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Johnson's Russia List


November 29, 2000   

This Date's Issues:   4658  4659  4660


Johnson's Russia List
29 November 2000

[Note from David Johnson:
1. Christian Science Monitor: Fred Weir, Can Russia deliver on arms sales? In the past month, Russia announced major arms deals. But do countries get what they pay for?
2. AP: Summit Feels Cold War-Style Acrimony. (OSCE)
3. Moscow Times: Sarah Karush, Igor Sutyagin to Go on Trial for Treason.
4. Interfax: Putin "good enough for national judo squad"
6. Ira Straus: OECD and Russia's future in the Atlantic world.]


Christian Science Monitor
29 November 2000
Can Russia deliver on arms sales?
In the past month, Russia announced major arms deals. But do countries get
what they pay for?
By Fred Weir Special to The Christian Science Monitor

Moscow is moving aggressively to recapture its Soviet-era dominance in the
global arms bazaar, and the scale of recent Russian salesmanship in Asia has
raised deep anxieties in Washington. But some experts say Russia is peddling
weapons it doesn't have, as part of a desperate marketing ploy initiated by
President Vladimir Putin to save the bankrupt ex-Soviet defense industry from

On paper, Russian exports look feisty. In 1999, Moscow signed $3.5 billion in
foreign arms sales, to rank fourth in global arms exports. This year sales
are estimated at $4 billion. But the Kremlin's dazzling new arms showroom may
be an illusion, built on obsolete hardware pulled from Soviet military
warehouses and a lot of energetic sales talk about modern weapons systems
that are still on the drawing board.

"Most of our sales pitches these days are little more than a confidence
trick, because Russia lacks the capacity to produce many of the armaments it
is promising," says Vitaly Shlyikov, a former Russian deputy defense
minister, who is now an independent military expert with the Council of
Foreign and Defense Policy in Moscow. "Our military, as well as our arms
exporters, have been living for the past 10 years on the stockpiles amassed
by the USSR for World War III."

The art of selling decrepit arms

Last week Moscow said it is negotiating the sale of up to five ultramodern
Beriev A-50E early-warning aircraft, similar to the US's AWACS system, to
Beijing. The US recently blocked Israel from exporting a similar plane,
because it could give China an edge in any future confrontation with US ally

Moscow has also torn up a 1995 agreement with the Clinton administration not
to sell conventional arms to Iran, and will soon resume deliveries it says
will include submarines, tanks, and sophisticated ordinance.

In the past year, Russia has concluded contracts to sell state-of-the-art
SU-30MK fighter planes to India and China. It is currently offering advanced
helicopter gunships to Turkey, and anti-aircraft missiles, warships, tanks,
and fighter planes to a variety of other countries.

But after a decade of severe budget-cutting, and almost zero procurement by
the Russian military, the ability of arms factories to deliver on many of
these contracts appears in serious doubt.

"The Russian armed forces have kept going by upgrading existing weapons, and
won't be in a position to buy new ones in any quantity until at least 2005,"
says Valentin Rudenko, an expert with the independent military news agency
AVN in Moscow. "Money from foreign sources is all that keeps some design
bureaus and production lines alive, but it's clearly not enough".

Mr. Shlyikov, a veteran of Soviet military intelligence who spent 10 years
heading a secret committee that compared the USSR's defense potential with
that of Western countries, says few people really know the parlous state of
Russia's once-vaunted military-industrial complex.

"Of course the directors of defense plants dream that the state will step in
and revive them, or that foreign money will appear," he says. Only 10 percent
of Russia's 1,700 military factories are still working.

"The system of subcontractors is completely gutted," Shlyikov says. "Some
people from big factories may be signing contracts, but they know they cannot
produce the final product anymore. They just hope someone else will take

A case in point is the A-50E early-warning aircraft, which has so alarmed
Washington. Russia has been producing earlier versions of the plane, known by
the NATO code name "Mainstay," since 1980. But the craft's electronics and
radars are considered far inferior to US or Israeli-produced AWACS systems,
and the Chinese have demanded a massive upgrade. Moscow insists it can
deliver an equal to the American AWACS plane within five years, but needs
huge sums in development money up front.

Another example is a $1.3 billion deal to sell 40 Su-30MKI fighter planes to
India, under negotiation for several years. Experts say Russia has so far
managed to deliver only a few modified copies of an older aircraft, the
Su-27, in place of the promised SU-30s. "India has paid Russia several
hundred million dollars to help develop the SU-30MKI, but the new
superfighter continues to be a mirage," says Pavel Felgenhauer, an
independent Moscow-based defense expert. "It would seem that we are taking
the Indians for a ride."

Earlier this month, Mr. Putin moved to consolidate Russia's military export
industry, merging two key agencies and putting a former KGB colleague Mikhail
Dmitriev in charge of all future Russian arms sales.

Experts say the Kremlin plan is to centralize control and concentrate income
from weapons exports, in hopes of salvaging something from Russia's
disintegrating military-industrial machine.

Kremlin commissioners

"Over the years, there has been a lot of abuse in Russia's arms trade, and
money has often wound up in private pockets," says Dmitri Trenin, a military
expert with the Carnegie Endowment, in Moscow. "Putin wants to channel this
income into projects that might keep Russia competitive in the world's arms
market. It's a rational plan. If we can develop these new weapons for other
countries, they will be available to the Russian armed forces later."

But the Kremlin's reforms, even if they take hold, may be too little, too
late. "Putin is on the right track," says Shlyikov. "But tinkering with the
old system won't work. Our military-industrial complex needs to be completely
rebuilt from the ground up".


Summit Feels Cold War-Style Acrimony
November 28, 2000
VIENNA, Austria (AP) - A two-day conference of Europe's main security
organization ended Tuesday in Cold War-style acrimony, with the United States
and Russia accusing one another of scuttling agreements on Chechnya and the
rights of children.

The foreign ministers of the Organization for Security and Cooperation in
Europe were to have adopted unanimous declarations on major issues on the
continent. But the 55 member states could agree only on an eight-point
statement of support for democratic change and stability in the Balkans. On
Monday, Yugoslavia was admitted to the organization.

Russia refused to accept a specific deadline for the return of the European
organization's observation mission to Chechnya. Moscow agreed at the
organization's summit last year in Istanbul to accept such a mission, but the
members have been unable to reach the war-torn region.

Russian deputy Foreign Minister Yevgeny Gusarov accused an unidentified
country - presumably the United States - of wanting to change the wording of
a draft declaration late in the negotiations.

``Another party wanted to introduce new demands to what was previously agreed
upon,'' he said. ``We do not believe that is a fair way of conduct.''

U.S. Ambassador David Johnson said the United States had made clear for two
months that it wanted the Russians to commit to a specific date for the
return of the European mission.

``We were disappointed that we didn't have a document which was fuller in
respect to implementation of commitments made at Istanbul,'' Johnson said.
``We're not backtracking on the Istanbul commitments. I don't think we've
lost anything.''

The Russians also blocked adoption of a statement affirming support for the
rights of children in areas of armed conflict.

Gusarov noted that Russia had ratified the U.N. document on international
rights of the child, which protects children from prosecution as adults and
the threat of capital punishment.

The United States, where children are sometimes prosecuted as adults, has
never ratified the U.N. declaration on children's' rights. ``We do not seek
that it be dictated by countries that have not ratified the U.N. rights of
the child,'' Gusarov added.

The current head of the European security body, Benita Ferrero-Waldner, said
the conference also couldn't approve declarations on Russian troop reductions
in Moldova and Georgia. Western diplomats, speaking on condition of
anonymity, blamed the Russians for scuttling the declarations.

Western diplomats said Russia's hard-line apparently reflected Moscow's
interest in limiting the role of international organizations in conflicts in
the traditional Russian sphere of influence.

Russian Foreign Minister Igor Ivanov had given assurances that Moscow would
honor agreements reached at Istanbul on troop withdrawals from former Soviet

In those agreements, Russia pledged to pull all its 2,500 troops from Moldova
by 2002. The troops have been there since they intervened to end a 1992
separatist war.

Russia also agreed at Istanbul to reduce its troops in Georgia, where Russian
soldiers enforce a 1994 cease-fire between Georgians and minority Abkhazian


Moscow Times
November 29, 2000
Sutyagin to Go on Trial for Treason
By Sarah Karush
Staff Writer

After spending 13 months in jail on treason charges, defense expert Igor
Sutyagin is at last due to get his day in court.

The Kaluga division of the Federal Security Service finished its
investigation and issued formal charges against Sutyagin, a resident of
Obninsk, a former closed city in the Kaluga region, on Oct. 26.

The case has been sent to the regional court, but a trial date has not been
set yet.

Sutyagin's lawyers told journalists Tuesday they filed a motion for the case
to be thrown out. They say the case is bogus since Sutyagin, a researcher on
security issues at the USA and Canada Institute, could not have given away
state secrets since he did not have access to them.

Lawyer Vladimir Vasiltsov said the final charges revolve around a British
consulting firm that Sutyagin worked with. The lawyers declined to name the

"Igor traveled to meetings there and brought them digests of the Russian
press," Vasiltsov said.

Boris Kuznetsov, another lawyer, said the firm advises potential investors
about Russian industries. He said the investigators had made no attempt to
question representatives of the company.

Previous elements of the investigation appear to have been dropped. Vasiltsov
said the final charges include no mention of Joshua Handler, a Princeton
University researcher whose Moscow apartment was searched the day of
Sutyagin's detention.

The charges also include no mention of Sutyagin's work in a study on
military-civilian relations conducted by two Canadian universities. Pavel
Podvig, an arms-control expert and a vocal supporter of Sutyagin, said the
FSB earlier this year interrogated people Sutyagin had interviewed for the

Podvig said the FSB investigators spent the past year casting about for
something to pin on Sutyagin f ever since they searched Sutyagin's apartment
and failed to find incriminating evidence.

After searching Sutyagin's apartment on Oct. 27, 1999, investigators asked
the researcher to accompany them to the Obninsk FSB department, where they
held him illegally for two days before formally arresting him.

Kuznetsov said the investigators told Sutyagin they knew he had not done
anything wrong, but they needed his assistance to catch foreign spies.

In Article 275 of the Criminal Code, treason is defined as giving away state
secrets or assisting a government or other foreign organization in hostile
activities. Sutyagin is accused of doing both.

On the one hand, the charges say Sutyagin gave away information from
classified sources without explaining where Sutyagin, whose status did not
grant him access to such sources, could have gotten them, Vasiltsov said. He
said the charges merely imply that "in his conversations with high-placed
military officials" he could have received such information.

"They don't go any further than 'could have,'" the lawyer said.

On the other hand, the charges say Sutyagin analyzed information from open
sources for use against Russia, Vasiltsov said. But the investigators did not
provide evidence the British consulting agency f or any other foreigners
Sutyagin was in contact with f are working against Russia, he said.

Instead, FSB specialists declared that "based on their research methods and
the questions they asked, these people could be secret service agents,"
Kuznetsov said. "By that logic you could put the entire scientific community
up for trial."

Like most spy cases, Sutyagin's case is classified and is expected to be
heard in a closed courtroom. If a case contains even one classified document,
the whole case can be classified. Thus, the FSB can add its own internal
documents to a case in order to classify it, a tactic Kuznetsov said was used
with Sutyagin.


Putin "good enough for national judo squad"
Source: Interfax news agency, Moscow, in English 28 Nov 00

The head of Russia's Judo Federation, Vladimir Shestakov, said on Tuesday he
thought President Vladimir Putin was good enough to qualify for the national
Olympic judo team, the Russian news agency Interfax reported.

"He is a master of judo and sambo [wrestling] and a distinguished Russian
Federation coach, which by today's classification would match an
international class master," Shestakov told the agency.

He said Putin could well make it into the 60-kilogram division, the so-
called "problematic weight" for the Russian judo squad.


Moscow pours money into freezing far east
By Denis Dyomkin
VLADIVOSTOK, Russia, Nov 28 (Reuters) - Moscow on Tuesday relented in a war
of words with regional bosses in its freezing far eastern Primorsk province
and rushed money to provide heat to thousands of people shivering in sub-zero

The move followed several days of bitter recriminations between the Kremlin
and the regional governor over who was responsible for the collapse of the
far-flung territory's creaking infrastructure and a lack of funds to buy
heating fuel.

While accusations flew, people in small towns and villages in the region
bordering China and North Korea bundled themselves up in clothes at home and
slept under layers of blankets as frozen water and sewage pipes burst around

RIA news agency quoted the spokesman for Russian Finance Minister Alexei
Kudrin as saying the ministry was opening two credit lines to Primorsk worth
a total of some $6 million and sending an additional $10 million in urgent

Moscow also dispatched Deputy Prime Minister Ilya Klebanov to the region with
orders to assess what was happening and who was to blame.

"We will sort everything out at the site and the conclusions will be in my
report to the president," Klebanov told reporters on arrival in Vladivostok.
He later also visited the headquarters of Russia's vast Pacific Fleet.

Pictures of heavily muffled people trembling in their flats in Primorsk hit
television screens about two weeks ago and an angry President Vladimir Putin
called the situation an "utter disgrace."

But he said Moscow was not responsible for the suffering, putting the blame
squarely on the regional administration and making clear that no new funds
would be forthcoming.

The governor, Yevgeny Nazdratenko, returned the blow, saying the root of the
problem was a huge debt run up by Moscow and its unwillingness to act to curb
rocketing energy prices.


On Tuesday, the regional Emergencies Ministry said the situation in the
northern Kavalerovo district was critical, with temperatures in the homes of
some 15,000 local residents never exceeding three to four degrees Celsius (39
degrees Fahrenheit).

Outside, the temperature was minus 27 Celsius (minus 17 Fahrenheit), it said.

"There is only enough heating oil to run for two days. A disaster may happen
then," a spokesman for the ministry's Primorsk outlet said by telephone,
referring to the fact that frozen water could start bursting pipes.

Residents of Kavalerovo, who have already appealed for help to local
authorities and Moscow, on Monday wrote a letter to Russia's Orthodox
Patriarch Alexiy II, asking him to step in.

Governor Nazdratenko poured scorn over the move. Russian television showed
him saying Alexiy was unlikely to give the freezing people anything more than
spiritual warmth.

Heating problems, aggravated by bouts of particularly nasty weather, also
persist in other parts of the region, including the regional capital


Jamestown Foundation
NOVEMBER 2000   Volume VI, Issue 11    Part 2

By Aleksandr Buzgalin
Aleksandr Buzgalin is a doctor of economics and a professor at Moscow State
University. He is a leader of Russia's Democratic Socialist Movement.


It was already clear from the presidential election campaign itself that
President Vladimir Putin's rise to power would alter the conditions in
which the Left operate. During the campaign Putin managed to employ the
trump cards which the KPRF and the so-called "patriotic opposition" had
considered their own.
Putin attracted voters with his rhetoric about Russia's standing as a great
power, and took advantage of growing nationalist feeling fueled by the
military operation in Chechnya.

This consolidation of presidential authority, however, was linked not only
to Putin's personal image (Putin was the clear winner in comparison with
Boris Yeltsin) and the exploitation of great-power, nationalist emotions.
Another important factor affecting the balance of forces on Russia's
political stage was the stable economic growth which began in 1999, mainly
due to an increase in oil and gas prices (the main sources of export income
in Russia) and a number of other favorable economic conditions.

In 2000 this growth has also been accompanied by a growth in people's
income in real terms, and a reduction in the debt owed to those whose
income derives from the state budget; this applies to pensions, benefits,
and the wages of those working in education, health and other public sector
industries. While Putin has not managed to completely eradicate delays in
the payment of pensions, benefits and wages from the budget, or to repay
everything that these people are still owed, he has managed a significant
reduction in the debt.

Naturally, this fact, alongside a growth in salaries in a number of
industries which have benefited most from the economic upswing, has
decreased social tension and helped assuage public discontent at the sorry
results of the previous seven years of economic crisis. However, the
potential for discontent remains very high, for in real terms wages have
not even reached the level they were at before the financial crisis of
August 1998. As before, about 30 percent of the population remains below
the poverty line.

Changes in the labor movement have also affected the position of the Left.
In 1998-2000 strike activity was noticeably down. In 1998 this was due to
the shock of the crisis, when a wage cut of almost 50 percent in real terms
meant that workers were preoccupied with more basic aims--the struggle to
survive--rather than with joint action to protect their rights.

After this there was no increase in industrial action, because previously
almost every strike had been related to delays in wage payments; when the
economy is growing such delays are less frequent. It turned out that the
labor movement was unprepared for making any other demands.

At a number of factories during this period, however, workers began
demonstrating against certain basic features of the new economic order.

Workers called for a review of privatization, for broader rights to
participate in running the enterprise, and for recognition of their right
to monitor the company's economic activity. This struggle frequently
assumed radical forms--major transport arteries were closed, and there were
sit-ins, where force was often used against the protesting workers. The
workers' struggles at the Vyborg pulp and paper plant, the Yasnogorsk
engineering plant, the Chernigov pit, the color printing plant in St.
Petersburg and others became common knowledge in Russia.

Yet with one or two exceptions (the pharmaceutical and chemical products
factory in Moscow for example) the KPRF proved incapable of supporting this
burgeoning radical labor movement--or at least of using it in its own


In the current climate the weaknesses of the main opposition political
party--the KPRF--have become even more obvious.

First, there was the "unexpected" success of the pro-Putin Unity movement.
This success was mainly due to a mistake by the KPRF itself: It tried to
operate on the opposition's territory--great power politics, "state
patriotism" and other elements from the basically right-wing, conservative
end of the political spectrum--and was rightly and easily ousted by the
authorities, which decided to switch to a great-power model for Russia's
barbaric semi-capitalism. This brought about a sharp decline in the
position and role of the KPRF in the Duma. Whereas the opposition used to
be able to amass about half the votes, in the new Duma the communists and
their allies are in a clear minority. No less painful was Zyuganov's
decisive loss to Putin in the first round of the election (remember that in
1996 Zyuganov lost to Yeltsin by just a few percent, and most observers
noted that even that was because the incumbent president monopolized the
electronic media).

Second, discontent is growing within the KPRF. At the same time, the
differences in the political positions of the party's leaders, members and
supporters have become much more obvious than they were.

The KPRF leadership initially attempted to use the fact that some of its
slogans were similar to President Putin's rhetoric to invite him to
cooperate more closely with the parliamentary opposition. But without
showing any signs of irritation at the actions of the opposition (which his
predecessor Boris Yeltsin often used to do), Putin nevertheless rejected
any form of partnership. Meanwhile, this attempt at rapprochement met with
the disapproval of many grassroots members of the KPRF.

The discontent is not new. Rank and file members have had plenty of reasons
to condemn the party leadership and the parliamentary group for their
excessive loyalty to the authorities. The parliamentary faction had already
been criticized for its vote of confidence in the government, for
supporting the president's proposed candidates for the post of prime
minister (for example voting for Kirienko in 1998), and for supporting (at
the end of the day) the government's draft budgets.

The policies of the so-called "red governors" caused even more anger. They
were reproached for putting friendly relations with the Kremlin at the top
of their agenda, rather than using their powers in the interests of the
working people--particularly to bring about a radical change in social and
economic policy. They were also rebuked for not using their authority to
support the political struggle of the Left. A number of governors who were
elected with the support of the KPRF turned away from their former allies
completely (for example former Kursk Governor Aleksandr Rutskoi).

With Vladimir Putin in power these problems have become more serious. Many
governors, including "red" ones, are determined to demonstrate their
loyalty to the new president. Gennady Zyuganov also went through a period
of playing up to the president. Multitudinous opposition politicians
declared that they were prepared to support President Putin in his fight
for Russia's national interests. It should be pointed out that many
ordinary members and supporters of the KPRF and representatives of other
left-wing opposition groups also supported this position. The hope was that
President Putin would fight to restore Russia's greatness, and some even
entertained the illusion that Putin would pursue policies in the interests
of working people.

Other members of the KPRF (mainly rank and file members of the party in the
provinces) and supporters of the radical left opposition (particularly the
Russian Communist Workers Party [RKRP]) were highly critical of Putin's
policy right from the outset. They pointed out that Putin was relying on
economic advisors of the liberal right to draw up his socioeconomic
program. Indeed the practical steps Putin's administration has taken attest
to the fact that he is prepared to pursue a policy of further economic

The elimination of higher tax rates on very high incomes and the
introduction of a flat income tax rate of 13 percent--against a background
of glaring differences in living standards and widespread concealment of
high incomes from the tax authorities--have effectively meant the
introduction of the principle "the poor paying for the rich." The
government's proposed draft Labor Code envisages a sharp reduction in
social guarantees for workers, effectively allows an 11-hour working day,
and strips trade union organizations of any material operating basis at

Naturally, such varying attitudes towards Putin among supporters of the
Left greatly undermine unity in the ranks and its ability to act as a
consolidated opposition force. Third, relations between the KPRF and its
allies have become fraught.


For many years the allies of the KPRF have been united within the Russian
National Patriotic Union (NPSR). On the very eve of the presidential
election in 2000 the influential organization Spiritual Heritage, led by
Podberezkin, split from the NPSR. This conservative-nationalist
organization and its leader had had no small influence on the development
of the ideological stance of the KPRF itself. However, Podberezkin's

growing political ambitions and his aspirations to the role of spiritual
leader of the NPSR led to conflict with the KPRF leadership, which saw the
NPSR merely as its political adjunct. The result of this conflict was that
Podberezkin independently declared his candidacy in the presidential
elections. While he had never concealed his dislike for communist ideology,
Podberezkin now adopted a radical anticommunist stance, not averse to
stooping to the old cliches of anticommunist propaganda.

Another well-known opposition leader who had figured among the leadership
of the NPSR--Aman Tuleev--also distanced himself from the union. He did not
resort to anticommunist attacks, but tried to create for himself the image
of a pragmatic politician with a constructive program, in contrast to the

A similar political maneuver was made by a prominent member of the KPRF
leadership, Gennady Seleznev, who is serving a second successive term as
speaker of the State Duma and who was nominated for the post by the KPRF,
still the largest single faction in the Russian parliament. He created his
own political movement, Russia, to which he also tried to lend a more
pragmatic and less ideological slant. This was met with stern disapproval
by the leaders and the grassroots members of the KPRF. However, unlike
Podberezkin and Tuleev, Seleznev did not go as far as to create an open
rift with the KPRF, and his Russia movement joined the NPSR, of which
Seleznev himself became a co-chairman.

For all the apparent mystery (particularly for foreign observers and
analysts) surrounding the Russia movement, it is in fact a quite
straightforward phenomenon. This movement is being formed according to the
same principles center-left movements have always tried to follow,
consisting mainly of paternalistic, state-oriented businessmen and the
middle and lower levels of the federal and regional nomenklatura who did
not make it into pro-presidential structures (whether due to political
convictions which prevented them from selling out to the right or for other
reasons). Clearly the most suitable leader has always been and will always
be a moderate opposition leader and a compromise candidate for chairman of
the Duma. This was exactly how the Civic Union, which cooperated with
Khasbulatov, then Rybkin's socialist party, and now the Russia movement
were formed.

The prospects for such organizations in Russia are not great. However,
Seleznev's close relationship with the KPRF, the movement's association
with the NPSR, and the presence of a large number of rebels from the middle
ranks of the communist party among Russia activists, all help create a
rather new situation. In particular, the KPRF has the opportunity to adopt
a different tactic in elections. Prior to the 1999-2000 election campaigns
this was dubbed the "three column" tactic: Radical communists (the
left-wing, mainly provincial section of grassroots members of the KPRF
together with the RKRP and other extreme left movements); moderate
great-power communists (the core of the party headed by Zyuganov), and the
even more moderate Russian social democratic "patriots", who lean towards
the idea of a strong state. It is to this last role that Seleznev's
movement may aspire under certain circumstances (above all if it maintains
its friendly relations with the Communist Party leader). One should not be
taken in, however, by the social democracy of Russia. While Western social
democrats grew out of the organized labor movement and are oriented not
only towards the establishment but also towards mass democratic
organizations, Seleznev's structure grew out of the CPSU-KPRF and is
oriented mainly towards a strong state apparatus.

The tension in the KPRF's relations with its allies, having lost a number
of influential figures who used to be members of the NPSR, is exacerbated
by its poor prospects for attracting any other significant forces among the
left-wing opposition.

This is difficult if only because the rest of the Left--although its
supporters are many in number overall--is represented by small parties and
groups which have little influence and are extremely varied in their
ideological and political predilections. The most prominent among them are
a handful of socialist and social democratic parties, three of which (the
socialist parties of Bryntsalov, Shakkum and Rybkin) were founded prior to
the 1995 parliamentary elections exclusively to service the personal and
political ambitions of their leaders (Bryntsalov is a businessman and vodka
baron; Rybkin was then the speaker of the State Duma) and have not played
any visible role since then.

There have been several attempts, mainly social democratic ones, to unite
these small parties and organizations. These attempts only differed from
each other in the time it took for them to fail. The two most recent were
the creation about two years ago of the Movement for New Socialism based at
Petrov's Realists club (this movement had effectively ceased to exist by
the end of 1999) and the attempt this year to create a united social
democratic party under Gorbachev. As of yet, though, only a very few groups
have come together within this project. The largest social democratic
organizations do not seem keen to join this united party (with the
exception of the rump of Rybkin's party, which does not enjoy very great
authority). The main problem facing socialist and social democratic
organizations is not a lack of will to unite, but the weakness of their
social base and the vagueness of their political and ideological orientation.

As regards the former, we should note that in Russia the middle class (in
the Western sense of the most numerous, "comfortable" and stabilizing
element in society) is very weak, unstable and represented mainly by small
business (predominantly the criminalized and very unstable group known as
the shuttle traders), medium business and management, and thus is not
attracted by socialist values. After the political upheavals of the late
1980s and early 1990s, the more qualified sections of the working class and
most specialists in Russia have a firm distrust of politics and politicians
in general and Gorbachev in particular.

As for politics and ideology, social democracy in Russia will be in a
miserable state until it reaches the level of the radical activism of the
Western social democrats at the beginning of the 20th century, when they
had to take tough measures to protect the interests of the trade unions and
secure their political niche. Neither Gorbachev, who is by nature soft and
tends towards compromise, and whose image is that of the man who broke up
the Soviet Union, nor politicians like Rybkin, who have demonstrated in
practice their inability to garner any significant public support even when
they have access to huge financial and administrative resources, will be
able to implement real social democratic policies.

However, the more radical tendencies on the Left--anarchists, Trotskyites,
and those who advocate purely working-class political organizations with
radical class-based ideology--have similar problems. Although their
influence is steadily growing among young people, this numerical growth is
still too slow to help these organizations emerge from the political
ghetto. Their slogans do not strike much of a chord even with those
sections of the population which suffered the most during the market reforms.


In any event, the KPRF remains the largest and best-organized opposition
party on the Left. But it has not remained unscathed by the problems
affecting the whole of the Left. By combining great-power and socialist
elements into its ideology and basing itself on the remnants of the
organizational structure of the CPSU, the KPRF managed to gain wide
popularity. However, its nationalist slogans were gradually taken over by
its political opponents, and the socialist element, which was adopted in
its most conservative (Stalinist) interpretation, was correspondingly only
capable of attracting the most conservative sections of the
socialist-minded public--mainly members of the older generation. Now,
painfully, the party's social base and its core of activists are gradually
beginning to erode. Many activists are only associated with the KPRF
because it is the largest opposition party, and any weakening in its
position increases the risk of an exodus.

The only thing preventing the potential escalation of tension within the
KPRF (which may end in a split) is the absence of any other strong
left-wing party capable of attracting those who adhere to socialist and
communist ideas.


From: (Ira Straus)
Date: Tue, 28 Nov 2000
Subject: Re 4651, OECD and Russia's future in the Atlantic world

The economic advice to Russia from the OECD (Organization for Economic
Cooperation and Development) seems to be of higher caliber than that from the
IMF. For example, take the thoughtful consultation/discussion conducted by
OECD together with Russian executives on corporate governance (JRL 4651), and
compare it to the advice Russia has been getting from IMF. Or compile the
other specimens of OECD advice on Russia, and compare with the IMF's. I
suspect the result of such a comparison would show that, while the IMF has
given variously some good and some bad advice, the quality and consistency of
OECD advice has been considerably better.

Why the difference? Probably because of a difference of institutional
cultures and history. The OECD is the direct institutional grandchild of the
Marshall Plan; its predecessor, the OEEC, was the institution created in 1947
for implementing the Marshall Plan. In fulfillment of the Marshall Plan
requirements for receiving any aid at all, the OEEC fostered European
economic cooperation and set in motion the process of European integration
that proceeded to take shape subsequently in the European Economic Community
(EEC), European Community (EC), and European Union (EU). OEEC became
semi-redundant after the creation of the EEC in 1957, so it was reorganized
as OECD, Organization for Economic Cooperation and Development, with the US
and Canada ("associated" countries in OEEC) becoming full members, and
Australia, New Zealand and Japan joining as well.

OECD was from the start in some respects looser than the old OEEC, since it
no longer had the impetus of Marshall Plan money, and since the US as a
member was not ready to go as far as the smaller European countries with
integration into a supranational union. Nevertheless, it retained far more of
the integrationist heritage and culture of the Marshall Plan than the average
international institution. It has emphasized intimate consultations with and
among its members in order to arrive at a far-reaching array of coordinated
standards and policies, and so create a kind of common economic space among
the industrial democracies.

OECD has had a culture of understanding in depth the specific conditions,
needs and potentialities of its member countries; of tailoring its advice and
surveillance to their specific conditions; of being sensitive to their
domestic political realities and constraints; of being concerned with their
social stability and political viability as well as with their technical
economic specifications (if only because they were all allies and needed each
other to be strong and to stand together); and of helping countries develop
reform programs of their own to meet the conditions for aid, with their own
sense of "ownership" of their programs, while still upholding effective
standards for the aid. It has also had maintained a respectable balance
between aid and advice. The Marshall Plan itself was on a scale that made it
possible to insist on far-reaching conditions and effective, intrusive
oversight without seeming unjustly intrustive. Subsequent OECD aid programs
to Third World countries, while on a smaller scale, have had conditions and
oversight adjusted to what the traffic would carry; they seem never to have
brought onto OECD the kind of resentment that the IMF seems to have almost
universally won for itself and nobly borne.

In 1989-91, it was pretty widely understood, among those who knew their
international acronyms, that OECD was the appropriate venue for coordinating
and administering a program of aid and integration for the countries emerging
from Communism. When the Christian Science Monitor and other newspapers ran
an article, "Complete the Marshall Plan" (February 23, 1990; I should
acknowledge having written it, although it had the good fortune of appearing
under the signatures of former congressmen Henry Reuss, deputy general
counsel of the Marshall Plan in 1949, and Henry Smith), the "plan" in it
centered around a scheme of using the OECD as the institution for organizing
a program of aid, and organizing it on terms that would push toward
integration of the post-Communist countries with one another and with the
West, using OECD structures for this integration as well as for coordinating
the aid; as opposed to, say, pushing the emerging countries into separate
national structural adjustment programs with all the consequences for the
break-up of the eastern market.

As we all know, this did not happen. The Bush Administration had already
conducted a vigorous polemic against any new or renewed Marshall Plan by the
time that article came out; instead it allowed only some nationally-targeted
aid and adjustment programs, and reluctantly at that. It seems that
nevertheless it, too, initially thought of the OECD as the venue for
coordination of aid. This was only natural, since the OECD has been the venue
for coordination of Western aid programs for decades. However, the
Administration did not insist on this; it yielded readily to a French
preference for instead having the European Community as the
leader/coordinator of the aid program, with a "Group of 24" (consisting
precisely of the same countries as OECD, but without using OECD as an
institution) getting together for the EC to lead them. This got the U.S. off
the hook from having to provide leadership and put up a creditable share of
the money. It meant that there would be no substantial program of aid: the EC
lacked the budgetary authority to raise substantial funds for such a program,
it could only coordinate the programs of its member countries, and the EC
also lacked enough institutional strength to be able to lead the U.S. or
Japan. In a somewhat parallel move, the Bush Administration turned over the
question of Yugoslavia to the EC; with similar practical implications -- that
the Yugoslav problem would be punted, left to fall into civil war. While it
is doubtful that the Bush Administration wished for the consequences that
ensued (as many Croatian and Bosnian intellectuals have believed, conspiracy
theory-style), it is certainly the case that the policy of punting to the EC
was a result, not merely of a premature desire on the part of the French and
of the EC to assert their precedence, but also of a wish on the part of the
Bush Administration to wash its hands of these matters and make sure there
would be no far-reaching programs of aid or engagement.

In the upshot, the OECD having been dropped and the EC quickly proving
inadequate, the actual leadership on dealing with questions of aid to and
reform in the east slipped into the hands of the IMF. Washington could not
really punt the ball to Brussels, not as long as there was no one in Brussels
to catch it; when the ball finally came down, it was found that it had only
floated a couple blocks across town, from the White House to the IMF.

The IMF sometimes acknowledged that this work was outside of its realm and
was being thrust upon it. It knew a lot about currency stabilization, and
something about structural adjustment programs for third world market
economies, but nothing about transforming industrialized societies from
comprehensive state socialism to a market economy. Nevertheless, as an
official institution, it did not shirk the responsibility (nor the
opportunity for institutional aggrandizement). It seems fair to say that it
has played a constructive role in making itself available as a funnel for
loans on those occasions when the West has been willing to give loans --
notably in 1996, when this was done as a means of stabilizing the
Yeltsin-Chernomyrdin government and giving it a fighting chance to come back
from behind and win the elections against Zyuganov; also in 1998, when loans
were given, at the last minute and in very whittled down form, in the hope of
stabilizing the Nemtsov-Chubais-Kiriyenko government. It is another question
whether the conditions which the IMF attached to those loans -- inevitably
attached, under its rules -- were useful given Russian circumstances. The
long delays in the 1997-98 negotiations, occasioned by the pressure in
Western circles and particular in Congress for exacting ever stricter
conditions, had a heavy cost. The various conditions and delays strayed some
distance from the real purposes of the loans, but this was an unavoidable
price of using the IMF as a funnel for aid. When the 1998 loan was announced,
all the commentators in the West expressed pride that the IMF had held out so
long, had whittled down the loan to so low a figure, and had been so exacting
in its conditions. When Soros called it 'too little too late' and the ruble
collapsed anyway, the costs of this attitude became apparent, although the
aid-bashing that ensued did little to improve the climate for any future

The OECD remained in the background through all this. Nevertheless, it did
begin to play a quiet role over the years, developing intimate dialogues with
the eastern countries concerning the state of their economy and the methods
of reform. It did this within the context of a perspective that they would
all eventually become OECD members themselves (thus reintegrating them into
their former common economic space, via the common OECD space). The quality
of its advice has reflected its institutional culture as an organization
dedicated from its very inception as OEEC to integration of modern industrial
societies. It was always, ever since 1947, involved with the reform of
European societies from the distorting inheritances of war and
totalitarianism; and while the circumstances of post-Communist countries
after 1989 was different in many ways from those of post-war and post-Nazi
countries after 1945, still there were far more similarities than there were
with, say, Third World structural adjustment problems or the IMF's brief.
Also, OECD was always sensitive to the socio-political side of reform. Its
advice has always reflected to some extent the attitude of a stakeholder,
interested in the entirety of the fate of the object countries as social
organisms, not just an external consultation or a shareholder interested in
near-term profits. This sense of being a stakeholder has to some extent
carried over from the West, where the OECD is dealing with its own members,
to the countries of the former east bloc; as is natural, since OECD plans to
bring this area in as a full part of the extended West bloc for which OECD is
the widest institutional gathering place. It is an outlook which leads to
what might be called an "internal" attitude, a concern for the cohesion and
success of the societies of the east; whereas an "external", consultant-type
attitude might be suspected of leading to socially careless advice, such as
to try a big shock and see how the therapy goes.

Significantly, OECD has officially embraced the goal of membership for Russia
as well as the others in the east. In this, it stands in sharp contrast to
the EU, which has gently stated that Russian membership is out of the
question. OECD goes substantially farther than NATO, which states only that
the possibility of Russian membership is "not excluded", but less far than
the G-7, which has already included Russia in a G-8 for the G-7's political
functions. Russia in turn seeks membership in OECD, without any of the
ambiguity that it (understandably) displays in regard to NATO. And it has not
objected when several other post-Soviet bloc countries have been admitted to
full OECD membership.

Getting into the today's OECD, however, will not be easy or quick for Russia.
While OECD has worked closely with Russia in consultative dialogues, there is
not even a timetable for Russian membership, perhaps because OECD fears that
no such timetable would be realistic. OECD has standards, piled up one upon
another in the course of the 53 years since 1947, and Russia is a long way
from meeting them. It would have been different if, in the early 1990s, OECD
had coordinated the aid program, Marshall Plan-style -- whether or not it
named it the second phase of the Marshall Plan -- and had brought in all the
eastern countries as "associate members", grouping them into a sub-committee
to plan coordinated reform efforts and maintenance of mutual economic
relations even while reforming. That would have been what the eastern
countries were immediately ready for. It would have smoothed the way to a
profound institutional relationship with them under the aegis of OECD, no
matter whether it led quickly or slowly to "full" identical forms of OECD
membership with the old OECD countries. This did not happen at the time when
it was possible; the prospect for such an enthusiastic approach to the
emerging east was killed by Mr. Scowcroft's polemics against "euphoria", Mr.
Eagleburger's polemics against the Marshall Plan, and Mr. Bush's readiness to
punt. Today it is quite impossible to imagine there suddenly re-emerging a
political impetus to make such a program possible. All that can realistically
happen today on the OECD level is continuation of high-quality consultations,
within a perspective of eventual accession to membership. Unfortunately, this
prospect is not likely to inspire much active enthusiasm on the Russian side.
One might doubt how many Russians even know the OECD exists. When I mention
OECD in my lectures, most people do not recognize the acronym, and when I
spell the words out and translate them, they at best vaguely nod their heads
about having somewhere heard the name. Of course, they are no worse than
Americans in this regard; but what this suggests is that there is not much
likelihood of Russia making a major effort to meet the standards of OECD for
the sake of joining it.

However, the energy to meet the standards and join OECD may yet be found
through the back door, if not through the front door. For one thing, it is in
the interest of the Russian economy to meet many of these standards. For
another thing, Mr. Putin has stated, in his meeting with the EU in Paris,
that Russia wants close integration with the EU, that it supports the EU as a
part of a multipolar world, that it does not exclude the possibility of
joining the EU, and -- what is crucial -- that Russia will meanwhile work to
harmonize its rules with the EU and meet the EU's standards. Paradoxically,
this could end up helping Russia get into the OECD, but not the EU.

In a sense, the promise to start adopting and meeting EU standards is an act
of supreme foolishness. The standards are numerous and difficult. Some of
them are onerous and make little sense in themselves; they would be worth it
only if accompanied by EU membership, which Russia is not going to get.

Furthermore, Putin's gesture of support for the Euro -- not supporting it in
itself as a constructive step forward in European integration, but supporting
it vis-a-vis the dollar, as an exercise in multipolarist currency geopolitics
-- was a mistake from the standpoint of the ruble's stability, while also
potentially damaging from a standpoint of global currency stability.
Similarly, Ivanov's statement of support for a European military force --
again, not as a constructive step of integration, but in contrast to NATO,
with an obvious hope of dividing the Atlantic -- was a misstep. One of the
virtues of an integrated EU force would be that it would be far MORE capable
than NATO as a whole of taking joint action without unanimity among its
members and without authorization from the UN Security Council where Russia
has a veto. Meanwhile, Ivanov's endorsement is doing some political damage to
the advocates of EU defense integration: most Europeans do not want a
trans-Atlantic division, and he has revived their visceral fears of this.

Even if Russia were somehow to meet all 80,000 pages of legal requirements of
the acquis communautaire of the EU and incorporate them all into Russian law,
still the EU would reject any Russian membership application. It has an
entire series of reasons -- very serious reasons -- for not accepting Russia
as a member in this period, or for as far into the future as can be foreseen:

1. Russia is far too much behind economically, in its average living
standards, for the EU to think of opening its borders to free movement of
Russians. Fear of immigration is growing among EU citizens as the EU expands
-- even when the expansion is only to its much smaller eastern neighbors,
which are much more stable and wealthy than Russia; ratification of their
memberships will be difficult for this reason. Russia is at the root of much
of the fear about the small neighbors: the EU is pushing Poland to close its
eastern borders with Russia and the CIS countries so that it will be safer to
let Poland into the EU.

2. Russia is far too big for the EU, with its delicate political balance
among member countries, to swallow as a full member with a full weighted
vote. EU countries already think that Germany is somewhat too big for
comfort. Germany has only 80 million people; Russia, 145 million. It is,
ironically, the Atlantic institutions -- NATO, OECD, G-7 -- that have a big
enough membership and population base that their balance would not be too
badly upset by including Russia.

3. The EU is concerned that the balance of power in its decision-making would
shift dangerously far to the poor countries and the immature democracies if
the EU merely lets in the small eastern countries that are already regarded
as candidates. Adding Russia would mean further doubling the weight on the
poor, unstable, eastern side, far beyond what the EU could bear to accept.

4. Russia still has an independent military with a strategy of its own. The
other major EU countries have given this up in favor of integration through
NATO, and this spares them any fear of being influenced by military pressure
by one on the other when working out common decisions in the EU. To be sure,
France is only half-integrated in NATO and freeloads a bit on the others, but
no one is afraid any more of whom France might be planning to invade. People
are still afraid of Russia. Until the day when tensions between Russia and
NATO relations are replaced by joint Russia-NATO integration of military
planning and training, Russia will not be trusted to join the EU. The
solution on NATO has to come first; the attempt to by-pass NATO by going the
EU route turns out to be a delusion. (This consideration would be less
important for the question of Russia joining OECD, due to the ballast and
balance provided in OECD by America. Yet even here, good strategic relations
with NATO would be helpful for winning confidence that Russia could be
trusted to support good economic relations once it was inside OECD.)

5. Russia itself would be ambivalent about joining the EU. The EU wants to
accept only new members that are willing to commit unambiguously to it, and
to commit further to its project of becoming a full political union. Russian
government organs under Putin have stated, in contrast to Putin himself, that
Russia does not want to join the EU because the EU is a supranational
institution and aims to become a full federation. 

6. If Russia is not even fit for full membership in the OECD after its 53
years of development, but would rather be fit immediately only for membership
in the original OEEC of 1947, which served as historical preparation of
countries for OECD -- if all this is true, then Russia is hardly fit for
joining the EU, whose 50 years of accumulated rules and standards represent
the heavy-duty outgrowth of OEEC, compared to which OECD is the lite version.

The EU has already stated on a number of occasions that Russia is off the map
of potential members. For Russia to go to all the trouble of preparing itself
for the EU and then get rejected -- it would be a terrible humiliation, far
more damaging than anything Russia has suffered thus far at the hands of

However, Russia, in the course of satisfying some of the standards of the EU,
might meanwhile satisfy the standards for WTO and OECD membership. The
standards for WTO and OECD are all contained as a subset within the more
exacting standards for the EU. If Russia cleverly chooses the right subset of
EU standards to meet, then WTO and OECD memberships could be forthcoming in
the historical present tense, bringing with them real benefits, and bringing
also the moderate level of integration that Russia could embrace in this era.

Thus, by playing out the fantasy of being European but not Atlantic -- the
perennial fantasy of a certain sector of the Russian political elite,
dreaming ever since the days of Brezhnev of uniting with Europe and dividing
it from America -- Russia might yet find its way into the Atlantic world.


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