October 5, 2000    
This Date's Issues: 4560 • 4561 • 4562 

Johnson's Russia List
#4561
5 October 2000
davidjohnson@erols.com


[Note from David Johnson:
1. Reuters: Backers of Russia's Mir say systems still go.
2. The Onion: Russia's Closest Friends Ready to Try Military 
Intervention.
3. Reuters: Pet-loving Russians promote neutering to curb strays.
4. Jonas Bernstein: re Kotkin on Berezovsky/4558.
5. Gleb Pavlovsky: Our Information Doctrine: Excerpts.
6. David Rowell: Russian Visitor Exchange Program Flaws.
7. Robert Bruce Ware: re Zuckerman JRL 4556.
8. Segodnya: THE STATE MUST NOT KEEP ALOOF. Since summer, experts 
have been pointing to a slowing down of Russian economic growth. 
What is the reason behind and what can be done to buck the trend 
is described by Yevgeny YASIN. (Interview)
9. Jamestown Foundation Monitor: DIFFERENCES ON RUSSIAN BUDGET 
REMAIN UNRESOLVED. (military)
10. Reuters: Russian PM asks businessmen for advice.]


******


#1
Backers of Russia's Mir say systems still go
October 4, 2000
By Karl Emerick Hanuska

MOSCOW (Reuters) - Despite ominous warnings from Moscow that their tourist 
space attraction may soon crash to Earth, Western investors who want to 
launch James Cameron to space station Mir say all systems are still go. 


The director of the film ``Titanic,'' who has said he is prepared to buy a 
ticket to space to fulfill a lifelong dream, is only one of the customers who 
will be disappointed if Russia allows its aging Mir orbiter to turn into a 
fireball. 


Another is America's NBC television, which has announced plans to blast a 
winning game show contestant into orbit during the 2000-2001 TV season as 
part of a true-life show dreamed up by the producer of the mega-hit 
``Survivor.'' 


But Wednesday, Russian Deputy Prime Minister Alexei Kudrin said Moscow had to 
focus its meager space budget on the International Space Station and stop 
spending money on Mir. 


``One rouble invested in the International Space Station (ISS) gives us more 
in terms of scientific research than a rouble invested in Mir,'' he told a 
news conference. ``We have to pay more attention to the station which has 
better prospects.'' 


The ISS is being constructed by a 17-nation consortium led NASA of the United 
States and including Russia, Canada, Japan, Brazil and member countries of 
the European Space Agency. 


Kudrin's comments came a day after Deputy Prime Minister Ilya Klebanov said a 
committee of designers had recommended ditching Mir because it had outlived 
its effective lifespan. 


BLACK HOLE? 


Mir's demise would blast a big black hole into MirCorp, a joint venture led 
by Western investors who bought the rights to sell tickets to the public to 
fly to the Russian station. 


The company said it was unfazed by the comments. 


``The long-term business prospects for Mir are extremely positive,'' it said 
in a statement. 


Jeff Lenorovitz, a MirCorp spokesman in Washington, said Russia had no need 
to choose between Mir and the International Space Station, since MirCorp was 
already paying Mir's bills. 


He said the company had already raised $40 million to keep Mir aloft, paying 
for two space flight since February. He added that MirCorp got the go ahead 
this week to launch a third space flight on Oct. 16 to send up more supplies. 


``MirCorp is pulling together investors to cover the cost of operations into 
next year. In the next week or two, we will be meeting with the Russian 
government people to make sure they understand that,'' he said. 


The company plans to charge about $20 million to space tourists -- it calls 
them ``citizen explorers'' -- for a week-long trip. One American millionaire 
space buff is already training at the Star City base near Moscow. 


WEAR AND TEAR 


Mir has been in orbit for more than 14 years, nearly three times what Soviet 
designers planned for it. It has lately suffered some embarrassing glitches, 
including a fire and a crash with a supply ship while U.S. NASA astronauts 
were aboard. 


But MirCorp still touts Russia's space program's safety record, saying it has 
had no fatalities in more than 25 years. 


Klebanov said the committee's recommendation to ditch Mir was made several 
days ago, but the national space authority had yet to make a final decision. 


Moscow has already dropped an earlier decision to scrap Mir. 


Energiya, the Russian company which runs Mir and owns part of MirCorp, said 
Wednesday the station could stay up a few more years, but needed government 
cash. 


Itar-Tass news agency quoted Energiya officials as saying that unless the 
government found money for Mir, it risked causing ``a calamity that would be 
impossible to counteract.'' 


Mir's ``uncontrollable crash to Earth would have unpredictable catastrophic 
results,'' they warned. 


Mir has given the Russians by far the world's deepest experience in 
long-duration manned space flight, expertise that is being used in the $60 
billion International Space Station. 


In July, Russia launched the ISS living quarters -- basically an updated Mir. 
But its launch was two years late, and Washington blamed the delay on Russian 
reluctance to scrap Mir. 


******


#2
The Onion
www.theonion.com
October 4, 2000
Russia's Closest Friends Ready to Try Military Intervention


MOSCOW--Concerned about its rising crime rate, mounting debt, and 
out-of-control alcoholism, Russia's closest allies are preparing to step in 
and stage a military intervention on the troubled nation's behalf.
"Russia is a very, very important country to all of us, and we can't 
just sit by and watch it destroy itself like this," German chancellor Gerhard 
Schröder said. "It's time we stepped in."
"We've talked and talked to them for years now, desperately trying to 
get them to change their self-destructive ways, but nothing we've said has 
gotten through," British prime minister Tony Blair said. "At this point, I 
don't think we have any choice but to brew up a pot of coffee, bring in some 
armored divisions, and force Russia to deal with its problems."
The intervention, which will be led by Germany and include the U.S., 
France, England, Poland, Hungary, and the Czech Republic, will most likely 
occur next week, before the harsh Russian winter makes acts of caring 
difficult for armored vehicles and infantrymen. The intervention's primary 
objective will be to communicate to Russia, through kind but firm military 
means, how much it means to the European community, how its problems have 
been affecting its neighbors, and what its allies want their relationship to 
be like in the future.
"I really don't think Russia understands how much it hurts my country 
when it does some of the things it does," Polish president Aleksander 
Kwasniewski said. "It withholds not only affection and attention, but vast 
oil and mineral reserves. There was a time when Russia was there for us with 
foreign aid. We could turn to them for emotional and military support. No 
more."
"I'm not surprised, though," Kwasniewski continued. "I mean, these last 
few years, Russia's been letting itself go to hell internally--roads, 
bridges, the power grid, you name it. How can you take care of others when 
you can't even take care of yourself?"
Much of the frustration felt by Russia's allies stems from the nation's 
inability to be self-reliant despite its age, its incredible potential, and 
the tremendous amount of help it has received over the years.
"I've given Russia something like $8.5 billion in foreign aid and 
international-relief loans since 1995," President Clinton said. "And what do 
they do when they get all that money? They devalue the ruble, close up the 
banks, and then turn around and ask Germany for a few billion more. Where 
does it all go?"
"Let's just say I have my suspicions," added Clinton, making a drinking 
motion with his hand.
"Funny how Russia always manages to scrounge up a few bucks when they 
want to roll into Chechnya and raise a little hell," French president Jacques 
Chirac said. "Well, I'm not helping them pay for that stuff anymore. And if I 
have to get together with the boys and go over there myself to put a stop to 
it, I will."
Organizers of the military intervention say they expect Russia to put 
up resistance when massed troops appear on its doorstep. They are confident, 
however, that Russia will eventually come to realize that the intervention is 
for its own good.
"I can already hear what Russia's going to say," Schröder said. "It's 
going to be like, 'Hey, I'm making strides. I'm doing better. I took down 
that wall, I did the whole glasnost and perestroika thing, I even have my own 
space station. What do you want from me?' It isn't going to be easy."
"We'll just have to use tough love," Schröder added, "and a lot of the 
T-72 tanks Russia left lying around when it moved out of our place."
Russia's friends are aware that history is not on their side. In recent 
centuries, numerous interventions have failed to work on the proud, stubborn 
nation. But despite the poor track record, its friends are confident.
"Yes, many people have gone in there without success," Blair said. "You 
have to realize, though, that people like Napoleon and Hitler probably didn't 
have Russia's best interests at heart when they went barging in. If we show 
Russia that we're doing this because we care, and we can avoid getting bogged 
down in a winter land campaign, I think we've got a really good shot at 
winning the country over."
"In this kind of intervention, you never know what's going to happen," 
Clinton said. "Believe it or not, sometimes when the subject recognizes that 
you are doing it out of genuine concern and have all of NATO on your side, 
they agree to change their ways instantly."
"But if that doesn't happen--and we certainly have reason to believe 
that a big, independent, historically cold country like Russia will try to 
fight us--we're more than ready for it," Clinton continued. "Russia is 
dangerous to itself and others right now. If a full-scale military occupation 
is what it takes to save Russia from itself, that's what we're going to do."


******


#3
Pet-loving Russians promote neutering to curb strays


MOSCOW, Oct 4 (Reuters) - Russians love their animals, too. 


Activists of Russia's tiny animal rights movement marked International Animal 
Rights Day on Wednesday by calling on the government to outlaw the killing of 
homeless cats and dogs, promoting instead sterilisation to curb the stray 
population. 


``Animals are being treated badly here. I'm here because I want them to live 
longer,'' said Maya, a 17-year-old student and one of about 40 protesters 
gathered in Moscow's traditional meeting place of Pushkin Square. 


Demonstrators ranging from students and housewives to full-time activists 
held aloft banners telling owners to be good to their cats and dogs. 


``Sterilisation instead of murder,'' read one placard. 


Many demonstrators sported T-shirts with animal rights slogans. Schoolgirls 
wore fake animal ears. 


Activists say sterilisation is cheaper and more humane than rounding up and 
killing packs of dogs roaming Moscow streets. They said more than 21,000 
animals were destroyed last year. 


Organiser Irina Arturmenkova said protesters hoped to persuade authorities to 
stage a referendum on the issue. 


``This day of demonstration is happening in many countries today, but here we 
are obviously dealing with the particular problems for animals in Moscow and 
Russia,'' she said. ``In principle, sterilisation programme is the main 
thing.'' 


Russians are serious pet owners, with a wide variety of exotic breeds 
frequently spotted in Moscow streets. Guard dogs are sought after by wealthy 
Russians. 


In December last year, the government passed an animal rights bill explicitly 
prohibiting people from eating pets. 


Pet owners were also required to prevent unwanted offspring by sterilising 
their pets or providing contraceptives, practices less common in Russia than 
in most Western countries. 


******


#4
From: JBernstein92@aol.com (Jonas Bernstein)
Date: Wed, 4 Oct 2000 
Subject: re Kotkin on Berezovsky/4558


Re: Stephen Kotkin's review in The New Republic of Paul Klebnikov's 
"Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia," 
posted on JRL #4558, 4 October 2000.


I have not yet read Paul Klebnikov's book on Berezovsky, so I cannot comment 
on Kotkin's rendering of the author's thesis and main points. I can, however, 
comment on some of Kotkin's own points. 


Kotkin's main thrust is that Berezovsky's reputed power during the Yeltsin 
era was more hype than reality, and, more generally, that the issue of the 
"the oligarchs" incited "collective hysteria" and "misinformed commotion" on 
the part of the media and Russia-watchers. To make the first point, Kotkin 
cites, among other things, Klebnikov's interview with Sergei Kiriyenko, who 
said that Berezovsky's boasts about influencing Yeltsin were "pure fiction" - 
a testament to the tycoon's "access to good information" and his tactic of 
claiming credit for things that others already planned to do. Kotkin hangs 
almost his entire argument on Kiriyenko's comment, calling it a "Eureka 
moment" and criticizing Klebnikov for missing its significance. Perhaps 
Kotkin is right, but I would be loathe to take the word of Kiriyenko, who was 
seen as such a heavy hitter in political and media circles that he became 
known as the Kinder-Surprise, after the egg-shaped candy popular among 
children. It is worth noting here that in an interview published in Vlast 
this past July, Anatoly Chubais spoke of his long-time rival Berezovsky in 
anything but dismissive tones, even though the latter seemed to be in trouble 
and, in Chubais's view, had committed some serious (but not "fatal") errors. 
I would take Chubais's assessment of Berezovsky's over Kiriyenko's, if only 
on the takes-one-to-know-one principle. 


Indeed, recall how at the end of 1997, immediately after Berezovsky was 
sacked as Security Council deputy secretary at the height of his feud with 
Chubais and the "energetic young reformers," the bribes-for-unwritten-books 
scandal broke, largely thanks to Berezovsky's ORT, shortly after which 
Chubais was sacked as finance minister. Chubais lost his other post, that of 
first deputy prime minister, in early 1998. In 1999, Sibneft got raided, 
Berezovsky got removed as CIS executive secretary and a warrant was issued 
for his arrest after he repeatedly denounced Yevgeny Primakov publicly as a 
KPRF tool and a totalitarian. What happened next? Primakov was fired as 
premier and the warrant for Berezovsky's arrest was rescinded. 


Were the firings of Chubais and Primakov simply things that Yeltsin planned 
to do anyway? Was there no causal link between the ouster of a finance 
minister/first deputy prime minister and a premier and their battles with 
Berezovsky? I don't have definitive proof either way, but the logic of those 
events seems rather obvious.


Secondly, Kotkin quotes Klebnikov quoting Berezovsky's famous 1996 interview 
with the Financial Times, in which the tycoon claimed that he and six other 
financiers controlled 50 percent of the Russian economy and had arranged 
Yeltsin's re-election in 1996. Kotkin then asks: "But could such boasting 
have been remotely true?" 


It seems to me that it could easily have been remotely true - and even not so 
remotely. In fact, a less boastful oligarch, Vladimir Potanin, said in 1997 
that twelve to fifteen corporations controlled more than 50 percent of 
Russia's economy. You can quibble over the exact percentage and exactly what 
"control" means. But given the fact that, as Vladimir Putin noted last 
December, Russia's GDP is ten times smaller than that of the United States, 
five times less than China's and would need to grow by at least 8 percent a 
year for 15 years to reach the level of Spain or Portugal, what else is 
there, really, besides the oil companies, Gazprom, UES, Norilsk, the aluminum 
smelters, etc.? 


Thirdly, Kotkin says that Klebnikov "misses the extent to which Berezovsky 
(along with Vladimir Putin) was a product of unsuccessful Soviet-era economic 
policies." Kotkin is absolutely right to point out that "despite the many 
levels of discontinuity before and after the collapse of the Soviet Union, 
the crookedness and breakdown of the old and the crookedness and breakdown of 
the new are of a piece." But this should not be used to obscure the fact that 
the main acts in the large-scale looting of state assets in the '90s - the 
privatization of Gazprom, the creation of ORT, the creation of Kremlin's 
"property department" (and the ensuing Mabetex scandal, etc.), the 
import-export privileges for the National Sports Funds (and also for the 
disabled Afghan War veterans fund, the society for the deaf, and even, 
according to M-K last year, for AVVA, the Voloshin-Berezovsky automobile 
pyramid scheme), the loans-for-shares scheme - were made possible by specific 
decrees and orders signed by specific people. Namely, Boris Yeltsin, along 
with Viktor Chernomyrdin and other top officials appointed by the Russian 
president.


P.S. Berezovsky may be in deeper shape than he was even in 1999, when he fled 
abroad ahead of the arrest warrant. That, at least, is the conventional 
wisdom. But can anybody explain why, if Putin and Co. are committed to 
driving him from the corridors of power once and for all, Nikolai Volkov was 
removed as the chief investigator in Aeroflot case just days after arriving 
back from Switzlerland with crates full of incriminating documents?


******


#5
www.strana.ru
September 28, 2000
Gleb Pavlovsky
Our Information Doctrine: Excerpts
[translated for personal use only]


After Vladimir Putin's victory, attempts to create a dependent opposition by
forces in control of the Russian media have failed. The fight is over: Putin
won, and the media oligarchy does not exist any more as a political menace.
For the time being, the question "kto kogo" has been answered.


After the media of mass (democratic) propaganda of the Second Republic
(1991-99) have totally collapsed, Russia needs new media - both governmental
and private. We are now observing their creation, which will be a difficult
and slow work.


It is time for society to build an orderly stage for public politics. Of
course, it cannot be built with the same governmental tools which were used
to demolish the previous one.


The post-revolutionary communication space is filled with debris and ruins.
There is no freedom of speech, no representation for the political spectrum,
no representation for the real forces of society. The watcher and the
listener has been deafened and blinded, has no access to information, nor
any chance to be listened or at least represented. The legacy of this era
consists of entrepreneurship that is defamed by the label of oligarchy;
journalistic cadres that have been used and thrown in the dustbin; civic,
ethnic and religious groups that are alienated from each other, mutually
suspicious and hostile.


In the course of the 1991 democratic revolution, the federal resources of
information and propaganda escaped both nationalization and privatization,
slipping from under the control by constitutional authorities. They became
dependent upon organized political-communicative groupings and gradually
became the stage for underground deals.


The billions of "free dollars available for the revolution" created a
cost-driven infrastructure of the political process. The media
infrastructure is not oriented toward commercial profits. A number of
newspapers and TV shows appeared and continue to exist as instruments for
the utilization of political money.


As a result, the funds that should have been spent upon the restructuring of
the media market, the renovation of regional media systems, development of
electronic channels, were invested in the hyperfinancing of the metropolitan
journalistic community in its newly found capacity - as a mobile pressure
group of political activists, working to destabilize the situation.


By purchasing particular types of coverage for the political process on the
shadow market, the government deprived itself of - and denied its citizens -
its legitimate tools for spreading information. Boris Berezovsky and
Vladimir Gusinsky created their fortunes in the capacity of information
brokers.


The problem of the so-called "oligarchic influence", i.e. of big business
pressure upon the government, was inflated by the group of media brokers.
The participation of the big business in the government was limited to a
number of lobbying abuses that were relatively easy to eliminate. Meanwhile,
metropolitan media transformed themselves first into a monopoly, and then in
a de-facto coercive power agency.


The end result was a shadow political market, a multi-billion part of a
semi-criminal triangle (drugs - vodka - mass myths). It made public politics
overly expensive for citizens and public organizations: society was
virtually eliminated from political life. A reliable mechanism ensured the
elimination of a number of topics, realities, and public groups from the
debate. The mechanism was based on the separation of the freedom of speech
from the freedom of access to information. The following subjects, among
others, were beyond the pale of discussion:


- real problems with army financing and threats arising from its
underfinancing;
- realities of Russia's geopolitical position and its real threats (it is
only in recent years that departments of international information have been
restored in the Russian media);
- the underutilization of the country's intellectual resources;
- the deficit of reliable personnel in government agencies and in business.


Meanwhile, all this directly bears on the state security. I would like to
pay attention to the fact that not just mass audience, but also the elites
are victims of this artificial information deficit. As they are not supplied
with anything except press releases and propaganda, political parties and
public groups have no opportunity to form positions and goals regarding
issues bearing upon the state security and even the life of citizens.
Society is supplied with rather detailed reports about what happened, but
has no substantive information that would make it prepared for future
catastrophies.


The lesson of August 2000 is that technological catastrophies may grow into
media-orchestrated challenges to national security in general. As
technological crises become further aggravated by communicative political
performances, they are transformed into major crises on a national scale,
which is completely inadmissible for the government. After Putin's victory,
the media brokers are trying to sell the existing communicative political
regime as their property. Meanwhile, the folding down of the political
market would lead to its buying up by irresponsible owners of political
capital, most likely of foreign provenance.


There is no more direct communicative-political threat on the part of
Gusinsky's and Berezovsky's propagandistic conglomerates. But there are
financial problems caused by the cutoff of wholesale government purchases of
their services. This creates a potential threat of these holdings' transfer
under external administration run by foreign consumers of their political
services.


There are attempts to create an extra-territorial communicative and
political enclave inside the country, whose services will be sold on both
domestic and foreign political markets. The first steps can be traced in the
Gazprom-Media Most relationships and in the Teletrust affair. Government
institutions ought to have legal agencies able to rule out such unorthodox
sources of pressure upon the constitutional order.


Meanwhile, there are also legitimate concerns of the Russian public that the
rollback of the anti-state opposition will be used by the bureaucracy to
purge professional journalistic cadres and will lead to the general
reduction of information level among Russia's citizens. The pretext for such
fears should be eliminated. We waged our struggle to defend the
constitution, not to destroy it.


We must proceed stage by stage to eliminate the regime of metropolitan
monopoly in the mass media. The state is interested in the liberalization of
the media market, which should lead to the parceling and fragmentation of
the communicative political groupings, which, in its turn, will make the
atmosphere more healthy. The quantity of mass media in Russia should be at
the level which society is prepared to pay for.


The present regime in the media was largely shaped by the de facto ban on
information activities of the communist, nationalist, and social democratic
parts of the political spectrum. This turned out to be the main reason of
the communicative decay, corruption, and collapse of the right-wing forces.
We need to give these parts of the spectrum the right to conduct normal
communicative activities.


Meanwhile, the Church also ought to be given a channel for communication
with the media. It is scandalous that Russia's major confessions don't have
their own radio and TV channels.


Political propaganda is an element of the freedom of speech and of
political freedom. But from now on it should be clearly separated from
providing information. The former's sources of funding, sponsors and
purchasers ought to be known to the citizens. A public control based upon
access to information should make it impossible for two incompatible
versions of national news to exist simultaneously at different nationwide
channels.


<...> The rearmament of the authorities and of the principal social groups
with the tools of information access will raise the actual level of national
security.


****** 


#6
Date: Wed, 04 Oct 2000
From: "David M Rowell" <David@Rossia.com> 
Subject: Russian Visitor Exchange Program Flaws


I have written before about my enthusiasm for the various programs that
bring Russian businesspeople and government representatives to the US on
two to four week programs. I'd like to update some of these impressions
based on my most recent involvement in such a program.

I believe the concept of such programs is that by exposing current and
potential future leaders of commerce and the community to "truth, justice
and the American way" the participants will be given a strong but subtle
demonstration of how our democracy and social system can truly and
positively work for the general good, and hopefully they will be encouraged
to take some of their experiences back with them and to gently embrace
them, helping Russia on a path towards a lawful orderly society built on
democratic and equitable principles.

A number of government departments seem to sponsor a rich variety of such
programs, and there are (I believe) close on two hundred different
coordinating organisations within the US that regularly bring groups of
people over on these programs. I have myself participated in four programs
now, hosting a visitor on each occasion, and on three of the occasions,
also having the visitor participate in the company I work for, seeing how
we transact business, etc etc.

My enthusiasm for the programs to date has been based on their broader
reach into Russian communities (than is the case with some of the MBA and
similar extended educational type programs) and their greater apparent "cost
effectiveness" (as measured both by the number of person-days of US
exposure, and also the total number of different people involved, per
dollar spent). Most of the programs seem aimed at junior and middle level
managers - people who hold the promise of the future, as it were, and
people who may transform themselves into a new Russian middle class, giving
the country the underlying stability that it so desperately needs.

My most recent involvement was with a small group of ten Russian local
government officials, who travelled from the Russian Far East for an 18 day
sojourn in the US. I won't name the US coordinating body because I
don'tbelieve that the criticisms which follow should attach as much to them
as they should to the program guidelines within which they must operate,
and to the selecting body that chooses participants.

I suppose my first point of uncertainty was in seeing people with such
"Grand Pooh-Bah" titles as the two people that were a manager and
specialist in the "Russian Federation Ministry on Antimonopoly Policy and
Support of Business, Primorsky Regional Board", followed by additional
skepticism at the two members of the "Primorsky Krai Fund for Small
Business Support" (I wonder what their annual funding might be - $100?) and
sheer curiosity at what on earth the members of the Vladivostok and
Primorsky Krai Economic and Planning Committees might do all day long other
than passively await the next power or water cuts (I never did find out!).

This initial uncertainty was re-inforced by the discovery that none of the
ten people in this group had a functional knowledge of English. This
should be an absolute disqualifier from participation in such programs. A
person that can't speak or read English may as well spend their time in the
US with their eyes
closed and their ears blocked. How can they possibly fully experience the
full rich tapestry of the American way of life, its commerce and its
community,when they don't understand a thing that is going on around them?

The ability to speak English provides an interesting pointer to another
issue, as well. I understand it to be mandatory as part of getting a
college degree in Russia to take classes in a foreign language. The person
that we were hosting had a recent degree (in Marketing - try thinking about
that without breaking into laughter) in which English was her chosen
language, and also studied English at high school. She now is not only
studying part time for an advanced degree but also is a member of the
University faculty teaching
undergrads all about marketing. So how is it that she can't speak English
at anything other than an extreme basic beginner level? Obvious answer -
because her degree wasn't honestly earned (hardly surprising when we found
out a bit more about her background, as evidenced by the fact that her
parents' new and free-standing house that they recently built is larger
than our own 3300sq ft dwelling - try telling me that her father, in the
construction business, earned his money honestly - excuse my cynicism). 
Talking some more about this
particular individual, the fact that she travelled over here with at least
US$600 in cash is also surprising - that should represent, in my estimate,
probably close on an entire year's after-tax salary for her.

All this builds up to the point I'm struggling to make. This entire group
was as likely comprised of a gaggle of corrupt government officials
enjoying a shopping trip at the US taxpayer's expense as it was of well
meaning sincere honest hardworking civil servants. In the limited
discussion with group members about their activities, I learned that some
of them took entire days off their scheduled program of activities in order
to spend more time shopping, while others of them found the scheduled
activity of exposures to local government in action in our area so boring
that they would fall asleep during presentations. I was also told (but
find this hard to believe) that even their interpreter fell asleep during
one particularly boring session!

What on earth is the US Govt doing supporting such totally unproductive
junkets for most likely dishonest Russian government officials?

It is plain (to me) that all participants in these programs must have
conversational level English skills for two reasons. First, it empowers
them to fully benefit from their US exposure and experience. Secondly, it
confirms their developed interest in international issues and suggests that
they may have earned their degrees honestly, giving a faint glimmer of hope
that "their souls may not yet be beyond salvation"! :) It isn't as though
there is a shortage of applicants for such programs, quite the contrary,
and so it behooves us to exercise due care and caution in who we select for
the privilege of participation.

I'd like to close with two "quotable quotes" from the person we hosted.

The first occurred after we collected her and were driving home. On the
way, we stopped at the local supermarket to buy some essentials, and
invited her to come into the supermarket with us to experience a US
supermarket. Rememberthat this girl not only has a marketing degree but
now lectures in marketing at
a Vladivostok University. Her reply : "No thanks. I'll wait in the car. 
A shop is a shop, they are all the same everywhere in the world"! (For any
apologists out there, I add that the weather was fine, it wasn't raining,
and we were parked very close to the entrance to a truly fine upmarket
supermarket.)

The second occurred one evening when I was struggling to understand what
the "Federal Antimonopoly Division, etc etc" actually did (as a sidebar to
this intriguing issue, the one example she proudly stated involved
providing strong support to the local can manufacturing monopoly which
seemed to contradict their basic mission!). We reached a point where she
conceded that not everything, from some viewpoints, seemed to be perfect,
but we weren't, ourselves, privileged to appreciate the full picture with
all the facts, whereas the government did have this omniscient view and
"the government knows best"!!! As I said to her in response, I've met many
different Russians from all walks of life, but never ever before have I met
any Russian at all that claims that their government knows best, and
indeed, it isn't even a very popular viewpoint of western citizens about
their governments, either!

Plainly, the selection process and program design of some of these programs
is seriously flawed, but other than using David's excellent List, I don't
know of any other way to introduce an element of accountability and
feedback into the system (yes, I have passed all these comments and more
besides back to the coordinating body). I suppose I could write a note to
Mr Gore, but that would run the risk of having swear-words scribbled on it
and being returned unheeded! :)

******


#7
Date: Wed, 04 Oct 2000 
From: "Robert Bruce Ware" <rware@stlnet.com> 
Subject: Zuckerman JRL 4556


Mr. Zuckerman regrets that "Russia has ended its love affair with
the West," in favor of recentralization and return toward authoritarianism
(JRL 4556). He blames it all upon endemic Russian backwardness, and
concludes that "the West can do little about it." But the West has
already done too much about it. Here's a brief summary of what we've
done: 


When Russians sought economic advice in the early 1990s we furnished
Harvard professors who entered in a spirit of market triumphalism and
instituted economic "shock therapy." These programs promoted hyperinflation
that destroyed the savings of ordinary Russians and threw the economy into
chaos. We ignored warnings from State Department officials in Moscow in
order to persevere in these policies. Now it has been revealed that the
Harvard advisory team was mired in corruption, and the US State Department
is suing Harvard University. We blindly supported the presidency of Boris
Yeltsin, who called in tanks to shell the democratically elected Russian
legislature, killing as many as 500 people, and then permitted his cronies
to loot Russia's national resources. We poured billions of dollars into
his administration, which barely touched Russian soil before being
transferred to off-shore companies and Swiss accounts. We
thereby underwrote the rise of a Russian
criminal class that further oppressed ordinary Russians. In 1996 we
expanded NATO into Eastern Europe, locking Russia into permanent "enemy"
status. Our journalists, diplomats, and scholars said little or nothing
when Yeltsin stole the presidential election in 1996. From 1994-6 we
turned a blind eye to Russia's brutal war in Chechnya. Then after Russia
abandoned Chechnya in 1996, we continued to look the other way while
Chechen gangs kidnapped, tortured and enslaved thousands of Russians
citizens and foreigners. When Russia finallywent to the aid of its
citizens, we condemned Russian atrocities in Chechnya while continuing to
ignore the horrors that had been inflicted upon the local population by
Chechen gangs. We enraged Russians when we launched an air campaign in
Serbia that immediately undermined the Serbian opposition to President
Milosevic, while providing cover for the murder of vastly more Kosovar
civilians than had died in previous ethnic cleansing. Finally, Western
journalists and academics have buried both the Russians and ourselves in a
blizzard of lop-sided self-complacency, to which Mr. Zuckerman has now
contributed one more flake.


As one of the few researchers able to work in the Northeast Caucasus in
recent years, I watched the Chechen hostage industry from close range,
and it is not hard to understand why Russians see the West as blind and
hypocritical. This summer my wife and I spent more than 6 weeks
interviewing elderly people across Russia. We closed each interview with
the question: "What would you like people in the West to understand about
Russia." Some asked for our insight and toleration; some asked to be left
in peace. Since we are incapable
of the former, it would be merciful if we attempt the latter. It is far to
late to feign surprise at the return of the Russian winter. 

Robert Bruce Ware
Department of Philosophical Studies
Southern Ilinois University Edwardsville


******


#8
Segodnya
September 30, 2000
[translation from RIA Novosti for personal use only]
THE STATE MUST NOT KEEP ALOOF
Since summer, experts have been pointing to a slowing down 
of Russian economic growth. What is the reason behind and what 
can be done to buck the trend is described by Yevgeny YASIN, 
Higher School of Economics professor, in an interview with 
Segodnya's Natalia ILYINA.

Question: Mr Yasin, what is happening with our economic 
growth, which but recently only rejoiced us all? 
Answer: Our growth has been due above all to transient 
factors that appeared after the crisis. We got a chance to 
rehabilitate our economy thanks to the collapse of the GKO 
(state treasury bills) pyramid and, we may as well confess, 
because we do not have to pay on most of our commitments. And 
devaluation of the rouble ordinarily leads not only to falling 
living standards and a shattered banking system, but also to 
recovery in the real sphere of the economy. It was all a 
textbook example. The devaluation of the rouble is said to be a 
very temporary factor and its effect is wearing out. But the 
actual state of things has not got so far, because the gap 
between the real market exchange rate of the rouble and 
purchasing power parity remains big: it is much more than 
before the crisis. I think such a state of things should be 
kept up and we should have the rouble rate as much as possible 
on the low side. 

Question: Should it be lowered?
Answer: With high prices for Russian export products, it 
is hard to expect a lowering of the rate. Simply, we should not 
allow it to rise. And viewed from this angle, the current 
policy has nothing bad about it. We keep up the rouble rate, 
increase our hard currency reserves, print roubles and, without 
fueling inflation too much, still provide the economy with 
liquidity, with non-payments falling off, barter reduced and 
tax take rising. I will now remind you that Japan maintained 
the low stable rate of its currency - 320 yen per dollar (now 
130) - for twenty-two years. If we manage to do the same, 
nothing bad will come of it. 
Besides, I beg your pardon, we launched market reforms 
with a view to seeing them yield results one day, seeing better 
managed enterprises better able to follow the market situation.
And now, though later than expected, we are beginning to reap 
the fruits of reforms. An absolutely positive phenomenon is a 
17 per cent growth in investments since the beginning of the 
year. It's a dream. If this had happened when I was a minister, 
I would have been happy. 

Question: Does it mean we have permanent factors of growth 
now at work?
Answer: No, this cannot be said. At present, with minimum 
investments, the use of such a resource as available capacities 
has a tremendous effect, but as they get saturated the maximum 
productivity of invested capital goes down. And when the 
easy-to-pick resources for boosting production are used up, 
economic growth brakes become increasingly felt. There are 
three of them. The first is the non-market sector of the 
Russian economy. I include here all the enterprises that are 
ineffectual, ill adapted to altered conditions, or produce a 
negative surplus value for a variety of reasons. They are 
second-sourced by either the budget or natural monopolies. The 
second is the shadow economy: non-transparency and a striving 
to engage in combinations. It is a colossal brake on 
investments. Something must be done in this respect. A judicial 
reform is for many reasons, these included, an imperative of 
the times. The previous ten years of reform have been 
shouldered by economists. The next ten years will be the 
concern of legal experts. Perhaps this is a romantic view, but 
new centurions must appear - you remember the American film - 
people dedicated to the ideals of the law. If society lacks 
such men, it is in a bad shape indeed. 
The last and third brake is the banking system. With our 
banking system we can take a rest. There will be no growth, for 
it presupposes availability of credits for at least circulating 
assets. Even before the crisis we had a mere semblance of the 
banking system. But today it is just a disaster. Banks, while 
having 80 billion roubles in correspondent accounts in the 
Central Bank, refuse to invest money in production. Something 
must be thought up. 

Question: What, in your view?
Answer: I do not have simple and straightforward recipes. 
My view is that the first thing to be done is to get rid of 
poor and problem banks. There must at last be a law on the 
bankruptcy of banking organisations. Second, contradictory 
though it may seem, I would give serious thought to bank 
capitalisation at the budget's expense. Of course, this is not 
a very liberal measure, but I see no other way out. 

Question: And you think they will start crediting the real 
sector?
Answer: Well, on some conditions at first. Banks fear 
advancing credits to production because of high risks and small 
capital: risks cannot be taken with small capital. The result 
is the vicious circle: no credit - no deposits - no credit 
resources. This circle must be broken. 

Question: You are saying that the state should give money 
to cost-effective banks, to guarantee easy credits for priority 
sectors of the economy, that is, to choose favourites, rather 
than to create equal conditions for all. Will this not lead to 
corruption, as is believed by liberal-minded economists?
Answer: We have entered the second stage of change which I 
call "restructuring and economic growth." A distinctive feature 
of this stage is that the state should exert a certain 
influence on structural changes. If it does nothing, market 
forces will pull us mainly into raw materials branches and to 
buying everything else abroad. It means the state must perform 
corrective actions. Say, support the development of advanced 
industries, which may in the future constitute the face of the 
Russian economy as a developed country. 
Currently we are woefully behind with new economic 
branches.
We may sit and wait for the natural course of things to take 
place or do something on the off-chance. But I think there must 
be priorities for the new economy to forge ahead. 


Question: In short, points of growth should be sought out 
and financed?
Answer: They are more or less known. And the state must 
help in these areas. Methods can vary: for example, export 
credit guarantees. If today we make money by selling oil, it 
would, of course, be right to use most of the earnings to repay 
debts. But a bit should also be allocated for what we 
discussed. For no particular reason the state must not keep 
aloof. 


******


#9
Jamestown Foundation Monitor
October 4, 2000


DIFFERENCES ON RUSSIAN BUDGET REMAIN UNRESOLVED. Russia's autumn 
conscription period opens amid a continuing political struggle over the 
size of the country's military budget for next year and on the eve of a 
series of potentially important--and controversial--changes in the way in 
which money is allocated to the Defense Ministry. As reported earlier (see 
the Monitor, September 8), the current Russian draft budget for 2001 
projects defense spending at 206 billion rubles (less than US$5 billion). 
This is an increase over this year's level of defense spending, which has 
been pegged at 140 billion rubles, but constitutes only about 2.5 percent 
of Russian GDP. The amount is considerably less than many in the Russian 
Defense Ministry--and the parliament--would like to spend on the country's 
armed forces.


Among the key questions attending the current military budget debate is 
whether President Vladimir Putin backs his Finance Ministry, which has 
settled on the 206 billion rubles figure, or those demanding increased 
defense spending. There have been reports that Putin has ordered 
allocations for the military to be raised to 271 billion rubles for 2001 
(Vremya MN, September 9; Itogi, September 19), but they remain unconfirmed. 
His public statements on this score, moreover, have been mixed. In 
well-publicized remarks to military and government leaders on September 27, 
for example, Putin spoke of the government having spent "colossal sums" on 
the military. But at the same time he admonished the Defense Ministry to 
use this funding more wisely (see the Monitor, September 29).


If a recent Izvestia article is to be believed, the government has taken 
several steps in recent weeks which could reshape the military budget 
debate. For one, it is apparently considering taking over the Defense 
Ministry's whopping 60 billion ruble debt to various private and government 
suppliers. According to Deputy Finance Minister Lyubov Kudelina, the 
ministry has already paid back 15 billion rubles of the debt, and will 
devote another 5.5 billion to that purpose in November. By the middle of 
this month, moreover, the Finance Ministry could decide to take 
responsibility for the rest of the Defense Ministry's debt, she said. 
Should this come to pass, the Defense Ministry will be freed from debt 
payments and should therefore be in a position to devote a far greater 
portion of its annual funding directly to military needs. It will also, as 
Izvestia observes, have far less reason to complain about the size of the 
defense budget.


On the other side of the coin, however, the newspaper suggests that the 
willingness of the government to pay off the Defense Ministry's debts has 
come at a steep price for the military leadership: namely, control over 
defense allocations. According to Kudelina, the government is now 
implementing a new accounting system whereby the government will calculate 
the defense budget based on its financial resources and then present it to 
the military leadership. Previously, the Defense Ministry had itself 
arrived at a yearly defense spending figure and had submitted it to the 
Finance Ministry. Kudelina suggested that the Finance Ministry is still not 
satisfied with its ability to oversee the manner in which the Defense 
Ministry makes use of the money it is allocated, but appeared to make clear 
that changes in this area will also be forthcoming in the years ahead 
(Izvestia, September 27).


Opposition to the Finance Ministry's 2001 defense budget, meanwhile, 
appears to be centered at present in the Russian State Duma's Defense 
Committee. The chairman of that committee, Andrei Nikolaev, is a retired 
general (and former top General Staff officer) who has emerged as an 
influential figure on defense matters. Nikolaev has accused the Finance 
Ministry of manipulating the defense budget figures to give what he says is 
a false impression that defense spending is on the rise. Nikolaev charges 
that virtually the entire nominal increase in defense spending from this 
year to next is lost when one considers both inflation and the fact that 
the Finance Ministry has moved several new expenditure items--including 
costs related to peacekeeping missions and military reform--into the 
defense budget. He has also complained about the manner in which much of 
the defense budget remains classified (a complaint, oddly enough, not 
shared by the Finance Ministry), and suggested that this lack of 
transparency obstructs the ability of lawmakers to resolve issues related 
to defense spending.


Nikolaev has urged that defense spending for 2001 be raised at least 
another 52 billion rubles--to nearly 260 billion (Nezavisimaya gazeta, 
September 15). Whether Putin will line up behind Nikolaev and the generals 
or back his Finance Ministry should become clear in the weeks to come. The 
Russian president's position on this issue will say much about the state of 
civil-military relations in Russia, and also about the Kremlin's political 
and economic priorities.


******


#10
Russian PM asks businessmen for advice

MOSCOW, Oct 4 (Reuters) - Russian Prime Minister Mikhail Kasyanov hosted 
business leaders on Wednesday at the first meeting of a council which the 
government says will help it improve the economy. 


The Council on Entrepreneurship, set up after President Vladimir Putin met 
business leaders in July, includes the heads of 24 major Russian companies, 
although many of the so-called oligarchs, Russia's most powerful businessmen, 
were not invited. 


"You can advise if the government is doing something wrong and if government 
actions corresponded to the real needs of the economy," Itar-Tass quoted 
Kasyanov as telling the meeting. 


"Real economic growth is the result of industrialists and and entrepreneurs," 
Interfax quoted him as saying. 


The Russian economy has been boosted since mid-1999 by high world energy 
prices and the positive effects of rouble devaluation after the 1998 
financial crisis, but the government has acknowledged structural reforms are 
needed to sustain growth. 


The government has pledged to continue tax reforms and provide equal business 
conditions to all, answering calls from local and foreign investors to 
improve the business climate. 


"The idea, supported by all participants, was that equal conditions should be 
created for everyone," Oleg Deripaska, head of Russia's biggest aluminium 
group Russky Alyuminy, said after the meeting in televised remarks. 


"Many have already realised that no one will get long-term favours in 
business," he added. 


******