This Date's Issues: 4592 •
Johnson's Russia Lit
21 October 2000
[Note from David Johnson:
1. Nezavisimaya Gazeta: PUTIN ADVISED TO NATIONALISE THE OIL AND GAS
2. AFP: Critics voice concern as divers begin piercing Kursk hull.
3. Financial Times (UK): Talented young Russians come home to a land
of opportunity: Youngsters who left their homeland vowing never to return
are being lured back by economic change - and big salaries, writes Arkady
4. Interfax: Russian prosecutor pledges tough action on privatization
5. Itar-Tass: Depopulation Mounts in Russia.
6. Katie Jennings: 10th anniversary of collapse of Soviet Union.
7. RFE/RL: Michael Lelyveld, Is Putin Making Progress On Caspian?
8. Radio Ekho Moskvy: Interview with Pavel ASTAKHOV, Edmond Pope's
9. Business Week: Rose Brady, Russia: The Making of a
(Reviews Freeland, Klebnikov, Cohen, and Yeltsin)
10. Moscow Times: Jonas Bernstein, Yesterday's Man? (Reviews
Kelebnikov on Berezovsky)
11. Los Angeles Times: Maura Reynolds, Religions Could Use Divine
Intervention to Overcome Legal Curbs.
12. New York Times editorial: America's Bolshevik. (Gus Hall)
13. Moscow Times: Boris Kagarlitsky, In Search of a New Myth.]
October 20, 2000
[translation from RIA Novosti for personal use only]
PUTIN ADVISED TO NATIONALISE THE OIL AND GAS INDUSTRY
The first session of the "Expert examination" round table
devoted to the fundamental political research conducted by the
Gorbachev-foundation's experts with the financial support of
the Carnegie corporation, was held in the Gorbachev-foundation
on October 19.
The point at issue was prospects for our country's
self-determination in the globalizing world, ways of effecting
market reforms and the role of President Vladimir Putin in
building a civilized, democratic state. Head of the group of
authors that published the report "Russia's self-determination"
Georgy Shakhnazarov noted that current authorities had not yet
provided a clear-cut answer to the question of whether a change
of the Yeltsin regime had taken place or this was just
face-lifting. In his opinion, both the president himself and
Russian society as a whole are still at the crossroads between
democracy and "moderate authoritarianism." The head of state
"has friends, the stuff but does not have a team, whereas a
reformer needs close associates," noted Shakhnazarov. The
corresponding member of the Russian academy of sciences is also
convinced that in the current situation Putin needs to
nationalize the oil and gas industry. In his words, only in
this case one can prevent the flight of capital.
Critics voice concern as divers begin piercing Kursk hull
MOSCOW, Oct 21 (AFP) -
Russian divers began piercing the hull of the wrecked Kursk nuclear submarine
Saturday with a view to recovering the bodies of 118 sailors who died when
the vessel sank in August, a Russian Northern Fleet spokesman said.
Four Russian divers, backed up by two Norwegians, were working to cut through
the vessel's outer armour around its rescue hatch, Vladimir Navrotski said
The Norwegian divers would not work directly on the Kursk, he said, adding
that a first attempt to pierce the hull was unsuccessful but that the divers
would try again later Saturday.
"Seven openings will be made, and divers will not enter the submarine before
Tuesday," Navrotski said.
But some observers doubt the real aim of the operation, claiming it will be
impossible to raise the bodies, and that authorities are more interested in
recovering documents from the sunken vessel and assessing the reasons for the
Investigators hope that documents from the command area of the sub will throw
some light on the causes of the accident, according to the Nezavissimaya
Gazeta newspaper, quoting an un-named source.
"The recovery of the bodies is no more than an element of the operation, but
the main aim is to discover the secret of the sinking," the paper said.
The Russian authorities themselves acknowledge that the operation will be
"difficult and dangerous", and according to the company Rubin which built the
Kursk, divers can only hope to raise between 20 and 30 percent of the bodies.
The Segodnia newspaper said Saturday that the operation to raise the bodies
was useless, quoting an un-named source close to the inquiry commission
headed by Russian Deputy Prime Minister Ilia Klebanov.
"Simply talking about sending men inside (the submarine) is madness," the
source said, adding that latest images of the Kursk showed catastrophic
damage and that the vessel was deformed and covered in mud.
The damage was far greater than has so far been admitted and rules out all
the current hypotheses as to what caused the sinking, the same source said.
"Problems should not be created around the operation, nor should it be given
poltical connotations," Igor Dygalo, head of press for the Russian Navy told
Moscow's Echo radio, though he failed to deny the criticisms.
The Kursk has been lying on the bed of the Barents Sea in 108 metres (355
feet) of water since August 12, when the vessel sank after a massive
explosion, equivalent to five tonnes of dynamite, ripped through the hull.
More than two months after the sinking, which has still to be explained, the
Norwegian Regalia diving platform was positioned over the wreck on Friday.
Eighteen Russian, Norwegian and British divers will take part in the grisly
recovery which will begin in earnest on Tuesday or Wednesday, according to
Fair weather conditions and and remote control measurements of radioactivity
around the hull should ensure a safe working environment for the divers,
However, weather conditions may deteriorate by next week, further hampering
an operation which has already been postponed once due to bad weather.
Moscow has still failed to issue an official explanation as to what happened
to the Kursk, although Western analysts suggest that a fire broke out in the
craft's ammunition store, which quickly set off stocked torpedoes and
The tragedy shocked the nation and led to a storm of criticism of Russian
President Vladimir Putin's handling of the crisis -- he was widely condemned
for staying on vacation as the drama unfolded.
Putin later visited the Kursk's grieving families, promising to recover the
bodies and offering promises of financial assistance to the families.
A new scandal erupted this week when Irina Lyachina, the wife of the craft's
captain Gennady, alleged in an open letter that regional officials were
embezzling charity donations intended for families of Kursk victims.
But on Saturday, Russian Deputy Prime Minister Valentina Matviyenko denied
via ITAR-TASS that a compensation fund for Kursk victims families had been
"I don't think there has been serious abuse nor have the rules been broken
regarding the distribution of money from the fund set up in the Murmansk
area," Matviyenko said.
Financial Times (UK)
October 21, 2000
Talented young Russians come home to a land of opportunity: Youngsters who
left their homeland vowing never to return are being lured back by economic
change - and big salaries, writes Arkady Ostrovsky:
When Alexei Yevgenyev left Russia 10 years ago and went to study in the US
he had no intention of coming back. He was young, Jewish and the son of an
intellectual family that had been treated with distrust by the old
communist nomenklatura. He saw little to keep him at home.
Mr Yevgenyev is now 28 and a US citizen, with a mathematics degree from
City University, New York, and an MBA from Columbia. But his career has
taken him to a small industrial town some 650km north-east of Moscow, where
he is a senior manager at Severstal, the country's main steel producer.
Every weekend he flies back to Moscow, where he has a flat and owns an art
"My opportunities here are far greater than they were in the US," he says.
"There I would have waited many years to become a top manager in a top US
company. Here, the future was offered to me now."
According to Olga Kryshtanovskaya, a sociologist who heads the Moscow-
based Institute for Applied Politics, Mr Yevgenyev's odyssey is part of a
trend. While there are no firm figures, she says new opportunities in
Russia are enticing back talented young business people who left in the
"These are highly skilled and well educated young professionals, mainly in
business, who have realised that they are valued by big companies in Russia
and that they can make astonishing careers in this country."
Illustrating the trend is a website just opened by a group of young
Russians who work for IBS, the country's largest information technology
group. The site is called WelcomeHome.Ru, but its creators say they may
rename it Russians-GoHome.Ru. The site offers advice to those who have
decided to return or are thinking about it.
"Life in Russia is becoming more normal," the website reads. "It is
possible to live here, make a career and bring up children. Many of those
who had left have come home. We are among them."
Kirill Dmitriev and Peter Panov, who created the site, say their aim is
simply to share their own experiences and help returnees readjust to
Mr Dmitriev, 25, left his native Ukraine when he was 17 with a scholarship
to study economics at Stanford University. From there he headed to Harvard
Business School to study for an MBA, graduating in the top 5 per cent of
After that came a job offer from Goldman Sachs in New York, but he decided
to return to Russia to work for IBS, where he builds electronic trading
platforms and earns an annual salary of about Dollars 100,000.
His friend and business partner, Mr Panov, a grandson of a general shot by
Stalin, received his MBA from Warton Business School and worked for a
high-tech company in San Diego before returning to Moscow.
Mr Yevgenyev, Mr Dmitriev and Mr Panov belong to a new generation of
Russian business people that has little in common with the country's
business tycoons, the "oligarchs" who made their careers under Soviet rule
before usurping power and money after the collapse of the Soviet Union. Nor
are they the children of the Soviet-era elite.
Instead, all three come from families of the Russian intelligentsia - the
teachers, scientists, engineers and artists who have traditionally survived
on the fringe of political power in Russia.
Against the background of gradual economic change, and with business under
pressure to adopt western standards of governance, the three young men feel
their time has come. "The time of asset grabbing is over, now it is time to
create value," says Mr Panov.
They believe that the new economy in particular, which is less criminalised
than other sectors of Russian business, will help their country gain
Yet few of those who have come back to Russia have done so for purely
"We came back because we feel there is a market demand for us here," says
He estimates that at least 1m people have left the country to study and
live abroad since 1991 and that a quarter of them could come back, if the
government of Vladimir Putin created the right conditions. "We have made
our choice; the ball is in Mr Putin's court," he says.
Russian prosecutor pledges tough action on privatization misdeeds
Moscow, 20th October: The Russian Prosecutor-General's Office intends to
search out any legal violations committed in the course of the
privatization of major state companies and state property and to recover
material damages caused thereby.
"Ways to recover the material damage inflicted on the state in holding a
'loans-for-shares' auction at the Norilsk Nickel company are being
considered at the moment," First Deputy Prosecutor-General Yuriy Biryukov
said when speaking at the State Duma on Friday [20th October]. A similar
situation also affects the Tyumen oil company and a number of other state
companies, he noted.
The Prosecutor-General's Office once had to cease action against commercial
structures and a number of state officials involved in the violations
during the privatization of the company due to an amnesty, Biryukov said.
"The suit [brought by] the Moscow prosecutor's office against the Norilsk
Nickel management on recovering damages will not resolve the problem," he
The prosecution official also spoke in favour of introducing amendments to
the current law on privatization, saying that it is unacceptable that
"privatization issues are farmed out to the Ministry of Property
Relations". "We must jointly prevent the selling of state property for a
song," he said.
On the subject of relations with the Russian Audit Chamber, Biryukov
pointed out that the Prosecutor-General's Office is not always in a
position to initiate criminal cases on the former's materials, as there are
not always enough grounds to do so. In particular, Biryukov mentioned the
situation surrounding the privatization of aviation enterprise Aviastar. On
the other hand, certain materials received from the Audit Chamber are filed
when criminal cases are investigated. Biryukov recalled in this connection
the so-called Russkoye Video state company case, in which R500,000 worth of
damage to the state has already been recovered and the criminal prosecution
of company head Dmitriy Rozhdestvenskiy is under way.
The Prosecutor-General's Office is also examining materials concerning
Unified Energy System of Russia [UES], the country's electricity monopoly,
Depopulation mounts in Russia
Moscow, 20th October: Only three regions of Russia, Tyumen Region, [the
Republic of] Dagestan and [the Republic of] Ingushetia, have a natural and
migration growth of the population.
Much of the population growth in Dagestan and Ingushetia results from
refugees, so they "cannot be regarded as favourable from the migration
point of view", head of the Russian Labour [and Social Development]
Ministry's demographic policy department Olga Samarina said at a news
conference on Friday [20th October].
The whole territory of Russia can be divided into four types by demographic
situation. The first type is 13 regions, mostly in central Russia, where
the death rate is higher than the birth rate and people are moving away to
The second type is mostly northern regions of Russia, where a large outflow
of residents is not compensated by the birth rate.
Moscow and about 50 regions of middle Russia and the central Black Earth
zone are the third type, where an influx of the population cannot
compensate for the death rate.
Dagestan, Ingushetia and the Tyumen Region make up the fourth type.
"Depopulation is mounting in Russia," speakers at the news conference said.
The stable decline of the population began in 1986, the Soviet period,
[and] 1992 started a lengthy period of de-population. Since then the death
rate has been stably high - 700,000-900,000 people per annum.
Date: 19 Oct 2000
From: <email@example.com> Katie Jennings
Subject: 10th anniversary of collapse
The ten year anniversary of the collapse of the Soviet Union offers an
opportunity to examine the extent to which U.S. policy has failed to move
beyond Cold War thinking. The Institute for Policy Studies is in the
initial planning phases for an anniversary event which would focus on the
U.S.'s choice to spend massive amounts to increase its military
preeminence, and meager amounts to help its former enemy to disarm and to
convert its military capacity to producing desperately needed consumer
goods for its people. We are particularly interested in knowing whether
events featuring similar themes are being planned by other organizations.
For more information, please contact Miriam Pemberton or Katie Jennings at
the Institute for Policy Studies, tel. (202) 234-9382.
Russia: Is Putin Making Progress On Caspian?
By Michael Lelyveld
Russian President Vladimir Putin has been mounting a new diplomatic effort
this month to reach an agreement on dividing the Caspian Sea. The latest
reaction from Iranian President Mohammed Khatami may be a sign that Putin is
making progress. Correspondent Michael Lelyveld reports.
Boston, 20 October 2000 (RFE/RL) -- Russian President Vladimir Putin is
pursuing a broad and increasingly successful campaign to resolve the issue of
dividing Caspian Sea resources, paying careful attention to relations with
In the past week, high Russian and Iranian officials have exchanged unusual
simultaneous visits. While Russian Security Council Secretary Sergei Ivanov
traveled to Tehran, Iranian Oil Minister Bijan-Namdar Zanganeh was received
by officials in Moscow.
The meetings in Tehran produced a series of positive statements about the
entire agenda of political and economic issues in the Russian-Iranian
relationship. Among the topics were the war in Afghanistan, construction of
the Bushehr nuclear power plant, and Iranian production of a Russian-designed
passenger plane, said the official Iranian news agency IRNA.
In Moscow, Zanganeh covered much of the same ground in his role as
co-chairman of the Iran-Russia Joint Economic Commission. Both sets of
meetings appear to be leading to an even higher-level exchange involving a
visit to Moscow by Iranian President Mohammed Khatami next year.
Typically, missions like those of last week accomplish little, other than to
reaffirm a relationship by stressing common positions and glossing over
rifts. Khatami was diplomatic in an apparent reference to at least one such
difference over the war in Chechnya, saying that problems in Central Asia and
the Caucasus can be settled by "avoiding use of force."
But this series of visits also seems to have smoothed over another major
dispute on a formula for legally dividing the Caspian. At an appearance with
Ivanov, Khatami called the Iranian and Russian positions on the Caspian
"close." If that turns out to be the case, it could mark a sudden change and
a diplomatic breakthrough for Putin.
As recently as three weeks ago, Russian and Iranian officials were aiming
statements at each other that showed how far apart they were. Late last
month, Putin's Caspian envoy Viktor Kalyuzhny said that Iran's demand for an
equal 20 percent share of the Caspian was "practically impossible" and would
"never happen." An Iranian Foreign Ministry official fired back that, in that
case, Russia could divide a 50 percent Soviet share of the Caspian with the
three other shoreline states of the CIS.
But since Kalyuzhny's failed efforts over the summer, Putin seems to have
followed a more careful step-by-step approach to promoting the Russian
formula, which calls for dividing the seabed but not the water or its surface
into national sectors. In addition, Russia would settle bilateral claims to
disputed oilfields through joint control.
This month, Putin won the strong endorsement of Kazakhstan for the Russian
formula after including in a series of agreements that included the creation
the Eurasian Economic Community.
Last week, Azerbaijani Foreign Minister Vilayat Guliev told reporters in
Moscow that Baku's position on the Caspian question is now "in harmony" with
Russia. The statement came shortly after an announcement that Putin would
travel to Azerbaijan in the first visit by a Russian president since the
As with Kazakhstan, Putin appears to have wrapped his Caspian proposals to
Iran in a package of agreements. In Moscow, Zanganeh concluded a memorandum
on cooperation with Russia for projects in power generation and industry.
According to Russian officials quoted by Interfax, the agreement includes
construction and Russian financing of a new thermal power plant in Iran, as
well as development of Caspian oil and gas. The deal suggests that Russia may
be trying to compensate Iran for concessions on its Caspian stand.
If an agreement with Iran is "close," as Khatami said, it could leave
Turkmenistan as the last holdout. A week ago, Putin called Turkmenistan
President Saparmurat Niyazov to discuss the division issue and arrange a
summit of Caspian nations. But no agreement was reported. Turkmenistan has
been highly critical of Kalyuzhny's efforts and has sided with Iran.
But if Iran has been persuaded to compromise on the Russian position,
Turkmenistan may find that its own stand will become untenable. But as the
biggest buyer of Turkmen gas, Russia also has other possible agreements in
which it could wrap a Caspian settlement with Niyazov. If this is indeed
Putin's strategy, he appears to have stepped up the pace of Russia's Caspian
initiative this month.
October 20, 2000
Radio Ekho Moskvy
Interview with Pavel ASTAKHOV, Edmond Pope's lawyer
By Olga Bychkova
[translation for personal use only]
O.B. Today, we will discuss one of today's important news: the trial of an
American businessman, Edmond Pope, who is being accused of spying and whose
case is to be considered by the Moscow City Court. The next session of the
Court will be held on Monday. And now we are talking to Pavel Astakhov,
Edmond Pope's defender.
Today, the defense issued several requests to the court, most of which were
denied. Now, Edmond Pope is supposed to submit his declaration to the court
in response to the accusation of spying. Pavel, what will your client's
declaration be about?
P.A. Yes, you are right, the majority of our solicitations were denied, and
we believe that these denials were totally groundless. Some of our requests
were purely technical, in particular, we asked for the conduct of audio- and
videotaping of the court and investigation procedures. The reason is, we
don't trust the interpreter, and we spoke about this at the previous session
of the court.
O.B. You don't trust him because he is an FSB employee?
P.A. Yes, this is correct. He is not just an FSB employee, but an employee
of the FSB investigation directorate which conducted the preliminary
investigation of this case. Today, Edmond Pope's escort guard was replaced -
now he is being accompanied not by the police, but by the FSB employees. And
our interpreter was openly socializing with these FSB escort guards,
demonstrating their friendship, so to speak. For this reason, we don't trust
him and we asked to replace him on these grounds. Since this solicitation
was denied, we said, OK, let us register all the inaccuracies in
translation, because there are inaccuracies here and there, and let us
register this by audio and videotaping, to avoid conflicts. This was denied.
Then, there was a request of a purely technical nature: we asked to add some
documents to the official file, because these documents are regularly
referred to in the case: in particular, even the investigator refers in his
indictment to certain presidential decrees. These are two secret decrees,
and there is also a government resolution which is also secret, we did not
see them in the official case file. It is necessary for us to familiarize
ourselves with these documents, because, of course, we trust the
investigator but not to such an extent as letting him reproduce these
decrees and resolutions in his own words. We want to see them ourselves. Our
defense of Edmond Pope is built upon this position. We were denied to see
O.B. But what will Edmond Pope say at the next session?
P.A. With regard to the statement that he is preparing, we have to make a
certain caveat. Regrettably, in the course of the three hours that we were
given by the previous session of the court to educate him about Russian
criminal procedures, Edmond Pope, alas, failed to understand the difference
between the Russian and the American law. He is guided by his understanding
of the process, of the American process. Since he is entitled for a
statement after the indictment is pronounced, he prepares to present in this
statement his position and his arguments as a retort to the official
indictment. And since he has truly serious health problems, his vision has
deteriorated, and this inhibits him to work fruitfully on this statement. So
he asked for some more time to prepare the statement. He will read it on
Monday, and then submit it in writing to the court. In fact, this will be a
rebuke to the official indictment.
O.B. What are the further plans of the defense? What shall you do, if all
your further steps will be likewise rejected by the court?
P.A. While our criminal procedural law does not allow to appeal the
decisions to reject our solicitations, we are nevertheless entitled to
submit these same requests repeatedly over the course of the entire
investigation and trial. And we will be putting the court in a condition in
which it will be impossible to proceed with this case without satisfying our
requests. For example, already today the court found itself exactly in such
a situation, when we were determining the order of the examination of
evidence in the case. We said that the investigation should start by
interrogating Prof. Anatoly Babkin, whose testimony is the basis for the
accusation and indictment, 90% of it is based on his testimony. The court
spent half an hour trying to figure out what to do, given that it had
refused our request to summon Mr.Babkin as a witness last time. So our
request to summon Mr.Babkin was denied yet again, and the court decided to
begin with the interrogation of Mr. Pope.
O.B. Will the entire trial be conducted behind closed doors?
P.A. Absolutely. It was declared that this court hearing will be closed for
the public, on the ground of protection of secrets.
October 30, 2000
Russia: The Making of a Kleptocracy
By ROSE BRADY
Brady, author of Kapitalizm: Russia's Struggle to Free Its Economy, was
Moscow bureau chief from 1989-93.
SALE OF THE CENTURY
By Chrystia Freeland
Crown Business -- 389pp -- $27.50
GODFATHER OF THE KREMLIN
By Paul Klebnikov
Harcourt -- 400pp -- $28
By Stephen F. Cohen
Norton -- 304pp -- $21.95
By Boris N. Yeltsin
PublicAffairs -- 432pp -- $26
When Boris N. Yeltsin resigned from his position as Russian President last
New Year's Eve, he shocked the world. But not a few Russian specialists
around the globe breathed a sigh of relief. The resignation put an end to the
uncertainty that had marked the erratic and ailing President's second term in
office since 1996. It also signaled the closing of an era--the first phase in
Russia's transition from a communist superpower to a much-diminished state
with its own version of capitalism and democracy. With Yeltsin out and his
successor--former KGB spy Vladimir V. Putin--known, it suddenly became
simpler to reflect on and write about Russia's experience in the 1990s.
Now, the first books analyzing the Yeltsin era are hitting stores.
Chrystia Freeland's Sale of the Century: Russia's Wild Ride From Communism to
Capitalism and Paul Klebnikov's Godfather of the Kremlin: Boris Berezovsky
and the Looting of Russia are both fascinating, well-written narratives of
how a corrupt, oligarchic capitalist system has evolved since Yeltsin and his
team first launched economic reforms in 1992. Stephen F. Cohen's Failed
Crusade: America and the Tragedy of Post-Communist Russia is a shrill
indictment of U.S. policy toward Russia over the past decade--what Cohen
calls ``the worst American foreign policy disaster since Vietnam.'' And Boris
Yeltsin's absorbing new memoir, Midnight Diaries, draws on notes he made
during his second term while suffering from insomnia. It is, as he puts it,
``his personal history as the first democratically elected president of
All four books are worth reading, especially by those who follow events in
Russia. Each is critical of the past decade. Cohen, a longtime observer of
the ex-Soviet Union, is the harshest judge, but even Yeltsin admits mistakes.
Klebnikov calls Yeltsin's legacy ``almost unmitigated failure.'' Freeland
concludes that ``Russia was robbed in broad daylight, by businessmen who
broke no laws, assisted by the West's best friends in the Kremlin--the young
For the best and broadest overview, turn to Freeland. As Moscow bureau
chief for the Financial Times in the mid-1990s, she closely followed the two
leading groups of protagonists in Russia's story--the ``young reformers'' and
the ``oligarchs,'' or business tycoons who came to wield powerful influence
in the Kremlin. The reformers started out idealistic, Freeland says, but they
were ``too fanatical'' and ``believed the end justifies the means.''
That's how they came to strike a ``Faustian bargain,'' as Freeland calls
it, with powerful Russian business tycoons. The reformers permitted the
latter to win control of huge chunks of industry in exchange for
embarrassingly cheap loans to the state. That ensured the tycoons' support
for Yeltsin, which was key to his 1996 reelection.
But it also marked a betrayal of the reformers' original goals. They
wanted to create an open economy with millions of private shareholders and a
flourishing middle class. But because of loans-for-shares, Russia ended up
with a ``corrupt, distorted, and inefficient market economy,'' Freeland
writes. That economy collapsed when Russia defaulted on billions in debt in
August, 1998. Freeland captures officials' near-hysteria at the time: Central
Bank chief Sergei Dubinin, she writes, was found ``laughing uncontrollably''
in his office.
Such details make Sale of the Century stand out as a work of reporting.
But the book disappoints in another way: Freeland doesn't use footnotes,
choosing instead to list where she got her information in a general way. This
approach sometimes undermines the credibility of her data.
Klebnikov's Godfather of the Kremlin, by contrast, is well-documented.
Klebnikov, who covers Russia for Forbes magazine, taps intelligence sources
as well as interviews with the tycoons and their enemies, getting them to
spill the dirt on each other. The result is a colorful--and, I would guess,
accurate--portrait of the corrupt world of Russian politics and business.
Klebnikov's main subject is Russia's most prominent crony
capitalist--Boris Berezovsky, the mathematician-turned-tycoon who insinuated
himself into the top echelons of power. Klebnikov lays out Berezovsky's modus
operandi: He doesn't create wealth. He destroys it by looting virtually every
business he touches. These include Aeroflot, Russia's national airline, and
ORT, the Russian public-television channel. Klebnikov presents Berezovsky as
a power-hungry, manipulative, ruthless person. ``Berezovsky's success was due
in part to his relationship with some of Russia's strongest gangsters,'' the
author writes. ``He was a man of big ideas, drawing up a grand strategy and
leaving his subordinates and intermediaries to deal with the execution.''
Klebnikov criticizes the Clinton Administration for failing to recognize
that the Yeltsin regime was a ``kleptocracy.'' In Failed Crusade, Stephen F.
Cohen comes to a similar conclusion. A New York University professor, Cohen
accuses the U.S. Establishment of engaging in a ``failed crusade'' to
essentially turn Russia into America by forcing unworkable formulas on its
shattered economy. Cohen takes on everyone from experts at Harvard University
to the U.S. media, including BUSINESS WEEK. His conclusion: The U.S. needs a
new policy ``aimed at the stabilization of Russia and its many devices of
mass destruction.'' That's a worthy goal, but Cohen's suggestions--including
an economic overhaul involving renationalization of industries and
restoration of price controls, all of which could cost $500 billion--seem
Failed Crusade will likely appeal more to policy wonks than to general
readers. Yeltsin's Midnight Diaries will also be enjoyed most by those who
already know Russia. That's because the ex-President doesn't bother to
explain who is who, and the book's editors offer only a little background
information at the start of each chapter. Still, students of Russia will find
it interesting to compare Yeltsin's account of events with those presented in
Freeland's and Klebnikov's books. At times, Yeltsin comes across as nave. On
one point, however, he is adamant: He claims he never asked Putin, his
successor, to grant him immunity from prosecution of any crimes.
Yeltsin ends his memoir by quoting his resignation speech. ``I did
everything I could. A new generation is coming that will do it bigger and
better,'' he writes. Of course, he means Putin. Neither Freeland, Klebnikov,
Cohen, nor Yeltsin say what they expect from the new leader. For such
predictions, readers will have to turn to other works. But for those looking
to understand the challenges that Putin faces--the legacy of Yeltsin--these
four volumes have much to offer.
October 21, 2000
By Jonas Bernstein
Boris Berezovsky is yesterday's man, at least according to President Vladimir
Putin's propagandists and some eminent Russia-watchers. The once-powerful
master of Kremlin intrigue, they insist, is being driven from the corridors
of power. Maybe so, but then why was Nikolai Volkov, who was heading an
investigation by the Prosecutor General's Office into whether
Berezovsky-linked firms massively looted the state airline Aeroflot, fired in
August, shortly after returning from Switzerland with crate-loads of evidence
pertaining to the case? The fact that this question cannot be answered
conclusively suggests that Berezovsky's reputation as a latter-day Rasputin
has some life left in it. It also makes Godfather of the Kremlin: Boris
Berezovsky and the Looting of Russia, written by Forbes magazine senior
editor Paul Klebnikov, a very timely work.
The core of Klebnikov's book is an account of how Berezovsky took over three
state enterprises f the AvtoVAZ car manufacturer, Sibneft and Aeroflot f by
"privatizing" their managers and financial flows. The author details how
Berezovsky, after making top AvtoVAZ executives principal shareholders in his
own LogoVAZ company, set about sucking the ailing car-maker dry. LogoVAZ won
the right to purchase Ladas from AvtoVAZ at a discounted for-export price
while selling them at home for the considerably higher domestic price.
Berezovsky, with the help of Alexander Voloshin (currently President Vladimir
Putin's chief of staff), cooked up AVVA, a scheme to build a "people's car,"
and won lucrative tax breaks and customs duty exemptions from then-President
Boris Yeltsin. AVVA sold bonds, promising their holders financial returns and
the chance to participate in a lottery for large discounts on AvtoVAZ cars.
The "people's car," however, never materialized, nor did the promised returns
or lottery. Berezovsky, according to Klebnikov, used part of AVVA's profits
to buy a 34 percent stake in AvtoVAZ.
Berezovsky and his associates, including AvtoVAZ financial chief Nikolai
Glushkov and LogoVAZ co-founder Badri Patarkatsishvili, turned their
attention to Aeroflot. Having already set up a network of Swiss companies to
"manage" AvtoVAZ's finances, they somehow convinced Russia's state airline to
let them work similar miracles on its behalf. It helped, of course, that
Glushkov became Aeroflot's first deputy general director in 1995 and that
Valery Okulov, Yeltsin's son-in-law, became its general director two years
later. In the end, writes Klebnikov, hundreds of millions of dollars of
Aeroflot's revenues wound up in the Swiss front companies' offshore
subsidiaries or simply disappeared. The Swiss authorities eventually began
investigating two of the front companies, Andava and Forus Services, for
money laundering, and Russian prosecutors also began a probe into Aeroflot.
The Swiss case is ongoing.
Klebnikov mentions people who died prematurely after colliding with
Berezovsky's interests. One of them was Vladislav Listyev, who was murdered
in 1995 after being named head of Russian Public Television, ORT, the
partially-privatized incarnation of the state's main television channel
which, Klebnikov writes, was created under Berezovsky's supervision. The
author, citing the Moscow anti-organized crime squad, suggests that Listyev
was killed for announcing a six-month moratorium on advertising on the new
channel, which was monopolized by Berezovsky and advertising mogul Sergei
Lisovsky. After Klebnikov first aired this allegation in the Dec. 30, 1996,
issue of Forbes, Berezovsky announced he was suing the magazine. That suit is
In researching Berezovsky's empire, Klebnikov did a whole lot of digging. The
result is a first-rate piece of investigative journalism. Having said that,
"Godfather of the Kremlin" tries to be something more: It is, so to speak, an
investigation wrapped inside a history. In this, however, it is not fully
The book, for example, includes descriptions of the failed August 1991 putsch
and October 1993 parliamentary rebellion. These accounts add little to those
already written. Likewise, Klebnikov's discussion of Russian organized crime
and official corruption during the late perestroika and the early Yeltsin
years treads ground already covered. There are also a few significant errors
in the historical narrative. Klebnikov writes, for example, that St.
Petersburg under Mayor Anatoly Sobchak and his deputy, Vladimir Putin, "was
largely spared the violence of the mob war and other excesses of the Yeltsin
era." In early 1994, I interviewed top St. Petersburg police officials about
two unrelated incidents of gang violence that had occurred only several weeks
apart. Ten people were shot to death in one incident, seven in the other.
"Godfather of the Kremlin" also includes more general commentary on Russian
economic reform. Klebnikov's bottom line is that it has been a scam,
enriching a small coterie of insiders at the expense of the general
population. He is right, and it is good that there is now another book to
counter-balance works like Anders Áslund's 1994 "How Russia Became a Market
Economy" and "The Coming Russian Boom," written by Richard Layard and John
Parker and published in 1996, just two years before Russia's financial
collapse. But even here Klebnikov's analysis is flawed. Simply put, he seems
to believe that some oligarchs are better than others. This leads to sins of
omission. LUKoil's Vagit Alekperov, for example, is "astute and decisive" and
"the Russian Rockefeller." Klebnikov writes: "Whatever methods he had used in
accumulating his empire, there was no denying that Alekperov was a capable
industrialist." Absent is any reference to Izvestia's May 1997 profile of
LUKoil, which detailed allegations linking top LUKoil officials to organized
Klebnikov examines Anatoly Chubais' key role in privatization and explains
how one of Chubais' allies, Uneximbank founder Vladimir Potanin, and Boris
Jordan, Potanin's American partner, cooked up the ultimate insider deal f the
loans-for-shares scheme. But the author also calls Potanin, a Berezovsky
rival, "smart, sensible and efficient," while neglecting to mention the 1997
MiG scandal, in which several banks, including Uneximbank affiliate MFK, were
accused of misappropriating $237 million in state funds earmarked to build
MiG fighters to sell to India. The Prosecutor General's Office summoned
Potanin for questioning in the MiG case, but it was swept under the rug. The
MiG scandal was widely reported in Russian newspapers, but Klebnikov, as he
notes in his preface, "tried to avoid relying on newspaper sources." Yet he
does not hesitate to use a dossier on Berezovsky compiled by Uneximbank's
"analytical service." (Perhaps he should have asked Berezovsky's private
security service, Atoll, for its dossier on Potanin. Fair is fair.) And while
he rightly sees Chubais' voucher privatization as having been an orgy of
insider dealing, he apparently did not ask Jordan how he acquired 17 million
vouchers for CS First Boston.
Klebnikov also appears to have a soft spot for certain generals, including
Alexander Korzhakov, the former head of Yeltsin's security service. Yet the
reader gets only a vague sense that Berezovsky and Korzhakov were on the same
team before the latter's ouster from the Kremlin in June 1996. The fact that
Korzhakov helped Berezovsky set up the Atoll security agency is mentioned
only in passing. And while Klebnikov discusses the eavesdropped conversation
with National Sports Fund head Boris Fyodorov, which Berezovsky set up in
order to undermine Korzhakov, the author leaves out some of its juicier
details, like Fyodorov's description of a business meeting between Korzhakov
and two mafiosi.
The author's contention that Alexander Rutskoi, Yeltsin's former vice
president, "retained some scruples" and thus rebelled against the corruption
of Yeltsin's cronies, is a stretch. While Klebnikov mentions how Viktor
Barannikov, Yeltsin's security minister, was fired in 1993 for his corrupt
links to the Canadian company Seabeco, he fails to mention the allegations
that Rutskoi also had a personal financial interest in Seabeco. Neither does
Klebnikov note that after leading the October 1993 parliamentary rebellion,
Rutskoi was born again as a Kremlin loyalist, became Kursk's governor and
proceeded to build in that region what the monthly Sovershenno Sekretno would
call "half-criminal socialism."
Klebnikov cites Alexander Lebed extensively, using the general's pithy quote
about Berezovsky being "the apotheosis of sleaziness on the state level" for
the book's dust jacket. But the author neglects to mention that Lebed, after
becoming Krasnoyarsk governor, called Berezovsky a "political partner" and
denounced the April 1999 order for Berezovsky's arrest as a "political act"
reflecting the "agony" of then-Prime Minister Yevgeny Primakov's government.
In Russia's new nomenklatura, like its old one, there are no permanent
friends or allies, and no guys in white hats.
"Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia," by
Paul Klebnikov. 400 pages. Harcourt. $28.
Jonas Bernstein is a senior analyst with the Jamestown Foundation, a
Washington-based think tank.
Los Angeles Times
October 21, 2000
Religions Could Use Divine Intervention to Overcome Legal Curbs
By MAURA REYNOLDS, Times Staff Writer
MOSCOW--Of all the proposals one might make to a Roman Catholic bishop, a
proposal of marriage is probably the least common and most audacious.
But in Russia, that is precisely what local authorities have suggested
to two Catholic prelates trying to obtain permission to live and work in the
former atheist superpower.
"They explained to me that if a priest marries a Russian girl, there's
no problem," Bishop Jerzy Mazur said by telephone from Irkutsk, seat of his
diocese, which covers nearly 4,000 square miles of eastern Siberia. "I find
there's a lot of misunderstanding about the Catholic Church."
That's putting it mildly. Nearly nine years after the collapse of the
Soviet Union, Russia is still struggling to come to terms with religion,
especially imports like Protestantism and Catholicism.
Although Russia's Constitution guarantees freedom of faith, churches and
other religious groups still have to register with the authorities. And under
Russian law, a religious vocation is not considered a good enough reason to
grant a bishop permanent residence or citizenship.
That leaves Polish-born Mazur and a second prelate, Bishop Clemens
Pickel, a German citizen, trapped in an eddy of Russian law.
"Russian law says [the bishop] needs to be a permanent resident to be
registered as the head of a religious organization, but [local officials] say
the only way to become a permanent resident is to marry a Russian," explained
Deacon Marcus Nowotny, an aide to Pickel.
He added that many Russians do not understand that while marriage is an
option for Orthodox clergy, it isn't for their Catholic counterparts.
In 1997, after reports that dangerous cults were gaining thousands of
adherents, the Russian parliament passed a new law on religion. Since most
Russians are unfamiliar with non-Orthodox faiths and can't tell Methodists
from Moonies, the law was designed to protect them by regulating religious
organizations, especially foreign ones. By the end of this year, all
religious groups in Russia must register with authorities or find themselves
without many legal rights.
Of the Catholic Church's four dioceses, only two have been
registered--Moscow and Novosibirsk. Both are headed by bishops born in the
territory of the former Soviet Union--Belarus and Kazakhstan,
respectively--and they qualify for Russian citizenship.
Mazur and Pickel, because they were born outside the former Soviet
Union, don't qualify for citizenship or permanent residence. And so unless
parliament or President Vladimir V. Putin intervenes, they may be unable to
register their dioceses.
Still, as with so many other laws in Russia, the religion law is loosely
written, and local authorities have a lot of room to bend the rules if they
"The Catholic Church would be in real trouble if the law were strictly
enforced," said Lawrence Uzzell, director of the Oxford-based Keston
Institute, which monitors freedom of religion in the former Soviet Union.
"Thank God it's not."
Before the 1917 Russian Revolution, there were more than 300 Catholic
parishes in Russia. There are still about 3 million Russians of Roman
Catholic ancestry, many of them descendants of Poles, Germans or Lithuanians
who lived in the territory of the Russian empire for centuries. During World
War II, Stalin exiled thousands of them to remote regions of Russia for fear
they would side with the Nazis.
At the time of the Soviet collapse, Russia was left with only two small
parishes--Moscow and St. Petersburg--which served mainly diplomats and other
foreign residents. Since then, more than 100 local parishes have been
reorganized throughout Russia.
That rapid growth has caused the Russian Orthodox Church to complain
more than once that Catholics are "proselytizing."
"We're not proselytizing; we're just trying to gather the people we
already have," said Mazur, whose diocese is the largest in the world in terms
of territory. "Many of them were sent here by force. Their grandfathers were
Catholics. They have the right to hear the word of God and decide for
In the end, says Uzzell, the real problem is that in the early 1990s,
predictions of a massive post-Soviet religious revival in Russia were
"No one is doing very well [at attracting church members]," he said,
noting that only 1% of Moscow residents attended Easter services this year.
"It seems that in Russia, 70 years of Communist repression did manage to
extirpate religious consciousness from most people's minds."
New York Times
October 21, 2000
Don Quixote himself might have despaired at the prospect of leading America's
Communist Party during the cold war, but not the indefatigable Gus Hall. Mr.
Hall died last week at the age of 90. His life story, improbably enough, is a
genuine American tale.
Mr. Hall was one of 10 children born to Finnish immigrants in northern
Minnesota. He joined the Communist Party as a teenager and at 21 he attended
the Lenin Institute in Moscow, the ultimate training ground for Communist
The 1930's were exhilarating times for a young Communist. The Great
Depression had revealed the frailties of laissez-faire capitalism, and Stalin
was then leading the fight against Fascism. But the next half-century sorely
tested his Communist faith. Mr. Hall's advocacy of a violent revolution
earned him an eight-year stay at Leavenworth. He was in prison when Soviet
troops quashed the uprising in Budapest and Nikita Khrushchev denounced
Stalin and his show trials. But none of that cooled Mr. Hall's Bolshevik
ardor. By 1959 he had become the party's leader â€” a post he held with
unswerving, often unthinking doctrinal loyalty despite the Prague Spring, the
Soviet Union's economic decay and the fall of the Berlin Wall.
Mr. Hall ran for president four times. His best showing was 58,992 votes, in
1976. But he never gave up his understated Midwestern manner, even after he
became a New York character and an odd kind of international celebrity.
Despite his claims of independence, Soviet archives revealed that Moscow had
bankrolled his activities for decades.
Mr. Hall was on the wrong side of history, and stayed there with what
ultimately became a comical consistency. His favorite Soviet leader was
Leonid Brezhnev. He condemned Mikhail Gorbachev and Boris Yeltsin as "the
wrecking crew," and proclaimed North Korea the latest miracle to emulate. He
never wavered from his sclerotic orthodoxy, and never attempted to transform
the party of the proletariat into a more trendy leftist alternative. That
would have offended his native Midwestern stubbornness.
October 21, 2000
COMMENT: In Search of a New Myth
By Boris Kagarlitsky
The villain is dead, long live the villain! With the departure of Slobodan
Milosevic, Russia's national press has declared that it is in mourning for
Serbia. When NATO was bombing Serbia our nationalists did not feel the same
pity for him as now when the Slavic brotherhood has decided to split with the
president who was so much loved within patriotic Russian circles. Without
Milosevic, they say, Yugoslavia will either die or be reduced to a puppet
regime completely under the control of the West.
In contrast, the liberal press in Russia and all over the world is
celebrating, announcing the return of Serbians to the European fold.
Meanwhile the ease with which Vojislav Kostunica has gotten rid of his
presidential predecessor and the surprising compliance of the police and army
bears witness to the fact that in spite of the "revolutionary" environment in
Belgrade, a complete transference of power is taking place.
It is striking that Western liberal commentators and Russian nationalists
reduce Milosevic and Kostunica to personalities. They forget that behind
these leaders stand not only political and social powers but also various
factions of the local elite. Judging by everything, these factions have found
a common language.
It is an extremely unpleasant fact, incomprehensible to Slavophiles and to
Westernizers alike, that there exists a broad consensus in Serbia on Balkan
politics. Kostunica and his predecessor differ on many things but on one they
agree: He wants to keep Kosovo and Montenegro in Yugoslavia and insists on
the return of the "ethnically cleansed" Serbian refugees from Kosovo after
the arrival of NATO troops. He is, in principle, in favor of integration with
It is significant that Kostunica has already declared that the Serbian
military leadership will stay in power. The elections that lie ahead in
December will give the pro-Milosevic socialists the status of legal
opposition and subsequently the chance of entering into a coalition. And
Kostunica himself will not object to a coalition f the problem is more likely
to be that officials of the old regime will continue to cling to their posts.
An argument in Kostunica's election campaign was that the West needs
Milosevic in order to justify its anti-Yugoslavian policies. And in fact with
Milosevic's exit the Americans lose almost all their trump cards in the
Balkans. They can no longer justify anti-Serbian measures by the need to
establish democracy since democracy has already been established. The
pro-Western policies of Montenegro will have to be reconsidered in order to
justify its striving to leave the federation. Once they looked like defenders
of freedom, but from now on they will seem like the same kind of nationalists
as Milosevic was.
In general, U.S. foreign policy desperately needs baddies as it is rooted in
the idea of good vs. evil where America is, of course, the embodiment of
good. Otherwise the United States would have to refer to itself merely as a
superpower and waive its imperial interests. Alas in order to have a fight
against evil one must at least have evildoers, if not an evil empire. In the
modern world they are becoming fewer and fewer.
What then can the Balkan myth be replaced with? The only alternative is the
Middle East where a new bloody drama between Israel and Palestinians is
ripening. But unfortunately for modern Russian nationalism its participants
are only fit for the role of antiheroes. After all, it has already been
explained to us that Russia alone confronts the "international Islamic
conspiracy." The Palestinians, as if intentionally, maintain links with the
Chechen guerrillas. As to Israel f it's full of Jews. It's hard to imagine a
more nightmarish choice for a Russian nationalist.
Boris Kagarlitsky is a sociologist. He contributed this comment to The Moscow
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