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Johnson's Russia List


November 9, 2000    

This Date's Issues:  4628  4629  


Johnson's Russia List
9 November 2000

[Note from David Johnson:
1. Moscow Times: Simon Saradzhyan, Kremlin Prepares for Possibility of Bush Win.
2. Reuters: Russia keeps champagne on ice for Bush or Gore.
3. Arms control will remain cardinal issue in relations between Russia and America after Republicans come to power, declares Russian expert. (Rogov)
4. BBC Monitoring: Senior Duma official says Russian interests will suffer under Republicans. (Arbatov)
5. Interfax: Russian deputy premier sends congratulations to Hillary Clinton.
6. Interfax: Russian Orthodox church decision "revolutionary"
7. Bloomberg: Russia's Mironov Rejects Chechnyan Military Solution.
8. Cato Institute: Conflict over oil pipeline is no "007" fantasy. U.S. support for Baku-Ceyhan route is strategic and economic disaster, study says.
9. Moscow Times: Yevgenia Albats, Bureaucratic Economy Is Russia's Bane.
10. Reuters: New Russian arms firm aims to lift export chances.
12. Carnegie Endowment for International Peace: Decentralization and Recentralization in Russia. (Presentation of Nikolai Petrov)
RESULT IN SOCIAL EXPLOSION. The government again assigns minimum funds
for Armed Forces needs


Moscow Times
November 9, 2000
Kremlin Prepares for Possibility of Bush Win
By Simon Saradzhyan
Staff Writer

While the winner of the U.S. presidential election remains unknown, Russia
was preparing Wednesday for the possibility that it will work with a
Republican White House led by George W. Bush for the next four years.

Political observers said the Kremlin might be eager for Texas Governor Bush
to take over the presidency from the Democrats because the United States
would probably adopt a more pragmatic policy toward Russia under the

The Kremlin, like many other governments, jumped the gun Wednesday and
congratulated Bush on his victory over Vice President Al Gore.

"[The Kremlin hopes for] mutually advantageous dialogue and joint action with
the new American administration," Sergei Prikhodko, deputy head of President
Vladimir Putin's administration, was quoted by Interfax as saying.

Bush initially appeared to have defeated Gore in Tuesday's election, but then
he saw his narrow lead thrown into doubt when a recount of votes cast in
Florida was ordered.

While Russia's congratulations might have been premature, Moscow may indeed
have reasons to believe that relations with Washington will become "more
active and pragmatic and less complicated" in its Russia policy if Bush wins,
said Vyacheslav Nikonov, head of the Politika research center.

Unlike the Democrats, the Republicans have historically been less inclined to
engage in "global moralizing," preferring not to use the United States as a
global policeman who is eager to intervene in other countries' affairs,
Nikonov said. Bush would be less enthusiastic about expanding NATO further
eastward, a policy pushed by President Bill Clinton that has angeredRussia,
he said.

Bush would also be less willing to boost U.S. influenc e in the former Soviet
Union, which Moscow views as its zone of strategic interest, said Yevgeny
Volk of the Heritage Foundation. He would not press Russia hard on internal
issues such as the ongoing conflict in Chechnya, he said.

Still, a Bush administration would bring some tension to U.S.-Russian ties,
observers said.

A Republican White House would almost certainly take steps to cut financial
aid to Russia, Volk said. The United States and international lenders loaned
billions of dollars to Russia during Clinton's presidency.

Bush has said the International Monetary Fund should have given less money,
and he has accused top Russian officials of misusing or stealing funds.

Volk said Bush would be less willing than Gore to seek a compromise with
Russia over strategic arms control, including the 1972 Anti-Ballistic Missile
Treaty that bans Russia and the United States from deploying a national
missile defense system. The Texas governor appears ready to scrap the ABM
treaty if Russia fails to modify the accord to allow a defense shield, while
Gore is more willing to negotiate, he said.

Gore may have built up considerable experience dealing with Russia during his
eight years as vice president, but for what Bush lacks in practical knowledge
he makes up for in veteran advisers, said Sergei Karaganov, chairman of the
Council on Foreign and Defense Policy.

Bush has already recruited enough veterans from the administrations of his
father and President Ronald Reagan to build good, healthy relations with
Moscow, Karaganov said.


Russia keeps champagne on ice for Bush or Gore
November 8, 2000
MOSCOW (Reuters) - President Vladimir Putin said Wednesday Russia will work
with George W. Bush or Al Gore but would not rush to congratulate either man
ahead of an official verdict in one of the tightest U.S. presidential races

"The U.S. is one of our most important partners in very many spheres of
activity...and we already know in detail the programs of both candidates,
Bush and Gore," Putin said in televised comments.

"In the programs of (both parties) there is laid out a clear, comprehensible
and quite detailed attitude toward the development of mutual ties with
Russia," Putin said. But Putin held back from congratulating either man,
after the deputy head of the Kremlin administration, Sergei Prikhodko, had
earlier jumped the gun.

Interfax news agency quoted Prikhodko expressing Russia's willingness to work
with a new Bush-led White House, after U.S. television networks gave the
Republican victory.

"We respect the choice of the American people, and will work with any
administration, but as regards final results and a congratulatory address to
the victors, I think we'd better wait for the decision of the official
American authorities," Putin said.

The Russian president even offered Washington the services of Alexander
Veshnyakov, the head of Russia's Central Election Commission which deals
monthly with complaints about electoral impropriety in regional and national

"You know Veshnyakov is over there," Putin told reporters with a smile. "If
necessary he can tell his American colleague how best to act."


November 8, 2000
Arms control will remain cardinal issue in relations between Russia and
America after Republicans come to power, declares Russian expert
By George Watts
The policy of the Republicans towards Russia will most likely acquire
concrete shape next spring when it becomes clear who in the new U.S.
Administration will be responsible for what. The Director of the Institute
for U.S.- Canada Studies, Sergei Rogov, made a statement to this effect in a
press interview. He considers that arms control questions will still occupy
first place in relations between Russia and the United States.

So far, Rogov noted, the attitude of the Republican Party towards the missile
defense problem was by no means determined by military-political or
military-technical considerations. Since the times of Ronald Reagan's
presidency, the question of America's invulnerability was of ideological
significance for the Republicans. At the same time, the Russian political
scientist did not rule out the possibility that relations between the two
countries might become aggravated in the event that the United States
unilaterally backs out of the 1972 ABM Treaty.

Anatoly Dobrynin who was this country's ambassador in the United States for
30 years considers that so far it is too early to predict how
Russian-American relations will shape out. In our relations, the former
ambassador pointed out, not only arms control and disarmament questions are
of vital importance, general problems which cannot be separated from each
other are equally important.

On questions of arms control, the Republicans always took a tougher stand,
but as the experience of our relations demonstrates, the majority of arms
control agreements were concluded precisely when the Republicans were in
power. "I do not think that the present stand of the Republicans is final,"
noted Dobrynin.

A Russian economist, the Director of the Institute for Globalization
Problems, Mikhail Delyagin, considers that the victory of George W. Bush at
the presidential elections is in Russia's interests.

By voting for Bush, the Americans spoke out in favor of international
stability based on America's technological leadership, and against corruption
in Russia. Bush, the Russian economist explained, promised to lay out $1.5
trillion for the national missile defense program, one of the objectives of
which was to score a technological breakthrough.

But Al Gore, Delyagin pointed out, proceeded from the premise that it was
possible to continue Bill Clinton's policy that had actually exhausted
itself. The Russian economist also noted that in view of historical reasons,
for Gore the subject of corruption in Russia turned out to be almost as
dangerous as for the Russian elite. "Therefore, the American people's choice
is in Russia's interests," Delyagin concluded in his press interview.


BBC Monitoring
Senior Duma official says Russian interests will suffer under Republicans
Source: TV6, Moscow, in Russian 1200 gmt 08 Nov 00

[Presenter] We have asked the deputy head of the Duma defence committee,
Aleksey Arbatov, to comment on the US election. Hello, Aleksey Georgiyevich.

[Arbatov] Hello.

[Omitted: the race is close because the Americans can't see much difference
between the two candidates.]

[Q] Who is preferable to Russia, [George W.] Bush or [Al] Gore?

[A] This is a difficult question to answer. As regards our internal problems,
the Democrats including Gore will, of course, be much more sensitive to such
issues as human rights, Chechnya, restriction of media freedom and the
consolidation of the so-called power hierarchy that exerts influence over the
economy. But the Democrats will be more inclined than the Republicans to help
us on certain conditions economically, particularly in negotiations on the
restructuring of the Russian debt. I think if the Republicans come to power,
we'll have to forget loans and aid for a while. They take a rather tough
position on this issue.

As regards foreign policy, the Democrats will be give us more trouble than
the Republicans on issues concerning NATO expansion. The Republicans, on the
other hand, will take a very tough and uncompromising position on such issues
as arms trade, Russian arms supplies to China and Iran, trade in nuclear
technology and materials, be it even for peaceful uses. The position the
Republicans take will make life very hard for us.

Among other things, the Republicans are very tough on China. Therefore, the
more we cooperate with China, the more we'll be going against the grain of
the United States because the United States under the Republicans will pursue
a much more strict and uncompromising policy on China.

Therefore as you see, the picture is not at all sraightforward, and not only
because there is no black-and-white answer, who is better and who is worse
for us, but also because it is not entirely clear what our policy priorities
are: is it Europe or Asia? What are we going to do in our own country?
Depending on our own conduct, we will fare better with one candidate or the


Russian deputy premier sends congratulations to Hillary Clinton

Moscow, 8th November: Russian Deputy Prime Minister Valentina Matviyenko said
she was "overjoyed at Hillary Clinton's victory in the US Senate elections"
and has sent her a message of congratulations.

Matviyenko told Interfax on Wednesday [8th November] that she was "overjoyed
by Mrs Clinton's victory, because she won not as the president's wife, but as
a politician in her own right". "She won a place in an exclusively male
company with a male mentality," she said.

In her opinion, Hillary Clinton "has potential of being president of the
United States". In Russia, "a woman president leading the country can be a
matter of only a distant future. I don't think this will happen during my
lifetime," she said during intermission at a concert given by opera star
Monserrat Caballe, in Moscow.

An Interfax correspondent reports that President Vladimir Putin's wife
Lyudmila talked with Caballe during the intermission. They spoke in Spanish.


Russian Orthodox church decision "revolutionary"
Nov 8, 2000

The Moscow Patriarchate, the most senior office of the Russian Orthodox
church, said on Wednesday that a decision by the Russian Orthodox Church in
Exile to disregard one key area of conflict between the two churches was "to
some extent revolutionary," the Russian news agency Interfax reported.

The branches of the church had been divided over the Moscow church's
allegiance to the Soviet government, embodied in a 1927 declaration by then
Metropolitan Sergiy.

Now a meeting of Church in Exile bishops in New York has decided that a new
social doctrine adopted by the Moscow church, which states that it will be
loyal to the state as long as state policy causes no problems for Orthodox
Christian consciences, settles the issue.

"A possible dialogue and the subsequent reunification of the domestic and
foreign parts of the Russian church will be great events in the spiritual and
national life of Russia," the agency quoted Patriarchate sources as saying.

"In this way the spiritual and national division of the Russian people will
be overcome and a complete and definitive reconciliation will be achieved
between Russian people in Russia and Russian emigres," it added.

The two branches of the church still need to resolve disagreement over
ownership of church properties in Palestine and the Church in Exile's
rejection of ecumenical activities by the Moscow church, the agency said.


Russia's Mironov Rejects Chechnyan Military Solution
Washington, Nov. 8 (Bloomberg)
-- Russian Human Rights Commissioner Oleg Mironov said that a
military resolution to the conflict in Chechnya isn't possible and
international observers should be sent to monitor fighting and document
rights abuses.

Mironov, whose office hears complaints from the public and reports them to
the Russian government, said that leaders must use ``much wider and more
comprehensive means to resolve the crisis,'' which he called ``a real tragedy
and pain for Russia.''

Speaking at Georgetown University in Washington, Mironov said that Russian
leaders ought to prove to the Chechen population that ``there should be a
rational social and economic society'' to offer security to people in the
predominantly Islamic republic that has fought to break from Moscow.

Mironov advocated that the Russian government begin to rebuild housing in the
capital city of Grozny, create new jobs and attract foreign investment. And
what he called the cultural and ethnic atmosphere in Chechnya needs to be

Mironov has spent a great deal of time climbing mountains in the Caucasus
region and said his brother was born in Grozny.

``I'm very sensitive to the psychology of the people of the Caucasus,''
Mironov said.

Continue Fighting

Still, the human rights chief asserted that the economic means for the
Chechen militants to continue fighting must be cut off. Although Mironov said
that much of the money for rebels came from the ``Muslim world,'' he didn't
propose how aid could be halted.

A 1999 U.S. State Department report on human rights said Russian ``government
forces killed numerous civilians through the use of indiscriminate force in
Chechnya, and security officials' beatings resulted in numerous deaths.''

``There were credible reports -- and government officials admitted -- that
law enforcement and correctional officials tortured and severely beat
detainees and inmates, and government forces reportedly raped civilians
following the battle for the Chechen town of Alkhan-Yurt,'' the report said.

Mironov, who was appointed by the Duma to his position in 1998, escorted
United Nations High Commissioner for Human Rights Mary Robinson on a visit to
Chechnya, and said he was ready to accompany any other foreign observers to
the region. He said that ``a lot of time and effort will be required to
establish peace, but I ultimately believe it's possible.''

As human rights commissioner appointed to a five-year term, Mironov has
published reports documenting physical abuse and torture of soldiers by their
comrades in the Russian military, the difficulties of people seeking to
migrate to new regions in the country and mistreatment of criminal suspects
by the Russian police.


Cato Institute
News Release
October 31, 2000

Conflict over oil pipeline is no "007" fantasy
U.S. support for Baku-Ceyhan route is strategic and economic disaster, study

WASHINGTON-In the latest James Bond film, a terrorist tries to blow up
Istanbul to put a competing oil pipeline out of business. But sometimes fact
is as strange as fiction. Washington's insistence on building an oil pipeline
from Baku in Azerbaijan to the Mediterranean Turkish port of Ceyhan is
dragging the United States into a political conflict and an economic
sinkhole, says a new Cato Institute study.

In "The Great Game, Round 2: Washington's Misguided Support for the
Baku-Ceyhan Oil Pipeline," Cato research fellow Stanley Kober shows how
President Clinton's support for this particular pipeline route is causing
huge tensions with Russia and Iran. The administration has argued that the
pipeline would promote economic and political stability in Central Asia and
benefit Turkey, a strategic NATO ally. But "U.S-Russian tensions, which are
already disturbingly high, are being exacerbated by the pipeline issue,
because Moscow suspects that Washington is trying to establish a U.S. sphere
of influence on Russia's southern flank," Kober says.

Russians are already suspicious that the Chechnya insurgency has been
inspired by foreign interests seeking to make the existing pipeline through
Chechnya and Russia appear unreliable, Kober points out. Washington's
insistence on the Baku-Ceyhan route has done nothing to ease those
suspicions, Kober argues. "When we tell the Russians, in effect, that we
believe in market economics except when our strategic interests are more
important, what are they supposed to think?" he asks.

U.S. pipeline preferences may be making Russia nervous, but they also isolate
Iran at a time when that country is breaking down the wall of mistrust
between itself and the United States. "The rewards of an improved
relationship, putting to rest two decades of hostility, are too great to
jeopardize for a pipeline route that is difficult to justify commercially,"
Kober writes.

Getting oil from the Caspian to a seaport is expensive no matter which route
is chosen, Kober says. To make Caspian oil commercially viable would require
high oil prices or huge cost reductions, he argues. The alternative is huge
subsidies-something the oil companies have already requested of Turkey and
could request of the United States.

"The pipeline, far from promoting U.S. interests in the region, undermines
them," concludes Kober. "The U.S. government should heed its own rhetoric and
let the market determine the pipeline route."


Moscow Times
November 9, 2000
POWER PLAY: Bureaucratic Economy Is Russia's Bane
By Yevgenia Albats

Official statistics have brought us yet another puzzle. Despite the fact that
the Russian economy is currently doing pretty well, capital flight out of the
country is about the same as it was in 1998 (the year of the financial
collapse) and greater than it was last year when the country witnessed the
start of another war in the Caucusus and markets were anticipating changes in
the Kremlin.

One would logically expect quite the opposite. But it is the reality hidden
in the shadows rather than straightforward logic that makes for unpleasant
statistics and keeps money flowing away.

For the first time since the early 1990s, the government put deregulation f
that is, the freeing of businesses from the tight hands of the bureaucracy f
high on its agenda. The adoption of the new Tax Code with its flat income
tax, a new and much simpler system of custom duties and a balanced budget are
optimistic signs for both foreign and domestic investors. President Vladimir
Putin's pledge that redistribution of property f regardless of how that
property was obtained f is not going to happen has led many to see a brighter
future as well.

The fact that liberal economists such as Alexei Kudrin, German Gref, Andrei
Illarionov and Alexei Ulukayev are among those running the economy ought to
serve as some sort of insurance against the omnipotent bureaucracy. Various
programs, pledges, battles for liberal legislation and for more transparent
budgets have been highly touted in the global press.

But those who control Russia's capital know a different story, one that they
don't talk about openly. First, they have learned that despite the proclaimed
"dictatorship of law," Russia's bureaucracy in epaulets feels more confident
than ever before.

For example, one day recently the CEO and co-founder of a large company that
provides thousands of jobs in agriculture f one of the most backward spheres
of the economy f hosted a visitor from the tax police. The officer was blunt
and asked for a simple payment of $500,000. Such demands were nothing new to
this CEO, who had been "working with" the tax police for years, but the sum
startled him. "What for?" he asked. "For the right to live and work in this

Money has also learned that the practice of extracting cash for myriad "good
purposes" is not just something that happens every election campaign. The
state-run racquet is becoming standard operating procedure whenever the
government faces some unanticipated expenses. And I am not talking about
highly publicized assistance funds like the ones set up to help the families
of the Kursk crew.

The state creates secret funds like this all the time. A banker will get an
unexpected call from a very high-ranking official asking for, say, $1
million. The banker doesn't even dare ask why. Business has already learned
that those who ask questions like that end up not just handing over money,
but often having to hand over shares of their businesses to their more
cooperative counterparts as well.

Finally, business has discovered that the high-profile assaults on certain
"bad oligarchs" have not just enabled the "good" ones to flourish. They have
also provided an opportunity for certain criminal elements who had fled
Russia in the mid-1990s out of fear of the oligarchs' return. "When I found
out that Anton Malevsky, whose record is well known to the authorities, has
returned along with some others," one industrialist explained, "I decided
that my savings abroad were simply not big enough."

Yevgenia Albats is an independent, Moscow-based journalist.


New Russian arms firm aims to lift export chances
By Patrick Lannin
MOSCOW, Nov 8 (Reuters) - Russia's new arms company is aimed at boosting the
country's chances in the fiercely competitive multi-billion-dollar world
weapons market, President Vladimir Putin said on Wednesday.

Defence analysts said the formation of Rosoboronexport was aimed at
strengthening Kremlin control over arms exports and putting the president's
own man in charge.

Putin last week ordered the merger of the two arms companies which carried
out weapons sales, Rosvooruzheniye and Promexport, to create the new firm.

"The battle between themselves hampered the producers. They lowered prices
without good reason. It was essential to reorganise and strengthen this
structure," Interfax news agency quoted Putin saying.

Ilya Klebanov, a deputy prime minister and government chief of the weapons
industry, also backed the new body.

"I have always been a supporter of the creation of such a company. This
should influence Russian arms exports in the most positive manner," Itar-Tass
news agency quoted Klebanov saying.

A spokesman for Rosvooruzheniye said Russia last year exported around $3.5
billion of weapons and that the government expected arms sales of around $4.0
billion this year.

The latest edition of "The Military Balance" by the International Institute
for Strategic Studies put Russia as fourth largest arms seller in 1999 with
6.6 percent of the roughly $53 billion world market.

This was behind the United States on $26.2 billion sales and 49.1 percent of
the market, Britain on 18.7 and France on 12.4.

Prime Minister Mikhail Kasyanov welcomed the new arms body, saying weapons
sales were important to Russia's foreign currency receipts. First Deputy
Minister of Industry, Science and Technology, Grigory Rapota, said it would
decrease confusion.

"Our foreign partners did not always understand why in such an important
business...the Russian state was represented by two companies and which one
was better to work with," Interfax quoted Rapota as saying.


The shakeup in the industry came after presidential decrees under which
Alexei Ogaryov was dismissed as head of Rosvooruzheniye and Sergei Chemezov
as head of Promexport.

The newly created body is to be headed by Andrei Belyaninov -- previously
Chemezov's deputy.

Ogaryov was on record as opposing the creation of a larger company as
unwieldy. The AVN independent military news agency said he had been totally
surprised by his dismissal.

Vladimir Kosarev, who runs the AVN news agency and is a retired general, said
Russia's position on the world market was good in China, India and several
African countries.

He said Russia specialised in exporting warplanes such as the Sukhoi and MiG,
tanks, warships and anti-aircraft batteries.

Beyond the sales there seemed to have been a political motive to change the
structure, too. "The task...was to get one's own man at the head of the
company," said Kosarev of the decision.

He said Belyaninov had like Putin served in Soviet intelligence and worked in
former East Germany at the same time.

Analysts said the new arms firm also had potential political punch across
Russia as it would decide on awarding contracts for weapons building,
contracts many of Russia's impoverished regions desperately need.


November 4, 2000
[translation from RIA Novosti for personal use only]
By Vyacheslav NIKONOV, President, Politika Foundation
     The scandals connected with the disqualification of Kursk
Governor Alexander Rutskoi from the race for re-election and the
publication by one newspaper of the list of "unsuitable"
candidates whom the Kremlin allegedly wanted out of the way
aroused at least some interest in the gubernatorial elections in
35 constituent members of the federation outside of their
territories. If not for all this, Russians living in other
regions might not have noticed these elections at all.
     There are several stereotypes in connection with this
gubernatorial elections. Some of them have nothing to do with
reality, while others are true only to a certain degree.
     Stereotype One. It is alleged that the Kremlin drags army
and secret service men into the bodies of power and all the
regions will be in the hands of people in uniforms shortly. In
the meanwhile, now that general Rutskoi's political star has
fallen, we are one military governor shorter than before. There
are no candidates from power structures in the majority of
regions. Servicemen have been found on the long lists of
candidates only in eight regions and only no more than four of
them can count on success. Taking into consideration that quite
a few generals had been elected governors before (Rutskoi,
Alexander Lebed, Boris Gromov, Ruslan Aushev and Vladimir
Semenov), there is no ground whatsoever to talk of the
"militarization" of gubernatorial elections in excess of the
previous statistical average.
     What is more, a number of representatives of power
structures are running for governorship not because the Kremlin
encourages them to do so. They do it either of their own free
will or at the wish of the oligarchs and other influential
personalities who stand behind them. It is only natural that
candidates do not tire of claiming that they are "Putin's men,"
though the President may not even guess that they exist.
     Stereotype Two. It is alleged that the Kremlin tries to get
rid of all incumbent governors. But the same things happened
before. As for the present elections, this does not spread to
the governors without exception. In the five members of the
Federation where the elections have already been held in the
past month four incumbent governors have been re-elected.
     An analysis shows that the number of regions in which the
Center is allegedly acting against the incumbent administrative
heads also constitutes a minority.
     Moscow is quite satisfied with the work of the majority of
the existing governors' corps and many of its strong
representatives in strategically important regions can count on
tangible federal support.
     At the same time, current elections do have some specific
features. In addition to the fact that candidates try to
demonstrate their loyalty to the President, I would also name
the complete de-ideologization of elections. All of today's
governors who seek re-election won their seats four years ago
fiercely fighting against their rivals under different party
flags. It was a struggle between communists and democrats,
between the White and the Red. There is nothing of the kind this
time. All appeal to common sense, show off their economic
experience and do the utmost to dissociate themselves from any
ideological labels. It happens now and then that the KPRF and
Union of Right Forces support one and the same candidate.
Contenders to governorship realize that none of the parties can
bring them votes necessary for victory by acting on its own,
while the leaders of all the parties want to stake only on
potential winners, even if they are not too close to them in
     The oligarchs have also changed their election tactics.
Whereas in the past they actively shuffled the election pack, now
they, with rare exceptions, make a stake on incumbent governors
with whom they managed to work quite well in the preceding
It is for the first time that we witness the striving of
oligarchs themselves to be elected to regional authorities.
     A new player has appeared on the electoral scene - Russian
President's special representatives in the seven federal
districts. Though their role is not quite clear yet, it is
obvious that they can influence the situation through control
over local power structures and selection of possible
     It is true that federal authorities are bringing stronger
influence to bear on the political process in the regions. But
it is, nonetheless, voters who make the final choice.

Carnegie Endowment for International Peace
Russian and Eurasian Program Vol. 2, No. 7, Oct. 25, 2000
Decentralization and Recentralization in Russia

On October 25, 2000, Nikolai Petrov, currently visiting professor at
Colleger and former scholar-in-residence at the Carnegie Moscow Center,
discussed the development of Russian federalism under President Vladimir
Petrov's discussion was moderated by Carnegie Endowment Senior Associate
Michael McFaul; it was the first session of the "state of the State" monthly
series, which seeks to increase understanding of the recent developments and
prospects of key institutions of the Russian state.

Nikolai Petrov immediately identified his particular angle of analysis as the
"state of centralization and de-centralization under Putin."  Petrov
pointed to
center-regional relations as a key issue of internal politics in Russia
He postulated that the development in center- regional relations since 1990
be described by a model of pendulum oscillations, which reflect the balance
between the alternative processes of de-centralization and centralization. The
pendulum has been oscillating between longer periods of decentralization and
shorter periods of centralization, until Putin's ascendancy.  Petrov noted
even when the oscillation led to a greater decentralization, the center was
consistently the determining actor of the changes.

The situation in the year 2000, however, is fundamentally different.  Instead
of yet another oscillation in favor of the center, what we observe is a shift
in the axis of the pendulum towards centralization.  Petrov explained that the
reason for conceptualizing the changes of 2000 as a fundamental shift is
alteration in the very mechanism of managing center-regional relations.

What is going on currently? Federal districts instituted by Putin are becoming
more and more meaningful; they are not merely another administrative layer,
are taking on a multitude of functions.  Petrov compared Putin's introduction
of Federal Districts to Catherine the Great's administrative reform -  she had
appointed governors, without determining the exact borders of their gubernias,
and allowed these borders to be defined by the governors themselves,
subsequently confirming the resulting arrangements by decree.  In this case,
the prerogatives and powers of the seven federal representatives are not
determined; each appointee is trying to define what are the prerogatives and
powers in his particular district.

Council of Federation reform is another symptom of the pendulum axis shift.
Putin's scheme for new Council formation involves an appointment of one
representative from each region by the governor, and another one by the
regional legislature, replacing the existing membership of governors and
speakers themselves.  While the new Council is planned to appear in a year and
a half, changes will be felt much sooner, since those governors facing
elections are losing their seats immediately.

In addition, there is a new federal intervention mechanism, which allows Putin
to remove governors and dismiss regional parliaments.  This innovation serves
as a "fly-swatter" over the heads of the governors, and this threat is more
important than its actual realization.

Budget allocations are also changed fundamentally in favor of the center
and at
the expense of the regions.  Estimates for distribution of tax revenues range
from 45%-55% (in favor of center) to 30%-70%.  Moreover, the regional powers
lose considerable control over expenditures as well as revenues to the
of the federal treasury.  Petrov brought up the example of the 6 poorest
regions, where all of the expenditures will be controlled by the federal
treasury branches.

Moreover, Putin's centralization activities augment federal control over the
court and the police systems in the regions - areas that formerly were almost
completely subordinated to regional powers.  This is not done through any
legal changes, but merely through a "realization of the center's

The general trend is the strengthening of the state, accompanied to a certain
degree by a weakening of Russian democracy and a weakening of Russian
federalism.  Petrov classified this period as a period of "accelerated
counter-revolution," and pointed out that none of Putin's reforms are new or
invented by him.  Petrov argued that these reforms are merely realizations of
previous unrealized proposals of Chubais and others in Yeltsin's
administration.  All of the innovations were previously proposed, but never
enjoyed a real possibility of implementation. 

Putin can be seen in this case as a "crisis manager"; we should especially
contrast him with Stepashin, who failed to organize the regional governors
around the Kremlin and to prevent Primakov from forming his block.  After
Stepashin's failures, Putin appears to be realizing the goals of Kremlin's
extant plans.

This is a counter-revolution because the regime had changed from a weak
authoritarian one under Yeltsin, to a strong authoritarian one under Putin.
Earlier, society was pushing Yeltsin in a certain direction, precluding him
from forming a stronger authoritarianism.  Putin, however, is so far supported
by a society that is tired and prepared to let him take control.  President
Putin feels a certain freedom to move in any direction. 

Why did Putin begin with the regions? Petrov offered three sets of reasons for
the president's actions.  First, it has been Putin's professional field of
interest since he arrived to the Kremlin in 1997.  Second, governors lost the
war with the Kremlin, and it is natural for the Kremlin to change the rules to
reflect that victory.  And third, the political calendar of the forthcoming
gubernatorial elections was favorable to the desired changes. 

Why was Putin successful at pushing forth his reform?  It is due to at least
three things: once again, the political timing on the eve of the gubernatorial
elections; the disconnection of the regional elites; and Putin's particular
"secret weapon" of blackmail and kompromat.  This latter weapon was used
initially during the creation of the Unity party in support of Putin's
presidential candidacy, and there is strong evidence that Putin and his team
continue to use this tactic. 

The recent gubernatorial elections serve as good indicators of governors'
weakness.  Two cases that Petrov brought our attention to are St. Petersburg
and the Kursk oblast.  He proposed that the Kremlin's strategy is not to
replace bad guys with good guys, but to weaken regional power itself, and
the governor to become subordinate to the Kremlin.  Vladimir Yakovlev's
election in St. Petersburg and his recent behavior towards the Kremlin
illustrate that judgement.  The last minute disqualification of Rutskoi from
the Kursk gubernatorial election shows another trend - the increased use of
semi-legal tactics by the center in order to advance its goals.  Petrov
expressed the opinion that Rutskoi's removal was actually not in Putin's
interests, so it is likely that someone other than Putin - either in the
Kremlin or the corresponding federal district -- is responsible for this
action.  But this does indicate that courts and other enforcement mechanisms
are under the center's influence.  This influence is likely to grow stronger,
since the very establishment of the federal regions is a kind of "bypass
surgery" - the federal representatives are responsible to the increasingly
powerful Security Council, and are essentially under its control.  Another
thing Petrov brought to our attention is that a greater number of issues are
being classified as security issues -  such as information security and
regional security - and thus are placed within the purview of the same

The important question to ask now is what are the general purposes of all
actions?  Some people argue that the new federal package just increased the
level of bureaucracy, and rendered the state structures even less manageable
and controllable.  But it is also possible to look at this from another angle:
Yeltsin had created a huge political machine that was very cumbersome,
of which were clearly not working. All of Yeltsin's efforts, however, were
directed towards keeping that machine together, and keeping it going; Putin
decided to change some parts of the machine, as well as construct some new
mechanisms.  Some of these new mechanisms are currently working in parallel
with the existing ones, but in time may take over completely.  In this light,
the federal districts are not another layer of bureaucracy, but a structure
parallel to the regions, intended to eventually replace the regions; the
Security Council is not a second government, but a parallel institution
intended to concentrate power within itself.

Petrov concluded with an assessment of Putin's changes to Yeltsin's machine. 
The new structures created by Putin are trying to move the system in a very
particular direction - towards a more effective and stronger state, but also
towards an "FSB-ization" of political life.  

Question and Answer Period

Michael McFaul posed the first two questions, and the first addressed
continuity and change: Why was Putin able to enact the reforms which Petrov
claims Yeltsin wanted but could not realize? Is it the influence of society
restrained Yeltsin and empowered Putin to action, or is it special features of
Putin's personality that are responsible?

In answering, Petrov emphasized several factors he believes to be responsible
for Putin's successes.  First, Putin is acting in a climate of greater
political consolidation, which was not present for Yeltsin.  Second, Putin's
government is enjoying a kind of political stability that the previous
government did not: for the first time, political horizons of center are
greater than those of the regions.  That is, previously regional leaders were
granted long-term benefits in exchange for short-term concessions to the
(such as electoral support); now, they are receiving short-term incentives
(non-intervention in their regional elections) in exchange for their
support of
the long-term legal changes favoring the center. Third, Putin and his team
possess the political will that Yeltsin lacked.  Yeltsin's focus has been on a
system of checks and balances throughout his presidency; all his resources
devoted to the maintenance of his somewhat dysfunctional political machine.
Now, because of the determination to change elements of Yeltsin's machine, all
checks and balances are disappearing.

Two other factors can be identified, that are connected with Putin's
First, his connection with the security services is significant. Unlike his
predecessors Primakov and Stepashin, Putin is heading a system in control of
huge regional branches.  As a result, Putin has access to greater
administrative and financial resources at his disposal. Second, the fortuitous
budget surplus enables Putin to pay for the courts and the police in the
regions, rendering these more compliant with the center than they were while
financed by the regions.  When and if the benefits of a surplus disappear,
controlling the regions will become harder for the center. 

McFaul also asked Petrov to identify one hypothesis or argument about the
Yeltsin regime that he has revised in light of Putin's era .

Petrov replied that he can now see better that Yeltsin's regime was a weak
authoritarian one, and most elements of democracy were present only due to
constraints, and not democratic will of the President and his administration.
As he had emphasized before, the continuity between Yeltsin's intentions and
Putin's actions now come to light.  The developments in center-regional
relations also reveal the importance of checks and balances, and the relative
unimportance of who is "the chief guy."  Since the continuity in intentions
from Yeltsin to Putin is now more apparent, we can attribute the shift of the
pendulum's axis towards centralization to the diminishing role of the checks
and balances system.

The discussion that followed highlighted the differences between a strong and
an authoritarian state.  One participant suggested that we must not equate a
strong authoritarian state and a strong state; the former may be strong enough
to maintain itself, but it is not truly strong, since it cannot accomplish
changes or enforce its policies.  Most participants agreed that while Putin's
administration appears to be dealing serious blows to the regional powers, it
is largely powerless to effect real policy changes in the social and economic
realms.  Petrov agreed with the distinction between authoritarian and strong
states, and added that the currently favorable economic climate is creating an
illusion of the effectiveness of Putin's government.       


WPS Media Monitoring Agency
Defense and Security
Issue No. 129, 03 Nov 2000
The government again assigns minimum funds for Armed Forces needs   
Financial problems of the Armed Forces become a topic of discussion during
debate on the budget for 2001. Many politicians who are participating in
these debates are optimistic in their statements about the sums to be
allocated for defense next year. For example, Vitaly Shuba, Chair of the
Budget Subcommittee of the Budget and Taxes Committee, cited increased
defense spending in the 2001 budget as a big success achieved through the
efforts of members of parliament.

Shuba presents the following figures. In 1999, 93 billion rubles were
assigned for defense, in 2000, 140 billion rubles, and in 2001, 206 billion
rubles is allocated before taking additional revenues into account. After the
second reading of the bill on the budget for 2001 defense spending was
increased by 12.6 billion rubles, to 218.924 billion rubles.

But the overall sum of defense spending amounts only to 2.8% of the GDP,
which is much lower than the level called for by presidential decrees
(according to which the military budget should not be lower than 3.5% of the

According to Shuba, during preparation of the draft budget for the third
reading parliament members need to define priorities for spending the 12.5
billion rubles available for additional allocations. Shuba adds that this sum
may be spent on new weapons, repayment of the debt for state defense orders,
or on current maintenance of the Armed Forces.

Meanwhile, according to Duma Deputy Yury Maslukov, the military proposes
spending additional allocations on purchase of fuel and lubricants and
current expenditures. It seems that the Federation Council supports the
military. In an October 25 statement the council advocated increasing
monetary allowances for servicemen and retired servicemen. Citing the fact
that their incomes are far below average for the country as a whole, and do
not provide for a normal standard of living, the upper house has requested
the President to gradually adjust the money allowances of servicemen to equal
the wages of federal state employees between 2001 and 2002.

Andrei Nikolaev, Chair of the Duma Defense Committee, also speaks about the
problems of raising servicemen's wages. According to him, the draft budget
for 2001 already allocates 6 billion rubles for a 20% increase of
servicemen's monetary allowances beginning October 1, 2001. However,
according to General Nikolaev it is also possible to allocate approximately
10 billion rubles more from additional incomes to raise the money allowances
of servicemen by 40%.

The government promises to make the money allowances of servicemen equal to
the wages of state employees. The new version of the law "On minimum wages"
does state that beginning June 2001 servicemen will be given raises in
accordance with the procedure and time schedule established for federal state
employees. However, according to former Defense Minister Duma Deputy Igor
Rodionov, this clause is fair if wages are being adjusted from the same
starting point. At present monetary allowances for servicemen are more than
50% lower than wages of federal state employees, and the increases in pay for
servicemen as they are promoted up the ranks are 33.33% smaller than bonuses
added to wages of the federal state employees when their qualification grade
is raised. If the monetary allowances of servicemen and wages of federal
state employees are raised simultaneously in similar proportions, the actual
difference between them will grow.

Despite the low level of monetary allowances for professional servicemen the
government is attempting to take some benefits from them. According to
Nezavisimoe Voennoe Obozrenie No. 40, during debate of the federal budget in
the third reading the federal government needs to make specific proposals to
implement mechanisms to compensate for the new income tax for military
personnel, as well as financial compensations for new housing, public
utilities and transport costs.

Although October is already over, such mechanisms have not been implemented
yet. Nezavisimoe Voennoe Obozrenie writes that the Defense, Finance, Labor
and Social Development Ministries all take totally different approaches.
Officials of the Labor and Social Development Ministry propose raising
monetary allowances for servicemen by 15% to compensate for the income tax
they need to pay, and say that it is necessary "to forget about the benefit."
It might seem that this proposal would be beneficial for the servicemen,
because it looks like they benefit 2%. However, according to military
economists, this is a one-time benefit, because within six months or a year
inflation will simply "eat" this benefit. The government has not made a final
decision about the compensation for the income tax yet.

The situation with other benefits is similar. Civil officials propose
conversion of all benefits into monetary form. For instance, officials of the
Labor and Social Development Ministry say that servicemen may use public
transportation free of charge only during business hours, which violates the
law "On status of servicemen."

According to Nezavisimoe Voennoe Obozrenie, the draft budget for 2001 assigns
8 billion rubles to compensate for cancelled benefits. Both military
economists and officials of the Finance Ministry agree that this sum is
insufficient. However, nobody knows how much is actually needed, although
there is a total figure representing the value of benefits for all citizens
of the country, that is, about 300 billion rubles. The military accounts for
over 50% of this sum.

Thus, Nezavisimoe Voennoe Obozrenie concludes that it is already obvious that
no matter what mechanism is chosen to convert benefits into monetary form,
the government will infringe on the social rights of servicemen. The
government will infringe on these rights on a large scale, even though
practically all officers live below the poverty line.

If the government does not give up its plans to cancel benefits for the Armed
Forces, and the living standard of the servicemen falls, a social explosion
in the troops is inevitable. According to Nezavisimoe Voennoe Obozrenie,
military sociologists have predicted such an outcome. Hence, the country's
leadership will probably revise its plans regarding the social guarantees for
servicemen. President Putin at least has made public statements about this
issue frequently.

Translated by Pavel Pushkin

Observer of WPS agency,  


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