Johnson's Russia List #5618 28 December 20012 davidjohnson@erols.com A CDI Project www.cdi.org [Note from David Johnson: 1. AP: Russia's Economy Posts Solid Gain. 2. Reuters: Russian court halts treason trial of arms expert. (Sutyagin) 3. Luba Schwartzman: ORT Review. 4. Peter Lavelle: Untimely Thoughts - Forty-four lines on twenty-two wishes for Russia in 2002. 5. Vremya Novostei: Viktor KHAMRAYEV and Gleb CHERKASOV, RUSSIAN POLITICAL OPPOSITION: RESULTS AND PROSPECTS. 6. Novye Izvestia: Said Bitsoyev, HOW WE FIGHT WARS - AND HOW THEY DO IT. Chechnya and Afghanistan: the Russian approach and the US approach. 7. Vremya MN: Dmitry Shusharin, THANKS, EVERYONE. Results of 2001: a brief review. 8. Rossiyskaya Gazeta: Mikhail Antonov, MONEY TESTS. Interview with Vladimir Mau of the Working Center for Economic Reforms. 9. Wall Street Journal Europe editorial: Putin and Pasko. 10. Washington Times: David Sands, Attacks bring old foes together. (re NATO and Russia) 11. Washington Post: Mike Allen, Bush Pledges More Aid For Russian Arms Cuts.] ****** #1 Russia's Economy Posts Solid Gain December 27, 2001 By JUDITH INGRAM MOSCOW (AP) - Russia's economy grew by more than 5 percent this year, recording a solid gain while other economies around the world struggled, Russia's prime minister said Thursday. ``This isn't a bad rate, it's one of the highest growth rates in the world, despite an essential recession in world economic growth in the second half of the year,'' Mikhail Kasyanov told the Cabinet. Growth in 2000 was higher at 7.6 percent, a strong jump from the 1.8 percent rise in 1999 - the country's first increase in gross domestic product after a decade of decline. Russia's economic growth was slowed this year by a drop in export prices, particularly for energy, metals, chemicals and petrochemicals - contributing to a 3 percent drop in exports for the year. Kasyanov said that Russians' real income had increased by 6 percent but that rising consumer demand fueled an 18 percent growth in imports. He faulted what he called a lack of competition among many Russian industries. ``The dependence of the Russian economy on exports is decreasing, but still remains high and we must pay special attention to this,'' he said. Economists have stressed the need to diversify Russia's revenue sources, to wean the state from its overwhelming dependence on oil and natural gas. But Kasyanov emphasized the importance of two new fuel export routes that were started in 2001: the Blue Stream gas pipeline crossing the Black Sea to Turkey, and the Baltic Pipeline System, which will allow Russian oil exporters to decrease petroleum shipments through the former Soviet republics in the Baltics. Despite the fall in energy prices, Russia's natural gas monopoly saw record high export profits of $14.5 billion in 2001. In a statement, Gazprom said its long-term contracts, worth $250 billion guaranteed Russia one-quarter of the European gas market for the next 10-15 years. Kasyanov said that the government expected 4 percent GDP growth in 2002 but that it would have to revise its forecast if the price of Urals crude oil drops below $14 to $15 a barrel. He said that the ideal price for Russia was $18.50. ******* #2 Russian court halts treason trial of arms expert MOSCOW, Dec 27 (Reuters) - A court halted the treason trial on Thursday of Russian arms expert Igor Sutyagin -- accused of passing nuclear submarine secrets to Britain and the United States -- so prosecutors could gather more evidence against him. On what had been scheduled as the last day of his trial, the regional court in Kaluga, a town near Moscow, ordered that Sutyagin remain in detention, where he has been held for two years. The court said the prosecution case was in places confused and inadequate but refused to release the arms expert from Russia's highly respected USA-Canada Institute. Russian law allows the court to stop a trail to allow the prosecution to gather more evidence. Defence lawyers said they would challenge continued detention of Sutyagin, who has been held in custody since his arrest in October 1999. The FSB domestic intelligence agency, the main successor to the Soviet KGB, accuses him of passing the secrets about Russian nuclear submarines to London and Washington. Sutyagin, who denies the charges, could be jailed for 20 years if convicted. His arrest followed the conviction of U.S. businessman Edmond Pope in December 2000. The former U.S. naval intelligence officer was sentenced to 20 years for trying to acquire state secrets about a high-speed torpedo, but was later pardoned by President Vladimir Putin. The case alarmed Sutyagin's colleagues and Russia's academic world in general, as it came against the background of a string of prosecutions of researchers and scientists brought by the FSB, which was once headed by former KGB agent Putin. ****** #3 ORT Review www.ortv.ru Compiled by Luba Schwartzman (luba7@bu.edu) Research fellow at the Institute for the Study of Conflict, Ideology and Policy at Boston University HEADLINES, Thursday, December 27, 2001 - A plaque has been dedicated to Lidia Ruslanova. It hangs on the house on Moscow's Leningrad Avenue where the Russian singer lived for twenty years. - The Russian MChS (Emergency Ministry) workers are celebrating their professional holiday. The short abbreviation stands for a longer official title -- The Ministry for Civil Defense, Emergencies, and the Elimination of the Consequences of Natural Disasters. All the words mean one thing -- these are rescuers, ready to help in just about any situation. In North Ossetia, Emergency Ministry workers are celebrating the holiday while patrolling the Transcaucasian Highway, where about a hundred avalanches occur every year. In 1993, 56 people were buried under the snow. - Another group of MChS workers are working to restore the Salang Pass tunnel to the Bagram Air Base in Afghanistan. - The Kaluga Oblast court has forwarded the case of Igor Sutyagin, the scientist accused of treason, for further investigation. - Ingush President Ruslan Aushev has declared that he will leave his position before the March 2003 presidential elections so that national stability can be maintained. Aushev has already served as the Republic's president for 8 years and suggests that this is enough. According to the Republic's Constitution, elections must be held within four months after a president relinquishes his position. - The Russian State Duma has begun its holiday recess, which will last until mid-January. On their last day of work Duma deputies accepted the draft bills "On the State of the Military" and "On the All-Russian Census." - Renowned film director Sergei Kolosov is celebrating his 80th birthday today. His films include Call Fire for Ourselves, The Taming of the Shrew, The Appointment, Operation Trust, and Remember Your Name. - A passenger train traveling from Moscow to Togliatti collided with a cargo train at the Ruzaevka station early this morning. The engineer of the passenger train and his assistant suffered severe brain injuries and broken bones; several passengers were also hurt. The circumstances surrounding the accident are under investigation. - Russian President Vladimir Putin attended the ceremony of the opening of the oil-loading port of Primorsk, which he termed another "window to Europe." President Putin will also visit a number of other industrial objects during his trip to the Leningrad oblast. He will be accompanied by Deputy Prime Minister Viktor Khristenko and Transportation Minister Sergei Frank. - At its last session, the Russian Cabinet summed the results of the national socio-economic development over 2001. According to Prime Minister Mikhail Kasyanov, pensions have been increased, social support has been channeled to those who really need it, industrial and agricultural production grew, and two major export transport systems (the Blue Stream gas pipeline to Turkey and the oil-pipeline to the Baltic) have been completed. At the same time, Kasyanov noted that the dependency on export needs to be curbed further, and the competitiveness level of the Russian industry needs to be improved. ****** #4 From: "Peter Lavelle" Subject: Untimely Thoughts Date: Fri, 28 Dec 2001 Peter Lavelle: Untimely Thoughts - Forty-four lines on twenty-two wishes for Russia in 2002 1. I wish oil prices to stabilize at around $18.50 a barrel. It would be a shame to have to fiddle with a Duma's budget so diligently put together. 2. I wish Russians would listen to Andrei Illarionov more often. He understands and values what Russia can do for itself -- far better than any world financial aid agency. 3. I wish Russia a year of peace. End the war in Chechnya, bring peace to its people and end Russia's awful nightmare. 4. I wish Grigory Yavlinsky could become friends with like-minded politicians. Being liberal should mean greater tolerance. 5. I wish Anatoly Chubais would get an MBA. The utility monopoly needs a brighter light at the helm. 6. I wish Russia patience and wisdom with the euro. How many euros are there to an old ruble? 7. I wish Viktor Gerashchenko a wonderful retirement in the New Year. It would be real a bonus if the rumors were true about his retirement as of Jan. 1. 8. I wish Vladimir Ustinov and Sergei Stepashin could collectively figure out who the bad guys really are. At least they could pool their resources in determining who stole what, when, and how much. 9. I wish the Communist Party to continue its current state of paralysis. The party's problem with the "vision thing" only positively contributes to the democratic process. 10. I wish Boris Berezovsky would return from exile. The new legal code needs a high-profile test case. 11. I wish civil society would start being more civil. Civil society doesn't start with government recognition; it starts by respecting your neighbor -- or at least holding open the huge doors at the metro for the babushka following behind. 12. I wish Russia patience with its new pal the United States. Americans are good folks; even if they think what is good for them is just as good for everybody else in the world. 13. I wish greater wisdom with the calendar. Pretending Saturday is a Monday because of a holiday only hinders the work ethic in particular and reform in general. 14. I wish politicians and would-be media magnets greater restraint. Why not allow TV6 to turn into a PBS of sorts? 15. I wish Interfax would stop its almost daily reporting of hypothermia cases in Moscow. A Good Samaritan report would be much more uplifting. 16. I wish the State Customs Committee, German Gref's Economic Development and Trade Ministry and the Energy Ministry would report the same export figures. There is hell to be paid from foreign investors when the numbers reported by each ministry is (sometimes dramatically) different. 17. I wish the new chief at Sheremetyevo Airport would do something about the passport control area. Nothing puts off visitors more about this country than that godforsaken place. 18. I wish Russians better quality foreign videos. If bootlegging is to be allowed, can't the government create some kind of quality control commission? 19. I wish the RTS to reach 500 points. Investing in Russia is very risky, but there are some real cherry-picks out there and, in the scheme of things, 1998 was ages ago. 20. I wish my girlfriend Svetlana to expand her cultural horizons. A little less Alla Pugachova and a little more Rachmaninoff would be a start. 21. I wish Vladimir Putin good health, foresight and creativity. The year 2002 could be very trying; it's doubtful he will make many new friends. 22. I wish Yury Luzhkov would fix the muddy sidewalks near my apartment. My dog King (of Russian origin) doesn't mind, though I will need to buy a new carpet if the mayor does not act upon this messy problem. ******* #5 Vremya Novostei No. 239 December 28, 2001 [translation from RIA Novosti for personal use only] RUSSIAN POLITICAL OPPOSITION: RESULTS AND PROSPECTS Viktor KHAMRAYEV, Gleb CHERKASOV 2001 was a year of consolidation in Russia. The federal and regional nomenklatura, which in 1999 split into different parties and movements, joined forces in the United Fatherland under the banner of unconditional support of Vladimir Putin. By 2001, the high rating of the president turned opposition into bad political tone. Besides, it has become very difficult to express one's opposition. The set of instruments used by Russian public politicians is limited to work in the parliament and elections. The pro-presidential majority in the State Duma is closely controlling developments and there is still a long time until the next federal elections. Unable to seriously influence decisions, political structures are weakening. The more so that the possibilities of political opposition to inform the people about their opinion have dwindled. Remembering about the problems created by information wars, the authorities are creating conditions to prevent this. However, there is a minority that disagrees with the authorities or does not agree with everything they do, and this minority is doing its best to remind the people of its existence. The Left had it easier. In 2001 the Communist Party of the Russian Federation rejected absolutely all presidential reforms and government innovations, which the right wing of the Duma supported. Opposition to liberal draft laws, which were the main element of the parliamentary year, helped the communists to regain the ecological niche from which Vladimir Putin largely pushed them in 2000. The communists reached the peak of their radical form by the day when the State Duma started discussing the Land Code. The situation can be described as a demonstration - inside and outside the Duma building. Having failed to crush the Land Code with a demonstration, the communists went over to "persistent daily work" explaining the essence of the code and all these "destructive reforms." They gathered considerable speed, so that the KPRF's rating, although it has not grown, has stopped sliding either and keeps at 30%. Besides, the communists won gubernatorial elections in the Nizhni Novgorod Region and their candidate was the runner-up in Irkutsk. The KPRF also scored several other, less loud results in other regions. The continuation of liberal reforms and their implementation is playing into the hands of the Left. The communists can offer those who are not satisfied with the authorities' liberal tilt "a nostalgia for the good old Soviet times," embellished with the Left' general acceptance of the current economic realities. The Right minority is in a much worse fix. Two years ago the SPS and Yabloko promised to support the president whenever their policy goals coincide. And we will stand in opposition if our goals clash, warned the Right. They probably hoped that they would have to either support or oppose, but had to do both in 2001. They supported the judicial reform and protected the NTV, voted for the pension reform and protested against the import of nuclear fuel wastes, welcomed the military reform and oppose the authorities on the Chechen issue. It is impossible to understand if the Right won or lost, for their ratings, like those of the communists, have frozen. But unlike the communists, the Right have not accumulated "propaganda materials" for the future. In the past two years, the Duma approved nearly all laws the Kremlin and the government wanted. So, in the next two years the executive power will hardly send laws to the Duma which the Right could support or oppose and in this way raise their rating. SPS leader Boris Nemtsov said his party would tackle problems of federalism so as not to permit the creation of a unitary state. To do this, the SPS faction will submit two draft laws, one on elections to the Federation Council, and the other on the protection of local self-governments. Sergei Ivanenko, deputy head of the Yabloko faction, said Yabloko would suggest amendments to the recently adopted Labour Code, pension, tax and other laws. In this way Yabloko hopes to do what it failed to accomplish this year, when these laws were discussed in the Duma. In addition, Yabloko will continue to advocate the idea of a national referendum on the import of nuclear fuel wastes. Anyway, the place left to the SPS and Yabloko by the Kremlin, which has moved to the right, is too small for their successful political development. The only consolation for the supporters of Boris Nemtsov and Grigory Yavlinsky is that the communists were in their place a year ago, when the authorities moved slightly left and thus robbed Gennady Zyuganov of a part of his domain. So, the SPS and Yabloko should secretly wish the authorities to turn left again. Because their marriage of convenience with the authorities can result in a complete loss of their political identity. ****** #6 Novye Izvestia December 28, 2001 HOW WE FIGHT WARS - AND HOW THEY DO IT Chechnya and Afghanistan: the Russian approach and the US approach Author: Said Bitsoyev [from WPS Monitoring Agency, www.wps.ru/e_index.html] COMPARISON OF RESULTS OF TWO COUNTER-TERRORISM OPERATIONS, IN AFGHANISTAN AND CHECHNYA. THERE ARE NUMEROUS COMMON FEATURES. BUT AMERICA TOOK ITS TIME TO PREPARE THE OPERATION. AND THE AMERICANS ARE MUCH CLOSER TO CAPTURING BIN LADEN AND OMAR THAN RUSSIA IS TO ARRESTING BASAYEV AND KHATTAB. Vladimir Ryzhkov said in an exclusive interview with ITAR-TASS news agency that federal bodies, including the Security Council, "have done a great deal to counter terrorism in Russia and at the international level". Rushailo must have meant the developments in Afghanistan and Chechnya. Let us try to compare the results of the operations in these hot-spots. There are numerous common features between the operations. The military campaign in Chechnya was preceded by explosions of apartment blocks in Moscow. The second Moscow explosion took place on September 11, 1999 - two years before the attacks on New York and Washington. If these two tragedies in different parts of the world were really planned in one center, the masterminds behind the terrorist attacks are amazingly cunning and are unmatched organizers. The Russian and American authorities moved in; and here the similarities end. Moscow and other Russian cities were swept with overwhelming panic and fears of more explosions. The fears were fed by the authorities and the media. Mayor of Moscow Luzhkov urged city-dwellers to remain on guard and inform on suspicious neighbors (particularly if they are from the Caucasus). A campaign was initiated to brainwash the public into accepting the necessity and inevitability of a war on terrorists. The major enemy was indicated: Chechens. Not criminals of Chechen origin, but residents of Chechnya. All of them. Fortunately, a lot of Russians saw through the provocation, but 65% of poll respondents advocated an immediate launch of a counter-terrorism operation. The people's army set off for Chechnya again. There was panic in the United States as well. Several Arabs were attacked and beaten in the first several days following the tragedy. Aware of the danger of ethnic and religious conflicts, the authorities took preventive measures. President George W. Bush addressed the nation urging it not to associate the tragedy with law-abiding Americans of Arab origin. Situations in Afghanistan and Chechnya preceding troop deployment were nearly identical. Numerous Pushtu, Uzbek, and Tajik tribes were oppressed by the Taliban. Chechens were fed up with unemployment, absence of schools, inactivities of amorphous Maskhadov, and crimes committed by numerous Wahhabi. Essentially, they are the Taliban all over again, only using a different name. America took its time to prepare the operation, disregarding sarcastic remarks from the international community. It conducted lengthy and difficult negotiations with the Northern Alliance, Dustum, Rabbani, Zahir Shah and thoroughly studied the Afghanis' mood. Diplomatic meetings with the leadership of Pakistan and some other Arab countries were organized. Moscow did not bother with finesse. It got the consent of some regional leaders and presidents of republics of the Caucasus, and immediately sent its aviation against Russian cities and settlements. After World War II, no city in the world was probably devastated the way Grozny was. The Americans used bombs too, but did it much better. They mostly hit targets, trying to avoid civilian casualties. A Russian correspondent who visited Kabul recently says that only a few buildings were destroyed there, precisely the ones that housed Taliban leaders. They were driven away with volunteers' support. Tenements in the capital of Afghanistan were preserved. Grozny has been razed to the ground with nothing to show for it. When Kandahar was overrun (Taliban's last refuge), the Americans said a tank column would enter the city. Thirty armored vehicles, very few by Russian standards, but not one of them was burned. Hundreds of tanks were once used in the attack on Grozny. More than half of them were destroyed, with their crews. Senior officers resign after fiascoes like that elsewhere - but not in Russia. Shortly afterwards Boris Yeltsin called Pavel Grachev the best defense minister. Before entering Kabul, Americans showered illiterate Afghanis with leaflets assuring them of their love and friendship toward the people they wanted liberated from the hateful regime. Literate Russians of Chechen origin never saw any leaflets from the federal government. Dislike bordering on hatred was the only feeling representatives of the united federal group experienced with regard to the locals. Even though the military knew that success was impossible without the locals' trust. As for the separatists, the federal troops did not mince words. The separatists were asked to surrender, and that was that. There were no volunteers. When some did, they either disappeared - or their mutilated bodies were later discovered in a ditch somewhere. It is hard to imagine American GIs looting Afghani villages for rugs, furniture, home appliances, and even home-made preserves. It is hard to imagine a US Army colonel abducting an Afghani girl, raping her, and murdering her - saying she might have been a Taliban sniper. He would have been tried and convicted. Meanwhile, in Russia, Defense Minister Sergei Ivanov publicly admits that he supports Colonel Budanov. Chechnya has an Osama bin Laden of its own. He is Shamil Basayev. Chechnya has its own Mullah Omar. He is Zelimkhan Yandarbiyev. Despite the difference in size of the territory, the Americans are much closer to capturing bin Laden and Omar than Russia is to arresting Basayev and Khattab. The explanation is simple. We have been looking in the wrong places and in the wrong way. Or have not been looking at all. It follows that Rushailo should not exaggerate his country's contribution to the war on international terrorism. ****** #7 Vremya MN December 28, 2001 THANKS, EVERYONE Results of 2001: a brief review Author: Dmitry Shusharin [from WPS Monitoring Agency, www.wps.ru/e_index.html] EVERYONE IS SATISFIED WITH RESULTS FOR 2001. BUT EVERYTHING PEOPLE EXPECTED A YEAR OR TWO YEARS AGO IS SAFELY FORGOTTEN. VARIOUS REFORMS, ONCE DISCUSSED AND THEN FORGOTTEN, ARE RECALLED EVERY NOW AND THEN - DISCUSSED AGAIN, AND POSTPONED AGAIN. EVERYONE IS SATISFIED WITH RESULTS FOR 2001. THE UNION OF RIGHT FORCES HONESTLY BELIEVES THAT THE PRESIDENT IS IMPLEMENTING THEIR PROGRAM. THE LEFTISTS ARE HAPPY WITH SOCIAL PROMISES. THE SECRET SERVICES LIKE THE OUTCOME OF THE PASKO TRIAL, AND JOURNALISTS ARE HAPPY THAT THEY ARE STILL PERMITTED TO VOICE THEIR OPINION ABOUT THE TRIAL. THE GENERALS LIKE IT THAT THEY HAVE DEFEATED ADVOCATES OF THE MILITARY REFORMS, AND CONSCRIPTS ARE HAPPY THAT THEY CAN SLIP A BRIBE TO MILITARY COMMISSARS AND DODGE THE DRAFT. Everything is fine, in other words. This is a situation when the regime can forget about strategies and concepts, and concentrate on internal conflicts. The economy is still better than that of Argentina, and may also be disregarded for the time being. There hasn't actually been much news this year - unless it's something like a change in the third-highest state official. The newly-elected Federation Council speaker immediately made the headlines. Now he is proposing to extend the president's term in office to "100 years" (according to "Zavtra"), or speaking out on the Pasko case. All the rest, everything people expected a year or two years ago is safely forgotten. Various reforms, once discussed and then forgotten, are recalled every now and then - discussed again, and postponed again. The only exception confirms the rule. Reorganization of the court system ran into the first spirited resistance in post- Soviet history from the institution whose interests are at stake. Dmitry Kozak persisted, and the president signed the new laws. Immediately afterwards, the Pacific Fleet's military court showed the whole world what a "new and independent" Russian court really meant. After September 11, observers and commentators began comparing President Putin with the last general secretary of the Central Committee of the CPSU. Mikhail Gorbachev assumed that in return for the Berlin Wall he would get carte blanche from the West for actions in the domestic arena. That was probably why he sent troops into the Baltic states. He utterly disregarded demonstrations in Moscow, and the West as such did not really care. The situation we have now does resemble the one we had in the early 1990s, but differs from it in some aspects as well. The war in Chechnya, condemned by Western politicians, differs from the frantic attempts to preserve the Soviet Union. This is truly a war on terrorism. Russia's new allies may disregard the redistribution of assets in Russia, probable restrictions on freedom of the press, and court reforms... There is another difference as well. Gorbachev and all his predecessors were absolutely illegitimate, but Putin's power is of a different nature. Putin's approval rating has been rising, even after unpopular pro-Western political moves. At the same time, observers are left with the impression that the support of the West is of paramount importance for the regime, while the support of Russian citizens is not viewed as a political factor at all. And the legitimate regime doesn't know how to use its popularity. This is also explicable. The regime has nothing of national and social importance to offer, and doesn't know how to make use of Putin's approval rating in the current political wars. (Translated by A. Ignatkin) ******* #8 Rossiyskaya Gazeta December 28, 2001 MONEY TESTS Interview with Vladimir Mau of the Working Center for Economic Reforms. Author: Mikhail Antonov [from WPS Monitoring Agency, www.wps.ru/e_index.html] VLADIMIR MAU DISCUSSES HOW WORLD OIL PRICES INFLUENCE THE RUSSIAN ECONOMY, HOW MUCH RUSSIA DEPENDS ON FOREIGN INVESTMENT, AND OTHER ISSUES RELATING TO RUSSIA'S CURRENT ECONOMIC SITUATION. HE ARGUES THAT THE EFFECT OF OIL PRICES IS ACTUALLY MORE COMPLICATED THAN IT SEEMS. High oil prices are more dangerous for Russia than low ones - says Vladimir Mau, head of the Working Center for Economic Reforms of the Russian government. Question: There are a lot of inflation forecasts for 2002. The budget envisages a level of 13%, and now there is talk of 15-16%. How much will prices increase? Mau: This will depend on the economic policy of the government. There are two major approaches. The first one is not to suppress the momentum of the currency rate, gradually devaluating the ruble. This will increase inflation up to 20-25%, but will facilitate production. This is how stimuli for export and import substitution will be made. And it is important to tighten budget policy and activate negotiations about writing off our foreign debts. Importers, enterprises, which need foreign equipment, will profit by it. Such a policy demands active state regulation - significant budget investments, government work. Question: From the political point of view, the "left" variant looks more attractive: firm position of the ruble, active state, and all for the people's good... Mau: Alas, activity of the state in market does not always brings good to citizens. Who will manipulate people's money? Bureaucracy. To which extent will it be effective? It is hard to say. Tomorrow it will turn out that budget money was sent not where it should have been sent...Besides, the policy of artificial securing of the ruble's position will result in depression of several branches of industry - food production, textiles, light industry, a considerable part of mechanical engineering. It will not do any good to populations, who not only consume, but also produce. Quesiton: Why? Mau: Because with the strong ruble and "cheap" dollar, it will be more profitable to buy goods abroad. It often happens that a country loses its competitiveness because of high influx of foreign currency. This is called "Dutch disease": currency inpayments of export deprive our production of any stimulus to development. Roughly speaking, it is more profitable to sell a ton of oil and buy grain with the profit than to grow it in our country. The excess of foreign currency leads to rising the ruble rate, which makes importing cheaper. As a result, export branches are increasing, the rest - dying out. Question: Over the recent time, a lot of Russian citizens are watching world oil prices with great attention. Is this a really important question for Russia? If prices sink - we are sure to face a catastrophe, if not - we will be thriving, is it so? Mau: These are mostly just emotions. From the strategical point of view, it is high prices that are dangerous for Russia. Like cheap foreign loans, they relax the government. There appears a temptation: not to change anything, just distributing dollars and everyone is happy. The most important economic reforms of the past years took place in Russian in such periods, when oil prices were low - 1985, 1991, 1998. Question: This is strange, we receive much more money from export, and it creates problems for us. Usually, thriving is associated with financial abundance... Mau: Oil prices are important, but appropriate state policies are much more important - budget, monetary, structural policies. I would like to remind you that in the Brezhnev era oil cost much more than it does now on global markets. If we were to re-calculate that price, taking dollar inflation into account, which was quite considerable in the 1980s, we would get around $80 a barrel. But this profit brought huge losses along. Huge money, which the Soviet Union was getting for oil exporting, was spent on senseless projects - changing river-beds, support of authoritative regimes abroad... In the 1970s the west was carrying out painful but extremely necessary structural reforms, and we were lagging behind more and more. The west was increasing economy efficiency, developing communications, changing technologies, and we were dealing with "mastering investments": the more you spend, the better. As a result, the west entered a principally new, post-industrial phase of development, and we stuck in cast iron and steel volumes and number of tanks per capita. The collapse os such system was inevitable. Question: Western experts do not agree with you in the question of investments in defense industry. They believe that Russia should not count on developing the military sector. Mau: In fact, investing budget money in the defense industry in much more profitable than in agriculture, from the state point of view. Not because missiles are more important than bread to us. The thing is that the rate of stealing in the defense industry is much lower. When earlier money for "supporting villages" was provided, it was clear that producers would not get anything, all would be spent "in transit". Besides, production of the defense industry leads to demand in many other industries, which greatly stimulates economic development. Quesiton: Western experts assure that we will die if we do not manage to get investments from abroad. Here is a typical quotation, German economist Wolfgang Schrettl writes, "We should do away with the myth that Russia is rich enough to overcome the crisis by itself. From the economic point of view, it is not a hyper-state. Its human potential is useless without foreign investments." Do you agree? Mau: It would be wrong to place hopes only on foreign investments. The most important thing is that Russia is open to innovations, world processes of technology development. The present situation in the world makes self-isolation disadvantageous. The country should compete in markets, including stock markets. However, we should not take this indisputable thesis as Russia's hopelessness and its dependence on foreign investments. (Translated by Daria Brunova) ******* #9 Wall Street Journal Europe December 28, 2001 Editorial Putin and Pasko Conveniently for anyone who prefers the year in a snapshot, two sides of modern Russia were patently on display last week. Let's start with the more or less positive face of the Russian Janus. One might say that President Vladimir Putin's televised phone-in with ordinary Russians was perhaps the most significant display of populism since Boris Yeltsin climbed atop a tank just over a decade ago. Unlike Mr. Yeltsin's spontaneous and courageous stand against Communist forces, Mr. Putin's performance was carefully scripted and posed little risk to the president. He sat snugly in front of the cameras, computer prompts at the ready, while questioners braved temperatures of minus 20 Celsius and waited in long queues. There was only a meager question on Chechnya, a subject that makes Mr. Putin visibly bristle. Still, Mr. Putin didn't have to do it. Here was the man who blundered his way through the Kursk debacle declaring his responsibility for anything that happened in even the furthest provinces of Russia. The phone-in was a tacit acknowledgement of the President's accountability to the electorate and the awareness that there is such a thing as public opinion. It is that impression of democracy at work -- of a responsible leader answerable to the public, promising reform, law and order -- that makes the other event of last week so jarring, if not unexpected. On Tuesday, military journalist Grigory Pasko was sentenced to four years in prison for illegally attending a meeting of top military brass and possessing notes he made there. The court said he intended to pass on the information to Japanese media. Mr. Pasko's long-running case is a cause celebre among human-rights organizations. Yelena Bonner, the widow of Nobel laureate Andrei Sakharov, and Alexander Nikitin, an environmentalist who was acquitted of treason for his efforts in exposing dangerous nuclear-waste disposal, were among those who signed a letter by the Moscow Helsinki group. It said of the Pasko trial that, "Today an illusion collapsed, showing the true price of freedom in Russia." For those not familiar with this saga, a few details are in order. Mr. Pasko, who holds the rank of captain in the Russian navy, spent 14 years working for a military newspaper covering the Pacific Fleet. Mr. Pasko's articles on the dumping by Russian ships of radioactive waste into the Sea of Japan drew the attention of Japanese television station NHK. Mr. Pasko claims NHK paid him a few hundred dollars for permission to cite his articles in NHK broadcasts and for appearing as a commentator in one broadcast -- none of which is illegal. FSB secret police clearly had had enough of Mr. Pasko's whistle-blowing, however. He was arrested by FSB officers in 1997 and charged with 10 counts of espionage involving alleged attempts to transfer "state secrets" to Japanese journalists. When he was acquitted of the charges at a first trial, the FSB persuaded a higher court to launch a new trial. He has spent 20 months in prison during a number of trials and appeals. Human-rights organizations and others tracking the latest five-month closed door trial in Vladivostok claim that the prosecutor's evidence has been so flimsy, and the process so riddled with violations of Russia's legal code, as to make the entire trial a sham. Indeed, prosecutors and the court dropped or dismissed all but one of the charges against him by the time his sentence was read at a Vladivostok military court on Tuesday. Mr. Pasko's lawyer said in the end he was convicted only of "intending to transfer" documents to a Japanese journalist. The conviction is still a victory for the FSB, the organization in which Mr. Putin spent his career, and that can only have the desired effect of chilling journalism that shines an unwelcome light on the failings of the Russian state or any of its arms. Mr. Pasko has appealed the sentence, but has acknowledged he is unlikely to get satisfaction in a Russian court given the energy the FSB has invested in this case. In the FSB's zero-sum world, criticism of Russia is tantamount to betrayal. This thinking is so Soviet as to strike a Western observer as utterly absurd. The right to dissent is the sine qua non of democracy. "This criminal case was born of a dislike for the truth," Mr. Pasko has said. The truth has indeed had a bad year in Russia, with the disembowelment of Russia's only two major independent television stations, NTV and TV-6. All of this casts a pall on the otherwise commendable economic reforms undertaken by the Putin administration, and the encouraging pledges for institutional reform. The abuses cannot be ignored by the West as simply internal matters of no concern to the outside world. The freedom of expression, and due process of law are goods in themselves. Better observance would make Russia a more reliable partner for the West and a more attractive target for investment. Indeed, the vulnerability of Russia's judicial system to manipulation is part of the reason foreign investors have remained wary of Russia. Last week's phone-in was brilliant stuff. It left the impression of evolved, democratic government at the service of the Russian people; of the President, accountable, at its head. No one should say this isn't progress. But as Mr. Pasko knows too well, Mr. Putin's Russia has another face, wholly inconsistent with real democracy. At some point, Mr. Putin will have to choose between a state that exists to serve its citizens; and one that pursues its own ends foremost. His FSB has clearly made its choice. ******* #10 Washington Times December 28, 2001 Attacks bring old foes together By David R. Sands NATO, having spent most of the past five decades trying to contain Russia as a military threat, now finds itself struggling to contain its own enthusiasm for Russia as a partner. Pivoting on the terrorist attacks of a single morning in September, relations between Russia and the West have undergone a profound transformation marked by unprecedented diplomatic gestures, close cooperation in the war in Afghanistan and intense discussions on an expansion of Moscow's role in the 19-nation NATO alliance. The year began with a string of confrontations over spies, missile treaties and human rights between the incoming Bush administration and the government of Russian President Vladimir Putin. It ends with Mr. Putin spending the night at Mr. Bush's Texas ranch while providing crucial diplomatic cover and logistical support for the U.S.-led military force in the hills of Afghanistan. The shift represents, in the words of the Texas-based Stratfor private intelligence service, "the most consistent reversal of Russian foreign policy since the Soviet breakup, if not the 1917 [Bolshevik] revolution." With much of the world's attention focused on the military campaign in Afghanistan, NATO officials in Brussels have been contemplating a major upgrade in relations with Russia — the country the alliance was formed to combat 52 years ago. "In the past, we were divided by fences, walls, ideologies and weapons," NATO Secretary-General George Robertson said in an interview with the Russian newspaper Rossiskaya Gazeta last month. "Today, the threat to the Russian people is similar to the threats that the peoples of the NATO countries are dealing with. "International terrorism has been transformed into global terrorism," said Mr. Robertson. "Why should we solve the problems separately?" U.S. Ambassador to Russia Alexander Vershbow, who formerly served as U.S. representative to NATO, said: "I believe that the NATO allies, as they tackle new threats such as terrorism, will be increasingly prepared to engage Russia as a full and equal partner. This would mean working with Russia from the earliest stage — that is, before NATO members have taken their own decision." For his part, Mr. Putin insists he is "not asking for any indulgence" as he seeks a greater role for Russia in NATO's decision-making councils. "We are simply drawing the attention of our partners to the simple fact that it is in their interests to treat Russia as an equal partner," he said in an interview with the London-based Financial Times earlier this month. "The earlier our partners come to understand this logic, the better it will be both for ourselves and for our partners. And in pursuing these policies, we do not at any time prejudice the national security interests of Russia," Mr. Putin maintained. Even the Bush administration's decision earlier this month to withdraw from the 1972 Anti-Ballistic Missile (ABM) Treaty — widely predicted by arms-control advocates and nervous European governments to sour relations with Moscow — has been taken largely in stride by the Kremlin. Mr. Putin called the ABM decision "a mistake," but added: "We have no intention of raising any anti-American hysteria." New challenge for NATO The changed landscape presents a major navigational challenge for NATO, which faces several major decisions in the coming year. In May, foreign ministers of the 19-nation alliance will meet in Reykjavik, Iceland, to consider whether to endorse proposals to give Moscow a more formal role in NATO councils in such key areas as counterterrorism, nonproliferation, European missile defense and civil emergencies. Since 1997, Russia-NATO relations have been managed through the so-called "Joint Permanent Council," but the Kremlin has long complained the JPC gives it only a limited, reactive role to positions already adopted by NATO members. Relations plummeted after NATO's 1999 air war in Kosovo, a campaign bitterly opposed by the government of President Boris Yeltsin. The proposed new NATO body, building on a proposal by British Prime Minister Tony Blair last month, would give Moscow a much greater say on certain issues, although NATO officials were quick to insist that Russia would not join NATO or take part in the alliance's integrated military command. And NATO leaders will gather in Prague in November for a critical summit whose high point is expected to be the issuing of invitations to up to 10 Eastern and Central European states to join the alliance. Those invited are now widely expected to include the three Baltic states, Lithuania, Latvia and Estonia, a move that has long been bitterly opposed by leading Kremlin strategists. Russian Defense Minister Sergei Ivanov revealed last week that NATO will be opening a military liaison office in Russia in May. Chill turns warm The warmth of Russia-NATO relations at the end of the year is in distinct contrast to the chill at the beginning, when pointed disagreements between Moscow and the new Republican administration led many to speculate about a revival of old Cold War animosities. Mr. Bush came to power criticizing the Clinton administration's dealings with Moscow, saying during the campaign that Mr. Clinton had relied too heavily on his personal relationship with former Russian President Boris Yeltsin and overlooked many Russian failings. The State Department bluntly criticized Russia's military campaign in the breakaway republic of Chechnya and slammed Moscow for muzzling critics in the press. New National Security Advisor Condoleezza Rice, the administration's top Russia expert, said in an interview in January that Russia "constitutes a threat to the West in general" and to the United States' "European allies in particular." Mr. Bush's staunch backing for a defensive missile shield not only upset Russian military strategists. His oft-stated intention to junk the ABM deal and downgrade Russia's role in U.S. military foreign policy struck at deep-seated fears in the Kremlin about Russia's loss of superpower status with the collapse of the Soviet empire. Relations took a nose dive in February when U.S. investigators charged FBI official Robert Hanssen with spying for the Soviet Union and Russia for more than a decade. The Bush administration expelled 50 Russian diplomats in protest and Mr. Putin answered in kind, the largest such tit-for-tat expulsions since the Cold War. Mr. Putin, for his part, railed against a "unipolar" — meaning U.S.-dominated — world in a series of trips to European and Asian capitals. In July, amid much pomp and ceremony, Mr. Putin and Chinese President Jiang Zemin signed a "friendship and cooperation treaty" with distinct anti-Washington undertones. The atmosphere improved somewhat when Mr. Bush and Mr. Putin appeared to establish a personal rapport at their first face-to-face meeting in Slovenia in June. "I was able to get a sense of his soul," Mr. Bush said in remarks that startled his own advisers. Mr. Putin "is a man deeply committed to his country and the best interests of his country." Prophetically, Mr. Putin at the Slovenia joint press conference produced a recently declassified Soviet letter, written in 1954, inquiring about membership in NATO. The request, Mr. Putin noted, was summarily dismissed by France, Britain and the United States at the time as "completely unrealistic." But it was the attacks on the World Trade Center and the Pentagon that provided the true turning point. Crisis brings change President Bush and Secretary of State Colin L. Powell have repeatedly noted that Mr. Putin was the first world leader to call the American president after the hijacked planes slammed into their targets September 11. Mr. Putin offered Russian support for the United States and said he was calling off an ongoing military exercise to avoid any confusion in the chaotic aftermath of the attacks. He offered intelligence and security assistance to the emerging U.S.-led counterterrorism effort. Perhaps most critically, the Russian president overruled his own defense minister and said Moscow would not object to the use of former Soviet states in Central Asia such as Uzbekistan as a staging ground for the U.S. military campaign. Russian strategists have long viewed those states as part of the country's natural sphere of influence. The support has not been cost-free for the West. In addition to contemplating a larger role for Russia in NATO, Western nations have toned down criticisms of Mr. Putin's internal rule, notably in Chechnya, which Russian officials insist is an integral part of the militant Islamist threat posed by Osama bin Laden in Afghanistan. German Chancellor Gerhard Schroeder said on a visit to Moscow shortly after the September 11 attacks: "Regarding Chechnya, there will be and must be a more differentiated evaluation in world opinion." The Bush administration has also pledged to work to expand the market for Russian goods here and back Moscow's bid to join the World Trade Organization. Speed or haste? The warming of relations has come so quickly that there are voices both in Russia and the West who fear things have gone too fast. In Moscow, leading analysts say Mr. Putin has decisively cast his fate with the West and faces grave political dangers if his offers are not reciprocated. "Putin has clearly made a long-term decision to westernize Russia," wrote defense analyst Pavel Felgenhauer in the Moscow Times earlier this month. "If this pro-Western drive is rejected, will there be another chance?" Sergei Rogov, director of the Moscow-based USA and Canada Institute, argued Russia has a right to expect a lot in return for its actions since September 11. "I don't think it is an overestimation to say that Russia's assistance — political, military, technical and intelligence — to the U.S. war against bin Laden is no less important than the support provided by all the NATO countries taken together, Britain excepted," Mr. Rogov said in a recent interview. "We should use this opportunity to formalize the breakthrough achieved at the top political level in practical agreements and treaties, in new mechanisms of collaboration," he said. But U.S. officials have been quick to say that enhanced NATO-Russia relations will not undermine the alliance's ability to act in its own interests. NATO's 19 members "will retain [their] prerogative to act independently on any issue," Mr. Powell said in Brussels earlier this month, even as the decision to create a more powerful new joint council with Russia was being made. But suspicions run deep among the Central and Eastern European nations that have been clamoring for years to join NATO, in large part because of their long-standing distrust of Moscow. "One must be very cautious in these matters," said Martin Palous, the Czech Republic ambassador to the United States. "National interests will always remain on the map." He recalled the compromises made when the United States and Britain enlisted Stalin as an ally in the fight to defeat Hitler. "No historical analogy is ever exact," Mr. Palous said, "but our predecessors made their mistakes in assembling previous grand coalitions to fight a particular evil and we should not repeat those mistakes." Latvian Foreign Minister Indulis Berzins said he hopes his country can join NATO next year and hopes that NATO will be worth joining. An effective Russian veto over key security decisions could jeopardize that, he said. "We want to be part of a strong NATO, not just a place where people talk and talk," he said. Veteran U.S. strategists such as former Secretary of State Henry Kissinger and former National Security Advisor Zbigniew Brzezinski have also warned of the danger to NATO of allowing Russia a major role in the alliance. Even the modest, circumscribed role seen for Russia in NATO councils could prove dangerous, Mr. Kissinger recently wrote. "NATO is, and remains, basically a military alliance, part of whose purpose is the protection of Europe against Russian invasion," according to Mr. Kissinger. "To couple NATO expansion with even partial Russian membership in NATO is, in a sense, merging two incompatible courses of action." For now, both sides insist that NATO can improve ties with Moscow without undermining its core functions — what's been called the "bear's nose under the tent" trap. Russian Foreign Minister Igor Ivanov said in Brussels earlier this month: "Nobody, and I am speaking of the Russian position in particular, intends to create a new format with a view to torpedoing joint action." The Pentagon has been more skeptical of the idea, but appears ready to move ahead with its old enemy. Saying he could not predict how the relationship would evolve, Defense Secretary Donald H. Rumsfeld said last week in Brussels: "Our goal should be to find concrete ways for NATO to work together with Russia where our interests coincide while preserving NATO's ability to work independently." He added: "No country should be treated as a de facto member of the alliance or given privileges that are otherwise denied to NATO aspirants." ****** #11 Washington Post December 28, 2001 Bush Pledges More Aid For Russian Arms Cuts By Mike Allen Washington Post Staff Writer CRAWFORD, Tex., Dec. 27 -- President Bush pledged more money today to help Russia round up and destroy nuclear and chemical weapons, abandoning the skepticism he had expressed when he ordered a review of the U.S. assistance nine months ago. In a statement issued while vacationing at his ranch here, Bush said most of the $750 million the United States spent on 30 such programs this year appears to be worthwhile. He called for cutbacks in a few programs, such as a costly effort to dispose of excess plutonium. But he urged additional spending and accelerated efforts on others, including construction of an incinerator to destroy Russian nerve agents. White House officials said the administration would propose an overall increase in the aid when Bush submits his budget next year, and they depicted the decision as a milestone in the increasing cooperation between the United States and Russia. "Most U.S. programs to assist Russia in threat reduction and nonproliferation work well, are focused on priority tasks and are well managed," a White House statement said. Foreign policy specialists said the announcement reflected the warming of relations with Russia and the administration's heightened concern about the proliferation of nuclear, biological and chemical weapons after the Sept. 11 attacks. Lawrence J. Korb, a former assistant secretary of defense in the Reagan administration who is director of national security studies at the Council on Foreign Relations, said the Bush administration had been "saying one thing and doing another" -- declaring support for cooperation with Russia while proposing cuts in nonproliferation assistance. "Now, they realize these are important programs that could keep nuclear material out of the hands of terrorists," Korb said. "If these terrorists get hold of nuclear weapons, it will make September 11th look like a day at the beach." Democrats on Capitol Hill said programs that had appeared likely to be cut under the administration's budget now appear likely to be given more money. They said the announcement was another example of Bush criticizing the policies of President Bill Clinton and then later adopting them. "When all was said and done, they realized there were good reasons for the past policies," said a Democratic Senate aide who specializes in arms control. Sen. Richard G. Lugar (R-Ind.), a leader in the 10-year-old cooperative threat reduction program, also described Bush's action as "good news." The National Security Council began reviewing the programs in March. Bush said at a news conference at the time that it was in the nation's interest to "work with Russia to dismantle its nuclear arsenal." But he also said he had an obligation to the taxpayers "to make sure that any money that is being spent is being spent in an effective way." Some administration officials had wanted, for example, to eliminate the Energy Department's Nuclear Cities Initiative, which aims to foster partnerships with U.S. companies and to spur investment in Russian communities long dependent on weapons factories. Sen. Joseph R. Biden Jr. (D-Del.), chairman of the Foreign Relations Committee, had called such a cutback "absolutely foolhardy." In today's statement, the White House said the Nuclear Cities Initiative would be consolidated into a related program and "restructured to focus more effectively on projects to help Russia reduce its nuclear warhead complex." But it stopped short of canceling the program. Bush also said the Pentagon would accelerate a project to build a facility at Shchuchye, in Russia's Kurgan region, to incinerate tons of deadly nerve agents. The high-tech incinerator is the first major effort by the Russians to destroy chemical stockpiles, an effort they concede is decades behind schedule. The House Armed Services Committee had for several years held up money for the facility, arguing that Russia had not fully disclosed its chemical weapons stocks or shouldered its share of financing. But earlier this year, the House withdrew its objection. With the Senate, it approved the project under certain conditions, including contributions from other countries and certification that Russia has revealed its chemical stockpiles. With those provisions, Congress approved $35 million this month to get the project started. Russia has allocated $50 million for infrastructure work, such as building access roads and clearing land, according to congressional sources. The administration also said today that it wants to accelerate cooperation with Russia to install equipment at border posts to detect nuclear materials. And the White House statement called in general terms, without citing budgetary figures, for expanding Energy Department programs to improve the security of Russia's warheads and nuclear materials. Congress had already guaranteed an increase in that funding by providing an extra $286 million for nonproliferation programs in a supplemental appropriations bill this month. Of that amount, $120 million is for programs to upgrade protection and accounting for nuclear materials across the former Soviet Union. Bush's announcement called for the expansion of the International Science and Technology Center, a joint U.S.-Japanese-European effort to help Russian weapons scientists switch to civilian work. But the president also called for the restructuring of some programs. The White House statement said, for example, that the State and Energy departments will "examine alternative approaches" to a joint project to dispose of 34 metric tons of excess Russian weapons-grade plutonium, "with the aim of making the program less costly and more effective." Some administration officials had urged cancellation of the plutonium disposition project, which has faced sharply increased costs -- estimated at more than $2 billion -- and disagreements over how to render the material harmless. But today's announcement said "the administration remains committed to the agreement with Russia to dispose of excess plutonium," although it is searching for an effective way to carry it out. Bush had hinted at the outcome of the review during a speech this month on defense policy. In that Dec. 11 address at the Citadel in South Carolina, he called Russia "a crucial partner" in the effort to keep dangerous technologies out of the hands of terrorists and said the two nations "will expand efforts to provide peaceful employment for scientists who formerly worked in Soviet weapons facilities." Staff writer Walter Pincus contributed to this report. *******