October
8, 2000
This Date's Issues: 4568 • 4569
Johnson's Russia List
#4569
8 October 2000
davidjohnson@erols.com
[Note from David Johnson:
1. Newsweek: Book Excerpt: Yeltsin's Midnight Diaries.
2. Reuters: Boston-Moscow software link skirts Russian obstacles.
3. Rossiyskaya Gazeta: 55 Percent of Draftees Have 'Medical
Limitations'
4. The Russia Journal: Otto Latsis, Ups and downs of political will.
For Kremlin, unfocused vision has meant lost opportunities and disregard
of country’s real constraints.
5. Reuters: Russia's UES seeks foreign investment - Chubais.
6. Rossiyskaya Gazeta: Moscow Daily Slams Chubays Over Irkutskenergo
Takeover Bid.
7. Moscow Times: Lyuba Pronina, Business Bosses Plot Ways to Boost
U.S. Deals. (The Russian-American Business Council)
8. BBC MONITORING: RUSSIAN PAPER LISTS REASONS WHY MIR HAS TO BE
SCRAPPED.]
******
#1
Newsweek: Book Excerpt: "Midnight Diaries"
Former Russian President Chose Putin in Part for His Reticence: 'Unlike Other
Deputies,' But Named 'Decoy' First to Gain 'Surprise Factor'
Says Russian Intelligence Warned of Plot by U.S. Republicans to 'Plant' A
Young Provocateur ... Capable of Ruining' Clinton's Reputation
NEW YORK, Oct. 8 /PRNewswire/ -- Former Russian President Boris Yeltsin says
he chose his successor, Vladimir Putin, in part because of what he did not
do. "Unlike other deputies, who were always trying to lay out their visions
of Russia and the world, Putin did not try to strike up conversations with
me," Yeltsin writes in "Midnight Diaries," the next volume of his memoirs,
excerpted in the current issue of Newsweek. "Rather, it seemed that Putin
tried to remove any sort of personal element from our contact. And precisely
because of that, I wanted to talk to him more."
The excerpts in the October 16 issue of Newsweek (on newsstands Monday,
October 9), reveal how Yeltsin arrived at the decision to choose Putin as his
successor over other possible candidates and the lengths he went to in order
to keep his final intentions secret, including telling only top aides about
his plans to resign on December 31, 1999. Highlights from the excerpts:
On Putin's character: "I was also shocked by his lightning reactions.
Sometimes even my most innocuous comments threw people off. They would turn
red and search tortuously for the right answer. But Putin replied calmly and
naturally. It made me feel that this young man was ready for absolutely
anything in life, that he would respond to any challenge with clarity and
precision ... the more I knew Putin, the more convinced I was that he
combined both an enormous dedication to democracy and market reforms and an
unwavering patriotism."
On keeping the choice of Putin as his successor a secret: "Intuition told me
that it would be premature to bring Putin into the political ring at that
moment. He had to appear later ... I didn't want the public to get too used
to Putin in those lazy summer months. We mustn't let his mystery disappear;
the surprise factor needed to remain intact. Someone else had to fill the
gap. I needed someone to serve as a decoy ... Virtually no one knew of this
option, including Putin himself. That was the strength of this plan; it had
the power of the unexpected. As I have noted, such political moves have
always helped me win the whole round, sometimes even when it seemed hopeless."
On Putin accepting the post as president: "When I told him that I intended
to make him acting president, Putin's first reaction made my heart sink. 'I'm
not ready for that decision, Boris Nikolayevich,' he had said. No, it wasn't
weakness on his part. You wouldn't call Putin weak. It was the doubts of a
strong person. 'You see, Boris Nikolayevich,' he explained. 'It's a rather
difficult destiny.' I didn't want to have to twist Putin's arm. But unlike
Putin, I was in the iron grip of a decision already made. Once made, it
wouldn't let me go. 'Well, what do you think? You haven't answered me,' I
prodded Putin. 'I agree, Boris Nikolayevich,' he said."
On a secret Intelligence report about Clinton's enemies: "In late 1996 after
Clinton's re-election, Russian intelligence sent me a coded report containing
a prognosis of how the Republicans would resolve the major political problems
emerging for them and noting that Clinton had a particular predilection for
beautiful young women. In the near future, the report said, Clinton's
enemies planned to plant in his entourage a young provocateur who would spark
a major scandal capable of ruining the president's reputation ... But the
prediction seemed too farfetched. It seemed to me that if something like
this were in the works, Clinton, with his firm grasp of reality and his staff
of brilliant aides, would be able to figure out the cunning plot. During my
last meeting with Clinton, I thought I might give him the text of this coded
dispatch as a souvenir. But then I decided not to traumatize the man; he had
already suffered too much during this episode."
(Excerpts attached. Read Newsweek's news releases at www.Newsweek.MSNBC.com.
Click "Pressroom.")
BOOK EXCERPT: In a New Memoir, Russia's Ex-President Boris Yeltsin Describes
The Intrigue-Filled Conclusion of His Career. Fending Off Political Attacks
And Health Crises, He Picks Strongman Vladimir Putin to Succeed Him -- And
Inherit His Mixed Legacy.
Insomnia and memoir-writing seem to go together. Boris Yeltsin, who gets only
a few hours of sleep each night, is about to publish his third volume of
memoirs, entitled "Midnight Diaries." The book covers the end of his public
career, from his stunning re-election as president of Russia in 1996 to his
equally stunning resignation on the last day of the 20th century, when he
handed power to Vladimir Putin. The book may be the last word from Yeltsin,
at least in a literary sense. His health has been precarious for years. Last
week in Moscow, Yeltsin, 69, appeared to be very ill, according to people who
saw him. Rumors of a steep decline have been circulating; one Russian press
report recently claimed he has Alzheimer's disease. There has been no
official word on Yeltsin's health, but aides concede his schedule has been
sharply curtailed.
In his new book, Yeltsin puts his legacy in the best possible light and
explains his own sometimes unruly behavior. He admits that he had a problem
with alcohol but says he "gradually" got the drinking under control. He
denies that he or his family piled up a fortune while he was in power. He
glosses over the large-scale failures of his years in office, including
endemic corruption, the haphazard pace of economic reform and the ongoing war
in Chechnya. He also ignores the fact that one of his greatest achievements,
respect for freedom of the press, is now being threatened by his successor.
But iron-fisted Putin was very much Yeltsin's choice. In May 1999, Yeltsin
needed a new prime minister. Putin was one possibility; the other was young
Sergei Stepashin, the Interior minister. In the first of these excerpts,
Yeltsin explains why he picked Putin. In the second, he describes how he
stage-managed the announcement of his own resignation and Putin's promotion
to acting president. Sly and secretive, Yeltsin is the master of Kremlin
intrigue, bent on a career-crowning power play.
I. Choosing Putin
Stepashin or putin? putin or stepashin? they were of the new generation --
young, energetic and smart. But what a difference in nature! Stepashin was
soft, and he liked to pose a bit. He loved theatrical gestures. I wasn't
certain he could hold out to the end or display that tremendous will and
resolve needed in a fierce political battle. I couldn't imagine a president
of Russia without these tough character traits. Putin, on the contrary, had
the will and the resolve. I knew he did. But intuition told me that it would
be premature to bring Putin into the political ring at that moment. He had to
appear later. When there's not enough time to take a political running jump,
it can be bad. When there's too much time, it can be even worse. I didn't
want the public to get too used to Putin in those lazy summer months. We
mustn't let his mystery disappear; the surprise factor needed to remain
intact. Someone else had to fill the gap. I needed someone to serve as a
decoy. There was no alternative: this role had to be entrusted to the nice,
decent Sergei Vadimovich Stepashin. Virtually no one knew of this option,
including Putin himself. That was the strength of this plan; it had the power
of the unexpected. As I have noted, such political moves have always helped
me win the whole round, sometimes even when it seemed hopeless.
Yes, even as I proposed Stepashin's candidacy, I knew that I would soon be
removing him. And that knowledge weighed terribly on me. After all, people
perceive events in the present, today, now. They respond with happiness and
excitement or anger and despair. I knew that the situation would change
within two or three months, and I knew how it would change. But there was no
joy in this knowledge. Instead, I felt heaviness. I was again taking
responsibility for the fate of others. I would have to answer for the
unpredictable consequences of my actions. In the middle of a conversation or
an ordinary meeting, I would feel a black shadow suddenly pass through the
room. The preordained nature of my act constantly made itself felt. But I had
to bear up under this burden and not let my thoughts show.
Putin had to come onto the scene gradually. When our political opponents
finally showed their hand and the election campaign was at its height, that's
when Putin's decisive nature and toughness would come in very handy. But I
could not even inform Putin of my plan. I needed to preserve the key element
of surprise. Not that I felt sorry for [Putin]. I wanted to hand him the
crown of Monomakh [a symbol of Russian leadership]. I wanted to give him the
most important, the dearest thing I had: my political legacy. And I wanted to
do this through victory in the [parliamentary] elections -- the sort of
public politics he disliked -- to safeguard the democratic freedoms of the
country and to maintain a normal market economy. Carrying the burden until
2000 was going to be very, very hard, even for someone as strong as I.
So it was decided. I was nominating Stepashin. But first I would announce
[Transportation Minister Nikolai] Aksyonenko, just to shake things up. I
liked the way I had sparked intrigue around Aksyonenko. The Duma delegates
were expecting him and had geared up for battle. At just the right moment, I
would switch candidates. I pushed the button for the line to Gennady
Seleznev, speaker of the Duma. After much hemming and hawing, I said, "It's
Aksyonenko." I put the receiver down and thought, "Boy, will they be
surprised when they read it's Stepashin. But that's OK; it's good for them."
The Stepashin candidacy passed easily in the first round, no sweat. The
newspapers wrote that the Kremlin had played a clever trick. Everyone was
expecting Aksyonenko, whom they didn't like, and were relieved to vote for
Stepashin, whom they did like. Little did they know that I had more tricks up
my sleeve.
Putin appeared in the Kremlin in March 1997. [His] reports were a model of
clarity. Unlike other deputies, who were always trying to lay out their
visions of Russia and the world, Putin did not try to strike up conversations
with me. Rather, it seemed that Putin tried to remove any sort of personal
element from our contact. And precisely because of that, I wanted to talk to
him more.
I was also shocked by his lightning reactions. Sometimes even my most
innocuous comments threw people off. They would turn red and search
tortuously for the right answer. But Putin replied calmly and naturally. It
made me feel that this young man was ready for absolutely anything in life,
that he would respond to any challenge with clarity and precision. At first
Putin's coolness even made me cautious, but then I understood that it was
ingrained in his nature.
In the summer of 1998, I began to think about whom I could appoint to replace
Nikolai Kovalev as the director of the FSB [the Federal Security Service, a
successor to the Soviet-era KGB]. The answer was instantly clear: Putin. For
one thing, Putin had spent quite a few years working in the security
agencies. Second, he had gone through a school of management. But above all,
the more I knew Putin, the more convinced I was that he combined both an
enormous dedication to democracy and market reforms and an unwavering
patriotism.
Putin went about reorganizing the FSB very intelligently. He dealt with
Kovalev, the man he had replaced, in a humane way, allowing Kovalev to
resolve certain personal problems quietly. (It may seem trivial, but in the
military service that sort of thing is very important.) Then he drew up a
revised staff list. Although the reorganization meant that a number of
officers had to be retired, it proceeded calmly and, I would say, cleanly.
Putin's structure would prove to be quite workable.
But the most significant thing is that Putin took a very firm political
position. He did not allow himself to be manipulated in political games. Even
I was amazed by his solid moral code. He would not do anything that
conflicted with his understanding of honor. He was always prepared to part
with his high post if his sense of integrity would require it. Putin was the
man of my hopes. He was the man I trusted, to whom I could entrust the
country.
Three months after Stepashin was appointed prime minister,] I met with Putin.
I explained the state of affairs. A fierce battle loomed ahead. First, there
was the election campaign. It would not be easy to keep the entire country
under control. The northern Caucasus was very troubled. Some political
provocations were possible in Moscow. It was hard to tell whether the current
government would be able to keep inflation down. Everything, including the
future of the country, depended on the behavior of the new prime minister
over the next weeks and months. "I've made a decision, Vladimir
Vladimirovich, and I would like to offer you the post of prime minister," I
told Putin. Putin looked at me attentively. He was silent.
"But that's not all," I continued. "You must have some notion of why I was
forced to dismiss your predecessor. I know that Stepashin is your friend --
he's also from St. Petersburg -- but now there are other considerations. Your
stance must be extremely polite and restrained but firm. Only thus will you
achieve authority and win the parliamentary elections."
Putin reflected for a while. "I don't like election campaigns," he admitted.
"I really don't. I don't know how to run them, and I don't like them."
"But you won't have to run the campaign. The main thing is your will, your
confidence and your actions," I said. "Everything will depend on that.
Political authority either comes or it doesn't. Are you ready?"
"I will work wherever you assign me," Putin replied with military terseness.
"And in the very highest post?" Putin hesitated. I sensed that for the first
time he truly realized what the conversation was about. "I had not thought
about that. I don't know if I am prepared for that," said Putin.
"Think about it. I have faith in you," I said. A tense silence hung in the
air of my office. The tick of the clock reverberated distinctly. Putin has
very interesting eyes. They seem to speak more than his words. I knew he
would think seriously about my offer.
After Putin left, I summoned Stepashin and [the Kremlin chief of staff,
Aleksandr] Voloshin. "Sergei Vadimovich," I said to Stepashin, "I have made a
decision today to dismiss you. I will be proposing Vladimir Vlad-imirovich
Putin to the Duma as prime minister. In the meantime I would ask you to
approve the decree about appointing Putin as first vice premier [pending his
confirmation by the Duma as prime minister]." Stepashin became greatly
agitated and turned red.
"Boris Nikolayevich," he managed to stammer. "This decision is premature. I
believe it is a mistake. Boris Nikolayevich, I really beg you. Speak to me in
private." I nodded, and Stepashin and I were left alone in the room.
Stepashin spoke for a long time. His leitmotif amounted to this: "I have
always stuck with you and have never betrayed you." Although I knew this
conversation was totally senseless, I couldn't interrupt Stepashin. He was
right: he had been faithful and true. He had never betrayed me. And there
were no reasons to dismiss him -- except one, the most important: he was not
the right man for the current struggle. But how could I explain this to him?
Then I sensed I was losing my patience. "All right, go on now. I'll think
about it," I said as calmly as possible. Stepashin left. In the doorway he
whispered to Voloshin: "What have you been saying about me behind my back?
Have you gone mad? And at a time like this?"
I was in a terrible mood. I summoned Voloshin and said angrily, "What are you
waiting for? Bring those decrees! You know my decision already!" He brought
the decrees for my signature. "You tell Stepashin yourself that he is
dismissed. I do not want to meet with him again," I said.
Voloshin didn't argue with me, but he encouraged me to think about my
decision over the weekend. "You know better than I that only the president
can tell the prime minister he is dismissed," Voloshin said. Of course
Voloshin was right. I decided that I would inform Stepashin of my final
decision on Monday morning.
I intuitively sensed the power and strength of Putin, the future prospects of
this move and the atmosphere in society. The public was ready to accept a new
figure, a figure who was fairly tough and willful. Despite the complete
shake-up in the political establishment, people were ready to trust Putin.
Over the past years I had managed to create a stability factor that made it
impossible for anyone to go beyond the bounds of the Constitution. And that
factor was in our favor; despite the continuing crisis in the government, no
one could attack the new prime minister. This was especially true in the case
of Putin, who had recently been head of the FSB.
The meeting took place at 8 a.m. on Aug. 8 in [the suburban presidential
residence,] Gorki-9. Putin, Aksyonenko, Stepashin and Voloshin were present.
We all greeted Stepashin, but he would shake hands only with me. I didn't
mince words. "Sergei Vadimovich," I said to Stepashin, "I have signed the
decrees on your dismissal and on the [interim] appointment of Putin as first
vice premier."
Stepashin became flustered. "I will not authorize that decree," he said.
Aksyonenko intervened: "Stop it, Sergei Vadimovich!" Putin stopped
Aksyonenko. "It's hard enough for Stepashin. Let's not make it worse," he
said. "All right," Stepashin finally said. "I'll sign the decree. Out of
respect for you, Boris Nikolayevich."
On Aug. 9 I made a television address to the nation in which I named Vladimir
Putin as my successor and as a worthy candidate for the presidential
elections in 2000.
II. Stepping Down
On dec. 28, 1999, as usual, the president's New Year address to the nation
was being taped. The setting was the reception hall of the Kremlin, with a
decorated tree, gilded grandfather clocks and customary ritual; the speech
was to include the standard New Year greetings. A camera crew from ORT,
Russia's public-television station, worked briskly and attentively. There
were just a few people -- the producer, the cameraman and the sound and light
men. I wished Russians a happy New Year and got up from my desk. The lighted
text on the prompter grew dim.
"So, here's the story," I said dryly. "My voice is hoarse today, and I don't
like the text. So we're going to retape the speech." My speechwriters' faces
fell. I hadn't commented on the text before then, and my announcement came as
a complete surprise. "Why, Boris Nikolayevich?" they asked. "More work has to
be done on the text. I'm giving it three days," I told them. "We'll tape it
on December 31." And I left the room.
I couldn't reveal the real reason for my apparent capriciousness. I had
decided to resign from the office of president. I was leaving deliberately,
of my own volition. I was putting all the force of my political will into
this act. Therefore any leak, any advance talk, any forecasts or proposals
would put the impact of the decision in jeopardy.
After breaking the news to a pair of top aides who would handle the
administrative details, Yeltsin decides to let his family in on the secret.
As I returned to my desk, I felt as if cats were scratching at me. I
generally didn't tell my family about my decisions. But this was something
else. My decision was too bound up with their lives. I called Tanya [his
elder daughter, who had become a key confidante] in and told her to be seated
across from me. She looked at me expectantly. "Yes, Pa- pochka?" she said.
"Tanya, I'm going to resign," I told her. She looked at me in surprise then
threw herself toward me, crying. I gave her a handkerchief. "Papa! Forgive
me. Forgive me, please. It's just that it's so unexpected. You didn't tell
anyone. Let me give you a kiss." Then she and I sat for a long, long time
talking. She told me what an interesting life we would now have. We would be
able to walk down the street and meet people and visit people, and it would
all be without a protocol and without a schedule. But the whole time her eyes
kept welling up. "Daughter, you're driving me to tears," I said, waving my
hand as if to say, "Go on, now." Then Tanya asked me almost frantically, like
a child, why Mama didn't know anything about this. "Later. Everything will
come later," I said.
There was only one other important hurdle: my conversation with my prime
minister, Vladimir Putin. This would be our second talk about my decision. I
assumed it would be very short. My first conversation with Putin had taken
place about two weeks earlier. When I told him that I intended to make him
acting president, Putin's first reaction made my heart sink. "I'm not ready
for that decision, Boris Nikolayevich," he had said.
No, it wasn't weakness on his part. You wouldn't call Putin weak. It was the
doubts of a strong person. "You see, Boris Nikolayevich," he explained. "It's
a rather difficult destiny." I didn't want to have to twist Putin's arm. But
unlike Putin, I was in the iron grip of a decision already made. Once made,
it wouldn't let me go. "Well, what do you think? You haven't answered me," I
prodded Putin. "I agree, Boris Nikolayevich," he said. That had been almost
two weeks ago. At 9 a.m. Putin came into my Kremlin office. I immediately had
the impression that he was a different man. I suppose he seemed more
decisive. I was satisfied. I liked his demeanor. I told Putin how I planned
to arrange things on the morning of Dec. 31, what events would take place one
after another: the television address, the signing of the decrees, the
handing over of the nuclear suitcase, the meetings with the power ministers
and so on. The official set-ting wouldn't allow for a display of feelings.
But here and now, for the last time, I was sitting next to Putin in the role
of president, and for the last time he was not first person of the country
[Russians refer to their president as the "first person"]. There was a lot I
wanted to tell him. I think he had a lot to say to me, too. But we didn't say
anything. We shook each other's hand. We hugged goodbye.
On Dec. 31 I woke up earlier than usual. After my normal family breakfast,
while I was getting ready to leave for work, Tanya reminded me: "You'll tell
Mama?" Once again, I had my doubts. Perhaps I shouldn't worry her now? "Papa,
I beg you," said Tanya. I stood in the front hallway, undecided. I slowly
buttoned up my coat. "Naina, I've made a decision," I said. "I'm retiring. My
televised address is this afternoon. Be sure to watch the TV." Naina froze in
place. She looked first at me, then at Tanya. Then she turned like a
whirlwind and began kissing and hugging me. "How wonderful! Finally!" she
cried. "Borya, is it really true?"
I got through the speech with almost no trouble. Almost. At one point a speck
got in my eye, and I rubbed it away with my hand. When I finished the last
word, there was absolute silence. I could hear the clock ticking in the room.
And then suddenly somebody clapped, and then another person, and another, and
I raised my eyes and saw that the entire television crew was giving me a
standing ovation. I didn't know what to do. The women didn't try to hide
their tears, and I cheered them up as best I could. I asked that champagne be
brought in, and the women gave me flowers. We clinked our glasses and raised
a toast to the New Year and to that day. To my surprise I realized that I was
in a good mood -- a very good, cheerful mood.
I went downstairs. My car drove up to the door. It was snowing. I wanted to
say something important in farewell to Vladimir Putin. What a hard job he
would be facing. "Take care of Russia," I said to him. Putin looked at me and
nodded his head. The car slowly circled. I was tired, very tired. On the way
to the dacha, a telephone rang in the car. My adjutant said, "Clinton wants
to speak with you." I asked the president of the United States to call back
later, at 5 p.m. Now I could indulge a little. Now I was retired.
>From "Midnight Diaries." (C) 2000 by Boris Yeltsin. Reprinted by arrangement
with PublicAffairs. To be published in October. Translation by Catherine A.
Fitzpatrick.
******
#2
Boston-Moscow software link skirts Russian obstacles
By Tim McLaughlin
BOSTON, Oct 7 (Reuters) - The Russian economy now dances to the tune of
surging oil prices, but Boston technology executive Scott Killoh says
programmers banging out software code could be the drum beat of the
country's future economic expansion.
In downtown Moscow on Tverskaya Street, Killoh's company, Openpages Inc.,
employs 140 Russian programmers and engineers turning out software code at
``light speeds.'' Their blocks of code are shipped via the Internet to a
computer server in the United States. Openpages engineers in suburban
Boston then download the data for building and revising the company's
latest software content management product.
``We don't have any problems with customs,'' Killoh joked on Saturday at a
U.S.-Russian investment symposium in Boston.
Indeed, the company's Boston-Moscow connection already has gained the
approval of blue-chip investors such as Goldman, Sachs & Co. and Matrix
Partners who have invested more than $50 million in Openpages. Russian
expertise at producing software code for the Internet economy, however, has
largely been overlooked by American firms, said Killoh, chairman and
founder of Westford, Mass.-based Openpages.
While countries such as Ireland and India have become magnets for U.S.
technology companies strapped for high-tech workers, Russia's reputation
for corruption, its crumbling infrastructure and complicated tax code has
overshadowed Russia's intellectual capital, Killoh said.
Russian Trade and Economy Minister German Gref agreed his country should
study the success stories of India and Ireland.
Openpages is growing at an annual rate of 400 percent selling software to
leading U.S. media companies such as Knight Ridder Inc (KRI.N), Gannett Co.
Inc.(GCI.N) and Tribune Co (TRB.N) that allows them to build Web pages
automatically, Killoh said. He expects Openpages to generate about $15
million in revenue in 2000 and go public by midyear 2001.
Openpages' Russian employees come at one-fifth the cost of their peers in
Boston, a hot bed of high-technology firms.
``If you're in Boston, there's a negative unemployment rate for technology
talent,'' Killoh said. ``We would not have had success without our Russian
talent.''
Killoh, 35, relies on Russian Yuri Kirkel, 28, to find programmers and
software engineers for the Moscow operation. The two met in Boston not long
after Kirkel ended a two-week stint delivering pizzas.
Kirkel honed his programming skills at a biochemistry institute in Russia,
where he earned about $15 a month. Now, he recruits scientists from the
prestigious Moscow State University. These workers can earn as much as
$30,000 a year, not including stock options.
``Some are pure scientists who discuss quantum physics in the lunchroom for
fun,'' Killoh said.
In contrast, 20 percent of Russia's population lives on less than $2 a day,
said Johannes Linn, vice president of the World Bank for Europe and Central
Asia.
******
#3
55 Percent of Draftees Have 'Medical Limitations'
Rossiyskaya Gazeta
October 3, 2000
[translation from personal use only]
Report by Aleksandr Babakin under the "Our Commentary" rubric:
"Soldiers, On Your Way! Fall Draft Into Russian Federation Armed Forces
Began 1 October. Who Is Going To Serve in Our Army in 21st Century?"
This fall 190,000 new draftees face the aching
prospect of a journey. Barracks, smart new uniforms, beds, weapons, and
equipment have already been prepared for them at the units. These young
people will serve in the new millennium. According to Colonel General
Vladislav Putilin, chief of the Russian Federation Armed Forces General
Staff Main Organization and Mobilization Directorate, the Defense
Ministry and local budgets will spend 20 million rubles on the entire
call-up operation. The money will be spent on transportation, food,
medical commission doctors, and other needs of the call-up campaign.
Nevertheless, the most important thing is that the military units should
receive healthy, mentally and physically strong soldiers who can be
entrusted with very expensive, state-of-the-art weapons systems.
Unfortunately, however, 55 percent of the total number of draftees
are embarking on military service with various medical limitations.
This means that they cannot be assigned to the Airborne Troops, the Navy,
or the Strategic Missile Troops. There are therefore fears that the
special troops will continue to be short of the primary-rank enlisted
personnel who actually service the combat equipment, and the sturdier
individuals will have to perform soldierly drudgery both for themselves
and for "the other guy."
Of course, military service is not easy. So praise and honor to the
courageous guys who voluntarily come to the call-up points and declare
their readiness to serve wherever the Motherland sends them. How many
of the 190,000 guys will do this? This year the number of "dodgers" was
down by 10,000 compared to the 1999 fall call-up.
Current Russian legislation obliges every Russian who has turned 18
to don military uniform and serve the Fatherland honorably. But
everyone's circumstances are different, and life frequently throws up
various problems. The law therefore envisages deferral of military
service. First and foremost, the sick are given a year in which to
recover, and then a commission decides whether or not they are fit to
serve. Military service is also waived for people who are permanently
looking after and maintaining close relatives or raising children without
a mother, and also for a number of other categories of draftee.
Military service is waived for students and graduate students until
they have completed their studies at higher educational institutions, for
doctors and teachers working permanently in rural areas, and also for
certain categories of staffer at special state organizations, of which a
list is compiled by the Russian Federation Government and by the internal
affairs, Tax Police, and Customs organs. But those people who are
healthy and have no weighty reasons to defer are expected to perform
normal military service.
******
#4
The Russia Journal
October 7-13, 2000
Ups and downs of political will
By Otto Latsis
For Kremlin, unfocused vision has meant lost opportunities and disregard of
country’s real constraints.
A year has passed since the second Chechen war began the second since
today’s Russian state came into being, that is. (There had been countless
Chechen campaigns waged last century.) Summing up the latest war,
commentators have adopted the term victorious defeat. Whether this is the
case or not depends on how one defines the aims of the war.
For many in the military, it would seem, who welcomed the decision to
attack a year ago, the campaign was above all a pretext for getting revenge
for the humiliating end to the first Chechen war in 1996, when political
necessity obliged Boris Yeltsin to put an end to their destructive zeal.
This new war also gave the military a chance to win back public respect,
and it is in this sense that some call the campaign victorious. But this
view ignores the fact that even if the military hadn’t been stopped in
1996, they would have come to the same dead-end situation as today. The
aims of politicians of this caliber obviously have nothing in common with
Russia’s real interests.
Putting a stop to Shamil Basayev’s and Khattab’s attack on Dagestan,
stopping the spread of Islamic fundamentalism and preventing the
disintegration of Russia look like more convincing arguments in favor of
the war. These aims were better understood and accepted by most Russians
and by a large part of the international community, and a certain degree of
success was obtained.
But everyone took for granted that the aim was also to resolve the
knottiest strategic task of all finding an overall solution to the
Chechen problem. Today, however, it’s clear that Russia is perhaps even
further from this goal than it was a year ago.
The extremism of Basayev and Khattab, who pulled Chechnya into a new and
destructive war only three years after the previous one ended, was
condemned by much of the Chechen population. This created an opportunity,
once the main rebel groups were eliminated, to lay the foundation of a
lasting peace.
Moscow not only hasn’t tried to make use of this opportunity, but it could
let it slip through its fingers altogether. As time passes and villages are
"cleansed" in response to terrorist attacks, civilians continue to suffer
and forget just who started the war and why it was that federal troops
entered Chechnya again.
At the same time, with the real military work over, troops in Chechnya are
becoming more undisciplined, and civilians find themselves the victims of
senseless incidents involving drunken soldiers.
Moscow has hit an obstacle in its own unwillingness to hold negotiations
with those it is fighting above all, with legally elected president of
Chechnya Aslan Maskhadov. Instead, it attempts to find solutions through
its own appointees, what amounts essentially to trying to reach an
agreement with itself. This is costing the federal authorities local
support and increasing the likelihood that civilians will begin to support
Moscow’s opponents, which would have a decisive impact on the outcome of
any partisan war.
What is becoming clear is that on this issue, for which a purely military
solution is no answer, President Vladimir Putin so far has only offered a
military strategy. The question now is whether this strategic oversight is
just chance, or an inherent flaw in Putin’s political vision.
Putin’s predecessors, Yeltsin and Mikhail Gorbachev, are often reproached
for not having shown enough political will in furthering reform of Russian
society. Critics say that this is what got in the way of taking economic
and social reform to its conclusion and even beginning military reform.
Putin, on the other hand, is more commonly praised for his political
decisiveness. This is associated, above all, with the war in Chechnya,
though he has also been credited with decisiveness regarding the economy.
But it’s clear today that the most iron will is of no use if not backed up
by a clear strategy. Strategy, in many cases, remains vague, however. At
best, there are tactical moves dictated by day-to-day events, and this is
supposed to lead to a strategy.
Current Russian foreign policy clearly ignores the fact that Russia will be
able to guarantee its security in the 21st century only if it moves closer
to the West and becomes an integral part of the modern industrial world.
Concerning domestic policy, the Kremlin is striving ever more clearly to
impose its views on all political processes to the detriment of democratic
procedure. This is a strategy that certainly won’t help in carrying out
complicated social reform.
Putin’s announced military reforms look to be beyond all reproach, but it
is far from certain that he will be able to overcome the generals’
resistance. Most convincing of anything Putin has done so far was to
commission an economic strategy from German Gref and his team and support
its becoming government strategy.
But problems with electricity and heating expenses as winter comes have
shown that the underlying strategy of further market reform isn’t clear,
neither to the population nor, to a large extent, to the authorities
themselves. If this doesn’t change, economic strategy will be no more than
a hollow term and impossible to implement. But taken up as it is at the
moment with battling disobedient journalists, does the Kremlin realize this?
******
#5
Russia's UES seeks foreign investment - Chubais
BOSTON, Oct 7 (Reuters) - Russian power utility UES needs foreign
investment "on a grand scale" to modernize its inefficient technology, the
company's chief executive Anatoly Chubais said on Saturday.
Chubais said the company needs to invest over $5 billion to update its
increasingly obsolete technology, or else face a serious drop in energy
production capacity in a few years.
"2005 will be a critical juncture -- unless the trend changes, we will find
ourselves in a situation where Russia will have to become an energy
importer," Chubais told a U.S.-Russia investment conference here.
"We declare that what we need is Western investment in our company on a grand
scale," he added.
UES is one of the largest and most influential companies in Russia,
controlling almost all of the regional power utilities, and is key to any
plan to reform the economy.
UES has been embroiled in a conflict for months with minority shareholders
who fear plans to spin off generating units would amount to assets being sold
on the cheap.
Chubais, speaking by videolink from Moscow, praised the stable political
scene in Russia, adding that the government under President Vladimir Putin
had done a great deal to reform the economy in a very short period.
******
#6
Moscow Daily Slams Chubays Over Irkutskenergo Takeover Bid
Rossiyskaya Gazeta
October 4, 2000
[translation from personal use only]
Article by Anatoliy Osin under the "We Are Following the Situation"
rubric: "Why Does Chubays Want Irkutskenergo?"
Rossiyskaya Gazeta has written repeatedly about
Chubays's plans for the upcoming major restructuring of the YeES Rossii
[Unified Energy System of Russia] Russian Joint-Stock Company and what
this means for Russians. Today we present another of the reformer's
schemes. He has now taken a fancy to Irkutskenergo, an open joint-stock
company which is independent of YeES Rossii and running well.
Eight years ago every citizen in our country received his share of
the Motherland's material wealth in the form of a sheet of paper entitled
"Privatization Check," in plain language -- a voucher. The state also
received its share, not in vouchers, of course, but in real assets.
According to the scheme devised by Anatoliy Chubays, the main privatizer
and the ideologist of the voucherization of the entire country, this
state share was to remain unified, in other words it was to be managed,
as in Soviet times, from a single center.
However, the realities of the new economic conditions dictated the
need for other forms of ownership and management. After all, the
ownership of property implies not only the receipt of profits but also
responsibility for its functioning. Bearing in mind Russia's size, this
responsibility falls not only on the center but also on the regions.
State property therefore had to be divided into federal and regional
property, as is the normal practice in federal systems throughout the
civilized world.
De facto this division of property between the federal center and the
Russian regions has taken place. But this state of affairs has
absolutely no legal basis, apart from power-sharing agreements between
the center and a few Federation components. State property continues to
be regarded as unified. This leads to endless conflicts in which each
side uses every underhand means of "pulling the blanket onto itself,"
trying to demonstrate that the particular property in question belongs to
it alone. There are generally no winners in these "wars," but there are
victims: people without work, benefits, or electricity.
The freshest example of such a conflict is the dispute over the
state's stake in the Irkutskenergo Open Joint-Stock Company. By the
will of functionaries at the Property Ministry -- Chubays's former
fiefdom -- who are furthering the interests of YeES Rossii, this
flourishing joint-stock company, which has considerable assets and
promising projects and is running splendidly, has been drawn into a
maelstrom of legal proceedings.
The essence of the problem is that 40 percent of the shares in
Irkutskenergo are state property. Until now they have been held by the
Irkutsk Oblast Administration. But, as is well known, certain people do
not like it when things are going well for others. For this reason, in
the spring of this year the Russian Federation Property Ministry filed a
suit at the Higher Court of Arbitration seeking the transfer of these
shares to the federal center. The Irkutsk governor is prepared to
divide the shares equally with the center, but the ministry functionaries
have demanded everything.
If the suit succeeds, and everything seems to be heading that way,
Irkutsk has an unenviable future. It will be taken over by the YeES
Rossii monster monopoly. If this happens, Irkutskenergo will become
part of Chubays's power generation holding company, and the Irkutsk
powermen's revenue will support YeES Rossii for a time, but Irkutskenergo
itself will be in an unenviable situation. No matter how well the
Irkutsk powermen work, and no matter how much they reduce production
costs, all the profits will be eaten up by YeES Rossii. In the same way
as it fleeces its own regional power generation joint-stock companies,
which have lost all interest in working profitably ever since Chubays's
arrival.
Incidentally, before all these legal rows, Irkutskenergo's taxes and
payments comprised a major part of Irkutsk Oblast's budget. But this
does not interest the Moscow functionaries, who are assiduously trying to
match Irkutskenergo up with Chubays.
Chubays's interest in reprivatizing the Irkutskenergo Open
Joint-Stock Company can easily be understood in the light of the
unenviable position of his own company. Under current legislation,
foreign shareholders cannot own more than 25 percent of the shares in
YeES Rossii, but over 35 percent of them have been sold abroad. In
order to correct this situation, it is urgently necessary to increase
YeES Rossii's incorporation capital. This will make it possible to
issue additional shares, thereby reducing the percentage held by
foreigners. But if additional shares are simply issued, the value of
the shares held by Western shareholders will fall, and the shareholders
will naturally block such a move.
It was at this point that Chubays's entourage had the idea of taking
Irkutskenergo from the region and transferring it to the federal center.
The entire state stake in Irkutskenergo would then be in the hands of
YeES Rossii. However, even Irkutskenergo's assets are not sufficient to
fill the "black hole" that has formed recently at YeES Rossii, so the
"ingenious schemer" is provoking panic on the stock market and doubling
the value of Irkutskenergo's shares.
There is a very clear prospect of further conflicts with the Irkutsk
power generation system. The artificial inflation of the price of
Irkutskenergo shares (as a self-regulating mechanism, the stock market
will sooner or later bring the shares down to their real value, or
probably below it) and the scandal surrounding this power generation
company will cause it huge moral damage, and therefore -- in accordance
with the laws of the market -- financial damage too. Even if the
Irkutsk powermen succeed in frustrating Chubays' aspirations this time,
their prosperity will be significantly shaken. As will the prosperity
of Irkutsk Oblast as a whole. This can hardly be in the state's
interests, but this is unlikely to occur to state functionaries who
probably forgot during Yeltsin's time that the Fatherland is constituted
not by them but by the people, including the inhabitants of Irkutsk
Oblast, who hired them to do their job conscientiously.
This, incidentally, is written in the country's Constitution
*******
#7
Moscow Times
October 7, 2000
Business Bosses Plot Ways to Boost U.S. Deals
By Lyuba Pronina
Staff Writer
A newly created lobbying group of business heavyweights held its second
general meeting Friday to hammer out a plan of action for promoting commerce
with the United States.
The Russian-American Business Council is a nonprofit trade association
representing more than 50 companies f including No. 1 oil major LUKoil,
natural gas monopoly Gazprom, leading arms exporter Promexport, cellular
operator Vimpelcom and beverage retailing powerhouse Wimm-Bill-Dann.
RABC president and former Russian ambassador to the United States Yuly
Vorontsov told The Moscow Times after the closed-door meeting that the idea
behind the council was to emulate the success of the U.S.-Russia Business
Council, a loose counterpart to the RABC.
"When I was ambassador to the United States, I saw American businesses coming
to Russia in an organized way. They created an association f the U.S.-Russia
Business Council, which helped them do business in Russia," Vorontsov said
after the meeting. "I wanted to see something similar here for our young and
active businessmen that are unfamiliar with the specifics of working in the
United States," he said.
Vorontsov said he hoped to use his extensive personal contacts that he
developed when he was ambassador to Washington to further economic
cooperation between the two countries.
"It's important to have access to the U.S. government," Vorontsov said. "We
have contacts there f we know them all f and we will build up contacts in the
new administration, work with the U.S. Congress, and help lift logistical
obstacles in the way of Russian businesses."
Formed earlier this year with the blessings of both President Vladimir Putin
and Prime Minister Mikhail Kasyanov, RABC now has the official status of
"consultant to the Russian government on the bilateral economic relationship
with the United States." The council has also been officially designated a
consulting body to the U.S.-Russian Joint Commission on Economic and
Technological Cooperation.
Among its many spheres of interest, the council will help tailor the state's
policy in relation to business, pursue protection of shareholders rights and
try to ensure a smoother functioning legal system. As a mediator between
Russian and U.S. businesses, the council will help find concrete investment
opportunities on both sides.
"The Russian government has invited us to help promote Russian business
abroad and we hope to live up to its expectations. þ If a strong economic
fabric is created then it will favorably influence the political relationship
of both countries," Vorontsov said.
Vorontsov said the council plans to meet with Putin, Kasyanov and U.S.
Ambassador James Collins in the next few months.
The council will also work with the Duma on creating favorable economic
legislation and improving the investment climate in Russia, Vorontsov said.
He said the law on protecting investments, which is currently stranded in the
Duma, is particularly vital to gain foreign companies' confidence that their
investments will be protected, and he vowed to help get it passed.
RABC vice president Ednan Agayev f a partner in the Moscow-based law firm
Yegorov, Puginsky, Afanasiev and Marks f specifically listed U.S. tariff
policies and U.S. anxiety over shareholders rights in Russian companies as
high on the council's immediate agenda.
"Russian companies think that U.S. companies over-dramatize the problem of
minority shareholders rights and we have to reach a mutual understanding
about that," Agayev said.
Also high on the council's agenda is cooperation in the energy sector,
especially production sharing agreements, or PSAs, a key to unlocking massive
investment.
James Balaschak, chairman of the American Chamber of Commerce, which
represents over 560 companies in Russia, said the new council was a positive
development.
"It's a terrific idea to see Russian businessmen organize and take their
message to either the U.S. or Russian government with one voice," he said.
"This is very good for creating a general atmosphere for developing business
in Russia."
******
#8
BBC MONITORING
RUSSIAN PAPER LISTS REASONS WHY MIR HAS TO BE SCRAPPED
Source: 'Nezavisimaya Gazeta', Moscow, in Russian 5 Oct 00 p 1
The Mir space station is "our past" and has been allowed to stay in orbit
this long for all the wrong reasons, Russian newspaper 'Nezavisimaya
Gazeta' wrote, commenting on the decision of the council of chief space
technology designers of the Energiya corporation to scrap it. The station
sets false priorities for the development of the national space sector and
drains funds from new space technologies, the paper noted, stressing that
Russia's future lies in participation in the International Space Station
project. The following is the text of a report from the newspaper:
The decision regarding the necessity to cross the i's regarding Mir's fate
and to finally resolve whether the station should be destroyed at the
beginning of next year or its exploitation should continue, which was made
by the council of chief space technology designers of the Space Rocket
Corporation Energiya on 3rd October, bore a shocking resemblance to the
situation shown in the American movie entitled "Last Tango". In the movie,
a girl sentenced to death and already strapped to the table to receive the
lethal injection was unexpectedly told she had been pardoned. Several hours
later it turned out a mistake had been made, and the girl ended her life at
the executioner's needle.
Since 1998, the Russian orbiting station has been regularly sentenced to
death, the sentence was vacated at the last moment only to be pronounced
binding several months later.
What is currently happening to Mir is a reflection of the drama of Russia's
entire space sector. Let us answer one question first: What does Mir mean
for Russia?
Several months ago, pilot-cosmonaut Vladimir Kovalenok, twice the Hero of
the Soviet Union, said: The station is orbiting the earth only for its own
sake, whereas the crews onboard the station are doing nothing but
maintaining it in working order suitable for people's existence. In this
situation any more or less significant scientific research activities are
out of the question. Why then should we spend millions of dollars on this
complex every year?
However, the point is that traditionally one of the objectives of Mir, just
as any other grandiose Soviet/Russian space project, was to pursue the
country's political objectives, namely to be a symbol of its technological
and economic power.
Several years ago, the Russian station was assigned another similar,
although, admittedly, less important function - to emphasize a leading role
played by the Energiya corporation in the Russian space programme. After
all, it is Energiya, which designed the station and is currently operating
it. On the one hand, Mir, as the greatest national space project still
being implemented in Russia does emphasize the corporation's significance.
At the same time, however, in the developing situation Energiya's corporate
interests are somewhat at variance with state interests.
First, Mir's operation is consuming a substantial portion of Russia's space
budget, which, in particular, has to be used to ensure compliance with our
country's commitments arising out of the International Space Station [ISS]
project. Energiya's leadership claims the Russian complex is being financed
by the private corporation MirCorp, which organizes commercial flights to
the complex. However, this argument has to be specified.
Yes, MirCorp does sponsor launches to Mir, as it did with regard to the
mission to the station in April this year (commander Sergey Zaletin,
spacecraft engineer Aleksandr Kaleri). The cost of one space flight of this
kind reaches 20m dollars. Nonetheless, the total annual cost of the
station's operation, including its maintenance during unmanned orbiting,
reaches 250m dollars.
The second reason why Mir's operation is beginning to damage the interests
of Russia's space exploration is that it sets false priorities for the
development of the national space sector, in particular, for one of its
leaders - Energiya. Continuing operation of the complex makes the
corporation concentrate its efforts on maintaining old hardware rather than
creating new one. This very philosophy hides one of the reasons for the
lowered interest of society and the government to Russia's space
exploration and hence, its inadequate financing.
It is time we realized that Mir - regardless of all the unfading laurels it
won - is our past. An obsolete orbiting station cannot take us into the new
millennium in which a mission to Mars is acquiring more discernible
contours. On the one hand, Russia's future lies in participation in the ISS
project, being a necessary condition for retaining the experience of manned
space flights, and on the other hand - in the creation of absolutely new
space rocket systems that can radically galvanize the process of restoring
the reputation and prestige of the Russian state in the contemporary world.
The day before yesterday, when the decision made by the council of chief
space technology designers was publicized, MirCorp made an official
statement in which it underscored its intention to continue to engage
private investors for financing Mir's flight after 2001. Will the "Last
Tango" of Mir and along with it of Russia's space exploration continue?
*****
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