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Johnson's Russia List


December 10, 2000   

This Date's Issues:   4678  4679


Johnson's Russia List
9 December 2000

[Note from David Johnson:
2. Moscow Times editorial: Pardons No Substitute For Justice.
3. Jessica Allina-Pisano: re: Jake Rudnitsky's translation of the Kuchma conversations/4676.
4. Business Week: Catherine Belton and Paul Starobin, The Battle for Russia's Electricity Giant. Investors are scrutinizing the breakup of an electric monopoly.
5. Joe Bayerl: White People.
6. Bloomberg: Russians' Westward Drive Provokes Resistance in Hungary, Poland.
7. Conference on European Convention on Human Rights implementation in Russia, Yekaterinburg, April 2001.
8. The Wall Street Journal Europe: Vladimir Socor, There's a Bear in the Woods. (re OSCE)
9. Craig Hanson: RE: 4676-Anthem Restored.
11. Nezavisimaya Gazeta: Tatyana KOSHKAREVA and Rustam NARZIKULOV,
falling into a trap laid by the top officials who suggest opposing formulas of economic development



     MOSCOW. Dec 8 (Interfax) - U.S. policy towards Russia will maintain
continuity  no   matter  who  becomes  the  next  U.S.  president,  U.S.
ambassador to  Russia James  Collins told a news conference in Moscow on
     Still, changes  are possible  because the new president will review
the country's foreign policy, he said.
     The U.S.  policy vis-a-vis  Moscow will  be based  on U.S. national
interests and  on its awareness of Russia's importance as a country with
which the United States has an extensive agenda, Collins said.
     Asked how  Moscow's decision  to resume  arms sales  to Iran  would
affect U.S.-Russian  relations, Collins  said Russian  and U.S.  experts
recently discussed  this issue.  Officials in  Washington  believe  this
dialogue with  Moscow must  continue, the  ambassador said.  The  United
States calls  on Russia to be cautious in relations with Iran, a country
that the  United States  still regards as a supporter of terrorism and a


Moscow Times
December 9, 2000
Pardons No Substitute For Justice

The Presidential Pardons Commission has recommended that President Vladimir
Putin extend a pardon to American Edmond Pope, who was convicted of
espionage and sentenced to 20 years in prison on Wednesday.

Commission Chairman Anatoly Pristavkin, announcing the decision, emphasized
that "we do not judge or discuss the court's decision, but instead base our
actions on the laws of charity and humanity."

If the "laws of charity and humanity" are the only mechanism for reversing
this horrendous verdict, which came after a trial that was a sheer mockery,
then so be it. Pope has not been shown to have committed any crime and
should go free.

However, Russia's system of pardons is a poor substitute for a working
system of justice. In fact, the practice of pardoning people who are abused
by the justice system - both law enforcement agencies and the courts -
makes a mockery of the rule of law and even facilitates further abuses of
the system.

To make matters worse, the State Duma has adopted the habit of annual
amnesties. These result in the release of thousands of people who probably
should never have been imprisoned to begin with, as well as of thousands of
people who by rights should serve out their sentences. Either way, it is an
appallingly primitive practice that systematically destroys public
confidence in the legal system and inhibits reform.

Although the Presidential Pardons Commission is notoriously tight-lipped,
one member spoke out in the Pope case. Maria Chudakova told reporters that
the trial showed "the investigative organs in our country still bear the
marks of the Soviet system." She is absolutely right.

If Putin grants the pardon - and we say again that he should - he should
also emphasize that he is not being magnanimous. He is not responding to
appeals from the U.S. government or demonstrating compassion for a man who
is ill.

Instead, he must make it clear that he is using the most expedient method
of justly treating a man who has thus far been denied justice by the
prosecutors and the courts. His pardon for Pope should be a clear rebuke to
the prosecutors and the judge in this case and a call to the parliament for
serious and systematic legal reform.

Arbitrary pardons and blanket amnesties are holdovers from a legal system
of show trials (as are "posthumous rehabilitations"). Russia needs a system
of just laws equitably applied and strong protections for the rights of
defendants. Then we won't need to appeal to "the laws of charity and


Date: Fri, 08 Dec 2000
From: Jessica Allina-Pisano <>
Subject: re: Jake Rudnitsky's translation of the Kuchma conversations,
  JRL 4676

Some of Jake Rudnitsky's comments on the Kuchma tapes, published in the
eXile, deserve a second look. Specifically, they should be subject to
the same kind of textual criticism that the eXile applies to all other
anglo journalism on the FSU. While I'm shocked--shocked--that openly
racist views should appear in the eXile, I'm also surprised at the
anti-Ukrainian tone of the following paragraph:

Rudnitsky writes, "First, though, we should apologize for the inadequacy
of the translation
below. Aside from the usual difficulties of properly translating words
like blyat and posol na khui while maintaining the flow of the
conversation, we found ourselves confronting Kuchma's dialect. He speaks
in Surzhik-- a mix of Russian and Ukrainian that is roughly equivalent
to Ebonics in English. It is language typical of triple-chinned
uneducated kolkhoz managers and, apparently, powerful pols. Since our
staff lacks a qualified jive talker who knows Ukrainian peasant speak,
we opted to translate into Standard English. Keep in mind, though, that
the Kuchma dialect is much more simian in the original."

Kuchma's speech as recorded in these telephone conversations would
certainly be simian, if monkeys could talk and used a lot of vulgarity.
But not because Kuchma speaks in a surzhyk (spelled with a "y").
Surzhyks are the spoken language not only of "triple-chinned uneducated
kolkhoz managers" (who are apparently ignorant because they are fat) but
of much of the Ukrainian population outside the center of Kyiv.
Rudnitsky apparently understands neither BEV (Black English Vernacular),
nor the lingua franca of Ukraine, nor the social reality of either.
That does not mean that the two vernaculars are even roughly
functionally equivalent.s Criticize presidential vulgarity by all means,
but why gratuitously insult Ukrainians and African-Americans in the


Business Week
December 18, 2000
The Battle for Russia's Electricity Giant (int'l edition)
Investors are scrutinizing the breakup of an electric monopoly
By Catherine Belton and Paul Starobin in Moscow 

In one corner, there's Russia's erstwhile reform champion, Anatoly B.
Chubais, 45. In the other: shareholder-rights firebrand Boris G. Fyodorov,
42. Both were top economic policymakers in Boris N. Yeltsin's Kremlin. Now,
they are locked in a fight over the restructuring of one of Russia's biggest
companies and its most widely held stock--national electricity monopoly
Unified Energy System (UES). On Dec. 14, the Russian government will meet to
consider Chubais' controversial plan to break apart the 53% state-owned
company. Fyodorov, representing minority shareholders, is vowing to block the
breakup until Chubais guarantees he will protect their interests.
   This battle is about far more than kilowatts, or even personalities. At
stake are assets worth potentially tens of billions of dollars. And how the
government decides to restructure UES will signal just how seriously
shareholder rights will be taken in President Vladimir V. Putin's Russia.
``It's a test case for foreign-investor confidence in the market,'' notes
William Browder, director of Hermitage Capital Management in Moscow, a
venture fund with shares in UES. ``If the interests of the last group of
holdouts are ignored,'' he warns, ``that's hardly going to send the right
message for the future.''
SCARED OFF. Breaking up UES and deregulating the electricity market are also
crucial to making the sector attractive to long-term investors, who could
bring much needed funds for renewing Russia's aging electric-energy
infrastructure. UES should be a top pick of foreign investors, a proxy for
Russia's recent economic growth. But investors have been scared away by the
company's massive losses--partly a result of a low electricity-tariff regime
imposed by the government. UES also has trouble collecting much of the cash
it's owed by near-bankrupt industrial companies. It's expected to lose $1
billion this year on revenues of $7 billion. Investor fears over the
restructuring have caused UES's shares to slump from 21 cents last March to 8
cents today.
   Everyone agrees that Russia's electricity industry needs a drastic
overhaul. The question is how Chubais should do it. He wants to merge
hundreds of local power stations to create 10 to 15 competing regional
generating companies. UES would continue managing the nation's electricity
grid, while gradually selling off its stakes in the new power businesses.
   That's where the fight starts. Fyodorov, a UES director, wants to ensure
that shareholders have a say in how the sell-off is carried out. That's key,
he says, to preventing the sale of assets to company insiders in a way that
could dilute or shrink the value of shareholders' stakes. Fyodorov wants an
iron-clad stipulation that management win approval of two-thirds or 10
members of UES's 15-member board before selling assets worth more than 4% of
the company's total value.
   That might sound like a reasonable request from a shareholder in the U.S.,
but in Russia, it's a radical demand--and Chubais rejects it. Under his plan,
the sell-off of stakes in regional companies will be approved by the boards
of the local companies--not  UES. The reason: Russian law doesn't require it.
``It's clear that the greater the transparency and the greater the support
from the board of directors, the more chances we have of success,'' Chubais
told BUSINESS WEEK. ``But this plan to sell off stakes in [subsidiaries] does
not enter into the UES board's sphere of authority. This is not an issue.''
   That stance nonetheless riles crusaders like Fyodorov. ``Chubais is
ignoring shareholders' rights. It's very bad for Russia when a reformer
starts acting like an oligarch,'' he says. Minority shareholders are also
voicing concern about a pilot project for restructuring that's now under way.
Under this deal, UES management is consolidating three regional generating
units under one corporate umbrella. But the UES board has no say in hiring
the team of managers that will take over decisionmaking at the new company.
That team will be led by a regional gas and banking baron, Vladimir Avetisyan.
   Minority shareholders are worried that Avetisyan could use the umbrella
company to supply electricity to his own gas operation at cost, thus draining
value from UES's stake. Avetisyan has installed his bank, Gazbank, as the
authorized handler of one of the regional company's accounts--a move that,
though legal, raises questions among shareholders. Avetisyan denies he will
misuse the electricity company. ``It is my job to act in the interests of
shareholders,'' he says.
   Meanwhile, UES shareholder complaints have managed to capture the
attention of Igor Kostikov, the new head of Russia's Federal Securities
Commission. Appointed by Putin, he is drafting a new corporate-governance
code. ``If we're talking about the transfer of major assets, the board of
directors as the shareholders' representatives should have the right to
approve sales,'' he says.
   So why doesn't Chubais give in? After all, this is the man who, in the
early 1990s, was a leading advocate of free-market principles. One theory is
that he sacrificed his beliefs in the mid-1990s when he became, in effect,
Yeltsin's political power broker, allowing tycoons such as Boris Berezovsky
to buy state assets on the cheap in return for supporting Yeltsin. Fyodorov
suspects that Chubais may want to parcel out stakes in UES at low prices to
insiders, who can then pocket profits when UES' share price recovers. Other
shareholders suspect funds may already be flowing from UES to promote the
Union of Rightist Forces, a political party co-founded by Chubais last year.
Lending credence to that notion is UES's recent $33 million purchase of a
Moscow television station, Ren-TV, which could prove a useful propaganda tool
for Chubais and his party.
A ``NOBLE AIM.'' Chubais, however, will only concede that Ren-TV may be handy
in spreading the word about his UES restructuring plan. He denies that he is
using UES to further his political fortunes and rejects accusations he might
sell assets cheaply to insiders. Indeed, he believes he's pursuing a noble
aim of freeing Russia from vestiges of Soviet-style management.
``Deregulation is a historic task for the country,'' he says. Moreover, he
argues that his plan for deregulating Russia's electricity sector ``is the
only way of bringing in investment so urgently needed [before] current
capacities are exhausted.'' At least $50 billion is needed over the next five
years, Chubais says, to revamp the industry.
   Investors will be watching anxiously on Dec. 14, when Putin and his
government meet to review Russia's energy policy. If Putin doesn't side with
Fyodorov on the issue of UES board approval for asset sales, the
shareholder-rights activist is threatening to sue UES in Western courts and
so expose Chubais to the glare of negative publicity. ``Russia has to be seen
to be acting in the interests of minority investors,'' urges Fyodorov. The
ball is now in Putin's court.


Date: Fri, 08 Dec 2000
From: Joe Bayerl <>
Subject: White People

Edmond Pope's arrest and trial have reminded me of a conversation with a
Moscow cab driver several months ago.   During the ride, our conversation
turned to his impression of the status of persons abroad.  "You Americans are
belie liudi [white people]," he observed.  "If an American gets hit on the
head in Central Asia an aircraft carrier will come to the rescue to make
things right.  It's not that way for Russians.  Our government treats us like
crap here and abroad.  Take me for example.  When I was in Poland a few years
ago, I needed some documents from the Russian Consulate, so I rode the train
for three hours to Warsaw.  Unfortunately, I forgot that it was a holiday, and
the Consulate was closed.  While I was standing at the door, the Polish
mailman came along and I went in with him.  After the consular staff finished
chatting with him, he left and they turned to me.  As soon as I opened my
mouth they snapped at me, 'You're Russian!  Can't you read?  We're closed.
Get the hell out of here!  Come back next week.'  I tried to tell them that
what I needed was a simple document and that I had traveled from outside of
town, but they didn't give a damn.  It's not like that for you belie liudi."

As if to illustrate his point, our cab was stopped by a police checkpoint at
the next corner.  When a police officer opened the rear passenger-side door,
the driver looked over his soldier and informed the officer that "these are
Americans."  The officer closed the door and let us drive on.  "That's what I
will tell them from now on," the Russian said wryly.  "I'll tell my passengers
to keep their mouths shut and I'll tell the police they're Americans."

Obviously, this impression was in large part a fiction in the mind of our
driver, beginning with the difficulty of getting a carrier group into the Aral
Sea.  However, it is a fiction that is as flattering to the United States as
it is damning to Russian Federation.  I will not repeat all of the
condemnatory adjectives that have been applied to the Pope trial over the past
days.  The myth of "white people" seemed to prove to one Moscow cab driver
that there is a decent way to treat people.  It would be sad to see such a
myth debunked.


Russians' Westward Drive Provokes Resistance in Hungary, Poland
Budapest, Dec. 8 (Bloomberg)
-- When Laszlo Kovacs, chief executive of Borsodchem Rt., discovered in
September that Russia's OAO Gazprom owned a quarter of Hungary's No. 2
chemicals producer, he decided attack was the best form of defense.

Kovacs, a 58-year-old chemicals engineer who's worked half his life at
Borsodchem, gathered support from his colleagues at the helm of larger rival
TVK Rt. and Mol Rt., Hungary's oil and gas monopoly. Over Gazprom's protests,
Borsodchem sold half its TVK stake to Mol; then Kovacs warned the Russian
company not to push for any management changes. Last month, he persuaded
shareholders to delay a meeting where Gazprom was expected to fire the board.

The battle for Borsodchem, key to Gazprom's plans for a $1 billion a year
pan-European petrochemicals business, highlights the problem Russian
companies face as they expand toward Western Europe. After 40 years or more
of Soviet rule, they're unwelcome.

``People are going to use any way or means to block Russian companies coming
in,'' said Klaudius Sobczyk, who manages 100 million euro ($90 million) in
emerging market stocks at BNP Paribas SA in London. ``There's a lot of

Gazprom, oil producers OAO Lukoil Holding and AO Yukos Oil Co., aluminum
maker OAO Sibirsky Alyuminiy and other top Russian companies aren't going to
let that history delay their expansion.

``Our participation in this region's oil and gas market will inevitably be
expanding,'' Gazprom Deputy Chief Executive Yuri Komarov said in an

With rising commodity prices driving record earnings growth, investors expect
the Russian companies' westward push to succeed.

`Ultimate Elephants'

Gazprom expects to sell $11 billion of exports this year, more than a quarter
of Hungary's 1999 gross domestic product of $37 billion. Lukoil, which is
adding retail stations across Eastern Europe and has expressed an interest in
Polish oil company Polski Koncern Naftowy Orlen SA, may earn revenue this
year of $17 billion after world crude oil prices rose this year to a 10-year
high of $34.59 per barrel in October, analysts said.

For these companies, Eastern European assets are cheap -- after Borsodchem's
share price has fallen 37 percent in the past three months, it would cost
Gazprom about $275 million to buy the whole chemical company.

Gazprom and Lukoil are ``the ultimate elephants,'' said Peter Kysel, who
helps manage $100 million of emerging market stocks for AIB Govett in London.

Hungary isn't alone in opposing Russian expansion.

Poland, already concerned about Gazprom's plan to build a telecommunications
network linking Berlin and Moscow, said it supports closer ties between PKN
and Hungary's Mol, after Lukoil showed interest in its largest oil company.

An alliance between Mol and PKN would make them far harder to buy, analysts
said. Poland is already considering selling its remaining 28 percent of PKN
directly to a strategic investor, rather than through a public offering that
could assist a hostile takeover. More than 70 percent of PKN is publicly

Because of the resistance, and Russian regulations on foreign investment,
companies such as Gazprom have been less than open about their moves into
Eastern Europe. Gazprom acquired its stake in Borsodchem through an
Ireland-registered subsidiary, Milford Holdings Inc., and didn't immediately
disclose its connection to the company.

To limit such actions, Hungarian regulators since have called on Borsodchem
to ensure investors in the company fully disclosed their ownership structure.
The government, which owns 25 percent of Mol and has the right to veto any
takeover attempt, also recently persuaded shareholders to change Mol's
company articles, strengthening buyout regulations.

Shareholder Scuffles

Governments and companies, however, have to careful they don't damage the
region's reputation for transparent capital markets, investors said.

Borsodchem barred two investors from its shareholders' meeting last month and
when one of them, Alexander Antonovich, vice- president of Moscow's MDM bank,
tried to protest he was bundled away by security guards. The meeting,
convened by Gazprom to protest at Borsodchem's sale of half its 30 percent
stake in TVK to Mol, also was postponed to allow further clarification of
share ownership.

``If (Gazprom) had been an American company it would've been completely
different,'' said Spencer Jakab, head of East European research at Credit
Suisse First Boston in London.

Irresistible Force

Such opposition may be futile as the Russians are determined to tap into the
area's booming economies, investors said.

Economic growth in Hungary and Poland is expected to top 5 percent annually
during the next two years, while the Czech Republic's economy is emerging
from recession and should grow by 3 percent in 2001, investors said.

As well as the right economic conditions, the Russians already have companies
and gas stations in the region, making expansion easier, analysts said.

``Consolidation is inevitable and it's in the best interests of all the
companies to work together,'' said Tommy Erdei, senior analyst at ABN Amro in

Gazprom sells Hungary about 60 percent of its annual gas consumption through
a joint venture with Mol, while its Siberian gas fields are linked through a
Lukoil unit in Ukraine to Borsodchem and TVK.

Lukoil's Vision

Lukoil, with the most crude reserves of any publicly traded company, plans to
add 500 gas stations in Eastern Europe within two years, increasing its
number there and in Russia to about 1,700. The company also is confident it
will boost refining capacity to more than 35 percent of its own crude output
mainly through acquisitions.

``We have problems in the region, but mostly they are related to unclear
privatization legislation rather than political issues,'' Lukoil spokesman
Dmitry Dolgov said.

Some in Eastern Europe also fear Russian investment may be linked to
organized crime, he said.

That's what Kazincbarcika Mayor Balint Kiraly first thought when he heard
Gazprom bought a quarter of Borsodchem, the largest employer in the eastern
Hungarian town of 35,000 people.

``But as long as investment comes, (Borsodchem) makes money and the workers
are paid, we won't care who the owner is,'' Kiraly said.

Kovacs, Borsodchem's veteran manager, remains more concerned. He says he's
not opposed to Gazprom because it's Russian; he's worried about what the
investment could mean for his company's future.

``I am not anti-Russian,'' Kovacs said. ``We want the company to operate in
an environment without turbulence.''


Date: 8 Dec 2000
Subject: CFP: European Convention on Human Rights implementation in Russia,
    Yekaterinburg, April 2001

The Friedrich Naumann Foundation, The Department of International Relations
of Ural State University, and The Sverdlovsk Regional Fond for the
Advancement of International Relations Studies, invite papers for the
scientific-practical conference:

"The Implementation of the European Convention on Human Rights in Russia:
Legal Norms, Judicial Actions, and Political Practice"

to be held at the Ural State University of Yekaterinburg on 12-14 April
2001 (Thursday-Saturday, Easter weekend).

This two-day meeting will bring together representatives of Russian and
Western non-governmental organizations, lawyers, researchers, academics,
and others interested or involved in the realization, study, and
monitoring, of the implementation of the standards of the European
Convention on Human Rights (ECHR) in post-Soviet Russia. Apart from
establishing the current extent of the legal and practical implementation
of the ECHR, the domestic norms, and behavior of authorities and social
actors in Russia will be also analyzed from a comparative and historical
perspective. Although the main focus will be on scholarly and participant
observations about the current status of the ECHR in Russia, paper-subjects
may also include reports about experiences with the implementation of the
ECHR in other countries, or the development of monistic approaches to the
relationship between domestic and international law in Russia before her
entry into the Council of Europe in 1996. Prospective participants are, in
particular, asked to consider what practical conclusions, and what
recommendations to Russian authorities, and civil society activists, your
analysis may lead to. Western and Russian representatives of
non-governmental organizations are encouraged to describe - and, if
appropriate, to document - in detail (a) your experiences with particular
violations or applications of the norms of the ECHR, and (b) any examples,
you may know of, for the successful (or, for that matter, unsuccessful)
defense of human rights with explicit reference to the ECHR.
   Abstracts should be submitted to the below address until 15 February
2001 (late submissions will only in exceptional circumstances be
considered). The conference languages are Russian and English. Travel by
train inside Russia (2nd class, coupe), and accommodation in a student
hostel (for three nights) will be covered by a grant from the Russia bureau
of the Friedrich Naumann Foundation. Any other or further expenditures will
have to be covered by the participant her- or himself, or other sponsors.
The organizers will support prospective non-Russian participants in
obtaining funding and visas, making local hotel reservations, and orienting
themselves in Yekaterinburg. Presentations should be no more than 15
minutes long. Substantive papers submitted in appropriate form will be
published in a conference volume/policy handbook under the imprint of Ural
University Press Yekaterinburg. Further information and application forms
may be obtained from:
RUSSIA, 620083 Ekaterinburg, pr. Lenina, 51, Uralskii gosudarstvennyi
universitet,Otdelenie mezhdunarodnykh otnoshenii, k. 464, tel.
+7-3432-557543, Andreas Umland,
e-mail: (subject heading: ECHR)


The Wall Street Journal Europe
December 8, 2000   
[for personal use only]
There's a Bear in the Woods
By Vladimir Socor, a senior analyst at the Jamestown Foundation.

Twenty-five is a very young age for an international organization. Looking
back on those years, the Organization for Security and Cooperation in Europe,
known as OSCE, can point to a historic achievement: it helped break the
Soviet-imposed division of Europe into spheres of influence. Even before the
dividing line vanished along with the Soviet Union, that line had receded and
faded away inside the OSCE itself. Moscow, often reduced to a minority of one
in the organization, ultimately had to give up its empire.

In that as in other respects, Russian President Vladimir Putin seems set to
reverse Russia's course and priorities. Sphere-of-influence politics were
back with a vengeance at the year-end meeting of the OSCE's Ministerial
Council. The meeting on Nov. 27-28 in Vienna had to deal with a Russia
seemingly content, this time, to form a minority of one -- not counting
Belarus, which often acts like a Russian satellite -- in trying to grab back
parts of the ex-Soviet territory.

The foreign-affairs ministers of 55 member countries failed to hold Russia to
its obligations to withdraw the troops from Moldova, close down at least two
military bases in Georgia, observe the southern flank ceilings set by the
Treaty on Conventional Forces in Europe and cooperate with international
efforts to restrain the dictatorship in Belarus. The Russian side, using the
OSCE's own rules, blocked the adoption of resolutions on those and other
points. After two days and nights of intense negotiations, the conference
broke up without adopting a comprehensive final document.

The draft resolutions would have registered the fact of slow and insufficient
progress toward fulfillment of Russia's commitments regarding Moldova,
Georgia, and the CFE; and would have urged adherence to those commitments.
The language in those drafts seemed mild enough to obviate Russian
objections. It was the underlying principle that was rebuffed by Russia's
chief negotiator, deputy foreign affairs minister Yevgeny Gusarov--he handles
OSCE affairs for the Kremlin -- in classical terms of sphere-of-influence
politics. As cited by Russian news agencies, he declared: "We have been
warning our Western partners that we oppose the use of the OSCE for
interference in the internal affairs of countries situated to the east of
Vienna. This time, we are sending a clear signal: we won't allow that to
happen." In Moscow's view, interference apparently still means international
support for a country's independence from Moscow.

Russian policy at the present stage seeks to draw a line around Moldova and
Georgia. At the OSCE's 1999 summit, the Russian side had officially accepted
the obligations to: withdraw all its forces from Moldova by 2002; withdraw
the CFE-limited weaponry from Georgia by December 2000, close down two bases
by 2001 and negotiate about the other two bases, which Georgia wants closed
as well; and observe the overall southern flank weapons ceilings as soon as
the situation in Russia's North Caucasus permits.

That was just before Mr. Putin became president. By now, Russia is in breach
of most of those obligations regarding Georgia and the southern flank and in
total breach regarding Moldova. The Russian government now seeks to retain
the four bases in Georgia for the long term; it has forward-positioned a part
of its CFE-limited heavy weaponry in Armenia, instead of withdrawing it north
of the Caucasus; and it has refused to withdraw any troops or weaponry from
Moldova while encouraging the secessionist Transdniester leaders to do their
part in obstructing the process. Meanwhile the Kremlin is pressuring Georgia
and Moldova to accept an open-ended presence of Russian troops under separate
agreements with Moscow, outside the OSCE's framework.

To increase the pressure on Georgia, the Russian government on Dec. 5 slapped
visa regulations on Georgia's citizens while exempting the secessionist
Abkhazia and South Ossetia, both of which border on Russia. The exemption, in
effect, erases the internationally recognized border between Russia and
Georgia in the Abkhaz and South Ossetian sectors. Those sectors are now
controlled by Russian border guards and by the Russian-armed secessionist
authorities. It is a step toward de facto incorporation of those regions of
Georgia into Russia's political, military and customs space. At the OSCE
meeting in Vienna, Georgia strongly protested and sought with Western support
to stop Russia's moves. But Moscow went ahead in violation of the OSCE's
basic norms.

In Minsk, meanwhile, Russian intelligence officers took over the
chairmanships of Belarus's KGB (still so named) and National Security
Council. The two Russian appointees are career officers of the ex-Soviet KGB
and its Russian successor, the Federal Security Service. The move in Minsk
coincided precisely with the OSCE's Vienna conference. And it exposed the
constraints on the OSCE's ability to defend the sovereignty of a member
country, the government of which yields a part of its own prerogatives. The
takeover of Belarus's intelligence agencies rounds off a Russian takeover of
top Belarus posts. The country's prime minister, defense minister and other
senior officials are also Russians from Russia.

President Aleksandr Lukashenko of Belarus staged Soviet-style parliamentary
elections two months ago and plans to get reelected as president in a similar
exercise in mid-2001. The scenario calls for that election to be followed in
due course by a merger of Belarus with Russia. The OSCE has not recognized
the results of the electoral farce held in October. Even as the OSCE's
meeting convened in Vienna, Lukashenko publicly threatened from Minsk to
discontinue the activity of the OSCE Advisory and Monitoring Mission in
Belarus. And in Vienna, the Russian delegation vetoed a draft resolution that
would have called for a democratic presidential election to be held in

Belarus, Moldova and Georgia now face direct threats to their independent
statehood from new Kremlin leaders wedded to the old sphere-of-influence
politics. If those countries are left to their fate, their immediate
neighbors from the Baltic states to Ukraine to Azerbaijan would be the next
in line for pressure and intimidation. U.S. Secretary of State Madeleine
Albright rightly termed "tragic" the omens that emerged at the OSCE's
year-end meeting. But the Western world must recognize that it has ample
resources to make sure that no one turns the clock in Europe back to the time
before 1991.


Date: Fri, 08 Dec 2000
From: "Craig Hanson" <>
Subject: RE: 4676-Anthem Restored

In light of the restoration of the Soviet-era national anthem, I thought
your readers might be interested in reviewing the original wording, to
compare it to whatever changes are made for use in the new Russian hymn.
The English version below is of course not literal, but meets the demands of
cadence and rhyme.

Craig Hanson
English Translation:
Unbreakable union of free republics,
Great Russia has rallied forever to stand.
Created in struggle by will of the people,
United and mighty, the Soviet land!

Sing to the Motherland, home of the free,
Bulwark of peoples in brotherhood strong.
Oh Party of Lenin, the strength of the people,
To Communism's triumph lead us on!

Through tempests the sunshine of freedom has cheered us,
Along the new course where great Lenin did lead.
Before 1977: Be true to the people, thus Stalin has reared us,
Inspire us to labor and valorous deed!
After 1977: To a righteous cause he roused all the peoples,
Inspired them to labor and valorous deed.


In the vict'ry of Communism's undying ideal,
We see the future of our dear land.
And to her waving scarlet banner,
Selflessly true we always will stand!


Latin Transliteration:
Soyuz nerushimi respublik svobodnikh
Splotila naveki Velikaya Rus'.
Da zdravstuyet sozdanni volei narodov,
Yedini moguchi Sovyetski Soyuz!

Slav'sya, Otechestvo nashe svobodnoye,
Druzhbi narodov nadezhni oplot!
Partia Lenina - sila narodnaya
Nas k torzhestvu Kommunizma vedet!

Skvoz' grozi siyalo nam solntse svobodi,
I Lenin veliki nam put' ozaril:
Before 1977: Nas virastil Stalin - na vernost' narodu,
After 1977: Na pravoe delo on podnyal narodi,
Na trud i na podvigi nas vdokhnovil!


V pobyedye bessmyertnykh idey Kommunizma
Mi vidim gryadushchee nashey strani,
I krasnomu znamyeni slavnoi Otchizni
Mi budyem vsegda bezzavyetno verni!



December 12, 2000
[translation from RIA Novosti for personal use only]
Another version of the new wording of the Russian
constitution has been drafted. Its authors propose to extend
the president's powers and term, make the government
accountable to the Duma and reduce the number of regions to 60.

     The authorities proclaim their policy of no revolutions:
either bourgeois or proletarian. Hence the logic: state symbols
represent a combination of all historical times. Gradualness
and consistency in the economic field. Reforms are gradual.
There will be no constitutional coups. A new Fundamental Law is
not needed. However, amendments need to be made to the current
constitution. Various circles of the political elite and even
the Kremlin have started talking about a potential adoption of
a new wording of the constitution. Not a new text, but a
package of  amendments in the form of a law. The law must be
approved by two thirds of the parliamentary vote and the
lawmakers of two thirds of the regions.
     Amendments to the Fundamental Law have been drafted and
submitted to society by a team of Yeltsin's assistants, led by
Georgy Satarov, Mikhail Krasnov and Mikhail Fedotov. They wrote
the current constitution, too. In their opinion, the
constitution has become obsolete over the past seven years.
Times have changed, the president is waging a struggle against
legal chaos, "striving to make all Federation members bring
their constitutions in line with the federal one." However,
this is not enough. A constitutional reform should be effected
simultaneously - both in the center and in the regions. As a
result, all constitutions and charters would be "adjusted" to
one another, leaving no room for "legal holes."
     Continuity is also expressed even in the numeration of the
draft's articles after the pattern of the 1993 constitution. It
is proposed to leave the same day - December 12 - for the
adoption of the new wording of the constitution. However, there
are many novelties, too. The proposed amendments preserve the
structure of a presidential republic and expand presidential
powers. Say, the normative acts of the constituent members of
the Federation should correspond not only to laws but also
The president will be entitled to suspend the powers of heads
of Federation members and local self-government and appoint the
prosecutor general. The procedure for appointing the premier
will be the other way round: it is not the president who
nominates his candidacy, but vice versa, the Duma nominates the
candidate to the post of the head of the cabinet.
Simultaneously, the Duma's status will be lower: it does not
pass but only approves laws, which are later passed by the
Federation Council. Elections to the Duma will be held only
according to the majority system, that is, in single-mandate

     From explanations to the new wording of the constitution
     Article 5 defines only two types of Federation members -  
republics (autonomous entities) and gubernias.
     Article 6 provides for "a ban on the establishment by any
Federation subject of its own citizenship." Article 81 extends
the term of presidential powers to 5 years. Article 95 provides
for "a lifetime membership in the Senate of former Russian
presidents, the former president of the USSR and constitutional
judges in retirement" and "direct elections of senators."

Nezavisimaya Gazeta
December 8, 2000
[translation from RIA Novosti for personal use only]
     Russia risks falling into a trap laid by the top officials
who suggest opposing formulas of economic development
     Everything is abuzz in the Russian government. The
economic leaders of Russia are running amok, publicly
denouncing each other's statement every day.
               Five Centres of Power
     Vice-Premier Aleksei Kudrin, Finance Minister of Russia,
is openly debating with his direct superior, Mikhail Kasyanov,
who says that a part of debts to the Paris Club can be repaid
with the shares of Russian enterprises. No, Kudrin retorts, we
will not sell any shares; we will demand that the debts be
restructured and partially written off. Premier Kasyanov does
not agree with what presidential economic adviser Andrei
Illarionov says. Illarionov says the government's work this
year was very bad, while Kasyanov replies that his cabinet's
work merited an A minus.
     German Gref, Minister of Economic Development and Trade,
is debating with Illarionov, too. The presidential adviser says
we should repay all foreign debts now, as long as we have the
money, but Gref replies that the government has no right to
spend additional revenues only on repaying debts. The country's
chief banker, Viktor Gerashchenko, pays no attention to what
all those Grefs and Illarionovs say. For example, the minister
of economic development and the presidential adviser insist
that the rouble should be let down smoothly, but Gerashchenko
sent to the State Duma his draft of the Guidelines for the
Credit and Monetary Policy in 2001, which clearly says that the
Central Bank will continue to strengthen the rouble.
     In a word, our top officials have very different views on
the economic policy. This means that Russia does not have a
government as the headquarters managing the national economy.
     We can see Kasyanov, Kudrin, Gref, Gerashchenko and
Illarionov as individuals in the executive power. Each of them
has certain weight as economists, but they failed to rally into
a team. As a result, the executive power fell into at least
five independent economic management centres, each of them
claiming the role of the think tank and pulling the blanket to
The first centre is Kasyanov and his team, the second is Kudrin
and the Finance Ministry, the third is Gref with the Ministry
of Economic Development and Trade and the Centre of Strategic
Studies, the fourth is Gerashchenko and the Central Bank, and
the fifth is Illarionov flying solo.
     Since each of these five persons has access to Vladimir
Putin, we feel truly sorry for the president. Indeed, how can
he see the light in this situation? One of these five tells him
that the debts to the Paris Club must be repaid immediately.
Another says we should pay with shares. The third demands that
we must not pay now and calls for getting another postponement.
This is when the fourth squeezes into the door, shouting,
"Inflation will strangle us! Let's drop the rouble!" The fifth

is climbing from under the table: "Over my dead body! The
rouble must stand to the last drop of blood." Add to this the
oligarchs, some of whom are torturing the president with their
economic advice.
                 Back to August 1998
     A split of such dimensions has happened in Russia's
economic history before. Shortly before August 1998, the
Central Bank in the person of Dubinin and the Finance Ministry
in the person of Zadornov were well nigh clawing at each
other's eyes. Besides, concerned oligarchs tried to join the
melee, too.
     President Boris Yeltsin was befuddled to a point where he
promised - cross my heart! - a few days before August 17 that
there would be no devaluation of the rouble. You will laugh,
but today, in December 2000, the fuss and turmoil of the
economic officials are reproducing the picture of August 1998.
Indeed, why are Kasyanov, Kudrin, Gref, Illarionov and
Gerashchenko fussing so much now, although the latter appears
to be calmer than the others are? Economic indices seem to be
better than ever. Even the UN has admitted that Russia's
development this year was the best in the past 30 years.
     But they are not fussing without a reason. It appears that
Russia is edging towards a crisis comparable to the Black
August 1998. We did not invent this phrase. Michael Carter,
head of the Moscow mission of the World Bank, is speaking about
the possible repetition of the 1998 crisis in Russia. He said
this at the Wednesday conference on Russia and the protection
of the rights of investors and shareholders. He called on the
Russian authorities to do everything humanly possible to
prevent this.
     But the first to warn about the ghost of 1998 was German
Gref. He said several months ago that "unless we do something
now, we will be hit by a crisis that would be worse than in
August 1998." The other day Gref added details to this
statement of his. He said that although the government was
still controlling the situation in the economy, "the trend is
still alarming." He blamed this on "the strengthening of the
rouble and growing inflation," which "are moving towards each
other and hindering economic growth."
     Andrei Illarionov has premonitions, too. He believes that
unless the government takes extraordinary measures, the economy
"will reach a level of relative prices and real currency
exchange rate which we had in July 1998 and which served as the
main reason for the August crisis."
     These apocalyptic forecasts created disturbance in the
government. Everyone there understands that an economic crisis
is unavoidable and that something must be done. But nobody
knows exactly what must be done.
            The Rouble Threatens Russia
     What crisis do they fear? Virtually every journalist wrote
about the threat of falling oil prices, potential worsening of
the global economic situation and the debt noose on Russia's
neck in the past month. And this is all true. If these three
threats become a reality, Russia will suffer very seriously.
     But in actual fact, the self-same officials who guided the

national economy in the past year planted the economic time
bomb inside Russia. The bomb is called "strong rouble." The
rates of economic growth started falling in Russia even before
the appearance of unpleasant international trends. Look at the
statistics of the past two or three months, when oil prices
were high and everything seemed to be fine in the USA. This is
how economic analysts explain this: The dynamics of qualitative
indices testifies to the gradual exhaustion of the economic
growth resources created by the devaluation of the rouble in
August 1998. Quite right. In common language, it means that the
devaluated rouble revived the Russian industries and cheaper
raw materials ensured the success of national exporters.
     Today the rouble has grown stronger to a point where
Russian-made commodities have again become prohibitively
expensive and hence uncompetitive. Besides, export revenues
(and hence money in the economy) are so high that inflation
started growing, too. Unless this trend is reversed now, next
year's inflation will reduce to naught the magnificent
achievements of 2000. Even if world oil prices remain high and
the US economy does not slide into a crisis.
     The government is fully aware of this threat. Putin even
summoned Kasyanov in order to discuss inflation. Kasyanov
assured the president that the government knows how to deal
with the problem.
     But slogans alone will not help us to combat inflation.
The truth is that the government does not have a single
effective instrument to remove excessive money from the market
and channel it into production or securities. Nobody believes
in Russian production or Russian securities any more.
     There is one more method for preventing the crisis -
consistently bring down the rouble with regard to the dollar.
Independent economists, including Illarionov, suggested this
method to the government and the Central Bank long before the
August 1998 crisis. In actual fact, Illarionov is suggesting
the same now, although in a carefully disguised form.
     If regarded from this angle, one can easily understand the
high temperature of the debates over repaying our debts to the
Paris Club with money or not. Actually, the question is: Should
the excessive money mass be removed from the Russian market or
not? None of our economic leaders can admit - for political
reasons - that the repayment of our external debts can drop the
     What is Illarionov actually saying? He is saying this:
Let's pay the Paris Club with a few billion dollars. This would
reduce the amount of dollars in Russia and lower the exchange
rate of the rouble. By paying its creditors, Russia would kill
three birds with one stone: make national commodities
competitive again, reduce inflation, and create a favourable
image in the eyes of foreign investors.
     As finance minister, Kudrin discerns certain dangers in
Illarionov's proposals. If billions of dollars are allowed to
leave the country, how will it fulfil its obligations to the
public sector staff, pensioners and other clients of the budget?

Kudrin's worries have been best expressed by his predecessor
Mikhail Zadornov. He said the following: "I will simply remind
you that Ceausescu, for one, tried to undertake such
He decided in his time that his country could repay its foreign
debt within four years, clamped down on the nation and actually
sent the living standards in Romania to the bottom. I think we
all remember very well how this story ended for Ceausescu." But
it appears that Illarionov can talk with the president more
often than Kudrin or Zadornov. Anyway, Putin has recently put
forth his position on the foreign debt by repeating nearly word
for word the arguments of his adviser: Restructuring is not in
Russia's interests, because we have to pay more and more. In
1993, Russia owed the Paris Club 33 billion dollars, but the
restructuring of the debt increased it to 43 billion dollars,
although we have repaid 17 billion dollars since then.
               Trap for the President
     So, the president is clearly leaning towards the proposal
of his economic adviser: Repay foreign debts as long as we have
the money and hence smoothly devalue the rouble. If Russia
lived behind the Iron Curtain, as it did in Soviet times, and
little depended on the situation on the world market, this
experiment could be successful. But it looks highly risky
against the background of global trends. Flirting with the
Paris Club could result not in a smooth, but in a landslide
devaluation of the rouble. In this sense, the ghost of 1998 is
quite realistic.
     The trouble is that while Russia is preparing to devalue
the rouble, the world is waiting for the devaluation of the
The process already began in the past two weeks, when the
dollar started falling with regard to Euro. Judging by
statements made by Alan Greenspan, Gerashchenko's American
counterpart, this process will go on. And most European
analysts agree with his opinion.
     In this case, the Russian economy will face an obvious
paradox: The dollar will grow cheaper the world over, while
Russia would be strengthening it. These two opposing trends
will have the multiplication effect, forcing the smooth
devaluation of the rouble into a landslide one.
     Here is the possible scenario. Russia gives several
billion dollars to the Paris Club. The rouble grows somewhat
cheaper. At the same time, the devaluation of the dollar and
the falling demand for raw materials in the USA provoke a fall
in the prices of Russian export raw materials. The influx of
dollars to Russia will diminish, which will further accelerate
the devaluation of the rouble. The devaluation of the dollar
will depreciate the gold and currency reserves of the Central
Bank, 95% of which are kept in US dollars. The rouble will
become cheaper still.
     So, instead of one channel of the withdrawal of dollars,
which Illarionov and his supporters see, we will have three
powerful factors of the devaluation of the rouble. The result
of the wrong time chosen for "the sterilisation of the
excessive money mass" will be a repetition of the August 1998
     In other words, the ghost of August 1998 is roaming Russia
in the past month for a reason. And it can be called to life by
a fall in world oil prices, a depression in the USA, disastrous
playing with the dollar, a crisis in Turkey and Argentine, or
any other sneeze of the world economy.

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