November 26, 2000   

This Date's Issues:   4652 • 4653

Johnson's Russia List
#4653
26 November 2000
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Russia Seeks 'Strategic Partnership.' (with Western Europe)
2. Reuters: Ex-Soviet Central Asia cautiously eyes Internet.
3. Graham Stack: Re: 4651-Economist/Economy.
4. Los Angeles Times: Nina Khrushcheva, To Russia, With Love and Pharmaceuticals.
5. Stanislav Menshikov: CAN RUSSIAN DINOSAURS FLY? Not If Energy Costs Are Skyrocketed.
6. The Chronicle of Higher Education: Is America to Blame? Two Scholars Debate 'Failed Crusade,' a New Book on Post-Communist Russia. (Robert V. Daniels and M. Steven Fish)
7. PILLOW TALK: Continuing excerpts from the "Stringer" Yellow Pages.
8. Moscow Times: Nadja Vancauwenberghe, A Matter of Chemistry. (Interview with Zinovy Pak on chemical weapons)]

******

#1
Russia Seeks 'Strategic Partnership'
November 25, 2000

BERLIN (AP) - Russia called for a ``strategic partnership'' with Western
Europe on Saturday, saying it wants stronger economic ties with the region
and supports Europe's efforts for a more independent role in the NATO
military alliance.

Speaking at a private conference in Berlin on Europe's future, Foreign
Minister Igor Ivanov also aired Russia's longstanding criticism of last
year's NATO airstrikes against Yugoslavia and U.S. exploration of a missile
defense system.

``Europe can and must become the generator of comprehensive strategic
stability in the world,'' Ivanov said. ``Overall, our relations with the
European Union are now rising to a new level - the level of a strategic
partnership.''

Urging the 15-nation EU to take a stronger, more united role on the world
stage, he said one such initiative could be joint Russian-European
peacemaking in the Middle East.

Ivanov said non-member Russia is open to cooperation with NATO, but made it
clear that Russia still views the alliance's expansion to include former
Soviet allies Poland, Czech Republic and Hungary as a step back toward the
Cold War.

In contrast, he praised Europe's efforts to claim a stronger role in the
U.S.-dominated alliance.

``We view the Europeans' desire to provide forces for their own security and
to quell conflicts as something absolutely natural and are ready for
constructive cooperation,'' Ivanov said. ``I am certain that this opens good
perspectives for our common contribution to bolstering stability and security
in Europe.''

He also pushed for more European trade and investment for his country,
including in the energy industry and telecommunications.

Ivanov was to wind up a four-day visit to Germany on Sunday by laying a
wreath in memory of Soviet prisoners of war at the site of a former Nazi
concentration camp at Sachsenhausen, just outside Berlin.

******

#2
Ex-Soviet Central Asia cautiously eyes Internet
By Karl Emerick Hanuska

ALMATY, Nov 26 (Reuters) - The people who gather regularly in the dingy
Stalker Internet Cafe in a corner of Kazakhstan's largest city are fuelling a
revolution.

Not a political revolution that might threaten Central Asian governments
criticised for a lack of democracy, but a technological one that breaks down
barriers to expansion of the Internet in this far-flung region.

The Stalker cafe, just a half dozen computers in a dim basement room, is one
of a handful like it to spring up in recent years throughout ex-Soviet
Central Asia, which also includes Kyrgyzstan, Tajikistan, Uzbekistan and
Turkmenistan.

What the cafe lacks in style -- the paint on the walls is peeling and many
light bulbs are missing -- it makes up for by the simple fact that it
exists.

Some other, much more upmarket Internet cafes have opened, but with prices
out of reach for most would-be Internet surfers in Central Asia.

The average monthly wage is $100 in Kazakhstan and Internet access in an
upscale cafe costs about $5 an hour. In Tajikistan, where the average wage is
$10 a month, an hour on the Internet can cost about $4.

In the Stalker cafe, an hour online costs about a dollar, and you don't even
have to buy a coffee.

"The Internet is the only way I really have of knowing for myself what the
outside world is really like," said department store clerk Nurlan, thumbing a
dictionary to send an email message to a German friend she "met" on the
Internet.

"There are people and ideas out there that no one here has ever imagined. I
may never have the chance to see such things for myself, but the Internet
sort of makes up for it," he said.

A PSYCHOLOGICAL ROLE

Erik Burkitbayev, general director of Nursat, Kazakhstan's leading private
telecommunications company, said in an interview that the Internet was
playing an important psychological role in ex-Soviet states.

Nursat, which accounts for 35 percent of Internet users in Kazakhstan, is a
joint venture set up by U.S. and Kazakh investors five years ago under a
military conversion programme.

It turned a former command centre for the Soviet military space programme
into a cutting-edge data and voice network.

"Even a decade after independence, Kazakhstan, like a lot of former Soviet
countries, is dominated by a kind of closed-borders type of mentality,"
Burkitbayev said.

"But the Internet is helping us break through that mentality and open up much
more to the outside world."

While the Internet has spread rapidly in the West, the decay and limited
scope of Central Asia's telecommunications infrastructure have restricted its
growth.

Of about 60 million people populating this vast region sandwiched between
Russia and China, industry members say at most 450,000-500,000 are online.

Kazakhstan, with a population of 15 million, has the highest concentration of
users with some 250,000 people online. Tajikistan, which borders Afghanistan,
has just 400-500 users and only opened its first Internet cafe in June.

Throughout much of the region, telecommunications of any sort are virtually
non-existent. Where they do exist they tend to be less than reliable, even in
the largest cities.

"When you pick up a phone, you can never be sure it will work," said an
employee at a Western firm in Almaty. "As for the Internet, you can spend an
entire day dialling and get nowhere."

OTHER BARRIERS

Technology is not the only thing hampering development of the Internet.

As in many other countries of the former Soviet Union, leaders in Central
Asia are worried about what the free flow of information could mean,
politically and socially.

Last December, Kazakhstan quietly passed a law on telecommunications that
critics have said gives the government sweeping powers to monitor the
Internet.

Government officials say the law aims only to monitor volume and not content,
to allow it to better husband scarce resources for development.

But critics say the measures bear worrying similarities to steps taken in
Russia and China to regulate the Internet.

The government of Uzbekistan has also been criticised by the media watchdog
group Reporters Without Borders for establishing a centralised data
transmission network that monopolises access to international computer
networks.

Opposition Web sites in some Central Asian countries have also been closed
down or had their channels blocked.

Moves by Central Asian leaders seen as designed to hamstring development of
the Internet prompted Reporters Without Borders in 1999 to brand all five
countries here "enemies of the Internet."

ECONOMIC FORCE

But most people involved with development of the Internet in Central Asia say
it is an economic force leaders will have to learn to accept or risk losing
the potential it offers.

"In Kazakhstan alone some one billion dollars is spent on credit cards each
year. The Internet could easily attract half of that money," Andrei Nadein,
vice president of Actis Systems, told a recent news conference.

"This clearly is a real economic force with a real financial value and
governments have a lot more to gain by helping its development than they do
by limiting it," he said.

The Kazakh affiliate of Actis is now conducting the first wide-reaching
survey of Internet users, information Nadein said would help Kazakhstan's
Internet take a great step forward.

He added that his company had never been pressured by government officials in
Kazakhstan or elsewhere in Central Asia.

Nursat's Burkitbayev said the Internet was in Central Asia to stay and saw
the number of people online there climbing by 100,000 annually over the next
few years.

"It is not just information on the Internet that is important, but the fact
that the Internet is a whole new marketplace, and one with huge economic
potential for us," he said, adding that the Kazakh government understood its
value.

"The Internet is too big and too important for any rational government to
close its eyes to...It is the doorway to the future," he added.

******

#3
From: "Graham Stack" <stack@zedat.fu-berlin.de>
Subject: Re: 4651-Economist/Economy
Date: Sat, 25 Nov 2000

It seems to be a unaminous opinion that current economic growth in Russia is
'only' the result of 'external' factors - high oil prices and the effects of
the devaluation of two and a half years ago. Apart from the fact that this
ignores institutional change such as the retreat of barter and change in
aggregate demand, it clashes interestingly with the causes ascribed to the
currency collapse itself, which are held to be predominantly internal and in
addition tend to be painted with a very large and moralising brush. -
mismanagement,
corruption, oligarchy etc. The 'external' causes of the 1998 crisis- Asian
crisis, fall in oil prices, unrealistic rouble corridor - are in contrast
mentioned only in passing. Is there not something rather unbalanced about
this?

******

#4
Los Angeles Times
November 26, 2000
To Russia, With Love and Pharmaceuticals
By NINA KHRUSHCHEVA
Nina Khrushcheva Is Senior Fellow at the World Policy Institute of the New
School University in New York

Happily, some of the humor coming out of the test of wills over who
will become the next president of the United States carries the imaginative
lunacy of Rabelais, Gogol, Dickens and P.G. Wodehouse. Consider the verbal
images: "butterfly ballots," "pregnant chads," "chadder" as a new form of
chatter. No wonder political satire is said to be dead in the United
States; real life has bolted beyond it.
For the rest of the world, humor's coup against American politics is
great news. Yet the problem is that the vote counting will end and the U.S.
will go back to normal and begin exporting rationality once again, perhaps
even trying to send some to Russia. Yet as the years of Russia's transition
have shown, the country simply does not appreciate normalcy and values the
excitement of humor and fiction instead.
Humor helps you to survive the hardship of reality by making that
reality seem unreal and distant. Why do Russians sometimes appear
distracted and gloomy? Because they are busy contemplating their next joke.
Russians say that their reality has come out of Gogol and Dostoevsky, where
hypothetical conditions are as important as facts. Visitors to Moscow are
stunned by the number of restaurants, bars and other businesses carrying
names of writers or literary characters: Pushkin, Oblomov, Khlestakov, Vanya.
Yet U.S. policymakers seem to still prefer the "virtual" Russia of
their imaginative constructs to the looking-glass world in which Russians
live. So perhaps a practical policy suggestion would be for the next U.S.
president to provide Russia with ample supplies of Prozac. Prozac could
assist Russians in changing their behavior and attitudes toward the
practical and realistic. The drug could be administered in the same way
fluoride is diluted in water in the U.S. As Americans now have no cavities,
the next generation of Russians would have no national depression or desire
to escape reality.
But as some Russians do not drink water, preferring vodka, and
anti-depressants are not to be mixed with alcohol, perhaps the Prozac
should be distributed in the way the Red Cross fights other epidemics
around the world. Prozac tents could be set up in parks where pills or
shots could be distributed.
After the successful completion of "Operation Prozac," America could
embark on Phase 2 of its Russian Efficiency Project: a ban on reading
fiction in favor of reading contracts. Actually, the ban on fiction would
be a better discouragement; our official bannings, as with the samizdat
press of the Brezhnev era, only served to strengthen dissident movements.
Indeed, one of our modern-day Solzhenitsyns surely would rise up against
this Prozac gulag.
But we are great self-sufferers and natural autodidacts. So in
addition to the voluntary literary chastity, if Russians were offered
lessons in business--say, Uncreative Reading 101--they would answer the
call. For creativity is a serious Russian problem. When publishing an
annual report, one international organization was stunned by a Moscow
publisher's explanations for why he blew all deadlines and standards: "My
people are artists, they mix colors by hand."
"Annual reports do not need Kandinskys," the earnest American
contractors argued. "They need professional printers." He'd have been
better off offering Prozac.
Indeed, look at the titles for some business proposals submitted by
Russian nongovernmental organizations to Western foundations: "David
Copperfields of Saratov," "Green Noise in Siberia" ("Green Noise" is a poem
by Nekrasov) and, my favorite, "Educating Lolita." Program officers are
Westernized enough to understand that these are not book proposals but
projects aimed at improving orphanages in Saratov, environmental protection
in Siberia or creating the social conditions to eliminate prostitution.
Russians can't help themselves. All these concrete, measurable matters
are simply not as exciting as discussing "War and Peace." Worse yet, you
can't really think about them without thinking about "War and Peace"
because, when we look for truth, we start with things some author made up.
When Russians (let's say in another 10 years) learn to do business with
precision and to respect rules, perhaps they will then be allowed to get
back to Gogol and Pushkin.

******

#5
From: "stanislav menshikov" <menschivok@globalxs.nl>
Subject: CAN RUSSIAN DINOSAURS FLY? Not If Energy Costs Are Skyrocketed
Date: Sat, 25 Nov 2000 1

"MOSCOW TRIBUNE", 24 November 2000
CAN RUSSIAN DINOSAURS FLY?
Not If Energy Costs Are Skyrocketed
By Stanislav Menshikov

The Russian electric power monopoly is about to be reformed. There are yet
differences to be resolved between Mr. Gref, the Minister for Economic
Development and Trade, Mr. Chubais, head of RAO EES, Mr. Adamov, Minister
for Atomic Energy, and others. Most disagreement is about the future
institutional set-up of the industry. This is important because it may
affect the crucial issue of electricity tariffs. As prime minister Mikhail
Kasyanov (who chaired these discussions) stressed, raising tariffs is not
acceptable to the government because this is a "road leading nowhere". The
industry, he said, needs to be reformed in such a way as to guarantee
adequate supplies of electric power to the economy and population at
reasonable prices.

This is a position quite opposite to the recommendations of the European
Bank of Reconstruction and Development (EBRD). In its recent report on
Transition economies, it insists, among other things, on phasing out
"indirect subsidies" to Russian enterprises in the form of ARTIFICIALLY LOW
input prices, singling out "below-market energy costs". Eliminating these
"subsidies" is seen as one of the principal reforms urgently needed to set
the economy on a right track. Because this advice is contrary to how the
Russian government sees the situation, it could simply be ignored. But
because the EBRD is today one of the country's largest foreign creditors a
closer look at the Bank's arguments is in order.

The theory underlying the EBRD logic is that most Russian industry (except
mineral resource extraction) is inherently non-competitive if all products
and costs are measured in free market prices. Because domestic prices of
most raw materials (including primary energy) are below world prices, the
economy is artificially subsidised and cannot survive in a free market. It
is a "virtual" system without hope for efficiency and growth. Using one
author's allegory, it is a dinosaur that will never learn to fly. By
imposing "real" energy costs the economy should get rid of its dinosaurs
and become a high flying bird like all modern industrial nations.

There two basic objections to this theory. First, the assertion that
domestic prices in all open economies have to be equal is too far from
reality. Consider the very different prices of oil and oil products in the
US and Europe due to indirect tax rate differences. Yet nobody claims that
the US economy is artificially subsidised and living in a "virtual" world.
Second, high prices of energy are a relatively rare historical phenomenon.
Very low pre-OPEC world oil prices (similar to current domestic Russian
prices) were dominant throughout most of the 20th century and were a
powerful factor favouring industrial growth in the West. Nobody there ever
complained about that.

Low energy prices in Russia are not an artificial legacy of the central
planned economy but reflect relatively low local costs of producing oil and
gas. Relative prices of energy have not changed much during the 1990s,
either. Energy is normally sold to domestic users at prices set on a
cost-plus basis, i.e. including a profit margin. Because of very low wages
and most other personal incomes, charging higher domestic prices for energy
would make prices of other goods and services even more excessive and put
them out of reach of most domestic buyers. It would also undermine the
current economic boom which so far has profited not so much from high world
energy prices, but from relatively low domestic energy costs coupled with a
more realistic exchange rate that better reflects purchasing power parity.

Equalising domestic and world energy prices means a change from one
relative price structure to another that is quite different. In principle
this is possible but has to be gradual in order to avoid major
dislocations. It is feasible only in an economy where output and real
incomes are growing and where modern energy saving technologies are
introduced on a grand scale. Higher prices for energy are easier paid when
incomes are high and energy/product ratios are low. During most of the
1990s the Russian economy was falling or stagnating, and none of these
conditions for energy price equalisation existed. Today they could well
emerge if economic growth is sustained and the necessary technology
introduced through massive investment.

It is like the old rule -- the horse always comes before the carriage? High
domestic energy prices may be desirable in the long run but to get there
one needs to start with low input costs. Putting the carriage first will
ruin both the horse and the vehicle. As for "dinosaurs", Russia is a big
country which, like America, needs big companies to produce oil, gas,
electricity, steel, aluminium, aeroplanes, cars, etc. Gasprom, RAO EES,
Lukoil, far from being reptiles on the verge of extinction, have rather
become favourite playground for international investors. Given time, other
big Russian companies will also learn to "fly" in world markets.
Incidentally, some reptiles – pterosaurs -- could fly but disappeared all
the same. Freezing them out by skyrocketing energy costs is not the way to
teach Russian business the art of efficient management.

******

#6
The Chronicle of Higher Education
November 24, 2000
http://chronicle.com
[for personal use only]
EXCHANGE
Is America to Blame? Two Scholars Debate 'Failed Crusade,' a New Book on
Post-Communist Russia
Did American policymakers and scholars fail to see the truth about what
really happened in Russia in the 1990's? Stephen F. Cohen, a prominent critic
of U.S. policy toward Russia, thinks so.

In his latest and perhaps most controversial book, Failed Crusade: America
and the Tragedy of Post-Communist Russia (W.W. Norton), Cohen blasts American
officials, journalists, and scholars for complicity in what he considers the
worst foreign-policy disaster since the Vietnam War.

Cohen, a professor of Russian studies and history at New York University, is
also a frequent television commentator on Russian affairs, a contributing
editor of The Nation, and a consultant to CBS News. His critical views have
made him a lightning rod for criticism from other scholars.

We asked two Russia-watchers -- a historian and a political scientist -- to
analyze via an e-mail exchange the merits and flaws of Failed Crusade. Here
is their correspondence.

Robert V. (Bill) Daniels is professor emeritus of history at the University
of Vermont and the author of Russia's Transformation: Snapshots of a
Crumbling System (Rowman & Littlefield, 1998). M. Steven Fish is associate
professor of political science at the University of California at Berkeley
and author of Democracy From Scratch: Opposition and Regime in the New
Russian Revolution (Princeton University Press, 1995).

---

Dear Steve:

The cold war may be over, but the war among American academics over the
interpretation of Communism and post-Communism continues to reverberate.
Cohen's new book is a sweeping indictment of American thinking about
post-Communist Russia on the part of government experts, journalists, and
academic specialists alike. They are all, in Cohen's mind, guilty not only of
misunderstanding but of "malpractice."

Cohen divides his bill of particulars into three parts. The first is a
critique of American errors about Boris Yeltsin's Russia following the
dismantling of the Soviet Union in 1991.

Next is a narrative of America's Russia policy from 1992 to the present,
based on articles that Cohen published during that time, mostly in The
Nation. This series culminates in "Who Lost Russia?," an attack on the
Clinton administration for failing to back the man Cohen considers
post-Communist Russia's only genuine reform leader, former Prime Minister
Yevgeny M. Primakov, and for swallowing Yeltsin's K.G.B. successor, Vladimir
Putin. Part three offers Cohen's prescription for a new Russia policy for the
United States.

Cohen may overstate his case a bit on the media, and more so on the academic
Russianists: The half-dozen high-profile apologists for the pro-Yeltsin line
whom he repeatedly cites are hardly representative of the profession. But it
is hard to fault his dim view of the Clinton administration's "crusade to
reinvent Russia," which embraced Yeltsin and tried to foist a utopian
free-market ideology on the country.

Cohen's broadside ought to bring on serious debate among all Russia-watching
constituencies -- governmental, journalistic, and academic -- to clear the
ground of some dangerous historical misconceptions and open the way to a new
Russia policy.

Yours, Bill

---

Dear Bill:

My view of Cohen's book is more critical than yours, though your thoughtful
introduction shows sensitivity to some of the book's weak points.

The book certainly gets off to a fast start: "America's Russia-watchers, with
only a few exceptions, committed malpractice throughout the 1990's." Such a
statement places a heavy burden on the author to demonstrate his argument.

Unfortunately, after positing his provocative thesis, Cohen fills the
remainder of the book with repetitive, often stale articles he published
during the past decade in The Nation and with a tirade against U.S. policy.
This book fails, and it fails miserably -- as social science, as history, as
journalism, as policy analysis, as punditry, and as polemic.

Cohen rejects a social-scientific approach to understanding Russia. He
explicitly states his distrust of theorizing, hypothesis-testing, and
cross-national comparison up front. He also largely ignores the experiences
of post-Soviet countries other than Russia.

There is nothing wrong, of course, with rejecting the tenets and methods of
social science, especially since Cohen embraces history as the key to
understanding current-day Russia and since he fashions himself as something
of a journalist. But his book makes little contribution to either journalism
or historiography. The matter of historical interpretation deserves to be
addressed at greater length, and I will do so in a subsequent message.

Perhaps the most obvious sign of the book's shoddiness as historiography --
or for that matter, journalism -- is its use of sources. I found myself
examining the book's endnotes as I came upon one strange claim after another.
The "few exceptions" that Cohen allows to the "malpractice" that he
attributes to everyone else are the editors of eXile, an English-language
newspaper published in Moscow.

Most readers of Cohen's book will not know it, but eXile is a kind of cross
between the National Enquirer and Hustler magazine. It does include a bit of
politics, most notably a column by the notorious leader of a tiny fascist
political party. Depending on one's tolerance for outrageous misogyny, the
paper can be funny, but to treat eXile and its editors as sources of, in
Cohen's words, "some of the best press criticism" and "case studies," and to
rely upon them heavily as credible sources, makes for some odd "history." For
an analogy, imagine a specialist in American politics treating Larry Flynt,
P.J. O'Rourke, and Andrew Dice Clay as authoritative sources of information
and investigation.

Nor may the book be regarded as a work of policy analysis. Cohen doesn't
really analyze policy. He treats one-liners drawn from policymakers' public
statements as policy itself. Any serious policy analyst knows that
politicians' optimistic quips about Russia (or any other country) do not
necessarily reflect real beliefs. One must examine actual policies
systematically to grasp their essence and content. This Cohen simply doesn't
do. I actually share Cohen's dim view of U.S. policy toward Russia, but Cohen
provides critics with little ammunition for serious debate.

May the book be regarded as decent punditry? The marks of good punditry --
wit, humor, verve, and a combative style combined with suppleness of mind --
are missing entirely.

Finally, the book also fails as a polemic. A skilled polemicist may
exaggerate the differences between himself and his opponents. But he does not
wildly mischaracterize opponents' positions or fail completely to grasp the
motivations and beliefs that anchor opponents' viewpoints. Unfortunately,
Cohen commits both of those errors, and does so throughout the book.

For all its failings, Cohen's book does at least issue several clearly
expressed assertions. Do Cohen's arguments on the influence of U.S. thinking
and policy on Russia, his account of recent Russian history, and his
explanations for Russia's current political, economic, and social distress
stand up to scrutiny? Perhaps we can take up such matters in our next
exchange.

Yours, Steve

---

Dear Steve:

It is certainly appropriate to underscore the polemical character of Cohen's
work, which indeed he acknowledges up front. Whether it is an effective
polemic is a matter of opinion. Cohen paints heavy with a wide brush, and may
not win many new friends.

But I wouldn't criticize him for not doing what he does not intend to do, for
instance, to cover the non-Russian Soviet republics (where in many cases the
post-Soviet performance has been even worse than in Russia), or to apply
grand social-science theory to a historical chronicle of leadership errors.

I don't believe it is reasonable to fault an author for holding politicians,
journalists, and academics accountable for what they say, as one-liners or
not. Cohen's book is copiously and accurately documented. Explicitly or
implicitly he allows many more exceptions to his indictment of American
thinking about Russia than what is represented by eXile, for whatever that
obscure publication may be worth; in fact, Cohen's concessions moderate
considerably the force of his broadside.

The important questions that Cohen raises for debate are those you pose at
the end of your comment. First of all, what was the influence of U.S. policy
on post-Communist Russia? This is really three questions: What was official
U.S. thinking? How was policy implemented in practice? And what difference
did it make for Russia?

To my mind, Cohen does a good job of encapsulating in a short space the
incredible tale of American myth-making about post-Communist Russia, in which
Washington has projected onto Russia not so much the model of actual American
society as what I term America's ideological "false consciousness" of the
free-market utopia. Actual policy is not Cohen's main focus, except as to
averting the danger of nuclear weapons, where in fact the Clinton
administration has made substantial efforts, while allowing political
relations with Russia to deteriorate.

It would be interesting if you could spell out your own criticisms of
American policy toward Russia. Perhaps your disagreement with Cohen lies more
in style than in substance. In any case, I think Cohen exaggerates America's
blame for the tragedy of lost opportunities in post-Communist Russia. It is
Russians themselves, in the political infighting and economic greed on the
part of the few, and the cynicism and apathy on the part of the many, who
must accept primary responsibility for their country's plunge into the abyss.

Underlying these questions is the matter of accurate understanding of
Russia's post-Communist history. Cohen's account certainly stands up better
than the targets of his critique -- take only the egregious misrepresentation
by the American government and media of Yeltsin's suppression of the
opposition in 1993 as a triumph of democracy. The theory of automatic
transition from communism to free-market democracy has been blown to
kingdom-come by Russia's collapse, as measured by practically all social and
economic indicators -- or would be if the facts were faced as Cohen wants
people to face them.

Does Cohen, then, offer a satisfactory explanation for Russia's distress?
That is not the main task of the book, which is to clear the ground
historically, to remind us that the distress has in fact occurred, and that
much authoritative American opinion has tried either to deny, ignore, or
justify it.

To go further and blame the problem on American policy misses the main
target, i.e., what Russia, steered by its post-Communist leadership, has done
to itself. At the same time, it is not enough to sidestep the issue by
blaming the heritage of Communism, as Yeltsin's apologists often do; this
argument is wearing as thin as the Communists' stock attribution of all their
problems to "survivals of capitalism."

Yours, Bill

---

Dear Bill:

I agree with you that Cohen exaggerates America's blame for Russia's
failures. At the same time, I also agree that the Clinton administration
erroneously confused Yeltsin's fate with democracy's fate. You ask a good
question: What was official U.S. thinking?

Where Cohen sees ideology, malign intent, and arrogance, I see much more
mundane factors underlying U.S. policy: failure of imagination and a surfeit
of caution borne of low expectations for Russia and fear of Yeltsin's
opponents. The flow of optimistic official statements about Russian democracy
has always represented a transparent expression of anxiety. If American
policymakers really believed what they were saying (or thought that everyone
else did), they wouldn't say it so often.

You raise the crucial matter of understanding Russia's post-Communist
history. I agree that Yeltsin blew it in 1993. He should have called new
elections for both parliament and president immediately after winning in the
referendum, and his refusal to stand for reelection and his decision to
disband parliament by force were profound blunders.

But let's return to your larger question about understanding the recent
history of Russia. Here I'm afraid my disagreements with Cohen are not just
about his supercilious, malicious style of presentation, and his gross
mischaracterization of his opponents. Cohen builds much of his book on a
description of Russia's quandary and how it reached such a sorry state, and a
prescription for turning the situation around. Let's examine and evaluate his
arguments.

Cohen's description of present-day Russia is crystal-clear. He asserts:
"Moscow is an island of relative prosperity -- a 'fiefdom of thieves,' as it
has been called -- in a decaying country." Outside Moscow one finds only
"provincial wastelands," vast stretches of penury whose impoverishment
finances the lavish lifestyles of Moscow's tiny stratum of thieves.

Material circumstances for many, perhaps most, Russians are indubitably bad,
and they worsened between the late 1980's and the late 1990's. But is Cohen's
description accurate? I must admit that I suffer from a Moscow bias. I spent
about four years conducting research in Russia and other countries of the
former U.S.S.R. during the 1990's but only about a quarter of that time
outside Moscow. What I have witnessed in recent years in Orel, Kazan, St.
Petersburg, and Saratov, however, clashes with Cohen's portrait. I have seen
deepening poverty, but also successful adjustment, resilience, and even signs
of renewal.

But let's assume that he's right and I'm wrong. Cold-heartedness,
ultraliberal ideology, or fear of resurgent McCarthyism cloud my mind. Or
perhaps I have spent too much time in dilapidated Russian apartments and too
little time in the offices of CBS Evening News, and my experience has dulled
my critical faculties. How, then, may we account for how Russia arrived at
its current state of desolation?

Cohen's explanation is as unequivocal as his description. Policies of
economic "shock therapy," backed to the hilt by American Russia-watchers in
government, the news media, and academe, pushed Russia into its swamp of
undifferentiated misery.

If Cohen were not so averse to cross-country comparison, he might have
noticed that Bulgaria, Kazakhstan, Ukraine, and Yugoslavia also suffered
major economic and demographic catastrophes during the 1990's. These other
countries, at least in the early post-Communist years, did not suffer
policies of shock therapy or an onslaught of American tutelage. How then
could they, too, have encountered trials akin to those of Russia?

Which begs a separate question: What do all of these countries, including
Russia, have in common? The obvious similarity is that until a decade or so
ago they were all ruled by Communist-party regimes. Is it possible that the
Communist legacy is at least partially responsible for Russia's current
distress?

Cohen portrays attribution of Russia's impoverishment and demoralization to
the Soviet legacy as a cheap excuse. He may be partially right. I agree with
what you say in your last letter: The heritage of Communism cannot explain
everything. If a Communist legacy alone condemned a country to disaster, the
Polish, Slovakian, Croatian, and Mongolian economies -- which adopted more
thoroughgoing "shock measures" than Russia did -- would have never recovered.

Many critical observers do not share Cohen's view that "shock therapy" and
American Russia-watchers alone caused Russia's agony. Many attribute part of
the blame to the Soviet inheritance, including Gorbachev's policies. To
Cohen, such assessment is anathema. Gorbachev is "the greatest reformer in
Russian history" and may be held accountable for none of Russia's post-Soviet
woes.

Once again, I do not share Cohen's assessment. I lived in Russia for 18
months between 1989 and 1991 and watched the disaster unfold. The Gorbachev
years were when the supply of basic consumer goods went from poor to
desperate; when production plummeted; when the government become addicted to
massive infusions of credit and aid from abroad; and when the first major
measure that confiscated the population's savings was carried out. That
Yeltsin inherited an economy in ruins is not in doubt.

As for Cohen's prescriptions, we move from the realm of misinterpretation to
that of delusion. First, America's Russia-watchers must confess their
shameful role in Russia's degradation. The U.S. government is to organize an
international campaign to transfer one-half trillion dollars to the Russian
government over the next 10 years. Then, the United States and its allies are
to pay off the $7-billion former Soviet republics owe Russia. Meanwhile, the
United States is also to "relinquish its 50-year role in the West's relations
with Russia," turning moral and political leadership over to the Europeans,
who, after all, "stopped believing in crusades a long time ago."

We have now come full circle. America's "Russia-watchers," having dug
Russia's grave, now resurrect Russia. But wait a minute: Transfer the
half-trillion to the Russian government? Isn't this a government of brigands?
Indeed it is, and Cohen seems to be under no illusions about who's in charge.
For much of the book he characterizes Vladimir Putin as a viper, a man whose
early actions in office have been "ominous" and "regressive."

Then, as the reader moves through the book's final section, a remarkable
metamorphosis occurs. Putin the criminal becomes Putin the engineer of a
proud new Russia, as well as the voice of compassion for the poor. The
Russian government, previously described (largely accurately) by Cohen as a
den of thieves and incompetents, will now acquire and invest the
half-trillion dollars with the financial savvy of Robert Rubin, the creative
energy of Peter the Great, and the probity of the Christian Children's Fund.

Bill, while this book might, as you say, effectively encapsulate the "tale of
American myth-making about post-Communist Russia," that is all it does. The
book's depictions of Russia and of American Russia-watchers are cardboard
caricatures; its explanation for Russia's distress is simplistic; and its
prescription for change is a farce.

Yours, Steve

---

Dear Steve:

I think now that you and I can both agree with Cohen on his cardinal point,
that the official U.S. understanding of Yeltsin's Russia, and policy toward
it, were wrong. We all agree, moreover, that Yeltsin's leadership was
unfortunate for the development of Russian democracy and the rescue of the
Russian economy. You may not feel that Cohen's book is a useful contribution
to the understanding of these facts. I do.

Apart from the issue of Cohen's tone and style, there are disagreements
between us on the reasons for the American approach to Moscow, the depth to
which it was really taken seriously in Washington, and the effect it actually
had in steering Russia into the morass of the 90's.

You say, "Cohen sees ideology, malign intent, and arrogance." I agree with
Cohen on the ideology and the arrogance in U.S. policy, though as I have said
already, the ideology was not the actual model of American society, but an
abstract utopia. But I also agree with you on the "mundane factors" in U.S.
policy. It was a murky mix.

Your point that American policymakers didn't really believe what they were
saying about Russia is intriguing, and calls to mind the difference between
Soviet ideological statements about the world, and their actual policies. But
the "Washington consensus" about pushing the free market on Russia was
serious enough to cost some dissenters their jobs, notably Joseph Stiglitz,
recently pushed out of his position as chief economist at the World Bank. You
and I agree that American policy was not the prime villain in Russia's
troubles, but there are points where it had a bad impact, as in bailing
Yeltsin out with International Monetary Fund loans on condition of pell-mell
marketization.

I can't argue about the precise degree of Russia's misery or criminalization
under Yeltsin, but I disagree with both you and Cohen (and many others) about
"shock therapy." Shock therapy was a program originally designed by Jeffrey
Sachs and others for Latin American countries to stop runaway inflation.
Strictly speaking, it was never applied in Russia. Yeltsin and Gaidar did the
opposite in 1992, abruptly decontrolling prices and accelerating inflation.
Russia, as has been said, had lots of shock but little therapy.

Of course, we all know that the economic crisis began in Gorbachev's last
years, but it got much worse under Yeltsin, a fact that his apologists long
tried to evade. As the Russians say, "Back then we had plenty of money but no
goods to buy with it; now there are plenty of goods to buy but we have no
money."

I construe Cohen's notion of a massive American aid program for Russia to
stabilize the country and avert the nuclear danger as more rhetorical than
practical. After all, Cohen didn't say "must" but only "could." In any case,
the idea is hardly a "delusion," in the historical perspective of the
Marshall Plan and the "Grand Bargain," proposed in 1990, to help Russia if it
would accelerate free-market reforms. Debt relief is a more concrete matter.

Cohen's point in assuming the debts of the non-Russian former Soviet
republics is to stabilize them as well as Russia. This is not out of line
with current proposals of debt forgiveness for the Third World.

I am on record about the authoritarian proclivities of the new Putin regime,
despite its modest economic successes. Realistically speaking, any
large-scale aid or debt relief for Russia would now require us to negotiate
our way back through a maze of wrong turns, to recover the mutual trust that
we had in 1991-92, and make sure the money would not just flow out again to
Western banks as the I.M.F. loans did.

I have no problem with focusing aid to Russia on the regions and
nongovernmental organizations, having participated myself in some modestly
successful democracy-promoting programs at the provincial level -- with
well-directed though inadequate federal funds, I might add. But even in such
efforts I concur with Cohen's "simple rule of thumb: Americans should do
nothing in Russia that we would object to a foreign state doing in our own
country."

Yours, Bill.

******

#7
From: Matt Taibbi <exile.taibbi@matrix.ru>
Subject: stringer exceprt
Date: Sat, 25 Nov 2000

Here's an excerpt from the Stringer "Yellow Pages" book.

Again, any JRL readers who are interested in obtaining the book can contact
Stringer directly at stringer@stringer-agency.ru, or order it through our
website at www.exile.ru.

The following excerpt is of a conversation between Arkady Yevstafiyev and
Andrei Vavilov, in 1997.

PILLOW TALK
Continuing excerpts from the "Stringer" Yellow Pages

[Eds. note: The eXile has been regularly publishing translations of
telephone transcripts from the "Yellow Pages", a book released by our
Russian-language partners, "Stringer". The book contains the texts of
wiretapped phone conversations between well-known Russian political
figures.]

In this issue, the eXile looks at a phone call between two of Russia's
all-time all-star bagmen, Andrei Vavilov and Arkady Yevstafiyev. While
Vavilov has made the free agency rounds, working for both sides at one
point or another during the celebrated "Banker's War", Yefstafiyev was a
loyal bagman for the "Young Reformers." eXile readers may recall that
Yevstafiyev was one of the men caught carrying the famous "Xerox box" full
of cash out of the White House in 1996.

The time of this phone call is somewhere in the week leading up to July 16,
1997. Most probably, the call took place on Monday, July 14, when Central
Bank chief Sergei Dubinin publicly accused his former deputy Vavilov of
signing off on diversions of funds from the Central Bank that were meant to
be paid to the MiG factory. The money that Vavilov signed off on was
reportedly used by Vladimir Potanin-a Yefstafiyev/Chubais ally at the
time-to make his successful bid for 25.1% of Svyazinvest.

Vavilov is in London at the time of this call. Within days he would return
to Moscow and give a press conference in a hall packed with journalists to
deny the charges. The bombshell Vavilov conference was something of a
starting gun marking the beginning of the so-called "Banker's War" which
was to grip the country for the next year.

A week after Vavilov's news conference, shots were fired into Dubinin's
apartment. Almost immediately afterwards, Dubinin publicly changed his
story, declaring that no money had been stolen.

One interesting thing to note about this conversation. As in other calls,
there is evidence here that the two men knew they were being tapped and
were using that knowledge to their advantage. The conspicuous effort to
point out that "the charges are groundless" into the microphone seems to be
a common feature of the calls in the Stringer book. This is no exception:

Andrei Vavilov and Arkady Yevstafyev

Vavilov: Hi, Arkash. How's it going?
Yevstafyev: Fine. How about you?
V: Well, I'm sitting in London. Is there any news?
Y: Andrei, everything is fine. Ashot* came over. Everything is fine.
V: Everything's alright?
Y: Everything is fine.
V: Those guys haven't come by any more?
Y: No.
V: You haven't gone to them, either?
Y: Which guys do you mean?
V: Remember, we talked with them in the foyer?
Y: Not yet. Everything will be fine, don't worry. Petrovich, don't lose
touch, call me on my cellular.
V: When I call, you don't pick up.
Y: I was in a meeting in a conference room.
V: Maybe on Monday we can discuss that question?
Y: Sure, we'll definitely discuss it.
V: What's in the papers about Kokh?
Y: Hm, everything.
V: It's a criminal case.
Y: Andrei, there's nothing. They're just going to finish up the
investigation and make the decision to open a criminal case or not. There's
nothing to it.
V: There's a safety in his contract.
Y: Everything is clean. He declared everything openly. It's complete
bullshit.
V: Decay. How are our feathered friends?
Y: I'll tell you later. Really, the truth is on our side.
V: The truth of truth, but (didn't finish)...
Y: Andrei, everything is fine. See you soon. We'll talk.
V: All right.

*Ashot Yegariyan, former head of the National Credit Bank

******

#8
Moscow Times
November 25, 2000
A Matter of Chemistry
By Nadja Vancauwenberghe

Zinovy Pak spent the first decades of his career building up the country's
military-industrial complex. Having earned a doctorate in chemistry, Pak went
on to become a designer at Soyuz, a research and production facility near
Moscow that developed new missile technologies.

But after more than three decades of boosting Russia's military potential, he
now finds himself knocking it down. As head of the Ammunition Agency, the
state body responsible for honoring Russia's commitment to the international
Chemical Weapons Convention, Pak is in charge of dismantling the 40,000-ton
stockpile of deadly blister and nerve agents.

This chemist with a head for business recently took time away from his
schedule to speak with The Moscow Times. For a broader picture of the state
of the nation's chemical weapons, see Insight.

Q:
Your agency took over responsibility for chemical weapons destruction from
the Defense Ministry last month. That is not an easy challenge. Officials say
the program is three to four years behind schedule, while experts say it lags
even further behind. How would you assess the current situation?

A:
The situation is very difficult and there is great cause for concern. When
the Russian president signed the convention in 1993, we all knew the country
was taking on an incredibly difficult task. Economic conditions, financial
conditions and reforms made it even more challenging. And now, almost four
years after ratifying the convention [in 1997], we've had a lot of trouble
meeting our commitment.

Q:
Why? Is this due only to a lack of funding, or do you mean the government
lacked the political will to implement the program?

A:
No. The political was always there and remains today. There has never been,
at any time, any doubt or hesitation about the necessity of destroying our
chemical weapons and meeting our commitment to the convention.

First and foremost, the budget hasn't allowed us to finance this program f we
simply lack the financial means to move forward at the required pace. To a
certain extent there may also have been some lack of a concrete commitment on
the part of the government. When it came down to deciding how to divide the
scarce resources of the federal budget, there may have been some hesitation
about putting it into chemical weapons destruction. Maybe the government
didn't fully understand the importance of the program, or the extent of the
resources required.

Q:
Wasn't it a priority?

A:
It was. Had it not been, we wouldn't have gotten any money at all. And let me
stress that chemical weapons destruction was never hit by the budget deficit.

If you ask me whether the money was enough, then that is another story. There
is no doubt the funding is totally insufficient. But this year, for the first
time, the budget for 2001 significantly increases f by six times f funding
for the CWD program. And I can guarantee you that is only the beginning.

Q:
Why the sudden increase?

A:
The main reason is the economy has improved. But the takeover [from the
Defense Ministry] of the civilian-run Ammunition Agency played an important
role. We can be more focused and active. We put all our strength into
supporting this program. This is a significant change. As head of the
Ammunition Agency, chemical weapons are my main concern. The Defense
Ministry, on the other hand, had many other issues on its agenda and CWD was
not the only program that was underfunded and behind schedule.

Q:
How much money does Russia need to destroy its chemical weapons? Previous
estimates were around $6 billion. What is yours?

A:
In Shchuchye [one of the country's seven storage sites], the bill promises to
be high f as much as $1 billion. We have seven sites and plan on building
seven plants. That means a minimum of $7 billion. I would be dishonest if I
didn't add that such a figure is simply not realistic for us.

Q:
What do you plan to do then? Change the program?

A:
We do have to reconsider our plans.

Q:
Wouldn't it be more economical not to build a destruction plant at all seven
storage sites as you now plan to do?

A:
Definitely. Building on to a plant where we have already achieved so much
would cost less than starting to build a new one from scratch somewhere else.

Q:
Earlier plans ruled out transporting the chemicals because it was considered
to be unsafe. Are you now ready to reconsider the transportation option?

A:
In view of how well preserved our stockpiles are, we can certify that
chemicals may be transported without any danger to the population. We can
guarantee 100 percent safety. But I prefer not to go into this issue now.
Let's first complete our work in Shchuchye and Gorny [storage sites]. That's
our priority.

Q:
Besides the transportation scenario, what other cost-saving solutions are you
ready to take into consideration?

A:
Our destruction process includes such stages as neutralization.

This process results in a new substance that is rid of its toxicity. We
could, for example, wait beyond the convention deadline to get rid of this
substance, or even think about recycling it and selling it for civilian use f
a way to earn back some of the costs of destruction. We are not as rich as
the United States. We can't afford not to look for every opportunity to save
money or to make some, even just a little, along the way.

Q:
A good percentage of the funding for the CWD program is funneled into
developing the social infrastructure f such as building houses, roads,
improving water and heating systems, etc. f where the chemicals are stored.
How vital is this component of the program?

A:
There is a big difference between what goes on here and in the United States.
There they build the destruction sites, do the work and there is no need to
compensate the locals. People there already have everything they could
possibly want. But in Russia, the picture is quite different. Unfortunately
we have to spend a lot on infrastructure in places where it is lacking. This
adds a great deal to an already expensive program, but it is a necessary part
of it. It is our debt to the population.

Q:
In 1996 and 1997, before it ratified the Chemical Weapons Convention, Russia
was promised all the financial support it needed from abroad. In your
opinion, has the foreign aid committed to the program been sufficient?

A:
Of course, the more we can get, the better it is. My aim is for the whole
program to be funded 50 percent by the Russian Federation and 50 percent by
foreign governments. Many foreign assistance programs have been very modest f
more moral than material.

Q:
Is it not, in fact, a difficult time to beef up foreign aid? The U.S. Senate
is reluctant to release the funds already allocated, and for 2000 and 2001
the money for CWD has been frozen.

A:
Undoubtedly, everything will depend on the attitude of the United States and
more precisely on the goodwill of the U.S. Congress. It goes without saying
that if we want to succeed in our joint project we need Congress to support
the subsidies.

But I can understand they were a bit shocked by the miserly [level of]
funding provided by Russia itself in recent years and so they set conditions
on further assistance. We are now ready to meet all of these conditions.

But this is crucial. We need the United States to stay in the game and to
continue to provide the assistance they have committed. It is vital for our
joint project and it is vital for the Russian CWD program as a whole.

Q:
How do you plan to attract more foreign assistance to the program?

A:
I think the decisive moment will occur when we start the actual destruction
process. We will show the world we are committed to our task. Then countries
that are still a bit wary can join in.

I want to organize total transparency for our work with foreign donors. If
some countries are still suspicious about how the money they give to Russia
will be spent, they will see there is no reason. I will personally guarantee
it will be appropriately disbursed up to the last kopek.

Until now the United States has been the leading donor. Its attitude will be
decisive. American involvement has been a model for other counties. If they
step back it could have very negative effects on the whole program.

Q:
If, as you say, the stockpiles are in good condition and safely stored, why
put so much money into a program Russia cannot afford? Doesn't the country
have more urgent problems to solve?

A:
Our arsenal is safe, but we cannot rule out the possibility of extraordinary
circumstances. Terrorist attack, natural disaster f we cannot plan for that.
And in those circumstances these weapons would be dangerous for everyone f
including the United Sates. We are talking about 40,000 tons. That is enough
to create the worst catastrophe the world has seen.

Interview by Nadja Vancauwenberghe

******

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