March 22, 2001 

This Date's Issues:   5163 • 5164  • 5165

Johnson's Russia List
#5163
22 March 2001
davidjohnson@erols.com

[Note from David Johnson:
1. Itar-Tass: 90 Percent of Russian Firms Privatised with Violations of Laws. (Stepashin)
2. Reuters: Russia's Putin praises his first year in office.
3. Interfax: ANY SHOCK THERAPY FRAUGHT WITH SERIOUS CONSEQUENCES -
PUTIN.
4. pravda.ru: PUTIN FAILS TO OBSERVE THE RULE OF THE ROAD.
5. Celeste Wallander and Anatol Lieven: re #5159/Goldman.
6. The Economist (UK): New fiction from Russia.
7. Moscow Times: Pavel Felgenhauer, Too Early for Mopping Up?
8. Wall Street Journal: Steve Levine, Caspian Oil Rush: Missed Opportunity For Moscow, Cash Cow for Kazakstan.
9. strana.ru: Ichkeria is preparing to declare independence, Russian expert. (Viktor Kremenyuk)
10. Interfax: Nine out of ten Russians oppose import of nuclear waste.
11. eurasianet.org: RUSSIA RETHINKS ITS CENTRAL ASIA STRATEGY.
12. Interfax: LIBERAL FIGURE NAMES TAX  REFORM, LAND LEGISLATION, DEREGULATION AMONG PRIORITIES. (Gaidar)
13. Carnegie Endowment for International Peace: Anders Åslund, The Myth of Output Collapse after Communism.
14. AFP: Rights body urges UN to condemn Russian "dirty war" in Chechnya.
15. Reuters: Russia's Duma approves trade in non-farm land.
16. Reuters: Tiny Georgia squirms as Russia pulls rank.]

*******

#1
90 Percent of Russian Firms Privatised with Violations of Laws

YEKATERINBURG, Urals, Mar 21, 2001 (Itar-Tass via COMTEX) -- As much as 90
percent of Russian enterprises were privatised with breaches of legislation.
However, a review of privatisation results will lead to disruption of the
Russian economy, chairman of the Russian Auditing Chamber Sergei Stepashin
told reporters in Yekaterinburg on Wednesday.

The chairman expressed this idea, while assessing the results of audits,
conducted by his agency at several companies in the country. In Stepashin's
opinion, reasons for the hurried privatisation, carried out "on the verge of
a fall", were political, since "a task was set to create a middle class in
the country".

On the other hand, many legislative acts were absent at that time. Stepashin
noted that the Russian Prosecutor-General's Office instituted 42 criminal
cases by the results of inspections by the Auditing Chamber of how budget
funds were spent.

Stepashin arrived in Yekaterinburg to hold a meeting of heads of control and
accounting bodies of regions, forming the Ural Federal District.

He signed on Wednesday an agreement on cooperation with the auditing chamber
of the Sverdlovsk Region. It provides for cooperation in personnel matters as
well as for joint audits of how budget funds were used.

Stepashin noted in this connection that auditing chambers were set up in 62
subjects of the Russian Federation. Cooperation with them will help the
Russian Auditing Chamber, apart from control over spending of budget funds,
to assess the effectiveness of outlays.

According to the chairman, the Russian Auditing Chamber has returned 25
billion roubles to the state over the five years of its operation.

********

#2
Russia's Putin praises his first year in office
March 21, 2001
By Peter Graff
 
MOSCOW (Reuters) - Russian President Vladimir Putin gave himself good marks
for his first year in office in an interview published Wednesday and said he
hoped for a positive dialogue with the United States but remained firmly
opposed to Bush administration plans to build a missile defense shield.

Putin said in the interview that such a shield would endanger decades of arms
control talks.

The wide-ranging interview with journalists from four major Russian
newspapers touched on issues ranging from arms control to war in rebel
Chechnya. But the main focus was on economic policy and Putin's efforts to
build a strong state.

Putin's responses, printed in early editions of Thursday's Izvestia daily,
which appeared Wednesday evening, resembled a dress rehearsal for his second
annual policy speech to parliament, which a spokesman said would occur April
3.

Asked about the results of his first year in office, Putin said, "Of course,
we could not complete everything we would have liked, but the main things we
had planned, I believe we have carried out."

He said he had improved the lives of ordinary Russians and unified a state
that was falling apart.

Notably absent from the interview were reporters from Media-Most, the
country's largest independent media group, which has accused the Kremlin of
trying to muzzle its criticism.

PRAGMATIC FOREIGN POLICY

Putin has traveled to more than two dozen countries in his year in power and
hosted almost as many leaders in Moscow in an effort to build what he calls a
pragmatic new foreign policy.

The most important world leader Putin has yet to meet, however, is George W.
Bush. The new U.S. president has downgraded the importance of ties with
Russia, saying former President Clinton treated Moscow too indulgently.

Bush has agreed to meet Putin only on the sidelines of international
conferences, in Italy in July and in China in October, a standoffishness that
has been interpreted as a snub.

"The president of the United States has said that Russia is not an enemy, not
an opponent. I think that is a very positive step," Putin said.

STRONG STATE, STRONGER ECONOMY

Putin said his main accomplishment was strengthening the state by bringing
its 89 regions into line, forcing them to make their laws agree with those of
the center.

"We managed to make a significant step forward toward strengthening the
Russian state. Remember what kind of state we lived in not long ago?
Twenty-five percent of regional laws contradicted the constitution and
federal law," Putin said.

"On the foundations of a strengthened state, we have made a step toward
consolidating society. This has created conditions for achieving economic
results," he said. "We have been able to support a significant level of
economic growth."

Putin said it was a mistake for Russia to take on the debts of the entire
former Soviet Union, but having done so, Moscow would honor its obligations.
But he also said he expected creditors not to force Russia to pay more than
it could afford.

"We are paying and are prepared to pay our debt, but our first priority is
the development of our own economy and on this basis, meeting the social
obligations of the state to the population. If the Russian economy tumbles,
creditors will not get their money. Creditors understand this."

********

#3
ANY SHOCK THERAPY FRAUGHT WITH SERIOUS CONSEQUENCES - PUTIN

     MOSCOW. March  21 (Interfax) - President Vladimir Putin has said he
thinks that  "any shock  therapy is fraught with serious dangers however
good the intentions behind it."
     In an interview with four Russian newspapers, the Russian president
said that  it is impossible to carry out economic reforms without public
support and  this support cannot be ensured without the state fulfilling
its social obligations.
     Putin admitted  that there are differences between the presidential
administration and  the government  over  methods  and  instruments  for
achieving common  objectives. However,  "the main  thing is  that people
both in  the government  and administration think in similar terms, they
have  common   strategic  objectives,   similar  common   tasks  and  an
understanding of these tasks."
     Putin said  he becomes  concerned more when there are no arguments.
"That is  when concern  truly arises  that we  may  make  some  mistake,
overlook the  most acceptable  option of  development or  solution of  a
certain specific  task. When  there are  arguments, it  is normal,  that
doesn't worry me," he said.
     In this  connection, he continued, there is nothing critical or bad
in differences  of method  in resolving  common tasks  if objectives and
approaches  are   the  same.  "On  the  contrary,  this  is  a  positive
phenomenon," he said.

********

#4
pravda.ru
March 21, 2001
PUTIN FAILS TO OBSERVE THE RULE OF THE ROAD

Movement of Putinâ's cortege in the streets causes a lot of discomfort to the
people of the cities, Sergey Yushenkov, the State Duma depute said March, 21.
According to Yushenkov, the president has so many guards that his corteges
block the street traffic for more than half an hour. Many people are often
late for their offices and for the appointments.

Yushenkov even suggested that the head of the Federal Guard Service be
summoned to the State Duma in order to settle this trouble.

However the President's plenipotentiary in Duma Alexander Kotenkov explained
that other establishments cannot interfere in the Federal Guard Service
activity. Kotenkov also reminded that Vladimir Putin had many times presented
his apologies to the inhabitants of the cities he visited, because of
discomfort, caused by the President's cortege.

In many civilised countries, for instance, in UK, the high rank officials use
the governmental cars, obeying the rule of the road, accepted at the state.
Margaret Thatcher acted this way, her car has never neglected the road signs.
But it was in the Great Britain, it is often rainy and foggy there and you
cannot go fast. And Russians like to do things in a big way.

********

#5
Date: Wed, 21 Mar 2001
From: cwallander@cfr.org (Celeste Wallander and Anatol Lieven)
Subject: #5159/Goldman

Dear David,

We have received some excellent feedback on our piece, including from many
JRL readers, for which we'd like to express our thanks.  In particular,
several people raised interesting issues of moral hazard with respect to
Ukraine, Georgia, and Moldova.  It's a tricky dilemma, and we are glad so
many, as we are, are concerned about it.

However, much of the response is of another sort, attributing arguments to
us that we did not make.  It is rather difficult to understand how it is
possible to read such a short piece so wrong, but we would like to point
out in response to Marshall Goldman's letter that (a) we explicitly note
that part of a deal would need to include measures to push Russia's
neighbors towards domestic reform and alternative energy sources and (b) we
explicitly DO NOT argue that Russia should be forgiven all $48 billion of
its Paris Club debt.  We argue, in fact quite explicitly, that Russia can
afford to pay its debts this year, precisely because the economy has been
doing well.  Our concern is down the line, because as we pointed out, the
debt payments will increase radically by 2003.  Moreover, Russia's economy
is slowing even as world oil prices have sunk (though these last points did
not make it into the published version).  We believe that by 2003, the debt
will have to be renegotiated in any case because Russia will be unable to
pay, so we may as well try to extract some concessions in return.

Anatol and Celeste

********

#6
The Economist (UK)
March 17-23, 2001
New fiction from Russia
Speech therapy

KYS.
By Tatyana Tolstaya.
Podkova Inostranka; 380 pages; 48 roubles

VZYATIE IZMAILA.
By Mikhail Shishkin.
Vagrius; 392 pages; 92 roubles

ALTYN-TOLOBAS.
By Boris Akunin.
Neva; 412 pages; 53 roubles

IN THE opening scene of Andrei Tarkovsky's 1974 classic film, "Mirror", a
youth stands before a speech therapist who is trying to help him overcome
his stammer and teach him to speak freely. Contemporary Russian fiction is
like Mr Tarkovsky's youth, trying to get rid of an impediment inflicted by
the collapse of the Soviet state.

Russian may be the only language which has been mutilated twice over the
past 100 years: first by the Communist Party which, with the help of many
talented writers and poets, created a new Soviet jargon, and secondly by
the collapse of the Soviet Union which left the nation without such a
unifying language or identity. The language gaps were filled with mockery,
scorn and tireless playing with Soviet clichés. But ten years of ridicule
left readers and writers longing for a language that was capable of
expressing more serious feeling and experiences. It is this search for a
new language that has become both the subject and the object of modern
Russian fiction.

Tatyana Tolstaya, a short-story writer who spends much time in America,
conceived her anti-Utopian debut novel, "Kys" in 1986, the year of the
Chernobyl disaster and the beginning of perestroika. She completed it in
2000, the last year of Boris Yeltsin's rule. By naming each chapter after
the letters of the old Russian alphabet, she suggests that it is nothing
less than an encyclopedia of Russian life, a pretentious claim.

Written in a rich, ornate language, it describes a mutant, deformed world,
once known as Moscow, several hundred years after an allegorical Explosion
(with a capital E). Everyone who lives here bears its Consequences (with a
capital C). Some have gills instead of lungs, or claws instead of nails and
some "don't have any Consequences-only pustules coming out of their eyes in
old age, or a beard growing from private parts, or nostrils popping up on
their knees." They eat mice, drink rust and copy out books which they
cannot understand. Ms Tolstaya savours the words and images which make up
this disfigured, though strangely cosy world. Yet despite its ornate
language and ambitious claims, the novel remains as monotonous as the world
it describes, in part because there is nowhere for it to go.

Language is also the main theme of Mikhail Shishkin's "Vzyatie Izmaila"
(The taking of Ismail), which won last year's Russian Booker prize. The
book has no plot, no chapters and no character that is sustained through
the novel. It is held together by a conflict of styles, languages and
literary traditions rather than the interaction of characters. The
narrative, if it can be called that, moves between a pre-revolutionary
courtroom, Stalin's Russia, and modern-day Moscow. Latin phrases, church
Slavonic, Chekhovian language, modern obscenities, forensic documents, and
endless literary quotations are all elements of Mr Shishkin's linguistic
universe.

Within these crisscross streams of consciousness are a series of eloquent
and gripping novellas. The novel ends with a disarmingly sincere
autobiographical epilogue in which the author, woken from a dream about his
ugly Soviet childhood by a ticket collector on a train in Switzerland, is
left wondering: "Where am I?"

Of these three writers Boris Akunin, a bestselling detective writer, has
the fewest literary pretentions, which may be because he does not exist. Mr
Akunin is the creation of a scholar and translator of Japanese literature,
Grigory Chkhartishvili, who is also the author of a serious academic work,
"The Writer and Suicide".

Mr Akunin has conquered Russia's reading classes with elegant detective
stories set in the 1870s-1890s-the time which saw the birth of Russia's
capitalism. His main character, Erast Fandorin, a literary relative of
Chesterton's Father Brown, is a charismatic civil servant with a slight
stammer, who specialises in uncovering elaborate crimes. Fluent in English,
lucky but not a gambler, gallant yet restrained, possessing a sense of
honour alien to many of his countrymen, Fandorin is the personification of
a national dream of an ideal European-the perfect Russian gentleman.

Mr Chkhartishvili does not preach or even claim to write serious
literature. He believes his books simply fill the gap between high-brow
literature and pulp fiction. His is the first attempt to create good
commercial literature for Russia's growing middle class. But writing in a
stylised language of Dostoevsky's 1870s, he also tries to bridge two eras
of Russian literature leaving out 70 years of Soviet tradition.

In "Altyn-Tolobas", Fandorin's grandson, Nicholas, by now an Englishman,
returns to Moscow looking for the traces of the founder of the Fandorins.
The action moves between the 17th-century Russian court and the Moscow of
today, showing how little Russian ways have really changed over the past
three centuries-other than the language. Brought up on classical Russian
literature, Nicholas speaks a refined Russian unspoilt by the 70 years of
Soviet rule or the ten years since its collapse, which makes him a
linguistic foreigner in the land of his forefathers.

Mr Chkhartishvili believes in the magical power of language: "call
something a different name, and it will change its substance". If he is
right, bringing Mr Akunin and his character into modern Russian literature
may help it overcome its stammer.

*******

#7
Moscow Times
March 22, 2001
Too Early for Mopping Up?
By Pavel Felgenhauer (pavelf@online.ru) 
 
The Kremlin has begun to withdraw combat troops from Chechnya. Trainloads of
men and armor of the 74th motorized rifle brigade are on the move through
Russia into Siberia. Three other regiments from the Moscow military district
are scheduled to be withdrawn in the next few weeks.

According to official information, there are approximately 80,000 Russian
troops in Chechnya, about 40,000 of which are from the Defense Ministry and
the rest from other forces. Chechen sources claim that the Russian occupying
army is 120,000 to 160,000 strong, but these figures seem inflated.

Official Kremlin spokesman Sergei Yastrzhembsky put the number of troops in
Chechnya (including logistical units) at the end of January as 57,000 from
the Defense Ministry and 36,000 from the Interior Ministry (a total of
93,000). This figure did not include garrisons stationed close to the border
in the Northern Caucasus or logistical and support units stationed outside of
Chechnya but involved in the fighting (including air force squadrons flying
bombing or reconnaissance sorties into Chechnya). Taking this into
consideration, perhaps there is some measure of truth to the inflated rebel
figures.

The Kremlin has insisted that the present troop withdrawal is the beginning
of the end of the war and that other units will soon follow, leaving a
permanent garrison of some 25,000 consisting of an enlarged motorized rifle
division of 16,000 men and an Interior Ministry brigade of up to 6,000 men,
plus support and specialized units. The Kremlin has announced that this
permanent occupation force will be supplemented by pro-Moscow Chechen armed
militias.

But it will still be some time before the present force in Chechnya is
reduced to such levels. The military plans to keep a division-sized group of
Russian paratroopers in the southern mountains and to maintain a significant
concentration of armor and motorized infantry in the southeast near the
Dagestan border.

The units currently scheduled for withdrawal consist of about 5,000 men.
Moreover, it should be noted that the authorities have often withdrawn
various units with great fanfare, only to quietly replace them with other
units later. Essentially, they try to depict the normal rotation of units as
a cutback.

It appears that the Chechen resistance has recovered from the heavy losses it
suffered after Russian troops captured Grozny and chased the rebels into the
mountains a year ago. For the last few months, the rebels have been running
an increasingly deadly guerrilla campaign: mining roads, ambushing columns
and killing Russian solders daily.

Russian commanders say that in "liberated" Grozny troops can move only in
large detachments even during the day, usually supported by armor. Going out
alone means certain death or capture. At night, Russian troops in Grozny
barricade themselves in strong points while the rebels move around freely.

Soldiers believe that virtually all pro-Moscow Chechen support troops are
actually armed rebels in disguise, ready at any moment to shoot them in the
back. This notion seems to be at least partially true: A Chechen rebel
commander told me recently that he often moved through Russian checkpoints
posing as a member of a pro-Moscow militia, sometimes escorted for safety's
sake by a genuine pro-Moscow Chechen official.

The Russian public, brainwashed by official propaganda, may believe that
victory in Chechnya is around the corner. But soldiers and officers in
Chechnya know that this is not true. However, there are powerful reasons why
the Defense Ministry is beginning a partial pullback now. Some of the units
being withdrawn should soon be disbanded in accord with the newly approved
military reform plans to dramatically reduce Russia's military manpower.
Also, in recent months the war has evolved into a series of small-scale
engagements, meaning that fewer large-caliber guns are needed and some
howitzers and other heavy equipment are being removed.

The present campaign was planned as a relatively short victorious campaign
followed by a long low-intensity, low-casualty mopping-up operation. Now,
with the global economy apparently heading toward recession and world energy
prices predicted to fall, the government seems eager to try to curtail the
cost of its Chechen adventure. The government may be trying to move to the
mopping-up phase before all organized rebel resistance has in fact been
broken. And that would be a mistake sure to end in disaster.

Pavel Felgenhauer is an independent, Moscow-based defense analyst.

*******

#8
Wall Street Journal
March 21, 2001   
[for personal use only]
Caspian Oil Rush: Missed Opportunity For Moscow, Cash Cow for Kazakstan
By STEVE LEVINE
Staff Reporter of THE WALL STREET JOURNAL

ATERAU, Kazakstan -- The Central Intelligence Agency projected during the
Cold War that the northern Caspian Sea contained so much oil that it could
salvage the Soviet energy industry, the cash cow for Moscow's competition
with the U.S.

While the region obviously didn't rescue the Soviet Union, today it is the
talk of the industry. Geologists say that one big field near this Caspian
port -- called Kashagan -- could thrust Kazakstan into the ranks of the
world's biggest oil producers.

In a 1989 document, the CIA said the Soviet Union planned its next big oil
play in the northern Caspian, but that the move would require Western
technology. Ultimately, that is what happened -- only, nine years after the
Soviet collapse, it is the Kazaks, and not Moscow, who have imported Western
expertise.

"The Caspian Basin was a natural," said Robert Ebel, a former CIA oil analyst
who is now with the Center for Strategic and International Studies in
Washington. "It is just that the Soviets lacked the capital and equipment to
do anything about it."

The analysis is among more than 850 classified Soviet-era documents released
by the CIA this month. They are only a small part of what the CIA produced
between 1951 and 1991, and it is impossible to discern what the agency chose
to withhold. But former agency analysts say Soviet energy was a CIA
preoccupation, mainly because oil-export profits sustained Moscow's Cold War
struggle with the U.S.

"Oil production determined the strength and the economic viability of the
regime," said A.J. Johnson, a principal CIA analyst on Soviet oil from 1969
until he retired in 1988. "Everyone [in the CIA] wanted a piece of the oil
reporting, because that was one thing where you were sure to get attention."

The CIA's oil analyses were often on the mark, particularly in the final
years before the Soviet collapse. Yet the agency produced some major
bloopers, and consistently underestimated Moscow's resolve to maintain
oil-export revenue.

A 1977 document ignited a years-long row in Washington by projecting that the
Soviets -- then the world's largest oil producer -- could soon be forced to
begin importing crude. Some of those briefed on the paper said the agency was
implying that the Soviet Union might invade Iran or Kuwait to obtain more oil.

"It was an alarmist view," Mr. Johnson said. "There was a lot of bad-mouthing
of the agency because of the report."

The thinking persisted. As late as Aug. 1, 1991, the agency again predicted
that "the USSR may cease to be an oil exporter by the mid-1990s."

In fact, the Soviet Union continued to be the world's largest oil producer --
it pumped a peak of 12.5 million barrels a day in 1988 -- and a significant
exporter until its collapse. This year, combined exports from the main former
Soviet oil-producing states of Russia, Azerbaijan and Kazakstan are projected
to be some three million barrels a day.

Convinced the Soviet oil industry was headed for collapse, the CIA produced a
series of documents between 1986 and 1988 that tried to divine where Moscow
might compensate for the decline of its key western Siberian fields.

CIA analysts examined the Barents and Kara seas, then looked at the North
Caspian Basin, a geologic formation that reaches from the sea onshore into
Russia and Kazakstan. Mr. Johnson said the majority of CIA oil research
relied on openly available professional Soviet publications.

The resulting Caspian document, completed by Mr. Johnson's successors at the
agency, has its ironies.

The research was finished Feb. 15, 1989, the day U.S. officials celebrated a
Cold War triumph when Soviet occupation troops, under pressure from
American-backed rebels, withdrew from Afghanistan. In a paper dated April 1,
1989, however, the CIA analysts conclude that the North Caspian Basin could
shore up Soviet oil production, which made undertakings such as Afghanistan
possible.

Moreover, the analysts conservatively estimated the basin's oil reserves at
30 billion barrels -- without Kashagan, of which the CIA was unaware, Mr.
Johnson said.

In the past year, a nine-company foreign consortium exploring Kashagan has
announced evidence of the world's biggest oil find since Alaska's Prudhoe Bay
in 1969. Some analysts say that, if Kashagan proves as big as it appears,
Kazakstan could end up exporting five million barrels of oil a day.

Kashagan's shareholders are Britain's BG Group PLC, Italy's ENI SpA, Exxon
Mobil Corp., Royal Dutch/Shell Group and France's TotalFinaElf SA, with 14.3%
each. TotalFinaElf also recently announced preliminary deals to buy a 9.5%
share held by BP Amoco PLC and 4.8% from Norway's Statoil AS. Phillips
Petroleum Co. and Japan's Inpex Nord Ltd. each hold shares of 7.2%.

Instead, much of the CIA's enthusiasm surrounded Tengiz, a giant onshore
field east of Kashagan. The CIA said Tengiz had probable reserves of 18
billion barrels.

That figure is twice the highest proven reserve estimate offered by Tengiz's
main shareholder, Chevron Oil Corp., which says the field contains about 25
billion barrels of oil, of which as many as nine billion barrels are
recoverable. Chevron's share in Tengiz is 50%, Exxon Mobil has 25%, and the
Kazakstan government 20%.

The 1989 CIA document made much of the Soviet Union's lack of equipment
needed to work in the north Caspian's extremely deep reservoirs, with their
high concentrations of toxic hydrogen sulfide. But, because the CIA missed
the Soviet collapse, it failed to foresee the rush of Western companies into
the region.

"The North Caspian development program would have to fail dismally before the
Soviets would seek joint ventures to bring in Western management expertise on
a large scale," the document concludes.

*******

#9
strana.ru
March 21, 2001
Ichkeria is preparing to declare independence, Russian expert
 
Deputy Director of the Institute of U.S. and Canada Studies Viktor Kremenyuk
comments on U.S. intention to start contacts with Ichkeria representatives

My scenario of upcoming events is this. Quite soon the Chechens will start an
offensive and dislodge our troops from some important populated locality -
not Grozny, but, say, Gudermes. They do not aspire to much. After that
Ichkeria will declare independence in front of Western TV cameras. Things are
moving in that direction. Thereby they will convert the Chechen conflict from
a Russian to an international affair.

The Americans know this as do the Turks and numerous others.

They gave us one year to put an end to this affair. We failed. In principle,
the main separatist forces are not destroyed; they have scattered but will
flock together when it is necessary again. They will start an offensive as
soon as trees turn green. They have weapons, they still have their leaders.

The task that was posed before the start of the second Chechen war - to
destroy in full, to put under control - failed to materialize. It means we
have to prepare for the consequences. And the consequences will be what I
have said. In public and ceremoniously, Maskhadov will declare independence
of the Republic of Ichkeria and its withdrawal from the Russian Federation.
In general, it will be a sad picture for us.

Of course, the Americans will not recognize it, they will be the last to do
that. But they are already preparing for these events and therefore need
contacts with representatives of Ichkeria - open contacts, not the ones they
always had but kept silent about.

Were I in the place of our Security Council or Foreign Ministry big shots I
would estimate their intention to start the contacts as an open warning to us
that the next thing to come is the declaration of Chechnya's independence.

The Americans will under no circumstances stimulate the process, will under
no circumstances appear in the eyes of many as destroyers of statehood, etc.
But in principle, the case in point is preparing a situation where the
Chechens will become independent. And they are giving us to understand neatly
that they no longer intend to view the Chechen problem as an internal Russian
one. In principle, we were told as much at the OSCE, when OSCE people were
attempting to explain to us that certain aspects of the Chechen problem were
by far not internal Russian ones. The same was the message we got from the
Parliamentary Assembly of the Council of Europe. But we only wanted to win,
just could not settle for anything less. Coming from there today are
triumphant reports that someone has been arrested or caught, whereas
information that new weapon dumps are found each day, that they are testing
the strength of our lines of communication is pushed into the background.

As for the troop pullout, troops are being withdrawn because it has become
dangerous to keep them, because they are rapidly becoming demoralized. I do
not know what prompted the decision to pull out more - knowledge of the real
state of affairs or simply pressure from the generals, who saw the troops
turn into a gang of alcoholics before their own eyes.

As for thus assisting the emergence of a Chechen terrorist state or, say,
Greater Albanian terrorist state, the United States will cope with terrorism.
The more so that it is nowhere near their own territory. They have enough
forces, possibilities, a mechanism, allies, telecommunications, a global
criminal detection system. It is we who are unable to find for years who
blasted a house in this country.

What we are beginning to see as number one threat they regard more or less
calmly. Putting Yugoslavia under control is a more important problem for the
United States. Weakening Russia's positions in the Caucasus and thus maybe
bagging Georgia and Azerbaijan is also a more important problem for the
United States. And they are weakening our positions, among other things, by
secretly aiding Chechnya's independence. As for possible negative
consequences, never mind, I tell you again, they have a powerful police
machine of their own, have an international service. They'll manage somehow.

The Americans do not fear hand-fed terrorists. They will not lay a finger on
the Americans. Why did Clinton declare in 1994 that Chechnya was a purely
Russian internal affair? Because there was still faith that a strong
democratic regime was in the making in Moscow, that the process had to be
helped, that one should even close one's eyes to excesses like the shooting
of Parliament or Chechnya. Once come, the democracy will put all things in
their proper places. Today, after much time, the United States has a
different attitude to Russia.

*******

#10
Nine out of ten Russians oppose import of nuclear waste
Interfax

Moscow, 21 March: An overwhelming majority of Russians - 89 per cent - have a
negative attitude towards the idea of bringing nuclear wastes to Russia from
abroad for their reprocessing and burial even for financial compensation.
Only 4 per cent of Russians support this idea, and 7 per cent found it
difficult to state their position.

Interfax obtained this information on Wednesday from the sociological
research group monitoring.ru, which conducted a representative all-Russian
poll of 1,600 respondents residing in over 100 populated areas in all seven
federal districts.

*******

#11
eurasianet.org
EURASIA INSIGHT 
March 21, 2001   
RUSSIA RETHINKS ITS CENTRAL ASIA STRATEGY

Under President Vladimir Putin, Russia's foreign policy establishment is
rethinking the concept of empire. In the case of Moscow's approach towards
Central Asia, ideas about territorial domination no longer play a
significant role in the formulation of strategy, according to a source with
access to Russia's policy-making mechanisms. While the aim in Central Asia
remains the maintenance of stability, foreign policy shapers are accepting
of the notion that Russian national interests are best served by the
exploitation of economic levers of influence.

For the new Kremlin strategy to be effective, the source says, Moscow needs
to address a number of related security and social issues. Accordingly,
Russian leaders are determined to combat the spread of Islamic radicalism
into Central Asia, and are acting to prevent the penetration of Western
business interests.

At the same time, the Kremlin is seeking to persuade ethnic Russians living
in Central Asia to remain in the region, rather than emigrate. Ethnic
Russians in Central Asia are now viewed by the Russian foreign policy
establishment as a key asset in the attempt to tie Central Asian economies
to Russia's. Since the Soviet collapse the number of ethnic Russians living
in Central Asia has fallen from about 9.5 million, or 19.3 percent of the
region's overall population, in 1989 to approximately 6.9 million, or 12.4
percent, today.

There are many strategic interests that compel Russia to seek to retain a
sphere of exclusive influence in Central Asia. Perhaps most importantly,
the region is seen by Moscow as a bulwark against undesirable radical
Islamic influences emanating from Afghanistan and Pakistan. Thus, Moscow is
willing to commit a considerable portion of its resources to securing the
southern border. The Kremlin also views Central Asia as an important market
for its industrial output and a reliable source for raw materials,
especially cotton and minerals. In addition, Central Asia is seen as a
springboard for trade with Iran and China. Another factor in Russia's
thinking is that Kazakhstan's Baikonur cosmodrome is responsible for
launching upwards of 70 percent of all Russian space missions, and serves a
potent symbol for the country's past technical and scientific achievements.

Despite an intense desire to secure Central Asia's southern flank, Russian
policy makers recognize the enormity of the task may be beyond their means.
Cost estimates for securing the border with Afghanistan and Iran range
around $1 billion. Alternately, Moscow has attempted to establish closer
military cooperation with Central Asian states, with mixed results. The
withdrawal of Russian border guards from Uzbekistan and Turkmenistan has
greatly hampered the effectiveness of this policy. As a result, Russian
officials are now studying the feasibility of establishing a secure border
regime along the Russian-Kazakhstan frontier, an idea that had previously
been shunned by Russian policy makers.

To prevent any further erosion of Russia's military capacity in Central
Asia, Russia is willing to exert considerable pressure on Central Asian
nations not to interact with Western security organizations, in particular
NATO. Russia additionally views it as a matter of vital national security
that Central Asian states remain within CIS common military operational and
technical standards: planning, codes, service regulations, military
equipment and arms.

Russian-Central Asian trade turnover was estimated at USD $7 billion in
2000, comprising only about 5 percent of Russia's overall trade. However,
Russia depends on reliable grain imports from Kazakhstan, and uncombed
cotton fiber mainly from Uzbekistan. Moscow also views Central Asia as the
principle source of strategic raw materials, including such ores as lead,
zinc, copper, cadmium, bismuth and boron.

To expand its economic position in Central Asia, policy makers are now
actively promoting the Eurasian Economic Community, as well as Russian
participation in the privatization of strategic sectors of the regional
economy, including hydro-electric power stations in Kyrgyzstan and
Tajikistan. Russia will also aggressively seek to secure a dominant role in
the development and export of Central Asian oil and gas resources. [For
additional information see EurasiaNet's archives]. A key element in
Russia's energy strategy is securing a satisfactory agreement on the
division of the Caspian Sea [For additional information see the Eurasia
Insight archives].

In pursuing its strategic aims, Russia is willing to offer virtually
unconditional support to incumbent Central Asian leaders. The Russian
foreign policy establishment considers the existing regimes to offer the
greatest chance for the maintenance of stability. There is also a greater
willingness on the part of Russia to implement policy on a bilateral basis,
and not through multilateral organizations such as the CIS.

Since the collapse of the Soviet Union, Russian policy towards Central Asia
has moved through three distinct phases. The first, which lasted from
1991-95, saw Russia disengage from Central Asia, as Moscow grappled with
domestic upheaval. From 1996-2000, Russia sought to restore its once
uncontested military-political position in Central Asia, but various
instruments designed to promote reintegration, such as the Collective
Security Treaty, proved ineffective. Since Putin's ascendancy in 2000,
Moscow has pursued economic avenues of influence, which had until that
point played a secondary role in the thinking of policy planners.

Throughout all three phases, the biggest obstacle to the achievement of
Russia's strategic goals has been perhaps Russia itself. Member of the
policy-making apparatus admit privately that the competing agendas of
Russia's various power centers --including the Kremlin, the ministries of
foreign affairs and defense, the Parliament and business leaders - were
responsible for the inconsistent implementation of policy.

However, under Putin's leadership, Russia's policy elites appear to be more
flexible in their strategic thinking and more willing to embrace trade as a
tool to promote the country's goals. As for Central Asian leaders, they are
finding that, despite an ingrained suspicion of Russian motives, Moscow may
be their only viable partner in the quest for regional stability. Thus,
policy makers in Moscow feel they have every ability and opportunity to
overcome past inconsistencies and implement effective policies in Central
Asia that protect Russia's national interests.

********

#12
LIBERAL FIGURE NAMES TAX  REFORM, LAND LEGISLATION, DEREGULATION AMONG PRIORITIES

     MOSCOW. March  21 (Interfax)  - Yegor Gaidar, leading economist and
ideologue of  the Union  of Right Forces, has named as priority tasks in
the Russian  economy the continuation of the tax reform, the approval of
"good land legislation" and a package of laws deregulating the economy.
     "Russia's admission  to the World Trade Organization could serve as
a reserve," he said in an interview with the magazine Profil.
     In his  opinion, he  said, the Russian government "is not reluctant
to act rapidly, it doesn't know what it wants to do this year."
     "There is a certain good program. But, understandably, it is simply
impossible to  implement all its planks. Three or four are possible. The
government has not decided yet which. The longer it takes to decide, the
greater the chances that none will be implemented," Gaidar said.
     He went  on to  express his  view that  the beginning  of  economic
recovery in  Russia has  little to  do with  President Vladimir  Putin's
coming to  power. In  the years  of reform  "a critical mass of decently
managed companies  producing competitive  goods" has  developed,  Gaidar
said. "And this is what guarantees growth," he said.
     Gaidar also  stressed  that  economic  growth  must  be  supported.
"Something is already doing well, something is not. However, quite a few
things have  succeeded. For instance, the tax reform that is customarily
criticized is producing results already," he said.
     He said  that the introduction of a single 13% flat income tax rate
"resulted in the growth of real revenues in January by 60%"
     "Honestly speaking, I didn't even expect such radical results," the
former government head said.
     Asked how  long such  a   liberal tax might remain in force, Gaidar
responded that  considering "how  well it  works, nobody  will touch  it
during the next five years."

*******

#13
Summary
The Myth of Output Collapse after Communism
Anders Åslund
WORKING P A P E R S
Post-Soviet Economies Project
RUSSIAN AND EURASIAN PROGRAM
Carnegie Endowment for International Peace
www.ceip.org
Number 18
March 2001
http://www.ceip.org/files/Publications/wp18.asp?pr=2&from=pubdate

Anders Åslund is Senior Associate at the Carnegie Endowment for International
Peace, where he co-directs the project on Post-Soviet Economies in Transition.

SUMMARY

According to official statistics, output plunged in almost all Soviet-type
countries toward the end of communism. Then in the first year of
transition, the plunges turned even more dramatic, continuing for years.
The total registered declines in GDP range from 13 percent in the Czech
Republic from 1989 to 1992 to 77 percent in Georgia from 1989 to 1994. This
collapse has been widely proclaimed as the worst depression in the
industrialized world, exceeding the Great Depression of 1929-33. Both
communist and post-communist statistics are deeply flawed, however-and in
different ways.

The analysis and conclusions here contrast sharply with the conventional
view. First, everywhere the decline in output has been much smaller than
perceived, and a few countries grew immediately rather than contract.
Second, the Soviet economy was in a far worse shape than generally
understood. Third, even after revising the official statistics, the
differences between failures and successes remain vast-and the correlation
between structural reform and economic performance becomes much stronger.
Fourth, flawed statistics misled policy makers in post-communist
transformation, inciting them to adopt inefficient gradual reforms, which
reinforced rent-seeking and prolonged stagnation. And fifth, economic
welfare has diminished far less than output.

Use the right base year and focus on the post-communist fall in output.
Economic chaos prevailed at the end of communism, with Romania and the
Soviet Union registering sharp falls of output in its last year-Romania 7.9
percent in 1989, and the Soviet Union 6.1 percent in 1991 (table 2). While
East-Central European transition is measured against the last communist
year, the standard for the former Soviet republics (FSRs) is 1989, though
it should be 1991 if discussing post-communism. That correction to 1991
eliminates an average of 5 percent of 1989 GDP in the decline for the FSRs.

Add unregistered output. Central planning was a system of cheating.
Everybody had an interest in over-reporting production, as bonuses of
ministers, managers, and workers depended on their gross production. Their
persistent over-reporting probably amounted to some 5 percent of GDP
(Åslund 1990). The interest in such doctoring of numbers disappeared
immediately with the transition. Under capitalism, people and enterprises
became anxious to avoid taxes, implying a downward bias. Furthermore,
statistical agencies failed to keep up with myriad new enterprises.

This unofficial economy thus makes the economic development of the region
look very different. The average contraction from 1989 to 1995 was 32
percent rather than 40 percent for the whole region, and 36 percent rather
than 54 percent in eight CIS countries. This adjustment eliminates 39
percent of 1989 GDP for Azerbaijan, 28 percent for Ukraine, and 25 percent
for Russia.

Deduct unsalable goods. Much Soviet manufacturing was sheer value
detraction, as Ronald McKinnon (1991) put it. For instance, Soviet
fishermen caught excellent fresh fish. But rather than sell it on the
market, they processed it into (often inedible) fish conserves, reducing
the fish's value to almost zero. This value detraction was recorded,
incorrectly, as value added in national accounts and thus included in the GDP.

For most countries, the reduced value detraction in industry is in the
range of 9-20 percent of GDP until 1995. The size of the decline
corresponds largely to the intensity of structural reforms. Because hard
budget constraints started to bite later in most FSRs, the contraction of
their industrial sectors continued after 1995, while non-reforming Belarus
pumped up its old industrial sector after 1995, undoing its initial
reduction of value detraction. It appears plausible that the share of
unsalable goods, or value detraction, amounted to around 20 percent of GDP
in the last year of communism in most countries.

Deduct implicit trade subsidies for recipients. Socialist states mostly
exchanged goods nobody wanted, forcing substandard and overpriced
merchandise on one another. The wrong things were traded for the wrong
reasons between the wrong people in the wrong places at the wrong prices.
The share of unsalable goods in mutual trade was probably even greater than
that in domestic economies. Much intra-regional trade consisted of exports
of manufactured goods from the more developed countries to the energy
exporters, which effectively paid subsidies to the exporters of manufactures.

Raw materials, on the contrary, were fine, but their low prices involved
huge implicit export subsidies paid by the energy exporters-essentially
Russia, Turkmenistan, Kazakhstan, and Azerbaijan.

The foreign trade "shocks" thus reflect a combination of unsalable goods,
previously disregarded transportation costs, and the elimination of
implicit trade subsidies-essentially from Russia, Turkmenistan, and
Kazakhstan-to other countries. Because these subsidies were implicit, they
boosted the GDP of the receiving countries. But their elimination was a
result of political independence, not a cost of transition. So the implicit
subsidies should be deducted from the base GDP of the recipients to
facilitate a comparison with their post-communist output.

These corrections raise overall output substantially, but the differences
between success and failure remain stark. Central Europe, South-East
Europe, Estonia, Kazakhstan, and Russia saw no contraction of output, and
Central Europe even enjoyed significant early growth, with Poland in a
class of its own. The implausibly large declines in the Baltics disappear.
While statistics are incomplete, the war-torn countries, Georgia,
Tajikistan, Azerbaijan, Armenia, and Moldova, probably lost 20-30 percent
of their GDP. In non-reforming Belarus and Turkmenistan, GDP plummeted by
more than 20 percent from 1991 to 1995, revealing these presumed star
performers (in official statistics) as miserable failures. Within the CIS,
the order of performance is totally reversed, and Russia, Ukraine, and
Belarus have performed in correspondence to their degree of reform.

********

#14
Rights body urges UN to condemn Russian "dirty war" in Chechnya

MOSCOW, March 21 (AFP) -
The international pressure group Human Rights Watch called on the United
Nations Wednesday to condemn Russia's "dirty war" in Chechnya, citing torture
and murder of civilians still being carried out 18 months after the conflict
began.

Russian forces in the rebel republic were terrorising innocent civilians in a
wave of "disappearances", said Human Rights Watch (HRW) in a report released
to coincide with the UN Human Rights Commission's annual session in Geneva.

The New York-based body said it had documented 113 cases of civilians who
went missing after arrest by federal forces, mainly males aged from 15 to 49,
from December 1999 to last month.

Russia launched its self-styled "anti-terrorist" operation against Chechnya's
separatist administration on October 1, 1999.

"The 'disappearance' of detainees in the custody of Russian federal forces in
Chechnya is a major human rights crisis that the Russian government and the
international community must address," HRW said.

"The discovery of the mutilated corpses of some of the 'disappeared' has
substantiated fears that they have been tortured and summarily executed.
Because criminal investigations into 'disappearances' have been shoddy and
ineffective, impunity for such atrocities continues," it added.

HRW called for the Commission to adopt a resolution condeming Russia's
failure to heed a motion passed last year highlighting human rights abuses in
Chechnya, and establish an international commission of enquiry.

But Russian Deputy Foreign Minister Sergei Ordzhonikidze insisted before the
UN human rights commission in Geneva on Wednesday that life was returning to
normal for ordinary Chechens.

"A lot has already been done," Ordzhonikidze said, stressing that Russia
favored "political means" to solve the conflict.

"For the first time in several years, the republic is able to organise its
everyday life according to the Russian constitution and its own traditions,"
he said.

His statement to the UN Commission came after reports surfaced this week that
12 civilians have been killed in a wave of murders in the Chechen capital
Grozny.

Last month, in a case that generated international concern, a mass grave
containing 60 bodies was found last month one kilometre (less than a mile)
from the Russian military base of Khankala outside Grozny.

Seventeen of the bodies have been identified as civilians reported missing
after detention by Russian troops and were victims of extra-judicial
killings, the Russian human rights group Memorial said Monday.

Several photographs released media by Memorial showed bodies with skin peeled
off their faces while others had teeth pulled out. Many were blindfolded and
had their hands tied behind their backs. Others had their ears cut off.

Almost all had bullet holes in their skulls.

Russian officials maintain the dead were killed by Chechen rebels.

One of the victims was 40-year-old Nura Lulueva, a mother of four who was
selling strawberries in Grozny Central Market on June 3, 2000, when she was
taken away by masked and armed men along with her two female cousins, HRW
said.

Her husband, a judge -- informed by eyewitnesses -- told HRW that when local
Chechen police arrived at the scene to demand an explanation, one of the
armed men flashed an ID and told the police "not to interfere."

The 20-strong armed contingent then fired towards the police officers and
drove away, according to HRW.

The rights organization said that it had also documented at least eight
further makeshift graves containing mutilated bodies of individuals that bore
"unmistakable signs of torture."

In another eight cases, the bodies were dumped by the side of the road, on
hospital grounds or elsewhere, HRW added.

Relatives of missing civilians, who travel long distances and spend large
amounts of money on bribes to secure information on their loved ones' fate,
meet a "wall of denial" from military authorities, it said.

******

#15
Russia's Duma approves trade in non-farm land
 
MOSCOW, March 21 (Reuters) - Russia's State Duma on Wednesday approved a bill
which will allow trade in non-agricultural land for the first time since the
Bolshevik revolution in 1917.

Deputies of the lower house of parliament, who earlier on Wednesday passed
the draft in a second reading, approved the bill by 252 votes to 123 in the
third and final reading.

The measure must be approved by the upper house and signed by President
Vladimir Putin to become law.

The bill also states that the sale of farm land will only be permitted once a
land code and a separate law regulating the trade in land are enacted.

Putin has ordered the government to send a draft land code to the Duma before
May 1 and given it a June 1 deadline to work out a framework bill on land
sales.

Trade in land in Russia is currently haphazard, with no formal regulation.
Efforts in the 1990s to draw up a land code were hampered by a standoff
between the Kremlin and leftist deputies opposed to the buying or selling of
land.

Foreign and domestic businesses see the land issue as one of the key problems
in investing in Russia as companies want to be sure they have free use of the
land on which their factories and other facilities are built.

*******

#16
ANALYSIS-Tiny Georgia squirms as Russia pulls rank
By Rosalind Russell
 
TBILISI, March 21 (Reuters) - Harsh measures by an angry Russia are
threatening the stability of the former Soviet republic of Georgia, already
hurt by separatism and a failing economy.

Russian moves apparently to punish President Eduard Shevardnadze for his
pro-Western stance and refusal to help Moscow subdue Chechen rebels may prove
to be an intolerable strain on his weakened government, analysts say.

"The state of Georgia has lost control of much of its own territory and is at
risk of collapsing, or giving up its independence and becoming compliant to
the authority of Russia," said Michael Emerson, a Caucasus expert at the
Centre for European Policy Studies in Brussels.

Shevardnadze has failed to rein in secessionist regions in the north of the
small Caucasian state, or to control the rampant corruption which pervades
his administration.

While the West has assured strategically-placed Georgia it can rely on
Western backing, big brother Russia can still kick its neighbour where it
hurts.

COLD WINTER

Georgia suffered a winter of chronic power shortages as electricity supplies
from Russia were routinely cut off.

Next, Russia imposed a visa regime on Georgia, saying it needed to control
the border as Georgia was failing to control ethnic Chechens living in its
mountainous northeast.

But, to Georgian fury, it exempted  residents of separatist Abkhazia and
South Ossetia from visa restrictions.

"Russia felt Georgia was doing little to help over Chechnya and little to
control rebels in the Pankisi Gorge," said Andrei Grozin of Moscow's
Institute for Diaspora and Integration.

"Georgia did not appear willing to compromise at all and the tension grew."

The visas are likely to have a devastating impact on Georgia's economy by
curtailing remittances from 500,000 or so Georgians living in Russia -- worth
around a third of the republic's GDP.

"These measures have been seriously calculated to hurt Georgia where it is
most vulnerable, and for public pressure to build so that either the
leadership makes changes or the leadership changes," Alexander Rondeli, a
Georgian foreign policy analyst, said.

RISING DISCONTENT

Georgians have experienced a dramatic decline in living standards since
independence in 1991.

The streets of the capital Tbilisi are testament to the once prosperous
nation's decline. Pretty houses with balconies and shutters are crumbling and
neglected. Rubbish lies uncollected and the sick and elderly beg for coins on
street corners.

Occasionally public discontent has boiled over and last weekend Tbilisi
police used truncheons to disperse a rally of Communist Party supporters
calling for Shevardnadze to quit.

In November, hundreds of Tbilisi residents took to the streets, burning tyres
and erecting roadblocks, to protest against power shortages.

But analysts say most Georgians are reluctant to take their grievances on to
the streets in a country still scarred by the civil war which followed
independence.

"We've been surprised that there haven't been more vociferous protests from
people who are clearly facing very hard times," said a senior Western
diplomat in Tbilisi.

"But memories of the war are still fresh, and people are determined not to
see that sort of chaos again."

Analysts say Shevardnadze feels secure enough after a comfortable election
victory last year to stick to his pro-Western policies for now.

The former Soviet foreign minister speaks often about Georgia's aspirations
to join NATO. He is pressing ahead with plans to close Russian military bases
on Georgian territory despite the painful loss of local employment that would
bring.

WESTERN SUPPORT

Shevardnadze will be cheered by signals that the new U.S. administration
plans to make Georgia and the south Caucasus region a foreign policy
priority.

Secretary of State Colin Powell met Georgian Foreign Minister Irakly
Menagarishvili on Tuesday and offered "friendship and support" and said the
United States had raised the issue of Russian pressure on Georgia directly
with Moscow.

Western aid, which amounted to $1.5 billion in the last decade, is flowing in
steadily. U.S.-backed plans to build oil and gas pipelines from the Caspian
Sea through Georgia to Turkey would bring big revenues and an alternative
energy source.

"With Western aid we are just hanging on," said Rondeli. "Russia thought it
had delivered a fatal blow, but our yield point is higher than they
expected."

*******

CDI Russia Weekly:  http://www.cdi.org/russia

Johnson's Russia List Archive (under construction):  http://www.cdi.org/russia/johnson