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Johnson's Russia List


October 17, 2000    
This Date's Issues: 4583  4584  4585


Johnson's Russia List
17 October 2000

[Note from David Johnson:
1. AP: Russia Left Out of Mideast Summit.
2. Reuters: Russia's Chernomyrdin threatens to sue Bush.
3. Interfax: Russian Communists support some of Putin's policies 
and oppose others.

4. Anatol Lieven: Chechen settlement.
5. Nick Wadhams: re Ware/Lucas 4851. (Chechnya)
6. Interfax: Russia's Berezovskiy says Yeltsin accomplished historic 

Sokolin, chairman of the State Statistics Committee)

8. Newsweek International: Christian Caryl, The Empire In Shadows. 
Putin vowed to make it a beacon of reform, but Gazprom remains part 
of the problem for Russia. 

10. Ira Straus: Re: Lieven and the responses. (re views of

11. The Independent (UK): Patrick Cockburn, Heart of Asia heads 
for famine.

12. Moscow Times: Elizabeth Wolfe, Business Survey Places Moscow 


Russia Left Out of Mideast Summit
October 16, 2000

MOSCOW (AP) - In a blow to Russia's aspirations for a greater global role,
Moscow was left out of Monday's Middle East summit - an especially painful
humiliation after its extensive mediation attempts. 

``There has been no invitation, and I don't even know whether they were
sending any invitations at all or what was the format of the meeting,''
said Foreign Minister Igor Ivanov, who spent most of last week in the
Middle East talking to Israelis and Palestinians in a bid to end the
violence as well as revive some of Russia's faded clout in the region. 

It wasn't clear until the last moment whether Russian President Vladimir
Putin would join world leaders, including President Clinton, at the
Egyptian sea resort of Sharm el-Sheik for an emergency summit. 

Russia was prepared to attend ``on equal footing with other participants,''
Russia's Foreign Ministry said Sunday. But Putin instead headed Sunday to a
Black Sea resort to meet with President Leonid Kuchma of Ukraine. 

Putin put a brave face on the diplomatic rebuff, telling reporters:
``Russia is ready to take part, but only if Israel and Palestine consider
it useful.'' 

Putin also praised Clinton for his efforts. ``President Clinton didn't fear
putting his authority at stake. It was a brave step,'' he said. 

Russia is officially a co-sponsor of the Mideast peace process along with
the United States, and being left out angered some Russians. 

``On the one hand, everyone speaks about the need to involve Russia in the
peacemaking process. Yet on the other hand, the other sponsor, the United
States, carries out a de facto policy of pushing Russia away,'' said Dmitry
Rogozin, head of lower house of parliament's international affairs committee. 

While strongly supporting Palestinian statehood, Russia has said that it
could only be achieved through dialogue with Israel. 

``During the Cold War, Russia played an important role in the region and
had strong levers with the Palestinians, but it's all in the past,'' said
Yevgeny Volk, head of the Heritage Foundation's Moscow office. ``Even the
Palestinians now pin greater hopes on the United States and Europe.'' 


Russia's Chernomyrdin threatens to sue Bush

MOSCOW, Oct 16 (Reuters) - Former Russian Prime Minister Viktor
Chernomyrdin demanded a formal apology on Monday from U.S. Republican
presidential candidate George W. Bush for accusing him of stealing IMF
money, and threatened to sue. 

Bush, who in last week's campaign debate attacked Vice-President Al Gore
over the Democratic administration's ties with Russia, said some money lent
to Russia by the International Monetary Fund had ``ended up in Viktor
Chernomyrdin's pockets.'' 

``Such statements are not only damaging but they are also dangerous to the
public,'' Chernomyrdin told a news conference. ``That is why I insist on a
public apology. I am sure you (Bush) will present it immediately,'' he said. 

``Otherwise I will have to defend my honour in court.'' 

Chernomyrdin, who has called Bush an irresponsible politician, said the
governor was well aware his remarks were also liable to affect Washington's
relations with Moscow. 

``He knows that for the sake of his ambitions he is putting at risk future
relations between the United States and Russia, two nuclear superpowers
with a special responsibility for world security,'' he said. 

The IMF lent money to Russia throughout the 1990s, but most accusations
that some IMF money may have been stolen have surrounded $4.8 billion in
loans made in the summer of 1998, several months after Chernomyrdin was
sacked as premier. 

The IMF has repeatedly denied that any of the money it lent to Moscow was
misappropriated by the Russians, though officials are still investigating
whether some of the money was siphoned off via Swiss banks accounts. 

Chief IMF spokesman Tom Dawson has said he was not aware of any evidence to
support Bush's allegation against Chernomyrdin. 

But some U.S. Republicans and other critics have suggested that since it is
difficult to trace money once it reaches Russia the IMF should have been
more vigilant about corruption generally, even if IMF money was not
specifically diverted. 

The Bush campaign has stood by the Texas governor's statements, saying
Chernomyrdin, a former head of natural gas monopoly Gazprom, ``made a
fortune in personal profits'' in the Russian oil and gas business while in
the cabinet. 

A spokesman for Bush has said the industry has benefited greatly from
foreign aid, including aid from the IMF. 

Chernomyrdin has denied having made a fortune out of his connections with


Russian Communists support some of Putin's policies and oppose others 

Moscow, 16th October: Gennadiy Zyuganov, leader of the Russian Communist 
Party and its faction in the State Duma, the lower house of parliament, has 
said that the Communists have a differentiated approach to the policy pursued 
by President Vladimir Putin. 

"Our approach is strictly differentiated. We are ready to support the 
executive authorities' moves aimed at defending Russian interests in the 
international sphere, easing the tax burden on producers and investors, and 
at guaranteeing a minimum subsistence to all citizens. But we are 
categorically against the sell-off of the fuel and energy complex, the loss 
of state influence on the strategic branches, and the annulment of social 
guarantees for the citizens," Zyuganov told the resident of the Friedrich 
Naumann Foundation, prominent German politician Otto Graf Lambsdorff. 

The Communist Party faction's press service has told Interfax that 
Zyuganov assailed the socioeconomic policy being pursued by Putin. "The 
Communist Party and the people's patriotic opposition were ready to 
reach an agreement with Putin's team on adjusting socioeconomic policy 
and putting it on a legal footing," the press service quoted Zyuganov as 
saying. "But it is becoming increasingly clear that Russia's problems 
are becoming more and more serious, while trust in Putin, who has been in 
power for more than a year, is shrinking," Zyuganov said. 

He said that Putin "has failed to formulate his socioeconomic policy, and the 
old [former Prime Minister Yegor] Gaydar-initiated liberal policy is still in 

Noting that Putin had made some progress in the international arena, Zyuganov 
said that "Russia's national-state interests are being defended too 
timidly, not confidently enough and without any solid preparation." 


Date: Mon, 16 Oct 2000
From: Anatol Lieven <>
Subject: Chechen settlement

Dear David,

I’ll reply to Edward Lucas shortly, but in the meantime, since various
people have asked me about my beliefs concerning the future of Chechnya
and a possible peace settlement, I’d like to make these clear:

I still believe that in the long run, Chechnya must become independent
of Russia, both de jure and de facto. After everything that they have
suffered at the hands of the Russian armed forces in 1994-96 and in the
present war, it is impossible that most Chechens can ever again live
contentedly as part of the Russian Federation ­ something which, I’m
glad to say, is still entirely possible for Tatars, Bashkirs, Yakuts and

However, any true friend of Chechnya and the Caucasus must also surely
recognise that independence alone is not enough, and nor is Russian
military withdrawal. Before it can become a stable independent state,
Chechnya needs to develop the social, cultural and political foundations
for such a state, including an organised political nationalist movement
capable of mobilising the population behind a state-building programme.
These foundations proved largely lacking in 1991-94, and wholly lacking
in 1996-99, with disastrous consequences. Even in optimal circumstances,
they will take years to develop.

Aslan Maskhadov is the legitimate President of Chechnya, elected in 1997
by an overwhelming majority (65 per cent) in a vote which was certified
both by international and Russian observers as free and fair. I believe
that any stable peace settlement in Chechnya has to involve renewed
Russian recognition of this. Among the greatest crimes of Shamil
Basayev, Khattab and other warlords in 1996-99 was their contempt for
the democratic will of the Chechen people and for the authority of their
own elected President (who was also of course the chief architect of
victory in 1994-96). Their defiance of legitimate state authority laid
the basis for the subsequent disasters.

Ideally, therefore, I would like to see a formal, public Russian promise
to grant Chechen independence in ­ say ­ 10 years, if a clear majority
of the Chechen people vote for this in an internationally-observed
plebiscite and if in the meantime a number of conditions are met. Chief
among these are that the international Mujahedin should leave Chechnya,
together with those Chechen leaders who rebelled against Maskhadov’s
authority, attacked Russia, and participated in criminal activities
between 1996-99. Their followers should be amnestied in return for the
surrender of their weapons. A ceasefire (with a definite time limit and
international guarantees) should be put in place to allow them to do so.
If they refuse, the war against them should continue. If he agrees to
these terms, Maskhadov should be restored as Chechen President and
leader of a government of national unity.

Of course, it would be extremely difficult for either Maskhadov or Putin
to agree to such a settlement, and I won’t pretend that I am at all
optimistic that anything like this will happen. But what’s the
alternative? To keep Chechnya within Russia and impose Russia’s present
allies as its government will mean endless conflict, with dangerous
consequences for Russia and appalling ones for Chechnya. Even if the
Russians destroy the major armed groups in the field, the struggle will
become a terrorist one, as in so many other places round the world.
On the other hand, rapid and unconditional Russian military withdrawal
is also not a solution. Most analyses suggest that the various extremist
groups control a large majority of the fighters and would make short
work of Maskhadov’s men. Even if Maskhadov could hold his own, the
result would be continuing civil war within Chechnya, making it
impossible to develop stable state institutions. Chechnya would revert
to the condition it was in before the Russian invasion, and become once
more a source of criminality and extremism. It would once again be a
danger for the entire region and ­ like Afghanistan after the Soviet
withdrawal - in the long run for the West as well.

Anyway, this is the best I can come up with. If anyone has better and
more practical ideas for a long-term settlement, please put them forward
for discussion.


Date: Tue, 17 Oct 2000
From: Nick Wadhams <>
Subject: ware/lucas 4851

Dear David,

I apologize for this response to Robert Bruce Ware's response to Edward
Lucas' response to Anatol Lieven, but I think that Ware's criticizing
reporters for not having the "courage" to visit the Caucasus before the
latest war is laughable.
¶ How about not having the disregard for their own safety? It is well
documented that Chechen gangs were willing to kidnap almost anyone, and
that the price on a
foreigner's head was particularly high. I have trouble imagining a
reporter saying then, "Well, it looks like we foreigners are getting
kidnapped by the dozens by Chechen gangs, but why don't I down there and
hang out with a few of those wacky warlords and do some, you know, 
investigative reporting!"
¶ Even so, Ware's incessant claims that there wasn't much coverage of
the deteriorating situation in Chechnya, or that it was somehow not
critical enough of the Chechens, is simply not true. What about the
reports that more than 1,300 people had been kidnapped since 1996 and
extensive coverage of numerous incidents in detail: the capture and
beheading of three Britons and a New Zealander, the kidnappings of
Vincent Cochetel, Herbert Gregg, Valentin
Vlasov, Elena Masyuk. And the killings of six Red Cross workers in 1996,
along with subsequent coverage about aid groups pulling out for safety
reasons (they weren't "courageous" either, apparently). And then the
reports about Aslan Maskhadov's weakening grip on power, the battles
between competing Chechen warlords, the creation of a Sharia court at
the expense of a court system based on civil law? He knows about these
things -- I've seen he mentions it in some of his previous stuff. Where
did he learn it? First-hand research? Does he think the press is making
the Chechens look nice? Did that reporting have to be done from
ground-zero (and much of it was) to have an impact?

As for the current war, Ware's sarcastic comment about Western reporters
who were permitted "courageously to criticize the Russian campaign from
the safety of Russian military cover" was equally absurd. 
¶ He doesn't seem to remember that, unlike in the previous Chechen
war, access has been severely restricted, mostly because of the
Russians. And that Russians were doing things like raping, executing,
and torturing members of some of those families he writes about. 
¶ On the one hand you've got a hostile Russian military who won't let
you go there, or may arrest you if you do(Andrei Babitsky of course, and
others: Anthony Lloyd, David Filipov, Daniel Williams, etc), and on the
other, you've still got those gangs, who have been kidnapping anyone
they could get their hands on for the last three years. For Ware, that's
no excuse -- these reporters are too wimpy. 
From some of his other stuff, it appears that Ware's been to Dagestan
and made a few pals there, and doesn't like the Chechen rebels for the
havoc they've spread in the region (a while back he wrote an op-ed piece
for The Chicago Tribune titled "The war in Chechnya is about the people
in Dagestan"...huh?). But somehow that's turned into a belief that the
Western press isn't even-handed or courageous enough in its reporting. I
find it a bit hard to swallow such criticism from a guy teaching
philosophy in Illinois. 
Was he not paying attention, for example, to dispatches television
reporter Miguel Gil Morena sent from Grozny on New Year's Eve, during
some of the heaviest bombing of the city? Would he call Morena's
subsequent death while reporting under equally dangerous conditions in
Sierra Leone "courageous?"


Russia's Berezovskiy says Yeltsin accomplished historic mission 

Moscow, 16th October: Russian businessman and politician Boris Berezovskiy 
has said he has not given up the idea of forming an opposition to the 

"A hard confrontation of the authorities accentuates the need for forming 
such an opposition," Berezovskiy said at a news conference at Interfax head 
office today. 

The tycoon said that President Vladimir Putin has agreed with the need to 
form an opposition and had promised not to fight the process. 

However, "the whole might of the state machinery is being used to prevent the 
formation of an opposition," Berezovskiy charged. "Forces grouping around the 
authorities are now apparent. It is important to understand that this will 
last for years and we will have to keep fighting for the political space that 
has been created over the past ten years." 

Asked about his impressions of the new book of memoirs by Boris Yeltsin, 
Berezovskiy said that he "had mostly gone through it attentively". "The 
memoirs of the first president of Russia contain not all the truth and not 
only that," he said. 

Berezovskiy said further he is not a close acquaintance of Yeltsin's and 
they had met "several times at crucial moments". "Boris Nikolayevich 
(Yeltsin) thought that he was sent by God and regarded himself as God's 
deputy on the Earth," he opined. 

Yeltsin "did not resolve strategic tasks" during his presidency, Berezovskiy 
continued. "He was accomplishing a historic mission - he turned the country 
from the left to the right, sensing his predestination by instinct." The 
circle around Yeltsin "was wrapped up in intrigues around the president 100 
per cent", he charged. 

Comparing Russia's two presidents, Berezovskiy cited a statement once 
made: "Yeltsin pretended not to be and Putin pretends that he is." 


October 14, 2000
[translation from RIA Novosti for personal use only]
A trial census began in Russia last Wednesday. It covers 
110,000 people, or less than 0.1% of the country's population. 
It is in a way the "dress rehearsal" of the nationwide census 
scheduled for October 2002. Why is such a costly measure 
undertaken? Will Russians be asked questions which can be 
regarded as violation of privacy? What is to be done if someone 
refuses to let canvassers into his or her apartment? Vladimir 
Sokolin, chairman of the State Statistics Committee, or 
Goskomstat, answers these and other questions in a conversation 
with Trud's political commentator Vitaly GOLOVACHEV.

Question: According to tallies by specialists, the holding 
of the 2002 census will cost from 4 billion to 5 billion rubles 
and this year's trial census - 2 million rubles. Is it really 
necessary to spend so much money if Goskomstat regularly 
provides us with detailed information about the number of the 
country's population as a whole and the number of men and 
women, as well as children and members of all the other age 
groups? Its monthly reports analyze the demographic situation, 
the situation in the labor market, etc. Is all this not enough?
Answer: The answer is No. Many of the data are based on 
calculations and not always reflect new realities in full 
measure. Take, for instance, the number of the population. 
Expert estimates of the influx of migrants in Russia range from 
500,000 to 5,000,000 people. And how many of them are there in 
Or take such question as the ethnic composition of the 
population. All use the latest data obtained back in 1989, when 
the last census was conducted in Russia. In the meantime, 
representatives of more than 130 nationalities live in Russia. 
A great deal has changed since the latest census. The changes 
are fast but no new data are available. Only a national census 
can give a trustworthy picture of the present composition of 
our population. When adopting laws on support for small ethnic 
groups, we should at least know who are members of these groups.
By and large, the prime task of any country is to estimate how 
many people live in it.
Furthermore. What is the present educational level of the 
population? How many Russians have a higher education and how 
many have graduated from secondary schools? No one can surely 
answer these questions.
In order to shape the strategy of the country's 
development and conduct prudent economic reforms and an 
effective social policy it is necessary to know very well the 
structure of the Russian society, in particular, the number of 
employers, employees and so-called self-employed people, the 
state of unemployment and the situation on the labor market. 
There is only one way to obtain these and other data - a 
countryside census.
Right now, we are conducting a trial census only in three 
places: the Preobrazhensky neighborhood of Moscow's Eastern 
Administrative District, part of the Moscow region's 
Krasnogorsk district and part of Vladivostok's Frunzensky 
district. Our aim is to select the technology and 
organizational and methodological principles, reveal 
difficulties, which will inevitably arise and train personnel 
for conducting the universal census in two years.

Question: In the former Soviet Union many people had 
extremely negative feelings about the question on the notorious 
"fifth point" (nationality).
Answer: You are quite right. During previous polls some 
people said they were Russians thought they were members of 
other nationalities and ethnic groups according to their 
passports. To begin with, those times are gone. Second, we now 
ask to what nationality people think they belong. If someone 
says that he is a Dutchman, we will right "Dutchman" in the 
questionnaire. Let him be a Dutchman if he feels so. However, 
very few people try to conceal their "fifth point" today.
I would now like to say a few words about another matter 
of principle. Question No. 12 of our questionnaire is "What are 
your sources of income?" and 12 possible answers are offered 
such as (in addition to regular work, stipend or pension) "work 
on a personal plot of land," "allowances and grants," 
"savings," "proceeds from renting or leasing one's property," 
"interests on cash savings and securities," "dependent" and 
"other sources." People are asked to show not one but all the 
sources of income.
This will allow us to reveal an extremely important 
cross-section of our society. I do not think it is necessary to 
explain how important these data are.

Question: But you do not ask about the most important - 
the level of incomes. In the U.S., for instance, there is a 
special question about this, and Americans answer that their 
yearly incomes are up to $40,000, $60,000, $1,000,000 or more.
Answer: We have not caught up with the U.S. in this 
The question about the sources of income is new in our practice.
Let us pass this step and then we will be able to go further. 
By the way, in our micro census conducted in 1994 among 5% of 
the country's population we asked people about their incomes. 
The majority of them refused to answer this question.

Question: We have been thus discussing the first variant, 
that is, the poll that concerns all. You have said that there 
is a second variant of the questionnaire - for selective 
What additional questions are on this questionnaire?
Answer: These are mostly questions about people's main 
work (the post and the type of activity and enterprise). We 
also ask those who are out of work how they have been searching 
a job.
Three questions are addressed only women: How many children 
have you born? How many of them are alive? How many children 
are you going to have, including the ones you already have?

Question: What is to be done if anyone absolutely refuses 
to let canvassers in? Some, for instance, do not want strangers 
to see valuable pictures on the walls of their apartments or 
their luxury furniture.
Answer: In such cases we will not insist that the 
canvasser should be let into the apartment. Any person can come 
to a specially designated place, and the conversation will be 
held there. Or he or she can call and answer the questions on 
the telephone. As you see, we make it as convenient for people 
as possible.

Question: Suppose anyone refuses to take part in the 
What then?
Answer: In the democratic countries participation in 
censuses is a civil duty. This is written, for instance, in the 
U.S. Constitution. In Britain the fine for evasion from the 
census was raised from 80 pounds sterling in 1981 to 400 pounds 
(more than 16,000 rubles) in 1991. In Australia and Germany 
those who refuse to take part in the census can be imprisoned. 
We are not introducing such sanctions. We count on the 
consciousness of our people and appeal to their sense of civil 

Question: Will you poll foreigners who have come to 
Russia, for instance, tourists and people who have arrived on 
business from the U.S., Germany or France? What about people 
without permanent abode and "shadow" teams of builders from 
other ex-Soviet republics (who are not registered anywhere)?
Answer: Yes, the poll covers all who are staying in our 
territory at the given moment, including foreigners and tramps.

Question: Where are you going to talk with people without 
permanent place of abode?
Answer: At the places where they can be found - train 
stations, basements, underground passes, etc. Canvassers will 
come there and ask questions.

Question: Is the safety of canvassers guaranteed? There 
are different situations. It is unsafe to enter some apartments.
Suppose a student comes to the den of thieves. This can have 
very serious consequences.
Answer: We have thought all this very thoroughly. In each 
region militia have supplied us with a detailed list of such 
dens. All the necessary measures have been taken to guarantee 
the complete safety of our canvassers.


Newsweek International
October 23, 2000
The Empire In Shadows 
Putin vowed to make it a beacon of reform, but Gazprom remains part of the
problem for Russia. 
By Christian Caryl
It’s not everyday that American presidential candidates wade into the
murk of Russian corporate politics. So it wasn’t terribly surprising that
George W. Bush Jr. got it wrong during the debate last week, when he
suggested that loans from the International Monetary Fund wound up in the
pocket of former prime minister Viktor Chernomyrdin. 
IN FACT, THE RECENT ALLEGATION that Russian officials pocketed a $4.8
billion IMF loan date from the summer of 1998, when Chernomyrdin had
already left office. The stories that do involve Chernomyrdin are a good
deal more juicy. He has denied charges leveled by the CIA, among others,
that he amassed a dubious fortune from the vast business empire he once
ran: Gazprom, the natural-gas monopoly that figures prominently in so many
recent tales of intrigue out of Russia. 
Gazprom remains an enduring symbol of what’s wrong with the Russian
economy. In Soviet times, Gazprom was a vast bureaucratic monopoly, riddled
with bottlenecks and badly mismanaging the world’s largest reserves of
natural gas. Under the name of “privatization” in the mid-1990s, Gazprom
shares fell into the hands of former communist bosses, including
Chernomyrdin, who would grow conspicuously wealthy at its helm. Now the
government of President Vladimir Putin has vowed to make Gazprom a beacon
of economic reform. Yet the Gazprom empire keeps popping up in more
ambiguous roles: as a tool used by Putin against his enemies in the media,
as the corporate partner of a shadowy firm that has come out of nowhere to
become the second-largest empire in the Russian gas fields, as an epicenter
of high-level political power struggles. At best, Gazprom is not yet part
of the solution for Russia. “Making Gazprom more efficient isn’t just a gas
problem,” says Jonathan Stern of London’s Royal Institute of International
Studies. “It’s an economic-reform problem.”
How Gazprom became such a pivotal force isn’t very hard to explain.
Russia sits on one third of the world’s natural-gas reserves, and Gazprom
accounts for 93 percent of the gas produced in Russia. Sales of nearly $12
billion accounted for roughly 7 percent of Russia’s GDP last year. The
company’s 298,000 employees and 150,000-kilometer pipeline network funnel
what the Russians lovingly call “blue gold” to customers throughout the
former Soviet Union, and beyond. The nations of Western and Central Europe
get 30 percent of their natural gas from Russia. As a result, Gazprom not
only fuels most of Russian industry and pays 40 percent of government tax
revenues, it is also Russia’s single largest source of hard currency. “The
Russian economy is Gazprom to a large extent,” says analyst Marina Dracheva
of the Energy Intelligence Group in Moscow.
That clout has also made Gazprom a major player in Russian foreign
policy, particularly in the global duels for influence in South and Central
Asia. Whenever Putin travels abroad—during his recent visit to India, for
example—he’s invariably shadowed by Gazprom CEO Rem Vyakhirev. In recent
years Gazprom has beat out U.S. competitors by sealing deals to supply gas
to Turkey through a pipeline under the Black Sea. And lately the company is
even considering plans to build a huge new pipeline to India via
Afghanistan and Pakistan, which would give it far greater weight in the
region’s affairs. 
Like most “natural monopolies” in the Soviet Union, Gazprom was
controlled exclusively by the state for many decades. Then in 1994 Gazprom
bosses pushed through a plan that transferred most company shares to
private hands, which in practice meant their own personal control. Foremost
among those bosses were Vyakhirev and Chernomyrdin, who officially left the
company helm when he became prime minister in 1992—but maintained close
ties to Gazprom. The government was left with a maximum stake of 40 percent
(today it holds 38.3 percent) and even most of that stake was placed in a
trust under Vyakhirev’s control. Small wonder both he and Chernomyrdin are
reputed to be among the wealthiest men in Russia. (A 1996 CIA memorandum
assessed Chernomyrdin’s fortune at $5 billion.) So there are few outside
Gazprom who believe that privatization achieved reform. “The fact that the
state only has 40 percent is a scandal in itself,” says one Moscow
petroleum-industry insider. “The theft has already been done.”
Under the gas-industry bosses, known as gazoviki, Gazprom gained a
reputation for secrecy that was notable even by Russian standards. Until
1995 the company didn’t pay taxes to the Russian government. When it
finally started ponying up, the bill was usually the product of
behind-the-scenes negotiations with the authorities. The talks could not
have been easy, for Gazprom’s books had been fudged for years. The company
first adopted international accounting standards only three years ago, and
it still uses Russian methods as well. In the first half of 1999, the
international books exposed a $2.04 billion loss while the Russian ones
showed a $1.05 billion profit.
Not surprisingly, Putin chose Gazprom as an early target of his reform
campaign. This summer the government beefed up its control over Gazprom, in
part by installing a key Putin aide, Dmitry Medvedev, as the new board
chairman. His first challenge was collecting the bills. Today as in Soviet
times, Gazprom is politically obliged to keep supplying customers even when
they can’t pay. In 1999, by its own optimistic estimate, Gazprom received
only 40 percent of its payments in cash. And deputy chairman Sergei
Dubinin, a former director of the Russian Central Bank, figures it would be
a success to raise that to 60 percent next year. 
Cracking down on the deadbeats is seen as a dangerous idea. What
Gazprom does not collect in cash gets paid in barter or not at all. Some of
the worst debtors are former Soviet republics. Earlier this year Ukrainian
President Leonid Kuchma publicly admitted that his country was stealing gas
from the pipeline because it wasn’t in a position to pay. And the Russian
economy is dependent on artificially low Gazprom prices. “You could cut off
the nonpayers, and you’d have an economic catastrophe,” says analyst Doug
Rohlfs of the Energy Intelligence Group. “You’d have domestic production
falling, whole cities blacked out, whole industries threatened.”
Everywhere in the post-Soviet economy, the barter trade is an
invitation to unorthodox business deals. Some of the oddest involve an
eight-year-old outfit called Itera, which started out brokering obscure
barter trades for Gazprom and rose to become the second-biggest gas company
in Russia, producing 60.5 billion cubic meters last year. Critics claim
that Itera’s success is traceable to the secret holdings of some Gazprom
managers, who allegedly have granted Itera such favors as privileged access
to pipelines and gas fields. Both Itera and Gazprom have denied those
charges, but Putin and his allies realize that hardly settles the matter.
Itera was cloaked in silence until recently, when officials started
inviting reporters to its lavish glass-and-marble skyscraper in Moscow.
Press reps passed out glossy brochures—but could not answer simple
questions about sales or profits, or how Itera grew so fast. In written
response to questions from NEWSWEEK, Gazprom chairman Medvedev vows that
“we should thoroughly study all criticisms that have been directed at Itera.”
Meanwhile Gazprom faces its own critics, who say it is a tool of the
government. Back in 1996, Gazprom invested heavily in Media Most, which
counts Itogi magazine, published in association with NEWSWEEK, among many
holdings. At the time, Boris Yeltsin desperately needed media help in his
election campaign, and businessmen were glad to oblige. Lately, after Media
Most outlets started criticizing Putin, Gazprom started to demand its money
back, and authorities are now accusing Media Most founder Vladimir Gusinsky
of moving assets offshore to put them out of reach. Even some Gazprom
investors are concerned about the appearance of political interference.
“Gazprom should be dealing with gas, and not with political activities,”
says Boris Fyodorov, a shareholder representative on the Gazprom board. 
The twilight of the gazoviki may not be far off. Some radical reformers
in Putin’s government would like to see Gazprom broken up. Many
shareholders are increasingly restless at the company’s failure to live up
to its potential. Western investors are lobbying to ease limits on foreign
ownership. While Moscow remains reluctant to lose control of its “blue
gold”, the clock is running. Gazprom produces less and less each year, due
to rusting pipes and leaky wells. By one estimate, the company needs $50
billion over the next decade just to halt the decay. Putin has already
prepared the departure of Vyakhirev when his contract ends next year,
chipping away at the old guard. But so far, there’s no credible successor,
no new blood to make Gazprom a beacon of reform.


Date: Mon, 16 Oct 2000 
From: "Keith Bush" <KBush@CSIS.ORG> 

Meeting in Washington at Center for Strategic and International Studies
At 3:30 PM on Tuesday, October 17 at CSIS, 1800 K Street, NW, Dr. Ben Slay
of PlanEcon, Inc. will review the current recovery in the Russian economy
and will explore growth prospects in the medium-term. His briefing will be
on the record. No entrance fee, but please register with Jeff Thomas,
E-mail, or telephone: 202-775-3240. 


From: (Ira Straus)
Date: Mon, 16 Oct 2000
Subject: Re: Lieven and the responses

First, thank you for having published in full the analytical study by Anatol 
Lieven. It was logical, illuminating, and important in its conclusions. It 
has implications for all of us Russologists, at least if we do not want our 
ideas and suggestions to be perceived by Russians as malicious in intent.

Considering that he was dealing the fallacies and distortions in the Western 
response to Chechnya, perhaps it was to be expected that there would be a 
number of heated responses. Perhaps it was also to be expected that most of 
them would miss the point. Anti-imperialism is, after all, a matter of 
national ideology in America; it does not go down easily over here when there 
are appeals for more caution and perspective in condemnations of imperialism. 
It would seem that this problem pertains, even when there is simply an appeal 
for a more even-handed anti-imperialism and for being no more unfair to the 
Russians than, say, we were to the British and French. 

The latest response is also disappointing - that we should indeed be harsher 
on Russian imperialism than the other imperialisms, because 

(1) we have bad memories of being subjected to false moral equivalencies and 
question-begging comparativist arguments during the Cold War. (Anatol dealt 
quite well, I'd even say definitively, with this objection in advance, 
acknowledging that there may have been reasons for rejecting a purely 
objective comparativism during the Cold War, but showing that it is a bad 
mistake to allow any prejudicial habits formed in that period to carry over 
to the present),

(2) because Russian imperialism recently, in the Soviet period, did mass 
murders not readily paralleled in the other cases (a fair point, perhaps, but 
balanced by the point that Russia was created by renouncing the Soviet 
Union); and
(3) we ought to be sensitive to a Russian neo-imperialism as we would have 
been to a German neo-imperialism after 1945, or a German failure to 
de-Nazify. It seems to me here that it is sufficient to recall that Russia 
overthrew its totalitarianism and its empire from within, not by 
unconditional surrender and foreign occupation as with Germany in 1945. The 
process is bound to be messier; but that ought to create a presumption in 
favor of having some tolerance and working with reality, since we can't 
dictate as we could have during a military occupation. The more logical 
comparison is not with post-1945 Germany but with Weimar Germany, and with 
the consequences of the harshness of Western treatment of that tottering 
experiment in democracy.

It is intriguing that the latest response along these lines comes from the 
representative of the flagship journal of the British intellectual empire, 
The Economist. It is a very civil response, to be sure, and provides a 
creditable summary of Lieven's argument -- which becomes all the more 
forceful and impressive when summarized with such lucidity.

Yet, when it comes to its own argument, what is one to make of this passage? 
"If we want to say that Russia is not a proper democracy, nor a modern state, 
but rather a disintegrated/disintegrating colonial empire prone to acts of 
extreme brutality, with an ingrained misunderstanding about the horrors of 
its own history, then that's fine by me." 

It would seem that the esteemed writer is saying that "a proper democracy" 
and "a modern state" is one thing, a "colonial empire" and a 
self-misunderstanding country is the opposite thing, and the two pairs of 
categories are mutually exclusive. As if one could not be both! (Nearly every 
modern democracy has in fact been both.)

This hiatus in logic becomes all the more strange when the author proceeds 
implicitly to discriminate between the two - the democracy issue and the 
empire issue - later in his essay. Yet fails to draw the logical conclusion: 
that this distinction serves to nullify the earlier, foundational exclamation 
in his essay.

So, if the logical conclusion hasn't been drawn, I suppose it is necessary to 
belabor the point a bit here. Countries CAN be both empires and democracies 
(and modern states). Great Britain has been both an empire and a modern 
democracy ever since 1689. And it was so deep into self-misunderstanding that 
it didn't even understand that it was a modern democracy until sometime in 
the 19th century. But it remained an empire - and became even more 
imperialist - when it did understand that fact.

Even stranger than the idea that a democracy cannot be an empire is the idea 
that a country cannot be modern or democratic if it harbors deep historical 
self-misunderstandings and blind spots about its past evils. As if there is 
any major country in the world that does not harbor deep misunderstandings of 
its own history, including widespread amnesia about the evils in its past or 
the reasons for them! America certainly harbors such misunderstandings and 
blind spots in abundance, and regarding core moral issues in its history. To 
take only one case in point - ironically pertinent to the present issue: 
Americans habitually talk as if their freedoms came from getting away from 
England and Europe and from having thrown off European colonial rule in 1776. 
This is a serious self-misunderstanding. In any competent comparative survey 
of world history, it is understood that American freedoms came from the 
importatation to (and further development in) America of the achievements of 
Europe and particularly of Britain in in the spheres of political culture and 
political theory, starting with the Magna Carta quite a few centuries before 
the American "revolution" (and even that is starting a bit late, at the point 
after which there is an semi-continuous evolutionary development to modern 
freedom; otherwise one could go back to Roman law or Greek political theory). 
The American anti-imperialist revolution in turn, while opening a door for a 
bit more rapid unencumbered development of those achievements, also - piling 
irony onto irony - opened the door for a more unencumbered settler tyranny 
over the natives and over imported slaves, requiring a second civil war to 
undo the damage of the first (revolutionary) one.

I always expected high-brow British journalists to understand this as a 
matter of course, even if usually being too polite to say it outright to 
Americans. And not to equate democracy with absence of imperial holdings, 
much less with absence of serious historical self-deception.

It is such a fundamental hiatus in logic that leads me to say that I always 
hoped for better - and as a friendly critic and an avid reader I still hope 
for better - from The Economist and its writers. Meanwhile I would like again 
to thank you for running Anatol Lieven's piece, and Anatol for writing it.


The Independent (UK)
16 October 2000
Heart of Asia heads for famine 
By Patrick Cockburn in Dushanbe 

When Alexander the Great advanced into central Asia in 329BC it took his
army five days to cross the three-quarters of a mile wide river Oxus using
inflated skins stuffed with chaff as rafts. 

These days, if Alexander diverted his march a little to the west, his
soldiers would be able to cross the Oxus, now called the Amu Darya, without
getting their feet wet. The river peters out into a series of stagnant
pools 200 miles from the Aral Sea into which it once flowed. 

The worst drought to hit central Asia in three-quarters of a century is
combining with the overuse of water in the cotton fields and the collapse
of the old irrigation system to bring local farmers to brink of starvation. 
In the village of Pobedi, in the parched plains of southern Tajikistan,
close to where Alexander crossed the river, famine is only three months
away. "Even to survive that long my family will have to eat the seed corn
so we will have nothing to plant next year," said Ibot Sottorov as he stood
beside a dry drainage ditch in Pobedi's main street.
The people of Pobedi are traumatised by the speed with which their living
standards have collapsed since the 
break-up of the Soviet Union in 1991. Tajikistan, just north of
Afghanistan, may have been poor compared with 
Russia but only 10 years ago its cotton and grain farmers owned cars and
took holidays in Moscow and on the Black Sea.
Not any more. The 1,100 inhabitants of the village now rely on donkeys for
transport. They have just one 
state-provided car for medical emergencies but it does not always work. "A
family of five bought a poisoned fish and became ill," said Mr Sottorov,
pointing to an abandoned cement-block house. "We could not get them to a
hospital in time so they all died." 

The United Nations confirms that the future of Tajikistan is as bleak as
its inhabitants fear. Ross Mountain, a senior UN official from Geneva,
said: "Nearly three million people out of a population of 6.2 million
already face severe food shortages. Some 80 per cent of the population of
Tajikistan is already below the poverty line. The country will become like

In one respect the situation is worse than that in Somalia. Few people have
heard of Tajikistan or know where it is. 

"It is simply not on the map so far as most people are concerned," Mr
Mountain said. In so far as it is known at all it is as one of the five
independent republics in former Soviet Central Asia, often referred to,
with a sight undercurrent of contempt, by their final syllable as "the
Stans". The UN Office for the Co-ordination of Humanitarian Affairs says
that when it tried to organise a visit by potential aid donors they had to
drop the idea because of lack of interest. 

The most shocking aspect of the impending famine in Tajikistan is the speed
with which a civilisation has collapsed. 

In the Middle East, along the Tigris and the Euphrates, archaeologists
painstakingly investigate the remains of ancient cultures whose irrigation
systems were destroyed by neglect and war over hundreds of years. In
Tajikistan it took only a decade. 

At first sight there seems to be plenty of water from the glaciers of the
Pamir mountains in eastern Tajikistan. But a closer look at the canals
shows that the water is stagnant and the pumps which used to send it
gushing into the fields are broken beyond repair. "The desert is coming
back," said Rakhmeddin Sangakov, a farmer, pointing bitterly to a barren
patch of land not far from Pobedi. "I planted four sacks of seed and my
harvest was just one-and-a-half sacks." 

Mr Sangakov had fled to Afghanistan during the Tajik civil war which raged
between 1992 and 1997 and in many 
ways he is sorry he ever came back. He recalls that his village was sacked
in the first year of the fighting and 150 of its people killed. "The
attackers stole everything," he says. "They had so much loot they filled an
entire train with it." 

On one point most Tajiks are agreed. Life was much better under the Soviet
Union. "Who would ever have expected things to come to this," lamented
Toshmat Hasanov, 78, a war veteran who had fought his way to Berlin in 1945. 

Sitting on a large empty irrigation pipe he says that only four families
are left in his home village of Kumshoq while fifty have fled to the towns
and cities. The people who stayed own fierce dogs to keep away wolves. 

As part of the Soviet Union Tajikistan produced cotton, and food was
largely imported. These days cotton is still grown, often given priority
over food, because profits from its sale go to the government or local

"Villagers who do refuse to pick cotton often have the roof torn off their
houses in retaliation," a local aid official said. "It is like a form of
modern serfdom." In the midst of this ever-increasing misery only one
product produces high profits in Tajikistan. This is heroin from small
laboratories in Afghanistan. It is brought across the Pyandzh and Amu Darya
rivers which border Tajikistan to the south and then smuggled into Russia
and Western Europe. 

Earnings from the trade make up some 35 per cent of Tajikistan's gross
domestic product according to UN officials. 

Tajiks who transport the drug often leave one relative in the hands of the
Afghan producers as a guarantee that they will be paid once the heroin is
sold in Russia. 

It seems impossible that the situation in Tajikistan could get much worse.
But it may be about to do just that. The country is the most landlocked in
the world. The nearest useable port for bringing in grain by train is Riga
on the Baltic Sea. It is unlikely that food aid will arrive before the
villagers of Pobedi begin to starve. 


Moscow Times
October 17, 2000 
Business Survey Places Moscow Last 
By Elizabeth Wolfe
Staff Writer

Easy access to markets, customers and clients; availability of office space 
and qualified staff; convenient international air links f all are factors 
that could make a European city a desirable place to do business. 

And all these factors are found to be lacking in Moscow, according to a new 
survey by international property consultants Healey & Baker, which put the 
capital city in last place f again f in a rating of the best cities to locate 
a business. 

In fact, Moscow has been last or next to last since 1994. 

The annual European cities monitor, conducted in July, is based on responses 
from senior managers and board directors from 504 of Europe's top companies. 
Thirty European cities are on the list, including three others in the former 
Soviet sphere f Prague (21), Warsaw (23) and Budapest (24). 

Names and locations of the interviewees are kept confidential, though it was 
revealed that 41 companies "know Moscow very well" and 88 companies "know 
Moscow fairly well." No Russian companies were questioned for the survey. 

Perhaps most telling is that Moscow was tied for third place with Budapest 
for European cities as a place where companies plan to open a new 
representative office within five years. Warsaw rang in first, with Prague 
right behind. 

"Central and Eastern Europe continues to be a favorite destination for 
companies expanding in Europe," said Healey & Baker research chief David 
Hutchings in a statement. 

Hispanic cities are showing the most improvement, with Madrid moving up to 
No. 7, 10 places ahead of where it was when the survey began in 1990, and 
Latin America scored well for cities where European companies are aiming to 
expand in the next five years. 

The makeup of the top 10 barely altered, with London, Paris and Frankfurt 
again crowning the list. 

Anastassiya Khomentchouk, an assistant in the office group of Stiles & 
Riabokobylko, the Moscow associate of Healey & Baker, said the dismal results 
are not a deterrent for clients hoping to expand here. 

"Most of our clients are already in Moscow so they know the reality," she 

Thirty percent of interviewees named as an essential factor for locating a 
business the "climate created by governments through financial incentives," 
compared with 7 percent last year. 

More than a third of respondents said the Internet will have the greatest 
impact on business over the next 10 years, with European Union enlargement 
coming in second. 

Michael Lange, managing director of Jones Lang LaSalle was cautious about the 
poll's findings. 

Business-friendly is not necessarily analogous to investor-friendly, Lange 

"On the real estate side we're all waiting for investments, and investors 
traditionally do look at slightly different topics [than those presented in 
the survey]," he said. 

Lange also said that polls often rely too much on the opinions of outsiders 
who have not worked in Moscow, yet who absorb a steady stream of negative 
news coming from Russia. 

"Quite often such opinions are þ without necessary acquired in-depth, 
market-background information," he said. 

Moscow ranked last in "quality of life for employees" and "quality of 
telecommunications," and 27th for "freedom from pollution." In a more 
favorable showing, the city ranked No. 11 for "cost of staff." 



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