural land market. Survey data show that there is very little
support for an unregulated rural land market, while the overwhelming
preference is for a rural land market with restrictions. There is much more
support for an unregulated urban land market. 
(2) With dramatic decreases in the standard of living, the Russian
population (including private farmers) has little purchasing power for the
purchase of large tracts of land. Thus, land transactions involve very
small tracts, and this trend is likely as long as living standards remain
depressed. Moreover, when incomes do increase, the primary motivation to
obtain land--to grow food for the family--will decrease. Therefore, small
tracts of land are likely to remain the dominant feature of the Russian
land market.
(3) Organizations, such as food processors, that are able to purchase
large tracts of land, are in most regions reluctant to do so because
agricultural production remains unprofitable. 


What type of land code and land market can be expected in the future?


Government officials are optimistic that a land code will be adopted this
fall. However, it is important to note that the main point of contention
that has prevented adoption in the past will simply be excluded from the
new land code: what to do with agricultural land. The new land code will
not deal with agricultural land turnover, and separate laws will regulate
these transactions. 


Minister of Agriculture Gordeev has been clear that the Russian land market
will be a regulated one. The politics of the land market have in fact
suggested this outcome for several years, as only a small minority have
held out for an unregulated land market. There is, quite simply, little
constituency for an unregulated market among policy makers, agricultural
officials in Moscow or most regions, among farm managers, or among the
rural population. Russian liberals have misread popular attitudes and are
likely to be disappointed if they expect popular support an unregulated
agricultural land market. While the Western press seems to expect an
unregulated market to emerge from the passage of the land code, such an
outcome is unlikely. 


******


#5
Date: Fri, 22 Sep 2000 
From: "Robert Bruce Ware" <rware@stlnet.com> 
Subject: Re: Blank-Herspring-English on Lieven JRL # 4532


Stephen Blank, Dale Herspring, and Robert English make several good
points concerning to Anatol Lieven s suggestion that Russian inspectors be
allowed exterior access to specified American subs. However, none of them seem
to consider the possibility that a neutral, and mutually acceptable third
party
might be identified and asked to have a look. Presumably, such an inspection
might lay to rest existing issues, alleviate the climate of mistrust, and lead
Russian military officials toward a more realistic assessment of their
situation.


******


#6
From: "Jerry F. Hough" <jhough@duke.edu>
Subject: Re: 4534-Tainted Transactions Debate


There are two issues about Janine Wedel. The first is whether 
she is basically accurate. I think she clearly is. The second is Marshall 
Goldman's point that the excessive focus on Sachs distracts too much 
attention from others. That point also is right. I waited to let the dust 
clear from the Putin election before letting my book go forward. It is now 
going through press, and things are fresh in my mind from rereading. The 
giant is Larry Summers, to be sure from Harvard and the mentor of Schleifer
(much worst than Sachs personally) when he was Summers' student. (Summers 
was probably the source of the money of Sachs' institute.) So far as I can
tell, Aslund is his spokesman and frequent speechwriter. Summers named 
Stanley Fischer, also from Cambridge, deputy head of IMF and they talked 
daily. In fact, in 1991 and early 1992 Summers and Fischer (and Sachs) were
dubious about the Chubais voucher system. Fischer has some fine statements
implying that Chubais et al were rent-seekers, but then he wrote a New York
Times op-ed praising the privatization. One would really want to know the 
influences on Summers, for he is related to Ken Arrow, who also was 
dubious on privatization as it occurred. My guess--and it is no more 
than a strong, undocumented feeling--is that one needs to look at the 
campaign contributors. Rubin was Fischer's boss and a big fund raiser 
in 1992. My guess is that the big accounting firms that benefitted so 
much from privatization, the Wall Street firms, and, of course, Tysons 
were very important. One should look at Tyson's profits and stock after 
the money to Russia dried up. 


Some of this may be in the Cox report, which I haven't read. 
But other scholars need to follow Wedel's lead. Treasury replaced State 
and Defense as the dominant foreign policy institution in the Clinton 
Administration. Summers was the really secretary of state from 1993 on, 
and Strobe Talbott had little influence. Treasury should get the 
kind of scholarly attention that State and Defense got in the past from those
who want to understand American foreign policy making. It also is 
crucial for understanding Russia. If the US had supported Yeltsin in 
late 1992 on his choice of Chernomyrdin and the industrial policy he 
and Gerashchenko advocated, Russian economic reform would have been a 
great success. But instead they made aid dependent on a repudiation of 
Yeltsin's deal with the Congress and they promised he could dissolve the 
Congress if he followed their advice. If they had supported democracy by 
helping Yeltsin and Congress build a coalition in early 1993, there 
likely would still be democracy in Russia. The impact on events was 
enormous, decisive. 


******


#7
The Russia Journal
September 23-29, 2000
Media war only gets muddier
Revelation of secret agreement confirms long-standing rumors
By EKATERINA LARINA
In murky war over press, newly leaked document reveals possible government
blackmail of Media-MOSTís Gusinsky.


The mudslinging match between opposition media holding Media-MOST and
Russian state officials plumbed new depths over the week, as both sides
attempted to cast themselves as the aggrieved party while hurling so many
new accusations that by Friday neither side was left with much credibility.


"A scandal is a scandal," said Mark Urnov, president of the Expert
Analytical Programs Foundation. "When opponents start slinging mud at each
other, everyone ends up covered in filth, including the spectators."


The latest round in the battle began with the publication of a secret
agreement between Media-MOST owner Vladimir Gusinsky and head of
Gazprom-Media Alfred Kokh on the sale of the media company to the gas giant
for $763 million. Of this sum, $463 million was to go to pay off a debt to
Credit Suisse First Boston ≠ a two-tranche debt Gazprom guaranteed for
Media-MOST, which the latter has thus far proved unable to meet ≠ with the
remaining $300 million to go to Gusinsky himself. 


That revelation confirmed rumors that had been circulating for weeks, but
the scandal began in earnest with the disclosure of Protocol 6 of the
agreement. This revealed that one of the conditions for the deal was that
"criminal charges against V. A. Gusinsky shall be dropped" ≠ Gusinsky was
briefly jailed in June ≠ and that the constitutional rights and freedoms of
Gusinsky and Media-MOST organizational heads be guaranteed. 


What shocked observers the most was that, aside from being signed by those
directly concerned, the document also carried the signature of Media
Minister Mikhail Lesin.


Alexei Venediktov, a commentator and head of Echo Moscow Radio, one of
Media-MOST's oldest outlets, said he thought Lesinís signature on the
document amounted to the minister taking upon himself "the function of
guarantor of the Constitution, which in fact is the presidentís role."


Clearly, neither side had an interest in having the document made public. 


Lesin claimed the decision to sign the document was a personal one, not a
government-related function ≠ but there was no escaping the fact that he
signed the document as a government representative. This seemed to
confirmed that the state gave Gusinsky freedom from criminal prosecution in
exchange for his assets. 


Typically, a scandal of this magnitude would lead to a ministerís
resignation, but Lesin wasn't budging, telling journalists Wednesday he had
no intention of falling on his sword. By Thursday, however, it had been
announced that President Vladimir Putin had ordered an investigation into
Lesinís role in the case, and analysts said that the move would probably
end with the ministerís removal. 


But observers were still reeling from the fact that the Gazprom-Media-MOST
deal had been made public in the first place.


"It's natural that there shouldnít have been any leaks," said Sergei
Parkhomenko, chief editor of Media-MOST's Itogi magazine. "Neither side
wanted leaks, because our mission wasnít to show what Kokh was really all
about but to keep broadcasting and publishing our newspapers and magazines. 


"And they [Kokh and Lesin] had one good reason for not wanting this to go
public ≠ they knew that they had committed a crime, that they had left a
legal trace of the fact that they blackmailed their negotiating partner.
They more than just didnít want it leaked ≠ they knew that that Protocol 6
was death to them."


But Media-MOSTís aim did not appear to be solely to use the deal as an
insurance policy to continue broadcasting. At a Tuesday news conference,
Media-MOST management revealed it had also needed the deal to buy time, as
negotiations on a more favorable deal with Gazprom were, by Sep. 15, "in
the home stretch." The new agreement would have enabled Gusinsky to
continue participating in Media-MOST. Gazprom would have received shares in
payment for Media-MOSTís debts but not in payment for all Media-MOST debts,
as was the case in the first agreement.


Gazprom Media chief Kokh said the gas giant, 38 percent owned by the
Russian government, wanted to buy the entire media holding in order to
improve its image and to sell it on to a strategic, probably Western,
investor. [Gusinskyís] problem is that he looked only for financial
investors and was never willing to hand over control of the company," Kokh
said.


Indeed, Kokh said negotiations had already been held with Deutsche Bank,
which was ready to act as financial agent and to search for an investor.
Kokh added that there were no obstacles to the influential media company
going into foreign hands, and Lesin confirmed this to The Russia Journal.


"We have discussed this possibility," Lesin said, referring to the prospect
of a television network being foreign- owned. "There are no legal obstacles." 


This contrasts with most Western countries, where foreign ownership in
television companies is restricted on the grounds of national interest.


But representatives of Media-MOST said they remained skeptical of the
sincerity of Kokh and Lesin's statement, saying the main aim was to gag
opposition media, and to sell or get a hold of everything possible.


"There are two problems," said Echo Moscow's Venediktov, shortly after
having a long personal conversation with Putin. "The first is solving a
political issue for the president. And if Media-MOST gets sold off, that
solves the problem. 


"But then, I think, and I told the president this, the holding will be
broken up and, say, the satellites sold to one company, the cinema business
to another, the publishing business to a third, advertising to a fourth,
the security business to a fifth, and so on. And there wonít be any holding
anymore. Thereíll be some money from it, but money isnít the issue."


But the publication of the Gazprom-MOST agreement was only the beginning of
the scandal. After the deal's publication, Media-MOST declared the
agreement invalid, because on July 18, two days before it was signed,
Gusinsky, with two lawyers from a "well-known Western law firm" present,
had made a legal declaration that he was under pressure and that any
documents he signed would have no legal force. 


Gusinsky's opponents scoffed that voluntarily limiting one's own legal
competence was a unique legal precedent ≠ in other words, nonsense. They
then forwarded a counter-accusation, accusing Gusinsky of quietly shifting
his assets to an offshore zone since spring this year, something absolutely
illegal given that part of the Media-MOST shares constitute collateral for
a loan.


The mutual accusations and insults continued to fly. The Expert Analytical
Programs Foundationís Urnov summed up the views of many observers when he
said there was a need to clearly distinguish between the main elements of
the conflict ≠ the financial and the political.


"Itís clear that Media-MOST has debts, and itís clear they have to pay
those debts," Urnov said. "But itís another issue altogether that, because
Gusinsky doesnít have this money, he wants to convert his economic problems
into a political standoff ≠ slowing down an inevitable bankruptcy."


******


#8
Chicago Tribune
September 23, 2000
RUSSIA FAILS TO USE ITS SMARTS TO BUILD UP COMPUTER INDUSTRY 
By Colin McMahon 
Tribune Foreign Correspondent 


NIZHNY NOVGOROD, Russia -- Russia's potential to build a new economy out of
the tatters of its Soviet past is on display in Nizhny Novgorod. So are the
obstacles.


The Volga River city is home to several respected technical institutes,
former pillars of the Soviet military-industrial complex. Its workforce is
young, well-educated and relatively cheap. Already, Nizhny Novgorod has a
core of high-tech entrepreneurs focusing on computer programming and
Internet-related ideas.


U.S. computer chip manufacturer Intel Corp. this summer opened a software
development center here, planning to catch skilled Russian computer
programmers before they export themselves and their talents to Western
Europe or elsewhere. That should boost private efforts to develop a
homegrown industry in Russia based not on natural resources but on
intellectual ones.


Yet the same issues that dog traditional businesses in Russia--crushing
bureaucracy, tight credit, confiscatory taxes--threaten high-tech
enterprises too. Few government officials seem to understand the industry,
how the state could help its development or, at the very least, stay out of
its way.


"It's all here--the institutes, the people, the experience," said Sergei
Yakimov, director of development for a Nizhny Novgorod telecommunications
company. "A real boom could happen here, but the government does not see
that."


Part of this is the nature of the work.


To many Russian officials, the domestic economy means farms and factories.
Computer programmers don't make guns or tanks or airplanes--big Russian
exports. They don't build cars. They don't drill for oil.


It is these industries, not Russia's fledgling computer industry, that
officials target in their efforts to boost business. Russia's software
sector accounts for only 0.1 percent of the gross domestic product.


More troubling, some in government and parliament are looking for ways not
to help but to control high-tech and Internet-related enterprises.
Legislation proposed in the lower house of parliament, for example, would
force businesses to re-register each time they change their Web site.


Like Motorola, Sun Microsystems and IBM, for years Intel Corp. has hired
Russian programmers on a project-to-project basis. This expansion could
lead other Western firms to follow suit.


Intel expects its Nizhny Novgorod workforce to grow to 200 this year,
company officials estimate, and 500 within three years. They declined to
specify how much money Intel is investing, but analysts called it a tiny
fraction of the $6 billion in capital expenditures Intel is expected to
spend in 2000.


The Russian programmers will help create software for the new Itanium
64-bit chip and the next generation of Pentium processors. The software is
actually a building block to be used down the line by applications
programmers.


The experience of Russian programmers is one drawing card for Intel. Their
high level of education is another, even if some of the recruits were
schooled at research institutes and factories once home to Soviet military
secrets.


During Soviet times, back when Nizhny Novgorod was named Gorky, an
estimated 75 percent of local enterprises were defense related.


"The laws of physics and mathematics are the same whether you use them to
write computer software or, to put it crudely, build a nuclear bomb," said
Alexei Odinokov of Intel. "The advantage of the employees here is that they
have a deeper and broader knowledge of mathematics and algorithms."


The Russians also have had to be inventive. With technology that trailed
the West's, Russian programmers constantly had to find shortcuts and tricks
to make their computers run.


"Russian programmers have had a lot of good practice doing some things that
American or European programmers have not had to do," said Oleg Suitin of
Intel. "The West has modern methods. I think the unity of these two
cultures is going to create something even better."


Despite Intel's decision, selling Nizhny Novgorod as a high-tech center
remains difficult. The city may be Russia's third-largest, but it is sleepy
and provincial compared with Moscow or St. Petersburg, Russia's second city
and present hub of computer programming.


Nizhny Novgorod has one flight a day to Moscow and none to St. Petersburg.
The city's best hotel has great views of the Volga River but rations water.


Beyond that, the man some people credit with opening up Nizhny Novgorod to
the West and to the market economy is no longer around.


Former regional Gov. Boris Nemtsov, credited by many with cutting down
governmental interference and inspiring entrepreneurship, was a heralded
reformer during the Boris Yeltsin era. Now he is a federal deputy of a
sidelined party. Many of his ideas are discredited among average Russians.


Even with their experience and advantages, Nizhny Novgorod and Russia have
a long way to go. Last year, according to the Moscow investment firm
Brunswick Warburg, Russia exported about $70 million worth of
offshore-programming services. India, the world leader, exported $4 billion.


******


#9
Los Angeles Times
September 24, 2000 
Homo Sovieticus 
By NINA L. KHRUSHCHEVA
Nina L. Khrushcheva Is Senior Fellow at the World Policy Institute of the New 
School and the Granddaughter of Nikita Khrushchev


First, there was Pavlik Morozov, a legendary Soviet folk child who so 
believed in the bright future of communism that he enthusiastically informed 
on his father for having more grain than an average "builder of communism" in 
a collectivized state was allowed. Then there was the Soviet children's 
classic, "Timur and His Team," the story of an honest and endearing Pioneer 
(communist Boy Scout), who, in his romantic zeal to become a perfect 
communist, devoted his childhood to unmasking the imperfections of less 
enlightened and faithful citizens. 
Other books and movies throughout Soviet history have glorified those 
who passionately confronted enemies from all sides who sought to undermine 
the Soviet Union: A novel, "Kortik" (A Dagger), by Anatoly Rybakov; a 
thriller and movie, "Mesto vstrechi izmenit nelzya" (Meeting Place Cannot Be 
Changed), by Arkady and George Vainer; a TV series, "Semnadtsat Mgnovenii 
Vesny" (Seventeen Moments of Spring), which included a gorgeous 
state-of-the-art spy-hero, Shtirliz; and "Shchiet i Mech" (The Sword and the 
Shield), which turns out to be Russian President Vladimir Putin's favorite 
movie. 
Now there is "First Person: Conversations With Vladimir Putin" (or, as 
the English subtitle bluntly announces, "An Astonishingly Frank Self-Portrait 
by Russia's President"), a collection of interviews and monologues about and 
with Putin, his friends, former teachers, colleagues and his family. The book 
portrays Putin as a "hero of our time." As the early socialist glorification 
of Pavlik Morozov and Timur were emblematic of the freshly established 
totalitarian regime, so Putin's memoir is an excellent piece of neo-Soviet 
post-liberal propaganda. Released on the Web in Russian right before the 
Russian presidential elections in March, published in English right after the 
presidential inauguration in May, the memoirs acquaint the world with 
Russia's president, descendant of the brave, honest and devoted heroes of the 
Soviet cultural canon. Putin himself tells us with proud shyness, "I was a 
pure and utterly successful product of Soviet patriotic education." 
"First Person" exhibits Russia's new leader as unbendable, tough, honest 
and very romantic. A perfect "product of Soviet patriotic education," Putin 
decided on a career in the KGB because he was so enamored with the heroic 
deeds of Soviet detectives and intelligence officers, exactly as they were 
portrayed in such stories as "The Sword and the Shield." "What amazed me most 
of all," he says, "was how one man's effort could achieve what whole armies 
could not." 
Putin wanted to serve his country so much that when he was in the ninth 
grade, he went to the office of the KGB Directorate in Leningrad "in order to 
find out how to become a spy." He was told that, first, the KGB did not "take 
people who come to [them] on their own initiative" and "second, [one] can 
come to [them] only after the army or after some type of civilian higher 
education." "What kind of higher education?" asked young Volodya. "Any." "But 
what is preferred?" "Law school." Putin went on to take a law degree. 
So forcefully and willfully has Putin pursued his career that one might 
have trouble distinguishing him from a young Vladimir Lenin. However, there 
is a softer, modern side to the story, one without the harshness and burning 
fanaticism of his early socialist years. Written from the presidential 
pulpit, his memoirs portray him as a more human, less official apparatchik. 
We almost immediately learn, for example, that he "was a hooligan, not a 
Pioneer," an informal and popular street leader: "If I had to compare it with 
my adult life, I would say that the role I played as a kid was like the role 
of the judicial branch, and not the executive." Although he continued as a 
good college student, we are told, he was neither a Komsomol ("Young 
Communist League") functionary nor an active obshchestvennik (one not 
involved in any extracurricular activities). 
What is surprising, however, is to find out what a meritocracy the KGB 
was at the time Putin became an agent in the mid-1970s. His experience 
suggests that it was possible to be hired by the KGB on the basis of good 
college grades alone. In addition, Putin seems interested in portraying the 
agency as a society within a society, consisting of good and devoted 
enthusiasts who "work for the interests of State." Of course, in the late 
20th century, it was no longer necessary to report on one's parents to prove 
oneself worthy of communism. Socialism had by then developed more subtle 
methods of influencing society and enforcing conformity. These means were, as 
Putin puts it, "less coarse," a characterization that allows him to present 
himself as a "boy from our street," an "invisible" hero of the state. 
Putin has selected his material in order to meet all the necessary 
requirements for being a "good man"--good neighbor, good friend, good 
everything. We see his family sharing a communal apartment in Leningrad with 
an old Jewish couple; we learn that the young Vladimir befriended them. The 
message is clear: Some of my best friends are Jews. Putin tells us that he 
sang songs of Vladimir Vysotsky, a semi-dissident bard, whose words became 
part of Russia's modern Soviet-mocking folklore. He joined a judo club while 
others were fashionably doing karate. "Karate," he explains, "we viewed . . . 
purely as moneymaking enterprises. . . . Judo is not just a sport--It's a 
philosophy." He attended Leningrad University, one of the most prestigious 
schools in the country, but got there on his own merit, with no connections, 
at a time when the only way to advance in the Soviet Union was by way of 
privileges. Putin's best friend is a violinist who taught Vladimir to 
understand music and art. 
At home, Putin is at pains to emphasize his everyman qualities, 
conceding early love troubles until he met his wife, Lyudmila, with whom he 
has lived happily ever after with two daughters and a toy poodle. Another 
family dog also makes an appearance, a Caucasian sheep dog (quite appropriate 
for a spy), but it died in an accident. Their next pet, the toy poodle, 
"amazed [Putin] at first--she's so little," but then he learned to love the 
small pet too. All these details are meant to prepare us for a president who 
can be sensitive, loving and kind but also for a man who never backs down, 
who is just, honest and zealous for the truth. 
Putin mixes his personal "common man" qualities with an astonishingly 
idealistic, almost blind, fondness for Soviet strength and statehood. He 
explains his zeal for the KGB by the fact that, during his college years, he 
"didn't know much . . . about Stalin's cult of personality. . . . How deep 
was that cult of personality? How serious was it? My friends and I didn't 
think about that. So I went to work for the agencies with a romantic image of 
what they did." It is even more astonishing that Putin insists that, at the 
time he was a KGB agent, if "there probably were some agents who engaged in 
persecution of people, I didn't see it. I personally didn't see it." 
At several points in the book Putin does, however, mention that after 10 
years of being at "the Organs" (of state security), he was no longer a 
romantic, but it was not until 1991 that his disillusionment with the system 
became final: "Up until that time I didn't really understand the 
transformation that was going on in Russia. . . . But during the days of the 
[August] coup, all the ideals, all the goals that I had had when I went to 
work in the KGB, collapsed." 
Even after growing disillusioned with communism after the failed coup, 
Putin hardly admits that communism has any flaws. It is usually the people, 
he explains, not the system, who are flawed or, even better, it was the fault 
of Mikhail Gorbachev, who lost the Cold War too quickly, or the crowds that, 
in 1989, attacked the German Ministry of State Security in the East German 
city of Leipzig, where Putin was posted as an intelligence officer from 1986 
to 1990. Although Putin "understood those people--they were tired of being 
watched by the MGB [the East German secret police], especially because the 
surveillance was so totally invasive," he insists that the "way in which they 
expressed their protest was upsetting. 
"I regretted that the Soviet Union had lost its position in Europe, 
although intellectually, I understood that a position built on walls and 
dividers cannot last," he explains, "But I wanted something different to rise 
in its place. And nothing different was proposed. That's what hurt. They just 
dropped everything and went away." The personal tone is striking: Clearly 
Putin feels that the fall of the Berlin Wall was the first sad step toward 
the Soviet disintegration; 1991 coup-makers were right in trying to preserve 
the Union; and the Chechen war has been the necessary step to prevent the 
further disintegration of Russia. 
For a man who has been disillusioned for almost 10 years, who admits at 
one point that the USSR "didn't have a future," Putin, in these early months 
of his presidency, has shown fond support for the Soviet system, as if he 
were still a romantic boy who more than anything wanted to serve his 
country's greatness. After winning the presidential election, Putin showed 
his colors, however, when he addressed the Federal Service Bureau (the former 
KGB). His words seemed to ridicule the election process: "Officer Vladimir 
Putin reports that his dispatch to the Kremlin has been completed 
successfully." To those who know about Stalin-era purges, it is a tasteless, 
even cruel, turn of phrase. Putin not only draws on nostalgia for the 
country's socialist past, the cruel stability which contrasts with the chaos 
of the post-communist years, he also insists on presenting the KGB in a 
favorable light. Thus, by capitalizing on public fear, he has created a 
campaign to restore a security mechanism that will crack down on corruption, 
crime and liberal disarray. Sensing that the liberalism of the last 10 years 
has left Russians with a desire for a strong leader capable of imposing 
order, Putin has been carefully evoking Stalin's image as a positive one: In 
speeches, on commemorative coins and on the memorial plaque to the heroes of 
World War II. 
In these memoirs, Putin admires the KGB's techniques of controlling 
society "covertly," as: "it was considered indecent to be too obvious." If 
dissidents would call a meeting to protest against communism, the KGB would 
in turn organize its own event at the same place. That same style was 
recently introduced by Putin as president: In a policy document published 
last spring by the Russian newspaper Kommersant, the new government suggests 
that as society now shows a strong devotion to the democratic process, some 
necessary although unpopular actions (especially those dealing with media and 
opposition) should be handled "covertly" by FSB-run presidential 
directorates. 
But "First Person" encourages us not to worry: If the agency's work is 
"based on some idealistic principles, then it's something else" compared to 
operations in Soviet times--the ends justify the means, so to speak. We also 
learn that qualities necessary for a president are needed for a secret agent 
as well: "organizational abilities, a certain degree of tact, and 
businesslike manner." An instructor from the Andropov Red Banner Institute, 
which Putin attended before his German posting, attests in an interview that 
his former student had it all. In fact, the book suggests that the "art of 
[razvedka] intelligence" requires a great "ability to come into contact with 
people, the ability to select the people you need, the ability to raise 
questions that are of interest to our country and our leaders, the ability to 
be a psychologist, if you will." In one of the conversations, Putin calls 
himself "a specialist in human relations." And as Lyudmila Putin confirms, 
despite his "plain and dull" appearance, Putin has an "inner strength--a 
quality that draws everybody to him now." 
The question "who is Vladimir Putin?" is thus answered. According to 
"First Person," he is Russia's perfect president, a man for whom Timur and 
Pavlik were once role models but who has now stepped from the pages of heroic 
children's stories to be a real man ruling in the real Kremlin. What we are 
yet to learn is whether this version of Putin is an invented character for 
the book of power he is writing, nothing more than a patriotic propaganda 
symbol, or if he is a true worshiper of the KGB, making him a modernized, 
contemporary hero of neo-Soviet totalitarianism, the creator of his own 
Putinism. 


******


 

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