Center for Defense Information
Research Topics
CDI Library
What's New
CDI Library > Johnson's Russia List

Johnson's Russia List


September 27, 2000    
This Date's Issues: 45414542  


Johnson's Russia List
27 September 2000

[Note from David Johnson:
1. AP: Vodka Dispute Shows Russia Chaos.
2. AFP: Top Chechen official slams "insignificant" Russian aid.
3. PRNewswire: United States Sues Harvard and Others for False Claims 
Relating to USAID Program in Russia, Reports U.S. Attorney.

4. San Jose Mercury News: Rep. Christopher Cox, Clinton-Gore team 
aided Russian economy's demise.

5. Minnesota Daily: Khrushchev's son discusses Russian economy, 
politics at U.

6. The Sunday Pioneer (India): Tatiana Shaumian on Russia's
demographic implosion and India.

7. Robert Bruce Ware: Reply to Herspring JRL# 4538.
8. Ilvi Cannon: JRL #4536 and #4508/Patriarch and KBG.
9. Trud: RUSSIA IS A NORTHERN MEXICO. But It Does Not Know 
What to Do With $300bn. (Views of Mikhail ZADORNOV)

10. The Annual World Convention of the Association for the 
Study of Nationalities (ASN). Call for papers.] 


Vodka Dispute Shows Russia Chaos
September 26, 2000

MOSCOW (AP) - Heading the Kristall vodka distillery should be a businessman's 
dream - the chance to manage one of Russia's most prestigious enterprises, 
with a world-renowned array of products, a diligent work force and awards 
from the government. But it's closer to a waking nightmare. 

For seven weeks, Kristall has been split between two men, each claiming to be 
the manager. One runs the executive offices, the other runs the production 
floor, and both are backed by squads of guards. 

The standoff highlights the perils of doing business in Russia, where the 
legal system is often ineffectual. How the dispute is resolved could indicate 
whether President Vladimir Putin's government can improve the business 
climate by upholding the law and public accountability. 

Kristall is among the most famous of Russia's approximately 180 vodka 
distilleries, producing the Western hit Stolichnaya as well as home-country 
favorites such as Gzhelka. The plant's red-brick complex on a leafy Moscow 
side street looks like a 19th century fortress. The resemblance was 
especially strong on Aug. 4, when gun-toting men arrived in waves. 

First came masked tax police, who seized documents as part of a tax-evasion 

Within hours, Alexander Romanov and his private guards showed up and moved 
into the building's executive offices. Romanov said he was staking his claim 
to the post of general director, to which the board had elected him in May. 

Before the day was over, Vladimir Svirsky and another group of guards moved 
into the production facilities. Svirsky, who had been Kristall's acting 
director since April, pointed out that a Moscow court had voided Romanov's 

But on Sept. 1, the same court reversed itself. Svirsky said an appeal has 
been filed. 

The dispute is further complicated by allegations of deceptive stock trading. 
Romanov says that about 20 percent of company stock that once belonged to the 
factory workers' collective has gone offshore. 

``I admit that 19 percent of the stock belongs to an offshore company in 
Cyprus,'' Svirsky said. ``But this is a friendly company, and the stocks 
never vanished: they are working for the collective.'' 

Romanov spent the first couple of weeks of the standoff living in the 
executive offices, saying he was afraid to leave because ``I see many men 
with guns out there.'' But recently, he has had to go out occasionally on 
business duties because the office phone lines have been cut. 

Vodka is a cornerstone of Russian life, despite attempts by a succession of 
leaders right up to Mikhail Gorbachev to curb drinking. And Kristall has done 
its part in slaking Russians' thirst. Despite the tensions, it met its usual 
monthly production level of over 2 million gallons, said Kiril Peskov, a 
Romanov deputy. 

The guards, meanwhile, seem relaxed and amused. 

``I never saw such a situation as this,'' said one guard, laughing and 
glancing at his rivals a few yards down the street. 

Russia, however, has seen many such disputes over lucrative firms. Workers 
seized a paper mill last year to protest foreign ownership of the plant, and 
troops shot one worker when they raided the plant to end the occupation. This 
month, rival factions brawled for control of a chemical plant in 

But the Kristall dispute is in a class of its own because the state owns 51 
percent of its shares. It is also notable because the government had lauded 
Kristall's previous management, naming the plant Russia's Outstanding 
Taxpayer of 1999 ($89 million on profits of $142 million, according to 

Analysts say the Kristall case sends a discouraging message to foreign 
investors who have been otherwise heartened by the Russian economy's recent 
tentative expansion after years of decline. 

``We're watching it closely. What happens to a Russian company can just as 
easily happen to a foreign one,'' said Scott Blacklin, head of the American 
Chamber of Commerce in Russia. 

At the least, he said, it seems to demonstrate a pattern that has plagued 
Russia under czarism, communism, and nascent democracy: ``The power elite has 
never been a friend of the entrepreneur.'' 

However, Z. Blake Marshall of the Washington-based U.S.-Russia Business 
Council said the attention-grabbing dispute could be seen as ``a step 
forward'' if it is resolved in court. 


Top Chechen official slams "insignificant" Russian aid

MOSCOW, Sept 26 (AFP) - 
The top civilian official in Chechnya criticised Tuesday Russia's failure
to pour aid into the war-torn republic, and admitted he was virtually
powerless to improve the situation.

Akhmad Kadyrov also dismissed as "unrealistic" a claim by Council of Europe
chief Walter Schwimmer that 18,000 people had gone missing since federal
troops stormed the rebel republic last October.

Kadyrov, the province's former religious leader, named civilian
administrator by President Vladimir Putin in June, was in Moscow for
parliamentary hearings on the breakaway province.

"There is no (Russian government) programme to rebuild the economy," he
complained during an interview with AFP.

"We have only received money to meet pension and social security payments,
with a bit to help to finance the health and education systems," he said.

"At the moment we are getting only moral support from Moscow, even though
the situation is very difficult. People don't have a roof, they don't have
work," he said.

"All the humanitarian aid goes to Ingushetia," he added, referring to the
neighbouring Russian republic which houses the bulk of the refugees who
fled following the October 1, 1999 invasion of Chechnya by federal forces.

Kadyrov also accused the Ingush leadership of exaggerating the number of
refugees living in the republic.

Ingush President Ruslan Aushev says his impoverished republic is playing
host to some 200,000 refugees, but Kadyrov puts the figure at 115,000.

Kadyrov, who backed the rebels in the 1994-96 conflict which left Chechnya
with de facto independence from Russia, said he split with Chechen
President Aslan Maskhadov over last summer's armed raids on southern Russia.

Attempts to recreate a 19th-century Islamic republic embracing Chechnya and
the neighbouring Russian republic of Dagestan, led by field commanders
Shamil Basayev and Khattab, helped trigger Russia's ongoing crackdown in
the separatist province.

In his hour-long interview, Kadyrov also complained that the failure by
Russia's federal parliament to pass legislation on the rebellious province
had left him in a legal void.

"Neither the army, nor the interior ministry forces, have been subordinated
to me, even though we work together," he said.

"It would have been preferable for there to be one line of command, for all
the forces to be under my authority, but that's not realistic," he concluded.

He also repeated his warning that the brutal tactics employed by Russian
forces in Chechnya were counterproductive and could lead to more strife in
the unruly republic.

However, he took issue with claims by the Council of Europe that 18,000
people had disappeared since federal troops rumbled into the republic
nearly 12 months ago.

"The figure of 18,000 missing is not realistic," he said.

"There are around 400 localities in Chechnya, and there would have to be 40
missing people in each village, which isn't possible," he said.

"The number of missing may be in the hundreds but not the thousands. There
might be 18,000 dead, but not 18,000 missing," he added.

The official said Vladimir Kalamanov, the Kremlin's envoy to the breakaway
republic, had recently said that 379 people had been officially listed as
missing since Russian forces entered Chechnya on October 1, 1999.

Schwimmer advanced the figure of 18,000 missing in remarks to a Russian
parliamentary hearing on Chechnya last month. He did not say how the figure
had been calculated.

Kadyrov said he hoped the war would be over by year's end but said that the
guerrillas, while disunited, retained the ability to carry out "terrorist"

The official admits that he too could be the target of the separatists, who
have branded him a traitor and sentenced him to death.

The 46-year-old Kadyrov said he had learnt how to "live with stress,"
having escaped several assassination attempts.

"When my time comes, I will die where fate had decreed," he concluded.


United States Sues Harvard and Others for False Claims Relating 
to USAID Program in Russia, Reports U.S. Attorney

BOSTON, Sept. 26 /PRNewswire/ -- The United States has filed today a civil
Complaint which alleges as damages at least $40 million which the United
States Agency for International Development ("USAID") paid to HARVARD
UNIVERSITY in connection with a USAID-funded project in Russia. 

United States Attorney Donald K. Stern and Assistant Attorney General for
the Civil Division of the Department of Justice David W. Ogden announced
that the United States has filed a civil Complaint against HARVARD

The Complaint alleges that in 1992 and 1995, USAID and HARVARD entered into
two Cooperative Agreements. The agreements required HARVARD to provide
impartial and unbiased advice with respect to a USAID funded project in
Russia. HARVARD utilized its now defunct Harvard Institute for
International Development to implement HARVARD's project for USAID. 

The HARVARD project included economic and legal advice regarding the
privatization of Russia's national assets, and the creation of laws and
institutions required for functioning and open capital markets in Russia.
To ensure that the advice provided by HARVARD was impartial and unbiased,
the agreements prohibited HARVARD employees working on the project from
making any investments in Russia. 

The United States claims that, despite the clear terms of the agreements,
SHLEIFER, a tenured professor in HARVARD's Economics Department and the
Project Director, and HAY, HARVARD's Moscow-based representative in charge
of the project, were making prohibited investments in Russia in the areas
in which they were providing advice. The Complaint further alleges that
SHLEIFER and HAY were using their positions, inside information and
influence, as well as USAID-funded resources, to advance their own personal
business interests and investments and those of their wives and friends. 

U.S. Attorney Stern commented: "The United States paid Harvard for
impartial and unbiased economic advice, both in fact and appearance.
Despite clear prohibitions against investing in Russia, Harvard advisors
abused their positions and attempted to tip the playing field to their own
private financial advantage." Stern continued, "We hope that today's
complaint will make clear that those who abuse the resources of the United
States will be held accountable." 

The Complaint alleges that while they were acting on behalf of USAID,
SHLEIFER and HAY, along with ZIMMERMAN and HEBERT, engaged in the following
prohibited investments and businesses in Russia: 

(1) SHLEIFER and his wife ZIMMERMAN invested and reinvested $200,000
through Renova-Invest, a United States/Russian investment entity, in
various Russian companies and in Russian government debt; 

(2) SHLEIFER, ZIMMERMAN and HAY purchased several hundred thousand dollars
worth of shares in Russian oil companies, and concealed the ownership of
those shares by using the name of SHLEIFER's father-in-law; 

(3) HAY, ZIMMERMAN, HEBERT and SHLEIFER participated in the launching
and/or financing of: (a) Russia's first licensed mutual fund, which was
started by HEBERT, HAY's then girlfriend (now wife), and (b) Russia's first
licensed mutual fund depository, the First Russian Specialized Depository
("FRSD"), which was started by HEBERT's business partner; 

(4) HAY and HEBERT participated in creating a real estate firm to start a
real estate mutual fund, and to conduct business with a project to which
HAY was a key advisor; and 

(5) HAY and ZIMMERMAN used USAID-funded staff and offices to trade in
short term bonds and other Russian government debt. 

The United States claims that SHLEIFER, HAY and HARVARD never disclosed any
of these personal business activities and/or investments to USAID, and, in
fact, SHLEIFER and HAY actively concealed such activities. 

The Complaint alleges that as a result of the misconduct of the defendants,
USAID funds were diverted, abused and wasted. Not only did the defendants
make prohibited investments, but the Complaint also alleges that the
defendants diverted USAID funded resources for their own use. For example,
USAID funded staff was used to perform research in connection with SHLEIFER
and ZIMMERMAN's oil and other investments, and HAY took USAID funded staff
to Siberia to investigate various private real estate opportunities. The
Complaint alleges that HARVARD personnel other than SHLEIFER and HAY were
aware of improper conduct on the project, but HARVARD failed to provide
adequate oversight and administration to correct the problems. 

As a result of the defendants' misconduct, USAID suspended and ultimately
terminated the HARVARD project in Russia. 

The Complaint is based on the False Claims Act, which prohibits the
submission of false or fraudulent claims for payment to the United States.
The United States' Complaint also includes claims for common law fraud, and
allegations that HARVARD and its advisors breached the terms of the
agreements between HARVARD and USAID, as well as their fiduciary duties of
loyalty and good faith to the United States. Pursuant to these common law
claims, the United States seeks the return of all funds paid to HARVARD and
its conflicted advisors, as well as the profits earned from their improper
business activities. 

This action is being handled by Assistant U.S. Attorney Sara Bloom of
Stern's Civil Division and Trial Attorney Alicia Bentley of the Department
of Justice's Commercial Litigation Branch, and was investigated by agents
from the Inspector General's Office of USAID, with the assistance of agents
from the Federal Bureau of Investigation. 

SOURCE U.S. Attorney 


San Jose Mercury News 
September 24, 2000
Clinton-Gore team aided Russian economy's demise
Rep. Christopher Cox, R-Newport Beach, is the chairman of the Speaker's
Advisory Group on Russia and chairman of the House Policy Committee. He
wrote this article for Perspective.
The collapse of the Soviet Union brought to an end one of the cruelest,
most violent, least humane and most viciously ideological empires in the
history of the world. The West's victory in the Cold War presented America
with its greatest foreign-policy opportunity since the end of World War II:
Just as America's defeated enemies, Nazi Germany and Imperial Japan, became
free-enterprise democracies and close U.S. allies, so, too, might the new
Russian federation. 

In the final days of the Soviet Union, Communist Party General Secretary
Mikhail Gorbachev desperately sought billions of dollars in foreign loans,
and many in the West endorsed a policy of providing enormous amounts of aid
in an attempt to save the collapsing Soviet economy. But President Bush
believed this would not work. ``A shortage of foreign capital is not what
plunged your economy into crisis, nor can your economic ills be cured by an
infusion of cash,'' he told the Moscow State Institute for International
Relations in a speech July 31, 1991, five months before the Soviet Union

Bush's advice for Soviet state Instead, Bush stressed the importance of
building free enterprise and
deconstructing the Soviet state. 

This approach produced dramatic early success. Before 1993, Moscow worked
harmoniously with Washington across virtually the entire spectrum of
international issues -- including Operation Desert Storm, waged against the
Soviet Union's client state Iraq, and arms control, culminating in a START
2 treaty that will slash U.S. and Russian nuclear arsenals by 66 percent. 

At the outset of the Clinton administration, building a relationship
withthe United States was the highest priority for Russia. 

But the Clinton administration failed to capitalize on this opportunity. It
used America's enormous influence not to build the fundamentals of free
enterprise, but to strengthen the finances of the Russian government and
transform state-owned monopolies into private monopolies. Billions of
dollars in Western aid to Russia thus amounted to mere temporizing, and
doomed the corrupt insider ``privatization'' schemes to failure. 

Worse, by using massive lending and aid to plug the gap in the Russian
government's operating budget, the Clinton administration exposed these
funds to theft and fraud, and destroyed incentives to reform. The loans
also added to Russia's growing foreign debt, which continues to burden the
central government's operating budget. 

In addition, the Clinton administration's unquestioning support for a small
circle of Russian favorites, despite their corrupt conduct, damaged Russian
perceptions of America. By ignoring and suppressing evidence of
wrongdoingand failure by officials, including Victor Chernomyrdin and
Anatoly Chubais, the Clinton administration contributed not only to the
spread of corruption, but also to Russia's failure to overcome it. 

CIA officials say they provided Vice President Al Gore in 1995 with
information about Chernomyrdin that was ``more detailed and conclusive than
allegations of bribery and insider dealing that have been made in the
Russian media and elsewhere.'' Yet when asked on ``Meet the Press'' as
recently as July whether Chernomyrdin is corrupt, Gore replied: ``I have no

The Clinton administration also contributed to a climate in which organized
crime has flourished by failing to focus its attention on replacing
communism with the basic elements of free enterprise. 

The culmination of the Clinton administration's advice to Russia occurred
in August 1998, when Russia's default on its debts and devaluation of the
ruble led to the nation's economic collapse. The disaster was worse than
America's Crash of 1929. 

The disaster that began Aug. 17, 1998, spread immediately throughout
Russia. Millions of men and women who had deposited their money in Russian
banks lost everything. 

In America's Crash of 1929, stock prices fell 17 percent by year's end;
they weren't down 90 percent until four years into the Great Depression
that followed the crash. By contrast, the Russian stock market lost 90
percent of its value in 1998 alone. 

Millions of senior citizens, whose meager pension income had been suspended
for months, were cut off completely. When the dust finally settled in March
1999, the ruble -- and with it, every Russian's life savings -- had lost 75
percent of its value. 

Many Russians, not surprisingly, blamed the United States for intentionally
leading Russia down the path of ruin. The heavy-handed and wrong-headed
involvement of the Clinton administration in Russian economic policy made
America an obvious focus of citizen anger. Since the beginning of the
Clinton administration, U.S. officials had urged a steady diet of borrowing
to mask the Russian economy's fundamental weaknesses, deepening the
eventual collapse. 

The failure of the Clinton administration's economic strategy for Russia
has had profound implications for Russia's policy on proliferation of
weapons and technology, and therefore for U.S. national security. The need
for hard currency provided an incentive for Russia to sell sensitive
weapons and technology as quickly as possible to any nation or groups that
would buy them. 

Consensus on foreign policy 

Russian policy soon evolved into a rationalization of these arms sales.
Under the rubric of ``strengthening multipolarity,'' the purpose of the new
Russian consensus on foreign policy and national security is to check the
power of the United States. This consensus helps allay any concerns that
Russian officials, scientists and businesses might have about transferring
weapons or military technology to such countries as Iran, Iraq, North
Korea, Libya and the People's Republic of China. 

Eight years ago, when President Clinton took office, the stated objective
of the Russian government was a formal alliance with the United States.
Russia pursued a strongly pro-American foreign policy, and the United
States enjoyed unprecedented affection and admiration among ordinary
Russians. According to identical U.S. State Department polls, 70 percent of
Russians held a favorable view of the United States at the beginning of the
Clinton administration. This year, only 37 percent held this view. 

After eight years of mismanagement by the Clinton administration -- and
despite a U.S. taxpayer commitment of $20 billion -- the U.S.-Russian
relationship is in tatters. In place of the promising future foreseen in
1993, Russia's policy toward America is characterized by growing hostility
and divergent perceptions of international realities and intentions.
Because of Russia's current and future importance, the consequences of this
failure are difficult to overstate: They almost certainly exceed the
consequences of the American defeat in Vietnam and the fall of the
pro-American government in Iran. 

The task ahead for Russia this year is essentially the same as it was in
1992. Because so little progress has been made toward building free
enterprise, that work must now begin in earnest. But whereas conditions in
Russia in 1992 were eminently hospitable to such an undertaking, the
ensuing years of policy failure have squandered that advantage, and now the
necessary work will be much more difficult. 

America and Russia have lost a decade. The growing estrangement of Russia
from the United States, the hostility to American interests reflected in
Russia's foreign policy, and the telltale signs of authoritarianism in the
post-Yeltsin era provide ample evidence that Russia faces a more formidable
task because U.S. foreign policy was weak, and did not lead. 

But it is not too late for the United States to stop impeding and start
assisting the transition from communism to free markets, from
authoritarianism to democracy, and from disorder to order. It simply
requires that we begin anew -- but this time, with a clear purpose.


Minnesota Daily
September 26, 2000
Khrushchev's son discusses Russian economy, politics at U 
By Nathan Arnold

Dr. Sergei N. Khrushchev, son of former Soviet Premier Nikita 
Khrushchev, discussed the current economic and political situation in 
Russia on Saturday at the Hubert H. Humphrey Institute of Public 
He also gave some insight on his father and his actions during the Cold 
Sergei argued that the West's interpretation of why the Soviet Union 
attempted a transition to a market economy was incorrect and that the 
assumption of Soviet defeat in the Cold War was wrong.
Instead, it was the country's lack of innovation and the growing 
difficulty of centrally managing an ever-more-complex economy that 
continually dogged the Soviet economy. 
"In the 1980s, it became clear that the system must be changed," Sergei 
He explained the market economy of the West presented a more efficient 
model than the Soviet command economy, where the government controls and 
plans production and distribution of goods and services.
The young reformers of the post-Soviet era stopped following the 
writings of Marx and turned to the economic theories of the Western 
economist Milton Friedman. The problem, Sergei said, was that while 
Friedman wrote about running a market economy, he did not explain how to 
transform a command economy into a market economy.
The new Russian economy failed because, although the rules for a market 
economy were put in place, there was no foundation for the market economy 
to rest upon, he explained.
Sergei became an American citizen in June of 1999 amid much fanfare of 
how the son of a Soviet Premier who led the Soviet Union through the height 
of the Cold War, the Cuban Missile Crisis and the Space Race, could choose 
to become an American.
The former premier was well known both for his loud, outspoken manner 
and for his atypical antics. During a United Nations assembly, for example, 
he once removed his shoe and banged it on the podium to make a point.
Sergei has far different memories of his father's political career than 
those who observed him from the West. The younger Khrushchev said he saw 
his father as a peacemaker and, despite his firm belief in Communism, he 
was not a proponent of the Cold War.
During his father's time, there was an "arms race in the U.S. only" and 
his father's main goals were not military might but housing construction 
and agrarian improvement, Sergei said.
The former premier reduced the Soviet Army in size from 5.5 million men 
to 2.5 million, his son said, and was more interested in spending resources 
to improve the lives of everyday people than on expensive military 
Sergei was born in 1935 and accompanied his father on many major 
foreign trips. He was a control systems engineer, worked in the Soviet 
space and missile programs, and was also involved in the development of the 
Soviet cruise missile.
The younger Khrushchev is published extensively on the topics of 
Russian security, politics and economy. His most recent book about his 
father is titled "Nikita Khrushchev and the Creation of a Superpower." 
Sergei, a senior research fellow at the Watson Institute for 
International Studies, currently resides in Rhode Island. 


(Story on eve of Putin's Trip to India)
The Sunday Pioneer, New Delhi
October 1, 2000
By Tatiana Shaumian

MOSCOW -- A new grandson was born to me last week, a joyful event
that got me thinking about one of Russia's unhappiest problems. As distinct
from India, which suffers from a so-called population explosion, Russia is
beset by what might be described as a demographic implosion -- that is,
there are fewer and fewer of us every year.
Over the past decade the population of Russia has shrunk by nearly
5-million people, or half a million annually. Not only has this vast country
got fewer people, the balance between young and old is shifting
disastrously. By the year 2003 there will be just two working-age Russians
for each pensioner and within 20 years the ratio will be one-to-one. That is
economically insupportable. The growing mass of pensioners will gobble up
any economic growth we experience.
The demographic crisis has come about because post-Soviet Russia, in
many ways, is afflicted with some acute First World problems combined with
growing Third World-like ones. For over two decades birthrates have been
plunging as well-educated, urbanized young Russians put off having children
well into their 30's. The current birthrate is about 1.3 children per woman,
well below the 2.3 kids per woman that would be required to sustain the
population. This, of course, is a phenomenon very similar to that in Western
Europe and North America, and by itself would be nothing to worry about.
But over the past decade deathrates among productive adults in their
30's and 40's have risen dramatically. This is due to a post-Soviet cocktail
of bad news, including mass impoverishment, deteriorating environmental
conditions, skyrocketing rates of alchoholism, the return of
formerly-eradicated diseases like cholera and tuberculosis, more industrial
and two bloody civil wars against the separatist republic of Chechnya.
The population disaster is part of what the Kremlin and Russian
parliament are warning is an onrushing "2003 crisis". A special commission
has been created to examine the convergence of three potentially
catastrophic problems 3 years from now. Experts say the country's
infrastructure will be 80 per cent exhausted by then, and much of the
economy may grind to a halt. I've written about that problem in this space
already. At the same time the burden of pensioners will become unbearable,
and Russia's external debt repayments will balloon to $17-billion -- an
amount that is equal to the size of the entire state budget for 2003. All
hope for economic prosperity, or even comfortable survival, will go down the
I know that politicians often require a slogan to focus their minds,
but the problems under discussion are very real indeed. Some of the
solutions being bandied about are quite harebrained, including the idea of
mass labour levies to rebuild roads, bridges and electric power stations
(shades of the Stalin era!). Some talk about restoring the Soviet-style
command economy for an emergency period. Serious experts are suggesting
Russia should jettison its hard-won -- and already fraying -- democratic
freedoms in order to fight corruption, crime and capital flight.
But I believe some much more intelligent solutions are staring us in
the face, and I fervently hope that when President Vladimir Putin visits
India in the coming week he will get an inkling of what they might be. First
of all, tough economic conditions are no excuse for scuttling democracy.
India is living proof that free institutions can be built and survive even
amid mass poverty. Second, economic cooperation with countries like India is
far more useful and productive for Russia than our often futile courtship of
the rich West. When it comes to making do with incomplete infrastructure,
promoting high tech industries and implementing the information revolution,
India is far better positioned to show us the way forward.
Finally, back to our demographic problem. Isn't it obvious that
Russia needs to encourage immigration from heavily-populated countries to
redress the imbalance in its own society? That is a path Western countries
have taken, and they haven't suffered as a result.
A few million young workers from other countries could revive our
industry and create a solvent tax base to support our pensioners. Already
many thousands of migrant Chinese peasants work in our agricultural sector,
mainly in Siberia. They are very competent and hard-working farmers, and
their contribution is bringing ruined Soviet-era collective farms in some
places back into production. But Russia's archaic laws and xenophobic social
prejudices against accepting outside labourers are a big obstacle to
immigration on any meaningful scale.
India has more energetic and capable entrepreneurs than it can
absorb. That is precisely the type of people Russia needs to modernize and
activate its economy. For example Moscow, a city of 12-million people,
boasts a pitiful handful of Indian restaurants. We will be able to say we've
really joined the 21st century world when there's an Indian business on
every Moscow street corner.


From: "Robert Bruce Ware" <>
Subject: Reply to Herspring JRL# 4538
Date: Tue, 26 Sep 2000 

I appreciate Mr. Herspring's clarification of his positon regarding the
possibility of an observer mutually acceptable to the United States and
Russia for an examination of submarine exteriors. However, the fact that
Mr. Herspring off the top of his head, over the weekend, is unable to
locate the address of such an observer is something less than a persuasive
argument against the possibility. Indeed, even the exterior of Mr.
Herspring's argument in JRL #4538 would appear to require further
observation: On the one hand, he begins by insisting that the examination
of the exterior of a submarine is a sophisticated exercise requiring a
technically trained citizen from either a NATO member country or Russia or
China. On the other hand, his argument concludes with his assertion that
exterior damage from the collision of two submarines would be so obvious
that "(s)hipyard workers, sailors, someone would have already leaked it."
So which is it, sophisticated or obvious to any ordinary "someone"?
Submarine exteriors are made of material. All materials respond in
characteristic ways to stress, and the world is full of materials engineers
who make their living examining the effects of stress (including recent
repairs) on various materials. Perhaps even Switzerland has managed
somehow to train a few, NATO membership not withstanding. Nor does Mr.
Herspring need to strain his rolodex. We have international organizations
whose function is to mediate disputes between states. 


Date: Tue, 26 Sep 2000 
From: Ilvi Cannon <>
Subject: JRL #4536 and #4508/Patriarch and KBG

The recurring revelations about Alexy II, the Patriarch of the Russian
Orthodox Church, and his collaboration with the KGB (JRL #4536) help to
explain the results of a recent poll in Estonia which revealed that half
of ethnic Estonians believe non-Estonians not to be loyal to the state
of Estonia (JRL #4508). Alexy II, and ethnic Russian, was born in the
Republic of Estonia before World War II, and served as an Orthodox
priest here until he was chosen to go to Moscow during the Gorbachev
era. The information in Keston Institute’s report on Alexy’s long ties
with the KGB is indisputable.

When a person of such stature is found to be collaborating with a
dreaded institution representing foreign power (Estonia was occupied by
the Soviet Union almost 50 years), presumably out of loyalty (but he
also received material benefits), is it, then, not normal for the
average ethnic Estonian to wonder where the loyalty of Russians living


September 26,2000
But It Does Not Know What to Do With $300bn 
Active consultations on the draft budget for 2001 began in 
the State Duma. The positions of deputies and the government on 
economic development guidelines do not always coincide. Will 
economic growth continue? What will be the dollar's exchange 
rate? What are the projected inflation numbers? Will the oil 
price remain high (this is, indeed, a very important question 
for us)? Well-known politician and economist Mikhail ZADORNOV 
gave his answers to these and other questions when he talked 
with Trud's Alexander DYACHENKO.

Only some ten years ago, when speaking, for instance, 
about the structure of the Russian economy some evil tongues 
from the journalists' corps called Russia "the Upper Volta with 
missiles." Today we see that the country and its economy have 
changed. We can now not only fall but also grow, even though we 
have paid a very high price for this.
Our present situation depends to a large degree on the 
world market situation. This concerns not only the oil and gas 
This year, exports are expected to exceed imports by upwards of 
50 billion dollars, which is an unprecedented number. At the 
expense of what has this result been obtained? Whereas a year 
ago proceeds from oil and gas constituted less than 40%, at 
present the corresponding figure is 55%. In terms of the 
structure of its gross domestic product and exports Russia can 
be compared with Mexico, Venezuela and a number of other 
countries. The only difference between them and us is that in 
addition to energy resources we also export ferrous, 
non-ferrous and precious metals.
It is perfectly clear that the federal budget receives 
additional proceeds mostly thanks to a good situation in the 
international markets of raw materials. This year additional 
budgetary proceeds will amount to 300 billion rubles, or 11 
billion dollars. This is 40% more than planned, which allows 
our government to feel confident.
On what are these additional profits spent? Half of them, 
or about five billion dollars, will be used to make payments on 
our external debt, as we will not receive those loans from 
international financial organizations on which we counted. The 
remaining five to six billion dollars are partly channeled into 
the economy and partly to settlements between the government 
and the Central Bank. Frankly speaking, considerable sums of 
money will be swallowed by hostilities in Chechnya.
By and large, we witness not only economic growth but also 
improvements in the efficiency of our fiscal services. The 
federal budget collected 10% of the GDP in 1998 and 13.5% last 
year. The corresponding number for the first seven months of 
this year is 17% (Sic!).
But there is always a fly in the ointment. The problem of 
surplus money has arisen. Just judge for yourself. According to 
the Central Bank's estimates, money supply was to increase by 
27% to 28% this year. But as early as July 1 it has already 
increased by 30%. As of August 1 the money base grew by 50% 
(Sic!). All in all, our economy has accumulated from 930 
billion to 950 billion rubles.
How does all this money work? Banks keep 100 billion 
rubles on their Central Bank deposits but 70% of this money 
belongs to the Sberbank. With inflation at the rate of 20% the 
banks receive only 9% on their Central Bank deposits. Another 
100 billion rubles, which belong to the federal budget, the 
Pension Fund and regional budgets, are also on Central Bank 
deposits, plus 85 billion rubles, that is, the free remainder 
of commercial banks on their correspondent accounts. So, 
neither commercial banks nor the government uses about 30% of 
money supply. According to preliminary tallies, money supply is 
to increase by another 100 billion rubles by the end of the 
year. It is only natural that such a mass of money, which is 
literally out of circulation, creates, along with the inflation 
of costs, pressure on all the prices in the economy. It is very 
unlikely that the situation will cardinally change next year.
The parameters of the monetary policy of the government 
and the Central Bank will be analyzed later. However, some 
forecasts can be made even now. By the end of this year 
inflation will be at the level not lower than 21% to 22%. The 
thing is that the growth of consumer prices has continued by 
approximately 2% a month on a stable basis since May. The 
optimistic number of August - 1% - does not reflect the real 
picture. It is only the result of the seasonal drop of the 
prices of farm produce. At the same time, tariffs and paid 
services became 3% and non-food products 1.5% costlier. It is 
also to be remembered that in September the Railways Ministry, 
or MPS, raised passenger and freight tariffs by 18% to 25% and 
the Unified Energy Systems, or RAO UES, made plans to increase 
electricity tariffs. Furthermore, a number of municipalities 
raised their tariffs on rents and public utilities as of August 
1. MPS and RAO UES announced that they would continue raising 
their tariffs. So, the inflation of costs in industry is 
ensured for us next year. There is the ground to presume that 
if the present trends persist wholesale prices will grow by 
upwards of 20% and consumer prices by 15% to 18% next year.
Will economic growth continue? For a whole year after the 
depreciation of the ruble in 1998 economic growth continued at 
the expense of an increase in pure exports and improvements of 
the world market situation. This ensured around 70% of 
increment in the GDP. In the past six months these factors have 
been giving no more than 10% of such increment. Different and 
rather promising factors have moved to the forefront. First of 
all, it is growing household consumption, that is consumption 
by the population. This factor now ensures from 50% to 60% of 
the GDP growth. The matter is that even a very insignificant 
growth of real per capita incomes (which has increased by 8% to 
8.5%) leads to an almost equal growth of consumption. This is 
an absolute must for stable economic development. If the 
government succeeds in strengthening this trend, the 
development of the food, light, printing and other industries, 
which are directly oriented to the consumer, will continue next 
Another positive trend is that for the first time in many 
years investments rose by 15%, compared with last year. This is 
not much money in real terms, but it is of importance as a 
factor of economic growth. I would like to hope that this is 
only the beginning.
We have recently estimated the spending of the additional 
proceeds, which our exporters received thanks to the growth of 
prices on Russian commodities. This year's oil export 
constituted about 20 billion dollars this year, or nearly 
doubled, compared with last year. The smallest part of these 
additional proceeds has been used for investment. At the same 
time, capital flight grew in the first quarter at the level of 
up to 2.2 billion dollars a month.
In 2001 economic growth will continue in Russia, but it is 
unlikely to be as high as the government forecasts it - plus 4% 
of the GDP. I am sorry to say but growth rates are already 
reducing. There are only two ways to arrest this trend: to 
increase investments and support real consumption. We cannot 
rely on the growth of exports. It is more likely than not that 
the exports will shrink by approximately five billion dollars.
It goes without saying that much will depend on oil prices.
But it is practically impossible to predict their dynamics for 
a whole year. So, let us proceed from a sufficiently 
conservative forecast of the government. According to it, the 
price of our Urals brand oil will be 21 dollars per barrel. In 
that case, Russia will have a 40-billion-dollar positive trade 
balance and the Central Bank's gold and currency reserves will 
grow by 7 billion to 8 billion dollars. The real strengthening 
of the ruble against the US dollar will constitute 6% to 8%. 
The supply of free money will increase by 20% to 25%, thereby 
only exacerbating the problem of surplus money supply.
It is yet unclear how this problem will be solved. The 
following variants are offered. The Finance Ministry intends to 
issue 70 billion rubles' worth of treasury bills, including 30 
billion rubles' worth of GKOs and 10 billion rubles' worth of 
savings loan bonds. At the same time, approximately 60 billion 
rubles' worth of TBs will be redeemed. This means that the 
Finance Ministry will offer investors to exchange old papers 
for new ones.
It is not the first year that discussions are on 
concerning the possibility to tie part of free money by making 
settlements between the government and the Central Bank. The 
government owes the Central Bank approximately 5.5 billion 
dollars and 240 billion rubles. With its current budgetary 
possibilities the government could pay a considerable part of 
its debt, especially, because the Central Bank counts to 
receive only 45 billion to 50 billion rubles. However, 
agreement has been reached on the return of only 15 billion 
rubles. It is hardly possibly to change anything radically in 
this context, because the solution depends on State Duma 
deputies, among others. And it is more important for them to 
increase the financing of the agro-industrial sector and the 
army than to allocate money for some incomprehensible payments 
to the Central Bank.
By and large, there are no signs that there will be any 
serious upheavals for our purses next year. And this per se 
gives us hope for the better.


Date: Tue, 26 Sep 2000 
From: Dominique Arel <> 

Call for Papers

"Nation-Making, Past and Present:
Community, Economy, Security"

ASN 6th Annual World Convention
International Affairs Building,
Columbia University, NY
Sponsored by the Harriman Institute
5-7 April 2001

The Annual World Convention of the Association for the Study of 
Nationalities (ASN) has become the most attended international 
scholarly gathering dealing with issues of national identity, 
nationalism, ethnic conflict and state-building in Central and 
Eastern Europe, the former Soviet Union, Central Asia, and adjacent 
areas. The Convention continued its impressive growth in 2000 with a 
record 600+ attendees and 100 panels. More than a hundred 
participants travelled from overseas for the event, particularly, but 
not exclusively, from Western and Eastern Europe. Panelists' 
disciplines included political science, history, anthropology, 
sociology, economics, geography, and sociolinguistics.

The central theme of the 2001 Convention addresses the interface of 
identity politics with economic issues and security/foreign policy 
concerns, either in the past or in contemporary developments. 
Proposals can focus on particular cases, theoretical questions, or 
cross-regional comparison. Papers or panels comparing cases of the 
post-Communist world with cases from other regions of the world are 
encouraged. Due to continuing instability in the Caucasus and the 
Balkans, proposals dealing with these areas are particularly 
solicited. Unlike most conventions, ASN accepts individual paper 
proposals, although full panel proposals have a greater chance of 
being accepted, due to space constraints.

The ASN World Convention's yearly theme specifically refers to a core 
number of panels. Since the Convention is far larger in scope than a 
thematic conference, we invite, as in previous years, proposals on a 
wide range of topics related to identity, nationalism, conflict and 
state-building in Central and Eastern Europe, the former Soviet 
Union, Central Asia, and adjacent areas.

Russia-related themes in 2000 included:

Nationalism and Federalism in the Russian Federation
The Russian-Chechen War(s)
Military Tactics and Operational Art of Yeltsin's Second Chechen War
Dagestan in Comparative Perspective
Russia's Regions and Republics
Ethnicity and Regionalism in Siberia
Russia In Search of Itself
Extremist Variants of Russian Nationalism
Orthodoxy, Ethnicity, and Civil Society in Russia
Conflict and Identity in Russian Foreign Policy
Security, Energy, and Foreign Policy South of Russia
Valery Tishkov and the Anthropology of Russia
and many more.

The ASN web site ( contains a complete list of the 
2000 panels.

Videos/Films. The 2000 Convention was enhanced by the highly 
successful screening of short videos (10-15 minutes), accompanying 
presentations in regular panels, as well as medium- and full-length 
documentaries or feature films in video format, shown as special 
screenings followed by a general discussion. The British 
documentaries The Valley, on Kosovo, and A Cry from the Grave, on 
Serbenica, were some of the highlights of the 2000 Program. For 2001, 
proposals partly or entirely revolving around video, film, or 
audio-visual material (including slides and power point 
presentations) are strongly encouraged. As a rule, the convention 
intends to show video or film material produced within the past year 
or two. Throughout the convention, one or two of the convention 
meeting rooms will be exclusively devoted to the screening of video 
material. All suggestions and proposals should be sent to the Program 
Chair, Dominique Arel (address below).

Location. The Convention will be held by the Harriman Institute at 
Columbia University, New York (address below), and co-sponsored by 
the Watson Institute, Brown University, Rhode Island.

Schedule. The convention will begin on Thursday, April 5th, at 1 PM, 
and end on Saturday, April 7th in early evening. No panels will be 
held on Sunday, and the dates do not coincide with the Jewish and 
Orthodox religious holidays, which all take place later in the month.

Panel/Roundtable/Roundtable Proposals. There is no particular 
application form to fill out. The vast majority of proposals were 
e-mailed to the Program Chair last year, but proposals sent by fax or 
regular mail are also accepted. For instructions on the proposals, 
see the "Application Information" below. All proposals must be sent 
to the Program Chair, Dominique Arel (address below).

Registration. Registration fees are $40 for ASN Members, $60 for 
Non-Members ($30 for East European Non-Members) and $25 for Students. 
All panel participants have to pre-register by March 15th, 2001. 
Non-panel participants are also urged to pre-register early. Please 
note that the Convention will be unable to refund preregisterees 
after March, 15th, 2001. Pre-registration by panel participants and 
attendees can be done electronically, by fax, or by regular mail. A 
registration form can be downloaded from our ASN web page 
(, or be requested from Gordon Bardos (address 

Funding. Participants are responsible for seeking their own funds to 
cover all travel and accommodation costs. ASN is unfortunately unable 
to assist participants financially, including applicants from Central 
and Eastern Europe, the former Soviet Union, and Central Asia.

Accommodation. The Convention does not have particular arrangements 
with hotels. Our ASN web site (, however, provides 
a list of several hotels, in various price ranges. Participants and 
attendees are strongly encouraged to reserve as early as possible.

Advertisements/Exhibitors. Several dozen publishers and companies had 
exhibits and/or advertised in the Convention Program in 2000. Due to 
considerations of space, advertisers and exhibitors are encouraged to 
place their order early. For information, please contact the 
Convention Director Gordon Bardos (address below).

Convention Papers. The convention papers will be available for sale 
at the Convention for $1.50 apiece. That policy has proven a huge 
success in the past.

Web Site. Our web site ( provides continuously 
updated information on the ASN World Convention.

Membership Subscription to ASN. A yearly membership to ASN is $50, 
and $30 for students. Members receive the journal Nationalities 
Papers (four times a year), the periodical Analysis of Current Events 
(ACE, four times a year), the newsletter ASNews (twice a year) and a 
registration discount at the ASN Annual World Convention. Since 1999, 
ASN Members also have the option of subscribing to Europe-Asia 
Studies at the cut-rate of $55 yearly. A membership form can be 
downloaded from our ASN web page (, or be 
requested from Gordon Bardos (address below).

We look forward to seeing you at the convention!

Dominique Arel, Program Chair
Gordon Bardos, Convention Director

Application Information

ASN is accepting proposals for panels, roundtables, or individual 
papers. There is no particular form to fill out. Proposals can be 
emailed (preferably), faxed or mailed to the Program Chair (address 

Proposals for panels with presentations based on papers must include:
*a chair, no more than three paper-givers and a discussant
*the title of the panel, as well as the title and an abstract (200 to 
500 words) for each of the papers
*the affiliation, postal address, telephone, fax, and email (very
important) of all participants
*a one-paragraph cv of each participant

Proposals for roundtables must include:
*a chair and no more than four presentors
*the title of the roundtable
*the affiliation, postal address, telephone, fax, and email (very
important) of all participants
*a one-paragraph cv of each participant

Proposals for individual papers must include:
*the title and an abstract (200 to 500 words) of the paper
*the affiliation, postal address, telephone, fax, and email (very
important) of the applicant
*a one-paragraph cv of each participant

If audio-visual equipment is required, please indicate so in your application.

As before, applicants must abide by three golden rules:
*No participant may be listed more than once on a given panel
*No participant may present more than one paper at the convention
*No participant may appear more than twice in the convention program

The proposals must be sent to Dominique Arel (address below). Email 
applications are encouraged. An international Program Committee will 
be entrusted with the selection.

Deadline for proposals:7 December 2000

For information on panel and paper proposals:
Dominique Arel
ASN Convention Program Chair
Watson Institute
Brown University, Box 1831
130 Hope St.
Providence, RI 02912
401 863 9296 tel
401 863 2192 fax

For information on exhibits
and advertisements in the convention program:
Gordon Bardos
Convention Director
Harriman Institute
Columbia University
1216 IAB
420 W. 118th St.
New York, NY 10027
212 854 8487 tel
212 666 3481 fax



Return to CDI's Home Page  I  Return to CDI's Library