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Johnson's Russia List


October 11, 2000    
This Date's Issues: 4573  


Johnson's Russia List
11 October 2000

[Note from David Johnson:
1. Reuters: Lennon joins Lenin on Russian town map.
2. Reuters: Russian lawmakers condemn U.S. vote on alleged spy.
3. Kennan Institute dinner October 18.
4. Sharon Tennison: Postscript to Piece on JRL #4572.
5. The Globe and Mail (Canada): Geoffrey York, Russian voters 
silent about signs of fraud. 'All our officials are corrupt...people 
are indifferent.'

6. Moscow Times: Boris Kagarlitsky, The Logic of Gain. (re Russian
military aid to South Africa)

7. Jamestown Foundation Monitor: YELTSIN DENIES HAVING PROPERTY OR 

8. Robert Brown: Money for the Bears.
9. Ron Pope: To Know or Not to Know English.
10. The Times (UK): Power comes at a price. In the second extract from 
his memoirs, Boris Yeltsin tells how both he and Bill Clinton suffered 
from systematic campaigns to destroy their presidencies.

11. Financial Times (UK): Martin Wolf, Avoiding the trap of transition: 
The former communist countries that have done best have ensured that 
goods can be bought more freely than judges.


13. Moscow Times EDITORIAL: It's Time for EBRD to Make News.] 


Lennon joins Lenin on Russian town map

YEKATERINBURG, Russia, Oct 11 (Reuters) - Most Russian cities have a Lenin
Street, but Chelyabinsk, a smokestack industrial city in the Ural
Mountains, will become the first to have a Lennon Street. 

Valery Yarushin, a one-time Soviet rock star and lifelong Beatles fan, told
Reuters by telephone that deputies on the Chelyabinsk city council had
voted overwhelmingly to back his proposal to name a street after murdered
Beatle John Lennon. 

``At the City Duma hearing there were only two opponents of the idea,'' he

``They said there were plenty of people in Chelyabinsk who had brought
glory to the city, and they deserved the honour. But good sense won out and
all the other deputies voted 'Yes'.'' 

Yarushin said he had initially proposed renaming the city's central Soviet
Street after Lennon, who was killed by a fan 20 years ago and would have
been 60 this year. 

In the end the city council had not decided whether to rename an existing
street or name a new one, he said. 

The Beatles were hugely popular in Russia during Soviet times, when fans
braved official disapproval to collect records of Western rock groups. 


Russian lawmakers condemn U.S. vote on alleged spy
By Ivan Rodin

MOSCOW, Oct 11 (Reuters) - Russian lawmakers denounced the U.S. House of
Representatives on Wednesday for asking President Bill Clinton to consider
restricting financial aid to Russia over the case of an American charged
with spying. 

The case of Edmond Pope, a former naval intelligence officer jailed in
Moscow since April on charges of illegally seeking information about a new
torpedo, has strained diplomatic ties between the two countries. 

The U.S. House had passed a resolution on Tuesday calling on Russia to
release Pope immediately and asking Clinton to consider cutting aid to
Russia if it does not. 

The Speaker of Russia's State Duma lower house of parliament, Communist
Gennady Seleznyov, told reporters the House resolution was ``crude
interference in our criminal procedural legislation.'' 

``President Clinton, it seems, has decided that America can do anything it
wants,'' he said. ``This cannot stand. 

``The Americans should send over fewer spies. Then we can waste fewer
resources catching them and proving their guilt.'' 

Washington says Pope was carrying out a legitimate business deal involving
military technology. It also says Pope, who has suffered from bone cancer,
is not getting proper medical care. 

Pope is due to go on trial as early as next week and could face up to 20
years in prison if convicted. 

Alexei Arbatov, deputy head of the Duma's Defence Committee and a member of
the liberal, pro-Western Yabloko party, called the House resolution ``a
great stupidity'' and said Clinton would probably ignore it. 

``Sanctions against Russia would cause a crisis of international scale,''
he said. ``Who would do that over this?'' 

The Russian Foreign Ministry condemned the State Department last week for
issuing a warning to U.S. citizens that doing business with Russia's arms
industry can be dangerous. 

The warning said in part: ``Any misunderstanding or dispute in such
transactions can attract the involvement of the security services and lead
to investigation or prosecution for espionage.'' 


Date: Tue, 10 Oct 2000 
Subject: Kennan Institute dinner

On October 18, 2000, the Kennan Institute for Advanced Russian Studies will
hold its second annual benefit dinner in Washington, DC. This event will
be held at the Embassy of the Russian Federation. The evening's program
will include remarks by Ambassador Yuri Ushakov and a performance by the
Kozlov Dance International Youth Ensemble.

Corporate tickets are $500.00. The Kennan Institute is also pleased to
offer a limited number of tickets at the Government/Non-Profit rate of

Wednesday, October 8, 2000
6:30 p.m. Cocktails / 7:30 p.m. Dinner

The Embassy of the Russian Federation
2650 Wisconsin Ave., NW
Washington, DC

For security reasons, we regret that we cannot accept registration at the
door. If you would like to attend or if you have any questions, please
contact Mr. Joseph Dresen at the Kennan Institute (Tel. 202-691-4100 or by
e-mail by 3:00 p.m. on Friday, October 13. Please
register by credit card (Visa or Mastercard):

Exp. Date:
Card Number & Type:
Total Amount:

Tickets, less the cost of the dinner, are tax deductible. A receipt
detailing your tax deduction will be mailed after the event.


Date: Tue, 10 Oct 2000
From: Sharon Tennison <>
Subject: Postscript to Piece on JRL #4572

Dear Johnson Readers,

Thanks for the response to my Oct 9 piece on US-based Internships for 
Russians and the usefulness of these internships for non-English 

My submission was sent at the end of day before I made my last edits 
which included a host of minor points (if you are interested I can 
send individually) but the most important is that PEP is funded by 
the U.S. Department of State under the Bureau for Educational and 
Cultural Affairs, American civic clubs and volunteers, and the 
Russian entrepreneurs themselves. The State Department being the 
largest contributor.

Sharon Tennison
Center for Citizen Initiatives
Presidio of San Francisco
P.O. Box 29912
San Francisco, CA 94129
Tel: 888-729-7071
Fax: 415-561-7778


The Globe and Mail (Canada)
Russian voters silent about signs of fraud
'All our officials are corrupt . . . people are
indifferent,' GEOFFREY YORK is told in Moscow

While millions of Yugoslavs have just overthrown a president who tried to 
falsify election results, most Russians barely utter a peep in reaction to 
reports of large-scale fraud in their own vote this year.

The evidence, gathered by a Moscow newspaper in a six-month investigation, 
suggests that Russian authorities falsified more than two million votes in 
the election in March, manufacturing a landslide victory for President 
Vladimir Putin.

Without the massive fraud, the newspaper concluded, Mr. Putin would not have 
captured a first-round victory by taking more than 50 per cent of the vote. 
Instead, he would have needed a second round to win, damaging his aura of 

The investigation by the English-language Moscow Times documents widespread 
evidence of ballot-stuffing, vote-buying, bribery, administrative pressure 
and the rigging of official vote counts to supply an estimated 2.2 million 
extra votes for Mr. Putin.

Remarkably, however, the investigation has been greeted with deafening 
silence. The evidence has been ignored or dismissed by Russia's top officials 
and almost all its media outlets. Most ordinary voters have reacted with 
cynicism or apathetic shrugs, even though they believe the fraud reports are 
probably true.

"There's no use in protesting," said Larisa Telina, a 61-year-old Moscow 
pensioner. "It was always useless to fight against the authorities and now it 
may even be dangerous. People are depressed and they hope Putin will help to 
change things, so they don't pay attention to how he came to power."

Viktor Tarasov, a 43-year-old Moscow driver, said the Russian people are 
accustomed to election fraud from the Soviet era. "All of our officials are 
corrupt and people have learned not to believe anyone. That's why the people 
are indifferent."

The Moscow Times found fragments of burned ballots in a pit in the Russian 
region of Dagestan, where a witness said he saw officials burning sacks of 
votes for opposition candidates. An estimated 550,000 votes were added to Mr. 
Putin's total in Dagestan by falsifying the vote tallies, the report said.

It also documented a mysterious increase of 1.3 million in the number of 
registered voters between the December parliamentary election and the March 
vote. And it noted that Mr. Putin implausibly claimed to have won 51 per cent 
of the vote in Chechnya, which his army has bombed for months.

The report concludes that Mr. Putin actually received less than 50 per cent 
of the vote, not the 53 per cent he officially won. That means he should have 
been forced into a second-round runoff against Communist leader Gennady 

A small independent newspaper, Novaya Gazeta, is one of the few Russian 
publications to recount the Moscow Times's findings. Many of its own readers, 
however, denounced the article, accusing the paper of seeking "the 
destruction of the Russian state" and of trying to "bury our President, whom 
all the people love."

One of the biggest Russian newspapers, Izvestia, wrapped itself in the 
Russian flag and condemned the "American press" for meddling in domestic 
affairs. The Moscow Times, however, is owned by Dutch and Russian investors.

Anton Ivanitsky, a Novaya Gazeta journalist who wrote about the 
election-fraud investigation, said the cynical reaction is an example of 
Russia's loss of faith in democracy.

"Ordinary people believe that all of their misfortunes are caused by 
'democracy.' Now they are afraid of democracy, and they are longing for a 
strong hand. They see this vision in Putin, so they don't mind any 

Fear is another strong factor, he said. "The authorities have become tougher, 
and the people are not so eager to argue with them."

Evidence of fraud has circulated after almost every Russian election. There 
were strong indications, for example, that authorities manipulated the number 
of registered voters to ensure a majority for Boris Yeltsin's new 
constitution in December of 1993. But few people responded to that evidence 

"For a decade, Russians have been vacating the public sphere, retreating to 
their private lives and activities," said Dmitri Glinski Vassiliev, a 
researcher at the Russian Institute of World Economy and International 
Relations. "As a result, officialdom faces no serious opponent on its turf."

Voters, he said, have struck a bargain with Mr. Putin: "Take as much power as 
you want, and let us live our private lives without another collapse." 
Western governments also have largely ignored the evidence of vote rigging. 
Paul Saunders, director of the Nixon Center in Washington, criticizes the 
U.S. government for touting each Russian election as a major step toward 

"The Clinton administration has never been willing to acknowledge the 
existence of large-scale fraud in Russian elections.

In a sense, electoral fraud in Russia is like the pink elephant in the room: 
No one can avoid seeing it, but few are willing to talk about it."

Western countries sent almost 400 observers, including three Canadians, to 
monitor the presidential election on March 26. The observers were 
co-ordinated by the Organization for Security and Co-operation in Europe, 
which issued a positive report on the vote, praising it as a "benchmark" for 
Russia's evolution as a democracy.

However, the OSCE also reported "serious" evidence of irregularities.

Officials from the Canadian Department of Foreign Affairs said they are 
concerned about the evidence revealed by the Moscow Times investigation.


Moscow Times
October 11, 2000 
The Logic of Gain 
By Boris Kagarlitsky 
Boris Kagarlitsky is a sociologist. He contributed this comment to The Moscow 

Novaya Gazeta recently published material that in any European country would 
elicit a deep political crisis. But in this country, the Oct. 5 piece was 
just another article whose political significance went almost unnoticed. It 
didn't even become a sensation or topic for further discussion by the media. 
We're talking here about none other than the delivery of Russian military 
equipment to South Africa during the period of apartheid. 

According to Novaya Gazeta, in 1991-93 the government organized the transfer 
to the South African state defense corporation Armscor aviation equipment 
worth $80 million, to be used for modernizing Mirage planes for the defense 
of the apartheid regime. In other words, at a time when United Nations' 
sanctions forbade the delivery of such military equipment to South Africa, 
the higher-ups in the Russian government, with the personal approval of 
then-President Boris Yeltsin, sent plane engines and military rockets to 
South Africa ostensibly for "technical experiments." And since government 
structures couldn't work directly with the South African government, they 
operated through the firm Marvol Management Ltd. The military equipment was 
sent to Africa f and never returned. The Russian state lost $80 million f and 
the equipment deliverers pocketed the money for their services. 

The history of post-Soviet Russia is full of such incidences. Theft is not 
just a part of its administrative and political life; it is its goal, its 
essence, almost its raison d'tre. But this incident goes totally beyond the 
usual bounds of pilfering from state coffers and technologies. 

What is truly amazing is that even Stanislav Sumskoi, author of the article, 
sees here nothing other than run-of-the-mill theft. He is bothered by the 
theft and by the fact that secret military hardware was sent abroad even 
though its export was forbidden. He also points to the authorities' crude 
flouting of the laws of their own land. But the main point here is not the 
theft, but that the Russian authorities perfectly consciously violated the UN 
sanctions (which Russia had publicly supported), that our government assisted 
the military machine of a racist regime. One gets the impression that in 
today's Russia, everything comes down to the bottom dollar f bottom ruble f 
and that no one is capable of seeing a moral or political problem. 

Explaining this history in terms of the incompetence of the Kremlin 
leadership of that period is pointless. In the first place, incompetence is 
never a justification. In the second place, it is clear from the supporting 
documents Sumskoi presents that this deal went through with the full 
knowledge of the Russian authorities. In response to the proposal of working 
out a military partnership with South Africa, Yeltsin introduced a 
resolution: "To work energetically, but carefully, considering the 
development of the internal situation in South Africa and the [UN] sanctions. 
Not to give an opportunity for [us to be] accused of violating the 
sanctions." Those in Moscow knew exactly what they were doing. 

Theoretically, it would be possible to justify the position of the 
authorities, if not formally and legally, then at least from the political 
point of view that, in South Africa in the early 1990s, there were movements 
afoot toward democracy. But in 1992, the question of general elections was 
still up in the air, and delivery of arms to the regime was actually a factor 
in preventing its move toward democracy. 

Worse yet, Sergei Chemezov, general director of Promexport, in speaking to 
the press about the development of trade with South Africa, noted that the 
coming to power of the black majority would put the brakes on military 
cooperation. In other words, hopes were placed on the white-minority regime 
because it would be easier to engage in "possible military cooperation"! 
After the lifting of sanctions, South Africa's military structures could 
renew their relationship with traditional Western partners f and Russian 
contraband shipments would no longer be needed. 

The political meaning of the actions of the Russian leadership was a 
violation of sanctions f nothing else. It's telling that no one even thinks 
of negating the actual fact of the deal; no one denies the legitimacy of the 
documents published in Novaya Gazeta. They're only arguing about whether the 
deal was advantageous, and to what degree there was theft on the Russian 

Documents show that the authorities understood that their actions conflicted 
with international norms, but they went forward with the plan. It's hard to 
know what inspired the Kremlin: a desire to make money from a contraband 
shipment of military hardware, or ideological solidarity with the apartheid 

What followed was understandable. In trying to keep the matter quiet, the 
government had to entrust the deal to a shady middleman, which then got the 
better of inexperienced Muscovite bureaucrats. 

This story is coming to light only after all the main players have retired. 
Yeltsin has full amnesty for past actions. And the new president answers only 
for the period he has held office since the March election. In a similar 
circumstance in the United States, articles about secret deals between the 
U.S. leadership and Iran became a huge political scandal, causing people to 
mistrust both Ronald Reagan and the entire Republican administration. 

But in Russia, there's no scandal. That, in itself, is the biggest scandal. 
Not only the authorities, but even its critics, are no longer capable of 
thinking along generally accepted moral lines. Duty, honor, responsibility f 
they all yield to the logic of gain. 

Many say they find national humiliation in the fact that we can't finish up 
the genocide of a small people in the northern Caucasus. But almost no one 
sees national disgrace in our country's delivering military equipment to 
South African racists. 


Jamestown Foundation Monitor
October 10, 2000

has also splashed mud on former President Boris Yeltsin and members of his 
family. Last year, the Italian newspaper Corriere della Sera claimed that 
Mabetex chief Bahgjet Pacolli had told Swiss investigators that he had 
provided more than US$1 million to President Boris Yeltsin, his two 
daughters and former presidential security chief Aleksandr Korzhakov as 
"pocket money" for a 1994 trip to Budapest, Hungary. According to other 
reports, Pacolli made funds available to Yeltsin and his daughters via 
credit cards. Both Pacolli and the Kremlin categorically denied the 
stories. In 1997, Britain's The Independent reported that Mabetex had 
brokered the purchase of two boats for Yeltsin in Britain, costing more 
than US$490,000 (see the Monitor, August 26, September 9, 1999). The weekly 
newspaper Versiya reported last year that Yeltsin, his daughter Tatyana 
Dyachenko and Borodin held accounts in Switzerland's Banca del Gottardo, 
and published a facsimile of what it said was a 1995 agreement to open an 
account in the bank bearing Yeltsin's signature. Officials with the bank 
called the alleged bank agreement a "blatant forgery" (see the Monitor, 
November 19, 1999).

Yeltsin, in a CBS interview which aired over the weekend, denied having any 
bank accounts or property abroad and put his net worth at US$300,000. 
Excerpts of the interview with Mike Wallace, host of "60 Minutes," CBS's 
weekly news magazine program, were shown last night on Russia's NTV 
television (NTV, October 9). Yeltsin has been giving interviews timed to 
coincide with the publication of the third volume of his memoirs. Over the 
weekend, Ruslan Tamaev, the Prosecutor General's Office official leading 
the probe into Mabetex, extended the life of the investigation by one 
month. On December 24 of last year, just a week before Yeltsin resigned as 
president, Tamaev had extended the Mabetex probe for six months so that 
investigators could conduct a detailed review of the presidential 
administration's finances (see the Monitor, October 9, January 3).


Date: Tue, 10 Oct 2000 
From: "Robert Brown" <> 
Subject: Money for the Bears

As Cohen presents in his book, the technical assistance "crusade" has for the
most part failed.

Mere attempts at replication of the USA in Russia and FSU did not work, and
actually continued the old system of getting money for nothing. The komsomol
boys and girls quickly realized that foreign money could be had by saying the
right words and writing the right reports and promising to foster free market
and civil society. The only adaptation in the lexicon of funding requests is
the elimination of the passe building socialism and five-year plans and the
inclusion of de riguer impact indicators and deliverables. Gullible foreigners
were smitten by the allure of Russia and their own idealistic dreams of making
a new world happen.

Does this sound familiar? Like the turn-of-the-century Russian
who took up the cause to create a new communist state, the foreigners became
the vanguard and tried to change Russia into something that the Russians did
not even envision for themselves. Therefore, it is no wonder that under the
nose of the foreigners -- the believers in the great ideal -- the Russians
advantage of the foreign good will to line their lairs for their own future.

The lining of lairs brings to mind the recent expose about the ingenious scams
run in the CIS to relieve people and organizations of their cash and quickly
send said monies to offshore accounts, (Money Trail, Moscow Times, Lucy
Komisar). These scams, I wager, are employed by clever persons in many of the
operations of foreign donor agencies in the CIS.

Additionally, the charges by the United States against Harvard University,
Professor Andrei Shleifer, Jonathan Hay and their wives, and especially
allegations that Harvard and its advisors breached the terms of the agreements
between Harvard and USAID, as well as their fiduciary duties of loyalty and
good faith to the United States raise questions about the crusading
managers of technical assistance funds in the CIS.

How can we be assured that funds, distributed via the crusading agencies
EBRD, TACIS, DFID, OSI, Mott, Ford and other foreign groups using nonprofits
and private organizations, have not been similarly absconded? Does anyone
Would someone who appropriates these monies to these agencies care if they
realized the number of pensions, teachers and doctors salaries that could have
been paid inside these countries before these funds were misdirected to fat

With whom should the final fiduciary accountability lay? Should it lay with
the grantee or grantor? Subgrantee, subgrantor?

With the charge against Harvard University for lack of supervision, the
standard for accountability has been stringently defined.

What is an adequate level of supervision?

What is the cost of adequate supervision?

Does any agency conduct adequate supervision for funds distributed in corrupt

Or is supervision just a fashion, a political distraction, and an obstacle to
the means and the ends for the ever committed "crusaders", who would wish to
turn a blind eye so money is kept flowing freely to their pipe dream of a
Russia in the West s likeness.


Date: Tue, 10 Oct 2000
From: (Ron Pope)
Subject: To Know or Not to Know English

Sharon Tennison, President of the Center for Citizen Initiatives in San 
Francisco, makes some good points in JRL #4527. She is absolutely correct in 
my opinion in emphasizing the need for well trained experienced interpreters 
to work with non-English speaking Russian exchange program participants. The 
problem, of course, is that besides CCI's PEP program, almost none of the 
exchange hosts have the resources to provide such interpreters, especially 
for extended stays. In short, I believe the PEP program's resources are 

This does not mean that programs have to be limited to those who already know 
English. Russians have a tremendous incentive to learn English because of 
its status as the "international language," especially of business. What is 
lacking is adequate funding for English language training. Especially in the 
provinces, what Russians can afford to pay for good quality courses is 
limited. Our American Home Project in Vladimir is probably unique in its 
ability to be self-supporting. But even we could benefit considerably from 
at least some modest additional funding. For example, we could bring in more 
specialists to assist us with developing curriculum materials if we could 
cover even just their travel costs. (There are almost no teaching materials 
available that are specifically targeted at Russian speakers.) There are 
other things that we could very effectively and "profitably" do with 
additional funding.

I think both the US government and American foundations are missing out on a 
MAJOR opportunity to "make a difference" by not providing substantial funding 
for American English programs throughout the FSU and Eastern Europe. If good 
programs taught by native speakers are available, many Russians will find the 
time to study English. As noted, they have a tremendous incentive to learn 
the "international language"--while most Americans have little incentive to 
learn Russian. This will then increase the pool of applicants in the years to 
come who can get maximum benefit out of visits to the US--without the aid of 
expensive interpreters. This will also greatly facilitate communication with 
visiting Americans, with the result that there will be more accurate and 
effective "cross-cultural communication." We need to be "investing" in the 
future, and not just concentrating on current programs.

None of this means that more Americans shouldn't be trying to learn Russian. 
(Our offerings in Vladimir now include an Intensive Russian Program.) It is 
just that as a matter of practical fact, more Russians are going to learn 
English--and we need to provide them with more opportunities to do so from 
native speaking Americans. (The British, Australians, and Canadians are 
doing more in this area than is the US. Why?)

Ron Pope, President
(309) 454-2364


The Times (UK)
11 October 2000
Power comes at a price 
In the second extract from his memoirs, Boris Yeltsin tells how both he and 
Bill Clinton suffered from systematic campaigns to destroy their presidencies 
Bill Clinton will be remembered not so much for his accomplishments as for 
Monica Lewinsky. Fortunately, he was not removed from office. But the 
interrogations and testimony of the President became public knowledge. That 
is the price of power. Every step and every word are examined under a giant 
magnifying glass. God forbid that you should stumble or make a mistake. 
Nothing is forgiven.I empathise with Clinton because I have suffered the 
indignity of impeachment. Of course, they are two different stories. However, 
I consider their simultaneous occurrence as a kind of warning that aggressive 
moralising, played as a political card, can be powerfully destructive. In my 
case, our leftist Russian parliament blamed the Russian President for the 
collapse of the Soviet Union. But behind the smokescreen of ideology there 
was the same settling of scores that occurred in Clinton's scandal. The 
political establishment (or the leftist segment of it in Russia) could not 
forgive us for our stubborn pursuit of our goals. Clinton had so confounded 
his political rivals that they had nowhere to go. So they turned to exposure 
and provocation. I could say the same thing about the Russian impeachment. 
After losing the first and second presidential elections, the Communists 
exploited everything: the fall of the USSR was declared a conspiracy; the 
mistakes of the first Chechen campaign were called a crime; economic 
difficulties were called the genocide of the Russian people. Every move I 
made, every word I spoke, all my health problems from my heart operation to 
my bronchitis became a pretext for political scandal and for obstruction in 
the Duma. Still, I think history will set the record straight. 
I recall my first meetings with Clinton in 1993. For me, he was the 
personification of the new generation in politics. He lent hope to the idea 
of a future without wars or confrontations and without the grim ideological 
struggles of the past. Clinton was ready to meet me halfway. 

No other US president came to Moscow so many times. (And, as Bill has said, 
probably none will do so in the future.) No other US president has engaged in 
such intensive negotiations with the leaders of our country or provided us 
with such large-scale aid, both economic and political. Sometimes it seemed 
that we were establishing a new world order. But Russia's adjustment to 
democratic values was more painful than we predicted. International financial 
institutions alone could not create the conditions for economic improvement. 

Russia and the US often diverged. We had different interests. Every new 
disappointment put Russian society into shock, while Americans began to see 
Russia as a country of bandits. Americans dissatisfied with the pro-Russian 
policy of the White House, and Russians who were trying to disrupt the 
Kremlin, were in unholy alliance. 

But this setback was temporary and cannot be compared to the gigantic step 
forward already made in the era of the Bill and Boris contacts. No scandals, 
intrigues or political jockeying could destroy this new Russian-American 
interaction. The United States and Russia had ceased to be enemies. 

In late 1996, after Clinton's re-election, Russian intelligence sent me a 
report that Clinton's enemies intended to plant a young provocateur in his 
entourage who would spark a scandal capable of ruining his reputation. The 
prediction seemed too far-fetched. In any case, Clinton, with his firm grasp 
of reality and his brilliant aides, would surely figure out the plot. During 
my last meeting with Clinton, I thought I might give him the text of this 
dispatch. But then I decided not to traumatise the man; he had already 
suffered too much. 

DESPITE the received wisdom, I have never clung to power. In both 1996 and 
2000, the decision whether or not to resign was not about myself but what I 
would leave behind me. Several times, both before and after 1996, I discussed 
with my closest aides the prospect of an early resignation. I told them that 
I was tired and that the country was tired of me. But again and again I was 
convinced that my departure would threaten the democratic process. Who among 
the new politicians could have been nominated as a national leader? Who was 
ready to take responsibility for a country with a transitional, crisis-ridden 
economy, a leftist parliament and misfiring mechanisms of civil society? Even 
while I struggled with these personal decisions, I had to maintain a bold 
stance to the world. It was crucial that Russia preserve its international 
relations, especially with the leaders of Western Europe, China and Japan. 
Thankfully, I had been blessed with two great allies, Helmut Kohl and Jacques 
Chirac. Not only had we grown up together at the negotiating table, but we 
are also from the same mould. All three of us are from the same generation. 
We are direct, outspoken, even harsh. We feel a sincere sympathy for one 

Only someone who has attended high-level diplomatic meetings knows how much 
depends on the atmosphere and the contact between people. Security and trust 
are often built by diplomacy in shirtsleeves, the diplomacy of friendship. I 
first came up with the idea of a meeting in shirtsleeves at a forum in 
Strasbourg in 1997. We decided to meet in March. Chirac and Kohl flew in to 
Moscow around midnight and departed the next day. 

It was a memorable occasion. Chirac called it a world premiere. It was 
evident even to the most cynical of observers that something unusual was 
about to take place. At the same time it was made clear that our informal 
diplomacy posed no threat to Atlantic solidarity. The special relationship 
shared by Germany, France and Russia was a given for the Atlantic alliance. 
Besides, discipline within Nato is firm. Britain and the United States are 
the steel backbone of Nato. And I am sure that Kohl and Chirac co-ordinated 
our three-way contacts with the Americans. The latter had a fairly mild 
reaction to the meeting. 

The British did not react so calmly. They started sending signals to our 
foreign ministry saying that they too were ready to participate. This pleased 
me in one sense but I felt that the presence of the recently elected Tony 
Blair would upset the psychological balance. The whole point was to have a 
personal, friendly discussion between three old-style leaders. In short, we 
sent a reply to the British that the casual three-way meeting should be tried 
first. We would then see where to go from there. I proposed to Chirac and 
Kohl that we discuss the concept of a Greater Europe extending to the Urals 
as the basis for an entirely new pan-European policy. 

We discussed a full range of international programmes: a 21stcentury 
aircraft; a London-Paris-Berlin-Warsaw-Minsk-Moscow transport corridor, 
heading toward Yekaterinburg and Siberia, which would include a high-speed 
autobahn and railway; a rapid-reaction force to cope with technological and 
natural disasters; an exchange of undergraduate and graduate students; and 
the creation of a French-German-Russian university. We agreed to hold a major 
Moscow-Berlin-Paris exhibition. We understood that our troika had been called 
to counterbalance the disequilibrium that occurred in Europe after Nato 
borders came closer to Russia. 

To quote Kohl: France and Germany carry a special responsibility for the 
policies of the European Union. They want to do all they can so that nobody 
gets the impression, in the world or in Moscow, that the processes occurring 
in Europe are leading to the isolation of Russia. 

The entire meeting was infused with an important idea: something was needed 
to oppose the American pressure — a will to collaborate, an independent 
European determination. The English-speaking world did not share our 
enthusiasm. The British press wrote that the three-way meeting was the first 
step towards an almost undisguised anti-American bloc in Europe. 

Russia's domestic crisis was another setback to casual diplomacy. When our 
financial system crashed, the Western European leaders reacted with great 
sympathy. They telephoned frequently, offered the help of technical 
specialists and made statements of support. But Russia's default and failure 
to pay back its loans was a painful issue in international affairs. The 
second meeting of the troika had to be postponed indefinitely. And then the 
Kosovo crisis struck. 

During the course of one year, our relationship went into reverse. The war in 
Yugoslavia allowed the Americans to put North Atlantic solidarity back on the 
track they wanted. But nothing is in vain. I am convinced that present-day 
leaders will come back to the idea of a Greater Europe and the construction 
of a new European civilisation, together with Russia. I felt overwhelming 
fear, then crushing pain IT HAPPENED on June 26, 1996, a few days before the 
second round of the presidential elections. I came home to the dacha from 
work about 5pm. It had been a stressful and difficult day. I took a few steps 
down the hallway and then took a break in an armchair in the living room. I 
thought I would rest then go upstairs and change my clothes. But suddenly a 
very strange sensation came over me, as if somebody had picked me up under 
the arms and carried me away. At first I didn't experience any pain, just 
felt this overwhelming fear. Then the pain sliced straight through me, an 
enormous crushing pain. Thank God there was a doctor nearby who immediately 
understood what had happened to me. All I could think was Lord, why am I so 
unlucky? It's almost the second round. There are only a few days left. 

My entire schedule of meetings between the first and second election rounds 
had to be cancelled. The pretext was a change in tactics; the President's 
victory was assured. At the same time my election team had to try to prevent 
any leaks about my illness. I am sure that if we had given the victory to 
Zyuganov or postponed the elections, Russia would have suffered a far worse 

I decided not to cancel a meeting with General Alexander Lebed. Lebed had 
garnered 15 per cent of the votes in the first round. On June 18 I had 
appointed him Secretary of the Security Council. Our agreement before the 
second round was that without waiting for the votes to be counted he was to 
take on the issue of Chechnya. This was vital to both of us. 

So on the second day after my heart attack, June 28, we turned the living 
room, where they had put my bed, into something like an office. The cameraman 
spent a long time figuring out how to get everything extraneous out of the 
picture, especially the piano, which had always been there, and the bed. He 
covered up the medical equipment. 

Lebed was told that I had a cold and he didn't ask any extraneous questions. 
I distinctly recall his black shoes, white socks and a loud checked jacket. A 
rather unpolitical thought flashed through my mind: He's in his summer 

Hour by hour, my strength returned. Still, my doctors forbade me to walk 
around and now there were only a few days before July 3 and the second, 
decisive round of the elections. The question arose: where would the 
President and his family vote? We discussed the various options. The first, 
voting on Osennaya Street in the district near our Moscow address, was 
immediately rejected. The building had stairs, a long hallway, and it was a 
long walk to the street. 

The second option was the sanatorium in Barvikha, not far from our dacha, 
where I was staying. People always voted at the sanatorium. There was a 
polling station there. I continued to worry. I asked: What kind of voting is 
it if I'm in my bathrobe and slippers? But in the end I agreed. 

With Zyuganov and I running practically neck and neck, everything depended on 
Lebed's and Yavlinsky's voters. Who would they vote for in the second round? 
Would they turn out at all? I tried not to think about it. 

On Sunday, the day of the second round, with an enormous effort I went to the 
ballot box. TV companies, journalists and wire reporters followed. I gathered 
my strength and smiled and said a few words. Then it was back to my bed where 
I awaited the result. 

It came quickly enough. And I could hardly believe it. I had won. At the 
beginning of the year not even my closest aides believed that it was 
possible. I had won despite all the forecasts, despite the low ratings, 
despite the heart attack and the political crises that had haunted the first 
term of my presidency. 

Although I wanted to jump up and dance, I lay on my cot, staring tensely at 
the ceiling. Fortunately I had my loved ones and friends around me. They 
embraced me and gave me flowers. Many had tears in their eyes. 

Boris Yeltsin 2000. Extracted from Midnight Diaries, to be published next 
week by Weidenfeld & Nicolson (£20). Buy it from The Times Bookshop,
8080, for £17 including p&p 

Financial Times (UK)
October 11, 2000
COMMENT & ANALYSIS: Avoiding the trap of transition: The former communist
countries that have done best have ensured that goods can be bought more
freely than judges
By Martin Wolf

The fall of Slobodan Milosevic is more than an important moment in the
history of the Balkans. What was, in effect, the last communist
dictatorship in Europe now starts on its journey towards the west. This is
a crowded path. What can Serbia learn from almost 11 years of transition
from socialism? 

Admittedly, its starting point is different. Yugoslav communism was based
on worker management rather than central planning. But property rights are
just as ill-defined. The Milosevic regime was quite as repressive as most,
not to mention vastly more dangerous to its neighbours. 

For these reasons, the Serbs have just as much reason to make the journey
as other former communist countries, both to cement their democracy and
secure greater prosperity. As Janos Kornai, the distinguished Hungarian
analyst, has noted, "capitalism is a necessary condition of democracy".*
Similarly, in the long run a market economy will outperform socialism
because it is the only system that rewards innovation. Before the second
world war, the then Czechoslovakia had much the same real income per head
as Austria. Today, the income per head of the Czech Republic is half the
Austrian level. In the same way, compare North with South Korea or the
vanished East Germany with its western counterpart. 

A successful transition is more than worthwhile. It can be achieved. In its
assessment of the experience, published in the latest World Economic
Outlook, the International Monetary Fund argues that "where reasonable
fiscal discipline was maintained and meaningful structural reforms were
pursued, inflation typically remained well contained and output recovered
more rapidly than in countries where stabilisation and reform efforts were
less consistent and vigorous". Equally, "the recorded increases in poverty
were sharpest in those countries where the reform process has stalled,
stultifying entrepreneurship and new growth opportunities, and where
privatisation favouring insiders and poor targeting of social safety nets
have permitted a lopsided accumulation of wealth". 

Reform works. But countries with the longest experience of communism and
economies most distorted by its mania for large-scale heavy industry, have
also found it hardest either to manage reform or achieve a healthy
recovery. Communism has left a deep footprint - so deep that many countries
are finding it almost impossible to climb out of it. 

Intriguingly, the transition countries that are closest to the output
levels of a decade ago are the ones that have either reformed least -
Belarus and Uzbekistan - or have reformed most - Hungary, Poland, the Czech
Republic, the Slovak Republic, Slovenia and Estonia. The former have
compelled unreformed enterprises to continue producing, however useless
their output. The latter have started to show the dynamism and flexibility
of a market economy. In between, neither communist fish nor capitalist
fowl, lie the semi-reformed. 

These unhappy countries are stuck in a transition trap. It is no accident
that they were also among those most deeply marked by the communist
experience. But it is possible to describe the trap more precisely. Much
attention has been paid to the supposed failure of many of those advocating
reform to recognise its institutional preconditions. But the error is more
subtle than that. It concerns the origins of personal behaviour as much as
formal institutions. 

A sophisticated market economy rests on an understanding of the distinction
between what can be bought and what cannot be: goods, yes; judges, no. The
more deeply was communism embedded in people's brains, the more difficult
have they found it to appreciate this distinction. The scale of the rewards
available to those who ignore it has further reinforced socially malign
behaviour. In Russia, for example, the failure to complete price
liberalisation for many valuable commodities opened opportunities for huge
private gain. So did insider privatisation. What economists call
"rent-seeking behaviour" then flourished, to the enrichment of the ruthless
few, and impoverishment of the hapless many. 

This process is carefully analysed in a recent paper from the World Bank,
on the basis of a huge sample of enterprises.** The authors distinguish
between state capture, influence and administrative corruption. The first
refers to the capacity of companies to buy the rules of the game they
desire; the second to their ability to achieve the same aim through their
insider connections; and the third to petty bribery, aimed at influencing
the implementation of existing laws, rules and regulations. 

The conclusion is that these various ways of influencing the state's
behaviour can be worthwhile for those who use them, but do great damage to
the economy as a whole. Because of the private benefits of state capture,
those who succeed have no interest in promoting a neutral state that would
help their competitors or outside shareholders. Having benefitted from the
partial liberalisation and privatisation that brought them wealth, these
interests have a strong incentive to prevent further reform. 

If the insiders succeed in halting the emergence of a law-abiding and
law-enforcing state, anyone engaged in business is forced to behave in the
same way to compete. This creates a downward spiral. It also means that
privatisation of large-scale business undertaken in the wrong policy and
institutional context, far from advancing reform, becomes an obstacle to
continued advance. 

Transition has been hard. Inevitably, some wonder whether it has been
worthwhile. The answer for all who care about personal freedom and
political democracy is that it has been. We also know that the combination
of liberalisation with institutional reform and macro-economic
stabilisation does work. Inevitably, however, countries with the longest
and most bitter experience of communism have found it hardest to reform.
Some seem caught in a transition trap, with the state no longer capable of
purposive autonomous action but prey instead to self-seeking private

The lesson of experience is the importance of moving as swiftly as possible
through this trap. The need is to establish the institutional norms of a
proper market economy before entrenched private interests corrode the
effectiveness of the state altogether. To have the right sort of
market-oriented democratic society, one needs the right sort of state.
Creating it is likely to prove as big a challenge for little Serbia as it
already has for its mighty patron, Russia. 

*Janos Kornai, "What the Change of System from Socialism to Capitalism Does
and Does not Mean", Journal of Economic Perspectives, Winter 2000. 

**Joel Hellman, Geraint Jones, Daniel Kaufmann, "Seize the State, Seize the
Day", Policy Research Working Paper 2444, 


Source: NTV International, Moscow in Russian 1532 gmt 10 Oct 00 

The deputy speaker of the State Duma, the Russian parliament lower house,
Irina Khakamada, was interviewed in NTV's 13-minute-long "Hero of the Day"
programme on 10th October by Marianna Maksimovskaya. Khakamada spoke about
the government's decision not to take measures to further strengthen the
rouble. She said that the rouble rate, which she assessed as R18 per
dollar, was very high and "with such an expensive rouble rate we can in
fact kill the growth which is evident within out industry, and thus we will
not stimulate exports and our products will not be competitive, because
there will be huge amounts of imports. Therefore the Central Bank is in
fact keeping the rouble rate down." She assured viewers that the balance of
payments was good, attempts were being made not to take more credits and
inflation was falling. She added that "at the moment an optimal
rouble-dollar rate has been found, and the government and the Central Bank
ought to back up that trend without announcing anything". She added that
owing to the improved financial situation, particularly more favourable oil
prices, there would not be a monetary crisis again. 

As co-chairperson of the Union of Right Forces party, Khakamada said that
whatever decision had to be taken by the party would only be in support of
the president and the government if it corresponded to the party's
ideology, that they were in fact "slaves" to their "values". She said that
her party had not set any deadlines with regard to Vladimir Putin's and the
government's performance, because it was pointless, but that her party
would fight any attempt to curb freedom of speech and information and
political freedom. 

Asked whether the president had defined his policy, she replied "I think
so. His main priority is to make Russia strong, to make it a great power, a
mighty country which can speak as an equal both to the United States of
America and the European Union. And here there are many different threats,
and very often we notice them. But what holds him and those around him back
from tough, authoritarian steps, is that the main instrument in the coming
into being of this great power, that is what the Communists have in their
slogans, is the market, a socially oriented, efficient, competitive economy
which is part of the world market. Therefore this is why the president and
the government seem to have two faces." She added that "I see what Putin is
up to, and where he is drawing support from a liberal economy, I am his
ally, because there is a trap. If the economy becomes liberal, then a new
elite will grow up. New people will come forward. And they will sweep away
an authoritarian regime anyway. If the economy is frozen, if the
bureaucrats have suppressed it completely and new owners, a new mentality,
new people do not emerge, then no matter how much democracy there is, it
will all be a farce, which in actual fact is just a guise for that same

Khakamada talked about the controversy surrounding the Yabloko-Union of
Right Forces campaign in the St Petersburg elections. She concluded that
she regarded herself as a member of a "constructive opposition". 

The video showed Khakamada being interviewed in the studio. 


Moscow Times
October 11, 2000 
EDITORIAL: It's Time for EBRD to Make News 

When the television industry evaluates itself later this month by handing out 
its highest annual awards, the TEFIs, there will be no award for best news 
programming. It seems that last year there was no news as such. It was all 
lies and propaganda. 

The TEFI cancellation is another minor yet clever chess move in the Kremlin's 
endgame against NTV. Why worry, for example, that NTV's parent company 
Media-MOST is being hounded into the grave by the Kremlin? After all, NTV 
never existed in the first place. There already is no news broadcasting in 
Russia f the entire TEFI category has had to be canceled. 

Even as they voted to scrap the news TEFI, television academy members freely 
conceded that NTV committed far fewer propaganda sins against its viewers 
than any other station. But as ORT's Konstantin Ernst so memorably put it, 
"All the big channels were engaged in political agitation last fall [and] 
the TEFI award is for 'best information program,' and not 'least effective 

So NTV is to be pilloried as dishonest f but also scorned for being 
ineffectively dishonest. (After all, ORT got its man elected. Where's the 
TEFI for "best proto-fascist manipulation of the popular will"?) 

The Kremlin's greatest PR triumph since the election is the way Vladimir 
Putin has edited himself out of the discussion of NTV's "business problems." 
Yes, NTV owes Gazprom money. But that was never a problem right up until the 
day Gazprom's CEO emerged from a Kremlin meeting to mutter something about 
not liking NTV's news coverage. From then on, it's been one "business 
dispute" after another f right up to the arrest of Vladimir Gusinsky and his 
amazingly cynical release from jail in return for signing away his company 
under the watchful eye of Press Minister Mikhail Lesin. 

To argue that Gusinsky is having "business troubles" is roughly equivalent to 
asserting that a man being clubbed to death with a bat is a poor baseball 

"Business" is simply the weapon of choice being used on NTV. It has no other 
relevance here. 

Now Gazprom is shopping around for a "foreign investor." About a year ago in 
this space, we suggested the EBRD, which is charged with fostering democratic 
freedoms via its investments. 

Instead, the EBRD is pondering sinking $300 million into Gazprom and LUKoil f 
where its investments aren't needed, thanks to windfall world oil prices, and 
will have no broader influence. 

The EBRD should wise up, buy into NTV, leave the existing journalists in 
charge f and aim for next year's TEFI. 


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