March 29, 2001 

This Date's Issues:   5175 • 5176

Johnson's Russia List
#5175
29 March 2001
davidjohnson@erols.com

[Note from David Johnson:
1. Moscow Times: Andrei Zolotov Jr., The Real End of the Yeltsin Era?
2. Moscow Times editorial: Putin's Move Fans Hope For Reform.
3. Reuters: Putin names woman to a top Russian defence post.
4. Interfax: $250 BLN IN RUSSIAN CAPITAL PARKED IN FOREIGN BANKS - INTERIOR MINISTRY.
5. International Herald Tribune: Leif Pagrotsky and German Gref, Economic Link With Russia Is Key to EU Future.
6. Jamestown Foundation Monitor: PREDICTIONS OF RECESSION VS POSITIVE INDICATORS.
7. Jamestown Foundation Monitor: ON FIRST ANNIVERSARY OF PUTIN'S ELECTION, POLLS SHOW A SOMEWHAT TARNISHED IMAGE.
8. Obshchaya Gazeta: Dmitry Furman, PUTIN RETURNS FROM WHERE GORBACHEV DID NOT REACH. On similarities between the two presidents.
9. Nezavisimaya Gazeta: Fyodor Burlatsky, CHANGE OF ELITE. Putin on the Verge of Solving a Very Important Problem.]

*******

#1
Moscow Times
March 29, 2001
The Real End of the Yeltsin Era?
By Andrei Zolotov Jr.
Staff Writer

President Vladimir Putin on Wednesday launched his first major salvo
against the entrenched Yeltsinites he inherited a year ago, but he did so
in a way that preserved the stability for which he has been acclaimed.

By radically reshuffling his security team while leaving his economic team
untouched, Putin managed to avoid entirely upsetting the delicate balance
of power that exists between the Kremlin's various clans of influence.

Intriguingly, however, the dramatic move comes just two days after Putin's
first presidential anniversary. Intriguing because it appears to confirm a
rumor that has persisted in the Russian media since his election: that he
cut a deal with Boris Yeltsin in which he promised to give Yeltsin's cadre
one year before he cleaned house.

But while Defense Minister Igor Sergeyev, Interior Minsiter Vladimir
Rushailo and Nuclear Power Minister Yevgeny Adamov are gone, two other top
holdovers from the Yeltsin regime remain - presidential Chief of Staff
Alexander Voloshin and Prime Minister Mikhail Kasyanov, who many thought
would be the first to go.

Putin himself, in a national television address announcing the new lineup,
added to the intrigue when he said - with his trademark shy smile - that
more changes were coming that would be certain to "attract the public's
attention."

It was not clear whether the remark pertained to more firings, or to the
appointment of Lyubov Kudelina as deputy defense minister, the highest rank
ever achieved by a woman in that traditionally exclusively male ministry.

"Putin has matured to the point that he's ready to make major changes and
he has chosen the optimal route," said Andrei Ryabov, a politcal analyst
with the Moscow Carnegie Center.

The Interior Ministry and the Tax Police, whose former heads Vladimir
Rushailo and Vyacheslav Soltaganov were seen as part of Yeltsin's "family,"
are now firmly under Putin's personal control, Ryabov said, as is the
Defense Ministry, which will now be run by Putin's personal friend Sergei
Ivanov and his team of deputies.

At the same time, the Security Council, whose role under Ivanov had grown
to the degree that it was seen as a "parallel Cabinet," is now relegated to
its formal position of an advisory body.

"Putin has strengthened the security block but prevented the security
officials from forming a separate center of political influence [in the
security council]," Ryabov said. This idea fits with the "demilitarization
of public life" that Putin said was the main theme of the change.

Wednesday's changes also streamline the power system by removing the
Security Council, which is now charged with the North Caucasus quagmire,
from the list of the three centers of power, said Sergei Markov, an analyst
with the pro-Kremlin web site strana.ru.

Ivanov, who has so far worked on projects ranging from reforming the
natural monopolies to the development of foreign policy, was widely rumored
to become the next prime minister. Now his time will be consumed by
implementing his main task - reforming the country's huge military apparatus.

"There used to be three governments: the economic government, the political
government and the security government," Markov said, referring to
Kasyanov's White House, Voloshin's presidential administration and Ivanov's
Security Council. "Now, there are two."

Along with bringing civilian officials and even one woman into the security
ministries, the streamlining constitutes what Markov calls the
"Europeanization" of Russian government, which he bills as the essence of
Putin's policy.

And with new teams at the corruption-ridden Interior and Defense
Ministries, Putin has shown a willingness to pursue the law and order
component of his policy, said Yuri Korgunyuk, an analyst the Indem
political research group.

"Without bringing order into the agencies that are supposed to bring order
to the country, it makes no sense to talk about law and order," Korgunyuk
said. Putin's recent efforts to jump-start judicial reform are also
presented as an effort to create the legal foundation for democracy and
market economy - something that has been missing in the "privatized"
government of Boris Yeltsin's decade, he said.

None of the analysts polled thought it was clear which of the three groups
considered to have influence on Putin - Yeltsin's "family," the security
complex or liberal economists - emerged as winners or losers in Wednesday's
reshuffle.

Nor would they predict what the future holds for Kasyanov or Voloshin.

"Maybe it's the prelude to the reform of the Cabinet and the Presidential
Administration," Ryabov said. "Or maybe it was a compromise with Voloshin
and Kasyanov, which will keep them in place. Which of the two versions is
true, I wouldn't dare to say."

*******

#2
Moscow Times
March 29, 2001
Editorial
Putin's Move Fans Hope For Reform

President Vladimir Putin explained his first major government reshuffling
as "a step toward the demilitarization of public life" and said that the
move was motivated largely by a desire to kick-start his stalled military
reforms.

These are certainly laudable goals and, from initial appearances, the
personnel shifts announced Wednesday could well lead to progress toward
them - if they are accompanied by a sustained, visible commitment by Putin
in the months to come.

There are definite advantages to having a civilian politician take charge
at the interior ministry. Likewise, having the semi-civilian Sergei Ivanov
(who is, after all, a retired KGB general) at the helm in defense is more
conducive to change than the leadership of 62-year-old Igor Sergeyev was -
although probably not as radical or rapid a change as genuine civilian
leadership would bring.

However, if these changes really indicate the dawning of an era in which
politicians - rather than narrow specialists - call the strategic shots in
government, then they may turn out to be little short of revolutionary.

Russia's previous attempts to entrust fundamental reforms to people who
were products of and committed to the old system have failed time and
again. In fact, we still see crucial judicial and criminal-procedures
reform blocked by Prosecutor General Vladimir Ustinov. Only leaders who are
able to see what the country needs to move forward rather than what
individual ministries need to continue along their merry way will be
capable of conceiving and carrying out reforms.

Nonetheless, it is by no means certain whether Putin appreciates this. His
replacement of Nuclear Power Minister Yevgeny Adamov - which in itself is
the most welcome move that Putin made Wednesday - with the narrow
technocrat Alexander Rumyantsev seems to reflect old thinking.

While the country certainly needs such high-caliber specialists advising
its nuclear power minister, that minister should be someone who is capable
of seeing beyond the narrow limits of technical questions. The main problem
with Adamov - leaving aside serious malfeasance charges raised by the
Duma's anti-corruption commission this month - was that he was stubbornly
politically tone deaf, unmoved by the fact that the vast majority of the
country opposes his spent-fuel-importing scheme.

Many hopes now rest on the new defense minister, Sergei Ivanov, and the new
interior minister, Boris Gryzlov. Some of the most painful problems
confronting Russia - from Chechnya to organized crime to the stifling
burden of Russia's overmilitarized society - are now theirs to deal with.
If Putin stands by them, maybe we'll see some progress.

*******

#3
Putin names woman to a top Russian defence post
By Tara FitzGerald
 
MOSCOW, March 28 (Reuters) - Russian President Vladimir Putin swept aside
precedent on Wednesday in appointing a woman to a senior Defence Ministry
post that is usually the domain of uniformed male officers.

Putin named Lyubov Kudelina, 45, as deputy defence minister, making her the
first woman to hold such a post in modern Russian history.

Previously deputy finance minister, Kudelina is one of only a handful of
women in the upper echelons of Russian politics.

The country's highest ranking woman politician is Valentina Matviyenko, the
deputy prime minister in charge of social affairs.

The central bank also boasts a female first deputy chairman in Tatyana
Paramonova, and Irina Khakamada, a leading proponent of equal rights for
women, is deputy speaker in the State Duma lower house of parliament and
former head of the State Committee for Support and Development of Small
Businesses.

Putin said the sweeping changes in his security apparatus which placed
Kudelina in the Defence Ministry were aimed at bringing civilians into key
positions previously held by serving officers and at demilitarising Russian
public life.

"(Kudelina) is a well known and very experienced person," Putin said in
remarks broadcast on RTR state television.

"I can't say the prime minister (Mikhail Kasyanov) was happy with this
decision, as he was sorry that she would leave (the Finance Ministry)...but I
think in this situation the Defence Ministry needs her more," Putin said.

Kudelina is no stranger to military affairs. In her previous role she held
responsibility for the finances of the defence sector and law enforcement
agencies. She was appointed to that job in July 1999.

Sergei Ivanov, her new boss, welcomed her appointment but said she had been
chosen purely for her professional abilities.

"(This is) not a PR gesture, she is one of the best specialists in the
country in the area for which she will be responsible," Ivanov said on
state-run RTR television.

Alexander Golts, military affairs analyst at the Itogi news weekly, said that
while Kudelina had a wealth of experience in defence finance, she also had a
track record of favouring moves to keep the ministry's finances as secret as
possible.

But as a woman, Kudelina is also part of an exclusive club.

Russian women make up an estimated 56 percent of the electorate, but this
majority is not reflected in the macho world of politics.

Aspiring female politicians have a tough balancing act to perform in
promoting women's rights while toning down their delivery to avoid
accusations of feminism.

Supporters say the reluctance of female politicians to be associated with
feminism is a factor that hurts women's progress in Russia.

*******

#4
$250 BLN IN RUSSIAN CAPITAL PARKED IN FOREIGN BANKS - INTERIOR MINISTRY

     MOSCOW. March  28 (Interfax)  - Some  $250 billion in capital taken
out of  Russia is sitting in foreign bank accounts, an Interior Ministry
official said.
     "We beg  the West for an extra billion dollars in loans, while $250
billion of  our own  is sitting  in foreign  banks. This  is five annual
Russian budgets,"  Alexander Babichev, the deputy head of the center for
fighting money laundering at the Interior Ministry, said in an interview
with Komsomolskaya pravda.
     Babichev said  most capital is channeled out of the country through
offshore firms set up by major Russian companies.
     He said  his center  had already  found and  recovered $300 million
that could  have been  spurred out  of Russian  under "dirty" contracts.
"But we  have to  gather almost  all our information through our agents.
This is bad. The whole world relies not on informants, but on comparison
of incomes  and expenditures.  This system  has not  been established in
Russia," Babichev said.
     Foreigners are  happy to  have the  capital of  others working  for
them, but  when there  is a  lot of it, it begins to control first banks
and then the whole economy, Babichev said.
     Babichev also  said that  "shadow capital" amounts to 40% to 42% of
total money  turnover in  Russia, and  even more  in some  regions, "for
example in Kaliningrad region it is 58%."
     Asked to  whom this  capital belongs, Babichev said "this is on the
one hand  banking and  raw materials  magnates, and  on the other bribe-
taking bureaucrats."  "The mechanism  of their mutual relations has been
perfected and is built exclusively on bribery," he said.
     In order  to return  capital that  has fled  the country  "we  must
provide proof  that the  capital is Russian and criminal. Then they [the
West] will repatriate it" back to Russia, Babichev said.

*******

#5
International Herald Tribune
March 29, 2001
Economic Link With Russia Is Key to EU Future
By Leif Pagrotsky and German Gref
Mr. Pagrotsky is Sweden's minister of trade, and Mr. Gref is minister of
economic development and trade of the Russian Federation. They contributed
this comment to the International Herald Tribune

STOCKHOLM The relationship between the European Union and Russia is key to
the future of the Continent. During Sweden's presidency of the European
Union, Sweden and Russia want to develop a positive interdependence that
furthers this relationship by improving conditions for trade and investment.

There are close connections between trade, security and prosperity. Few
things are more effective in bringing people together and securing
stability than economic integration. The potential for trade in our region
is a potential for employment and growth. As trade ministers representing
the EU presidency and Russia, our aim is to see this potential fully utilized.

We are convinced that the conditions for expanding trade and economic
relations are more favorable than ever. We have a solid basis to start
from: The EU accounts for 40 percent of Russia's total exports and Russia
is a major supplier of energy, especially natural gas. We see growth and
expansion again in the Russian economy, as reforms create an opportunity to
ensure sustained growth.

There is a growing recognition in Russia that Russia's full integration
into the world economy is in its own interest. In the EU this is very much
welcomed. An economically strong and vibrant Russia is of general European
interest.

The forthcoming enlargement of the EU is a significant factor in EU-Russia
relations. The Union stands ready to pursue a dialogue with Russia on the
consequences of enlargement, which will make it all the more important that
Russia adapt to EU rules and standards.

Russia's accession to the World Trade Organization will constitute an
important step toward Russia's integration into the world economy. The EU
strongly supports Russia's efforts to meet the requirements of WTO
membership. On Friday, Sweden, Russia and the European Commission will hold
a high-level round table in Moscow to support this process.

The round table will give an opportunity to analyze the benefits of joining
the WTO, the related commitments and the process of accession.

WTO accession is crucial to stimulate competition. But it is not only a
matter of classic market access. It is also about being part of a system of
open trade, governed by stable, predictable and transparent rules.

Membership in the WTO entails the introduction and strengthening of the
market economy principles that have proved so successful in the post-war
period. Russia's accession to the WTO involves incorporating stable and
predictable "rules of the game" into Russian legislation. The introduction
of such rules will not only make Russia more attractive for foreign
investors, but also create a more predictable economic and legislative
environment for foreign and domestic business.

Partnership and co-operation are key words to describe how we hope economic
relations between Russia and the EU will develop. To make our partnership a
success we need to increase our understanding of each other's motives and
intentions by deepening our dialogue.

The realization of a strong, long-term economic partnership between the
European Union and Russia depends on policies and developments in Russia
over the next decade. We are confident that through joint efforts we have
every possibility to make this vision come true.

*******

#6
Jamestown Foundation Monitor
March 28, 2001

PREDICTIONS OF RECESSION VS POSITIVE INDICATORS. Russia's industrial
slowdown, combined with recent gloomy developments in both the United
States and global economies, has led many economists to predict that Russia
is headed for a recession--if indeed one has not already begun (see the
Monitor, March 27). This claim has been made by, among others, Andrei
Illarionov, President Putin's economic advisor (see the Monitor, February
21). Because industry is the Russian economy's single largest sector, and
because industrial output now seems to be grinding to a halt, such
forecasts could well be correct. A number of other indicators, however,
would suggest otherwise.

For one thing, the industrial output data showing only 0.8 percent growth
in February 2001 compared to February 2000 is somewhat misleading in that
February 2000 was a leap month. This meant that February in 2001 had one
working day less than it did in 2000, which makes production comparisons of
these two months less favorable than would otherwise be the case. When
adjusted to reflect the difference in working days, Russia's industrial
growth in February rises to nearly 5 percent. This suggests that concerns
about a dramatic industrial slowdown may be premature.

Second, most of the other sectors continue to report strong output growth.
While little or no output growth was reported in the transport and
agricultural sectors, both construction and retail sales reported 8 percent
growth during January-February 2001 (compared to January-February 2000).
These rates suggest that the strong growth reported for these sectors in
2000 continues. Investment spending was reported up 8 percent during
January-February, and growth in after-tax household incomes was estimated
at 6 percent. This suggests that Russian consumers will continue to spend.
And a US$4.9 billion trade surplus was reported for January, indicating
that the Russian economy will continue to benefit from high oil prices and
strong growth in dollar exports.

Signs of resilience are apparent in other parts of the economy as well.
Russia's stock markets seem to have recovered from a lackluster year in
2000. After ending last year at 143, the RTS-Interfax index of equity
trading spent most of February-March in the 170-180 range. Russia's leading
companies continue to be flush with cash, and the unemployment rate in
February remained at 9.6 percent, its lowest level since mid-1996.
Moreover, the government is on track to fully service its foreign debt for
the first time since 1997. These trends suggest that slower economic growth
in Russia could be more likely than a recession (Sotsial'no-Ekonomicheskoye
Polozhenie Rossii, February 2001).

******

#7
Jamestown Foundation Monitor
March 28, 2001

ON FIRST ANNIVERSARY OF PUTIN'S ELECTION, POLLS SHOW A SOMEWHAT TARNISHED
IMAGE. Yesterday (March 27) marked the one-year anniversary of Vladimir
Putin's victory at the polls and transformation from Russia's acting head
of state--a position he assumed after Boris Yeltsin's resignation on
December 21, 1999--to its newly elected president. To mark the anniversary,
several of Russia's main polling organizations have published the results
of polls measuring attitudes toward Putin one year ago and today. The data
from two agencies--the All-Russian Center for the Study of Public Opinion
(VTsIOM) and ROMIR--indicate that while Putin's popularity remains far
higher than any other politician, the public's perception of his
performance has become far more sober, and its expectations for what he can
achieve have lowered significantly. Data from a third polling agency, the
Public Opinion Foundation, show Putin's rating as high and basically
unchanged.

VTsIOM found that while 45 percent of those polled a year ago named Putin
as the politician they most trusted, only 37 percent did so when asked the
same question in a poll taken this month. A year ago, 37 percent said they
"definitely hoped" that Putin would be able "to impose order on the
country." This year that number fell to 28 percent. At the same time, it is
interesting to note that in March 2000 some 22 percent said they did not
fear that Putin would establish a "harsh dictatorship dependent on the
armed forces." This number grew to 29 percent in the more recent poll.

A VTsIOM poll taken in February of this year found that when asked to
identify what they disliked about Putin, 26 percent cited his links to
Yeltsin and Yeltsin's inner circle. Only 16 percent gave that answer last
October. Twelve percent said they disliked the fact that Putin does not
have a "clear-cut political line" (up from 5 percent in October 2000),
while 6 percent said they disliked that Putin is "linked to corrupt
politicians" (up from 2 percent in October). In a VTsIOM poll taken this
month, 27 percent of those surveyed said they were "very worried" that
Putin had not put forward "a concrete economic and political program," up 6
percent from last March. In February of this year, when respondents were
asked whether they hoped Putin could raise living standards, 17 percent
said they had strong hopes, down from 26 percent in a June 2000 poll.
Twenty percent of those polled last month said they had strong hopes that
Putin could pull Russia out of its crisis, down from 27 percent in June 2000.

As for specific policies, VTsIOM found that Putin's biggest liability is
his Chechnya policy. Only 7 percent of those polled last month said they
supported his actions in Chechnya, down from 24 percent last October, while
48 percent said they were "very disturbed" by the fact that Putin had not
yet been able to "solve the Chechen problem," up from 22 percent in March
2000. Twenty percent said they had strong hopes that Putin could achieve a
victory in Chechnya and resolve the Chechen problem, down from 30 percent
in June 2000, while 17 percent said they had no such hopes, up from 11
percent in June 2000.

At the same time, VTsIOM's polling shows that Putin's image as an
"energetic, decisive, strong-willed" leader remains unchanged: 41 percent
of those questioned in February cited these qualities as what attracted
them to the president, the same number as last October. What is more, the
number of respondents who said that Putin impressed them as a "person who
is providing the country with stability" was up from 10 percent last
October to 15 percent last month. Meanwhile, 16 percent of those polled
last month picked Putin's appearance as his most attractive quality--up
from 10 percent in October 2000. And while only 9 percent of those polled
last month said they thought Putin was "consistently" fulfilling all of his
election campaign promises--down from 10 percent in August 2000--61 percent
said they believed he was doing his best to fulfill them (60 percent gave
this answer in August 2000).

VTsIOM's polls would seem to indicate that, in the eyes of the Russian
public, Putin has neither turned out to be the strict authoritarian his
enemies feared he would be nor decisively broken with the corrupt
oligarchic system which characterized the Yeltsin years, as many of Putin's
supporters hoped he would. They also would seem to show that while the
Russian public's original hopes for Putin have diminished, it still gives
Putin the benefit of the doubt.

The results of ROMIR polls suggest an even greater public disillusionment
with Putin. Thus while 30.5 percent of those polled by ROMIR last year
cited "concern with the interests of the people" as a quality they valued
in Putin, only 21.4 percent gave that answer this year. Likewise, 40.5
percent in last year's poll cited Putin's "professionalism" as a valued
quality, while only 25.7 percent did this year. Indeed, Putin's grades in
the ROMIR poll were down across the board: 20 percent of respondents cited
"decency" as Putin's best quality, down from 29.7 percent last year; 32
percent cited his being "active" in running the country (down from 54.5
percent); 8.1 percent cited his ability to pick his team (down from 20.4
percent); 15.8 percent cited Putin's "political will" (down from 32.7
percent); 15.3 percent cited his "charm." The only area in which ROMIR's
respondents gave Putin higher grades was for "absence of bad habits:" 15.5
percent named this as his most valued quality this year, up from 11.7
percent last year.

At the same time, ROMIR's poll found that 56.4 percent of the respondents
would vote for Putin if elections were held today, with Communist Party
leader Gennady Zyuganov coming in a very distant second, with 11.1 percent.
In addition, 81.6 percent of those among ROMIR's respondents who voted for
Putin last year said this year that they still felt they made the right
choice (Moskovsky Komsomolets, March 28; see also the Monitor, March 23).

Meanwhile, a poll taken by the Public Opinion Foundation this month found
that the public assessment of his performance had basically not changed
since last April. Asked to assess the president's performance, 5 percent of
those polled picked "excellent" (up from 4 percent in April 2000), 31
percent said "good" (the same as last April), 46 percent said
"satisfactory" (41 percent last April), 9 percent said "bad" (up from 3
percent last April), 3 percent said "very bad" (up from 1 percent last
April). The number who answered "hard to say" dropped to 7 percent this
month from 20 percent last April (Fom.ru, March 22). The Public Opinion
Foundation's director, Aleksandr Oslon, called Putin's stable popularity
rating a "mystical, mysterious phenomenon" (Kommersant, March 27).

*******

#8
Obshchaya Gazeta
No. 12, 2001
[translation from RIA Novosti for personal use only]
PUTIN RETURNS FROM WHERE GORBACHEV DID NOT REACH
On similarities between the two presidents
By Dmitry FURMAN
    
     Gorbachev and Putin are coming closer to each other. Putin
regularly makes signs of friendship and attention to the former
president, while Gorbachev never forgets to say a few good
words about Putin in his interviews and statements. It is
rumoured in the political corridors that a rather high honorary
post is being sought for Gorbachev. What are the reasons for
this mutual attraction?
    
     The grounds for Putin's benevolent attitude to the former
president of the Soviet Union are apparent. Putin needs
Gorbachev's prestige. He needs it to gradually get rid of the
image of Yeltsin's appointee, a man who depends on Yeltsin's
team. He also needs it to appease the West and the liberal
community in Russia (rapprochement with Gorbachev is seen as a
guarantee that Putin would not do anything "excessively
totalitarian"). And maybe there are personal reasons for such
rapprochement, as presidents are humans, too.
     The grounds for Gorbachev's sympathy for Putin are
transparent, too. After ten years spent in constant expectation
of something bad from the new regime, he suddenly sees signs of
respect and recognition - which he surely deserves. Naturally
enough, he is bound to reciprocate. This is a normal reaction
of a human being.
     But I think there are also other, more complicated reasons
for the new relations between Putin's regime and Gorbachev. and
Putin sense a certain similarity between the political system,
which Gorbachev was creating but failed to complete, and the
current, Putin's, system. Gorbachev really tried and gave
freedom to society. But he could not want this freedom to
deprive him of power. And not because he loved power as such,
but because he was a responsible man who was carrying out "a
revolution from the top."
     Gorbachev and his team had a plan of creating a kind of
three-party system, with the Right (then called the Left) on
the one side, the Left on the other side (both born of the
Communist Party), and a powerful but reformed Communist Party
(which would have been probably given a new name and would have
consistently carried on the great change of the Soviet Union
without undue haste) in the middle. In other words, the
rotation of political forces did not - and could not - fit in
with Gorbachev's idea of nascent democracy.
     The plan fell through, Gorbachev was dethroned and what
happened after that was bound to engender a feeling of
bitterness in him. But the collapse of the Soviet Union and the
liquidation of the Soviet Communist Party are historical facts
now. The orgy of privatisation is a thing of the past, too. The
feelings provoked by those events lost their edge and now that
these are things of the past the authorities are prepared to
admit that many things were done wrongly.
     These sources of differences between Gorbachev and the
subsequent regimes have disappeared. The regime created by the
group that dethroned Gorbachev gradually evolutionised; the
election of Putin enriched it with features similar to some
elements of Gorbachev's plan. In 1991, Yeltsin was a right-wing
radical, while Putin is a centrist equally distant from the
right and the left, something that Gorbachev wanted to be in
his time.
The Unity bloc is something akin to a centrist communist party
as envisaged by Gorbachev. Even the revival of the Soviet
anthem - although with new words - is what Gorbachev would have
done but had no time to accomplish.
     It might seem that everything is gradually "getting back
to normal" after the 1991 catastrophe. The spiral has made
another turn and we are largely back in the situation that
existed in 1990 and early 1991. However, these external
similarities of the failed Gorbachev system and the current
Putin system conceal major differences in the historical and
social roles of these systems.
     First, the centrism of Gorbachev and the centrism of Putin
are things apart. Gorbachev was a reformer, and even a
revolutionary, initiating changes from top. He initially placed
himself not in the centre of the political scene as it existed
at that time, but far to the right, in the reformers' camp.
More left-minded or more right-minded people can be found in
any position, and the leader is always in the centre. But
Gorbachev outlined a position of the centre that would be
regarded as extremely radical before him, and he gradually
shifted it further on, turning into "normal" and "centrist"
things that had been regarded as "extremist" only a year, or
even six months, before.
Consequently, Gorbachev's centrism was a fake, an illusion.
     But Putin's centrism is quite another matter. When he came
to power, Putin inherited a certain well-established political
scene and tried to occupy a place in its middle, at a
relatively equal distance from both the left and the right.
This is not a dynamic pseudo-centrism of a reformist power, but
a "true" centrism, the centrism of the status quo. There are
similarities, but they are mostly external.
     Second, the absence of alternative, which Gorbachev wanted
to create for himself and his party, and the genuine absence of
alternative that Putin has are different, too. Gorbachev wanted
to ensure stability as a condition for a relatively calm and
orderly dismantling of the old system. I am convinced that if
his plan were carried out, it would have been a much better
variant of development than the one we subsequently had. The
people would have gradually become used to freedom, elaborating
new rules and learning new skills in the process. The Soviet
Union would have collapsed anyway, but gradually and in a
planned manner.
     After that we would have encountered problems, of course.
The reformist idealism of Gorbachev's team would have
evaporated with time, and the party that would have had no
alternative would have degenerated into debility and
corruption. And we would have ended in a dead-end, similar to
the one from which India and Mexico are trying to emerge with
such great pains now. But this is the price we could have
gladly paid for a relatively gradual transition period. Today
the absence of alternative of the supreme authority has lost
its historical justification. It is now not a condition for the
gradual movement ahead, but a means of conserving the status
quo.
     And lastly, the third vector of development under
Gorbachev was the movement towards more freedom, that became
larger with every passing month. If Gorbachev's plan came to
fruition, freedom would have continued to grow, up until the
time when we would have decided to search for an alternative to
the renewed Communist Party and its leader. Today the movement
ahead, to more political freedom and a democratic norm is a
transition to a rotation of power, to really alternative
elections. But this is a transition that cannot be ensured by
the current power itself. A natural movement of the authorities
towards establishing a better order and greater stability can
only be a movement towards limiting the freedom we have now and
suppressing any potential alternative.
     The vectors of the development of the country and the
power, which coincided for some time as a result of the
reformist efforts by Gorbachev, have parted ways again. And the
rapprochement between Gorbachev and Putin is camouflaging,
irrespective of their subjective opinions and feelings,
different vectors of our development at the turn of the 1990s
and development at the turn of the new century and millennium.
    
*******

#9
Nezavisimaya Gazeta
March 13, 2001
[translation from RIA Novosti for personal use only]
CHANGE OF ELITE
Putin on the Verge of Solving a Very Important Problem
By Fyodor BURLATSKY, chairman of the Research Council on
Political Science, Russian Academy of Sciences

     We Russians are fond of all kinds of jubilees, memorable
dates, landmarks and eras. Lately, the daily Nezavisimaya
Gazeta has published a series of interesting articles, which
analyzed and appraised Vladimir Putin's activities as President
of Russia and tried to forecast his future steps. It seems that
representatives of the entire spectrum of experts, in
particular, political scientists, from the extreme left to the
extreme right, have had the chance to make public their ideas
and views. The only exception were those who are often called
"the nightingales of perestroika" by the other members of our
community and who prefer to rank themselves among moderate
liberals. I would like to fill this vacuum, though I have never
regarded myself as a blind voice of any official policy and has
always used a rather critical approach with regard to all the
leaders.
     I would also like to offer my answer to the sacramental
question "Who is Mr. Putin and what problems has he wished to
solve in the first year of his Presidency?"
                 
       The Leader
    
     The appraisal of Vladimir Putin as a personality and his
role as the second President of Russia is largely determined by
one's attitude to the first President and the legacy he left.
The authors of one of the articles -- Boris Yeltsin's advisors,
who still feel great nostalgia and remain infatuated with the
first President's charisma, could not help casting a shade on
his descendent either willingly or unwillingly.
     I personally never had any illusions about Yeltsin
because, above all, of the purges, which took place when he was
the first secretary of the Moscow City CPSU Committee. I more
than once told Andrei Sakharov and other members of the
Inter-Regional Deputy Group that they had made a mistake by
staking on a typical CPSU regional secretary. I warned them
that Yeltsin was avid for power and once he had it, he would
turn away from his intelligent companions.
     I have the possibility to compare not only these two
leaders but also others, including Nikita Khrushchev, Leonid
Brezhnev, Yury Andropov and Mikhail Gorbachev whom I knew
personally. I think I know the merits and weak points of each
of them.
     The first three plus Yeltsin were typical authoritarian
leaders. They were quasi intellectuals from the lower strata of
society with a touch of breeding. But their main, nearly
genetic, trait was the conviction that they were entitled to
adopt any decisions bearing on the fate of the nation and the
state without the people and for the people, not asking the
opinion of the people. Inasmuch as they had the wheel of
history firmly in their hands, it did not matter to them which
way to turn it - in the direction of "mature" socialism or
"wild" capitalism.
     Putin belongs to a new generation: he has a university
education, knows a foreign language and has an experience of
work in a foreign country, even if it was a rather peculiar
country.
He has not finished a party school and his brains are not
intoxicated by ideology. He is not moulding his personality
cult.
Quite the contrary, he tries hard to show that he is just an
ordinary man. He likes fast driving, sports and success. On the
other hand, secretiveness is his middle name - this is probably
the result of his former employment with the intelligence
service. But then, Yeltsin was also very secretive. Suffice it
to remember the way he prepared his resignation.
     Yeltsin had an inborn proneness to adventurous spontaneous
actions based on a kind of insight and a deep belief in himself
and his lucky star.
     Putin is Yeltsin's exact antipode. He is level-headed and
prudent. Despite some mistakes that are mostly connected with
his style of behavior and attitude to the mass media, he
thoroughly thinks over all his actions and their mechanisms.
     Yeltsin is a conflictive person. Putin is a man of harmony.
He searches support from the other institutes of power and
often finds sophisticated methods to reach his goals and put
his "boyars" under control. Elements of corporativism that can
be seen in such a policy are by no means signs of
"authoritarianism" about which some political scientists write.
Having lived through a period of reforms based on breaking
backbones, putting people behind bars and making them face
firing squads, should we fear reforms carried out with the
consent of the majority of people and representatives of the
powers-that-be?
     When comparing Yeltsin and Putin, I go for the latter,
above all, because I see him as a modern leader, and not a
communist boss. He is not an ideologist but a sober-minded
politician, the doer, I would say. Spin doctors and political
analysis desperately look for signs of charisma in him but do
not find any. I say: thank goodness he has nothing in common
with the genuinely charismatic leaders - from Lenin, Stalin,
Hitler, Mao Tsetung to Yeltsin. We can believe Putin that even
in the worst of dreams he did not see himself as the President
of Russia, as he put it. But this has happened. And his first
assignment as President has been steps towards improving the
health of the state and combating the malignant tumor of
corruption and money-grubbing. He has said more than once that
he is against dictatorship, so-called shock therapy and a new
revolution. But the most important thing is that he personally
is no money-grabber.
     If we are to search for an analogue to Putin in our
history, it will be not Yeltsin but sooner Andropov. I had the
opportunity to watch him at the most interesting period - the
1960s, under the Khrushchev rule. Andropov was an ardent
proponent of the 20th CPSU Congress and dreamed of political
and economic reforms. I prepared his program permeated with
such a spirit. He presented it to Leonid Brezhnev and Alexei
Kosygin after Nikita Khrushchev had been dismissed. Brezhnev
and Kosygin rejected his program banishing him to KGB to
fulfill the dirtiest assignments.
     By the way, Putin resembles Andropov in character:
reserved, restraint and very efficient. He as strongly loves
his country as Andropov loved it and is as dedicated to the
idea of reviving the might of Russia as a great power as
Andropov was dedicated to the idea of the Soviet Union's
grandeur as a superpower. It goes without saying that a whole
era of reforms divides these two leaders. So, an exact analogy
is out of the question. But I have no doubts about their
psychological affinity. Putin, too, wants to restore order in
state administration, eliminate corruption and create
conditions of normal life for all the people of the country.
     I say all this not to extol Putin (we are to watch him
more closely yet) but to argue with Yeltsin's inexhaustible
admirers who met by "gunshots" his own choice of "successor"
and whose attacks impede the process of reconstituting the
previous regime and shaping a new course.
    
              The Family
    
     The first problem the new President confronted by was the
liquidation of the illegitimate institute of power which is
known as the Family in Russia.
     It wasn't an easy task. We all heard Yeltsin, even after
his retirement, lay claims to the preservation of influence.
The ex-President meant, above all, the influence of those
business moguls who were part of the Family and exercised
immense informal power within it and through the mass media
they owned. That was a painful psychological problem for Putin
because precisely the Family had assigned him the role of the
heir to the "democratic throne." No one would doubt that Putin
successfully coped with this task, using many-step combinations
with each member of the Family separately and the clan as a
whole.
     I think that regardless of outcome, the Pavel Borodin case
will allow the President to finally cut off the "umbilical
cord" which connected him with the regime which was incredibly
strange for a modern European country.
    
                The New Course
    
     When Putin became President, many people thought he would
loyally continue the previous policy course. Yeltsin's era only
begins, one of the experts close to the Family openly declared.
But he was wrong. I personally talked of a new course from the
outset, though I do not claim any credit for such a prediction:
we all have the tendency of wishful thinking. Putin did not
continue the previous policy despite the fact that many members
of the government and prominent advisors insisted on it more
than once, but took an attempt to shape his own course.
     The West hurried to call the Yeltsin era "post-communism."
It fact, it was the last stage of communism - its
decomposition, withering away and painful reconstitution. It
was an economic and social coup, a revolution accomplished from
the top by members of the ruling bureaucratic elite.
     A 1,000-strong cross-section of the incredibly rich and
powerful oligarchs and a very narrow Middle Class stratum have
been formed. But the majority of working people continue to
live from hand to mouth as semi-serfs. Having got their way to
power and property, former communists and YCLers in one company
with Shadow Economy dealers have built the kind of democracy
and a market their leaders and gurus imagined: state-monopoly,
criminal and based on lies, egoism, money-grabbing and ruthless
suppression of the poor and destitute.
     It would be wrong to see only bad things in the past
decade.
Triumph of private property over public ownership has an
important step to a civil society, in spite of the criminal
character of this process. Despite certain trends to
authoritarian presidential power, the endorsement of the new
Constitution of the Russian Federation has been an important
step to democracy. The end of the Cold War has also been an
important step towards the international community, despite a
certain loss of independence and a sharp reduction of Russia's
international influence. However, the price of these steps has
been exorbitant.
     Of major importance now is to prevent the final
crystallization of an oligarchic and criminal state and launch
the gradual process of recovery in all the spheres. This is how
I understand Putin's policy. It in a way reminds me (as the
author of books about Mao Tsetung and Deng Xiaoping) of the
settlement policy, which China resumed after each new cataclysm
- be that the Great Leap Forward or the Cultural Revolution. As
a matter of fact, a kind of Cultural Revolution occurred in our
country, too, when a less educated elite replaced a more
educated one.
     In my article devoted to the constitutional reform and
published a year before Yeltsin's resignation I proposed to
enhance the role of the government by expanding its powers and
give parliament supervisory functions. I finished that article
by a warning that a new President might wish to do the
opposite, that is, to strengthen and expand his own powers. By
the way, either by his conscious choice or due to his character
and the experience of operative work, Putin often fulfills the
role of the President and the actual leader of the government.
This is partly explained by the weakness of the present Prime
Minister.
However, if things are moving in that direction, it is
necessary to increase the President's responsibility before
parliament. The State Duma should have additional powers,
including those in the sphere of control over the fulfillment
of the budget and the activities of the government and the
President as the executive branch of power.
     The need for a clearer definition by the Constitution of
the functions of the President and the government (given the
continued allegiance to the French model of government), the
Upper and Lower Houses of parliament and the judiciary
authorities will become inevitable in the future. This will
happen when the ruling elite will accumulate the experience of
work under the new conditions and when not only the problems of
the "demo-dictatorship" of Yeltsin (who constantly misused his
powers in the distribution of funds, established unjustified
privileges and ordered ministers about) will become clear.
Putin does not repeat this experience. But not infrequently he
assumes government functions, in particular, during his trips
around the country. These are new problems. Don't let us use
such terms as "authoritarianism" or "corporativism." If we
tolerated the ugly and arrogant rule by the Family, let us
tolerate Putin's "guided democracy" for some time.
     The power vertical, or, to be more exact, the development
of federalism, is another acute problem today. The Constitution
has not solved this problem: there are deep differences in the
volume of rights and powers between the so-called Russian
regions and national republics. This dilemma is only too
obvious: either national republics should be transformed into
autonomies, as was the case in the RSFSR, or Russian regions
should be consolidated and renamed, say, Lands with their
status raised to the level of national regions. We proposed
such a solution at the Constitutional Assembly. Probably, there
are other alternatives, but the solution of the problem cannot
be put off.
    
                The Pack
    
     Yeltsin and, in particular, the Family put their people in
all the spheres of government at all the levels during the ten
years they stayed in the Kremlin. The Pack is not the whole of
the elite but its upper level members of which were put by the
Family in posts of responsibility in national administrative
organizations, some mass media and other institutes claiming to
have power and political influence.
     In the first year of his Presidency Putin has left the
Family but it is only natural that he could not have left the
Pack. He is trying to escape but the rest of the Pack keep him
tightly by the lapels of his jacket, if not by his throat.
Instinct prompts them that he is the leader who wants to
deprive them of their main gain from the past - the right to
turn their power into gold. That is why like a master of
fencing Putin takes a step forward, then a step backward and
again a step forward.
This was most vividly manifested in his game with the governors.
One step forward: they are out of the Federation Council; one
step backward: they are granted the right to nominate their
representatives to the Upper House (it goes without saying that
this is a temporary measure before the election procedure
begins); another step forward: the President nominates his
plenipotentiary representatives in the federal districts;
another step backward: institution of the State Council, a very
prestigious body without any rights, which gets down to the
study of Sergei Mikhalkov's new lyrics to the National Anthem
to the music by Boris Alexandrov; one more step forward: the
President has the right to dismiss elected governors; one more
step backward: the most influential governors are invited to
form the presiding body of the State Council with the powers to
prepare important reforms.
     Similar ice-dancing has been performed with the NTV and
ORT television companies. It is obvious that the President
could not put up with the incredible power accumulated by Boris
Berezovsky and Vladimir Gusinsky. And he began taking it away
in a piecemeal manner. I cannot agree with those who say that
Putin is losing the battle against Gusinsky for NTV. His
tactics remind the tactics Andropov used: he is not in a hurry
but his strangling embrace is ruthless and uncompromising. What
is more, he does not have his own team of talented
professionals capable of ensuring the work of television at a
high level.
     Denouement is nearing. The question is what will replace
the omnipotent domination of oligarchs on television and in the
press. This is important, above all, for journalists who have
got accustomed to a new situation when a rich boss takes care
about their financial state. How to survive without him?
Advertising, which, as I was told by Washington Post officials,
covers 80% of all costs in the U.S., does not cover more than
20% in our country. With oligarchs out, many mass media will
collapse instantly.
     The other and even more important question is the
independence of the mass media from the state. Indeed, our mass
media have won such independence by only at the price of their
complete dependence on very rich media tycoons who are not
necessarily very educated. I see the only way out is the
attraction of mixed capital when no one should own more than 7%
to 8% of the shares and the state can have its own small stock.
I do not exclude that Putin may have more straightforward ideas
of control over the potentially most oppositional and effective
force.
     Putin failed to use the moment of his coming to power for
a quick change of the uppermost group of executive leaders, as
is the rule in democratic countries. In Russia, this process
has been postponed but we see it is beginning now. Hopefully,
it will take place in legitimate and least painful forms. The
main thing is to promote good organizers capable of handling
incredibly complicated tasks of our economic and cultural
revival. Not a single post-Stalin leader has been able to
fulfill this important function, and Yeltsin's personnel
experiments were just outrageous. Putin has come to the Kremlin
having no team of his own. That is why searches for Russian
Erchards and just efficient managers can become nearly the most
difficult problem for the President.
    
                Oligarchs
    
     It is clear to any politician and expert that it is
impossible to accumulate by legitimate methods a billion-dollar
wealth in a matter of a few years without producing anything
into the bargain. But the most serious problem is continued
capital flight.
     It is stressed in the report "National Development
Strategy for the Period of up to 2010, which was prepared by
the State Council, that annual capital flight abroad
constitutes between 15 billion and 20 billion dollars, which is
equivalent to the loss of 6% to 8% of the country's annual
production growth. An outrageous figure, indeed! However, while
laying down long- and short-term policy problems the report
does not even mention any concrete steps to restrict the flight
of capital abroad, to say nothing about any plans to make it
return.
     What is to be done? Putin had a package of alternative
proposals. The first was to forget and forgive all that
happened in the past (its author: Mikhail Kasyanov); the second
- to put the most odious oligarchs in prison (Yevgeny
Primakov); the third - to de-nationalize large capital (left
communists); and the fourth - to elaborate an effective
"lenient" mechanism to return capital (proposed by some
experts).
     Putin and the team of his economic advisors began by
strengthening the tax burden, in particular, with regard to
natural monopolies in which the state holds controlling stock.
Then measures were taken to increase the state's influence on
the oligarchic capital. At the regional level this was
accompanied by investigation, above all, in connection with
direct crimes (as was the case with the aluminum business). I
am surprised that practically nothing has been done to solve
the problem of the return of capital, its investment in the
Russian economy and the blocking of capital flight in the
future. I believe there are psychological reasons behind such
passiveness: in the government, in the State Duma, among
governors and in the Establishment as a whole it is unlikely to
find a crank who has not taken care about opening at least a
small account in a foreign bank just for rainy days. The
Russian criminal situation pushed even upright citizens to such
a step. Suffice it to recall the August 1998 default, which was
an act of glaring banditry on the part of the government. In
such a situation it was difficult to find enthusiasts in the
government and Duma committees who would draft complicated
decisions for the return of capital. But the problem does not
grow any easier or less urgent because of this.
     Many observers and political scientists keep repeating a
banal thing: capital is searching where it would feel better:
create the necessary conditions and it will be back. It is
clear that conditions like those which exist in the West will
not be created in our country earlier than in several decades.
That is why we should search for a prudent way for a gradual
return of capital to the country.
     There have been some attempts already. In 1995, as the
coordinator of the Consultative Council in the Office of the
State Duma Speaker I headed the elaboration of a bill on a
legitimate return of capital to Russia. Our working group
comprised eminent economists, political scientists, businessmen
and representatives of the Central Bank, the Interior Ministry
and Interpol. The bill stipulated: 1) an amnesty on exported
capital (except capital from illicit narcotic drug business);
2) establishment of a foreign fund by Western bankers; 3)
voluntary accumulation of Russian capital abroad in that fund;
4) anonymous channelling of this capital to Russia in the form
of investments;
5) sufficiently high interest rates on such investments; and 6)
permission to have minimal accounts in foreign banks. The Duma
leaders sent this bill to the government. Other options are
also possible.
     We should carefully study a very interesting experience of
solving this problem in Germany, Italy, France, Britain, India
and other countries.
     By changes in the tax system and adoption of new laws we
should restore the market principle of free and honest
competition and, in particular, encouragement of small and
middle business. Such laws have proved their efficiency in
Japan and Germany and also in the U.S. during the Great
Depression.
     This also concerns the mass media which are in the hands
of a few media moguls. The U.S. and a number of other countries
have laws which prohibit the ownership of more than one
newspaper or radio and television broadcasting company by one
and the same person. We should adopt a similar law. This would
give journalists a wider choice of a place of work and would
not make them sacrifice their views and morals.
    
                  European Model
    
     Putin has made an important statement that oligarchs
laying claims to power will become extinct as a class and that
he will equally distance himself from all the oligarchs. But
the problem is not oligarchs as such but oligarchic, that is,
state-monopoly, capitalism. Like a malignant tumor it has grown
on Russia's body in the past few years as a consequence of the
money-grabbing policy of the Family and the Pack.
     The main achievement of the past ten years is not so much
democracy and the market, as their very essence has been
distorted like in a crooked mirror. Trade, services and
house-building are the spheres that have been really
flourishing.
Previously these spheres were very small - suffice it to
remember the notorious "shortage of sausage." But we owe their
present flourishing not to big-time dealers with multi-billion
capital but to small and middle business. It has proved its
operativeness and viability. It alone has not given up the
desire to serve the country and its people. It has reared a new
generation of white-collars - educated men and women with
pragmatic views. With their help we could start dragging out
the Russian Troika from the quagmire.
     If I understand this correctly, the program of economic
reforms elaborated by Putin's advisors is based on a model
which is closer to European experience, in particular, the
experience of European countries with a well developed social
democratic movement. Western Europe has rejected the domination
of oligarchs. Germany, Austria, Sweden, Italy and other
countries have built the European model of capitalism without
billions of dollars.
     In conclusion, a few words about the so-called current
moment.
     I am deeply convinced that Putin is not interested in
early parliamentary election. This would upset stability, which
is nearly the main achievement of our President. What is more,
parties have not been structured yet in keeping with the draft
of a new law on political parties and early elections would
sooner lead to "a miscarriage" than to the creation or a two-
or three-party system.
     The issue at hand is the change of elite in the executive
branch and the bureaucratic Establishment as a whole. The new
President and his new course need new people who would, first,
be dedicated to this course, second, not infected by the virus
of money-grabbing, and, third, have the qualities of
organizers, rather than party agitators or simply windbags.
     Hardly any experts doubt that in the end of the first year
of his Presidency Putin is about to make a very important step
- to change the elite at the top of the ladder of power, first
and foremost. Further intellectual work on the new policy
course and, in particular, the guarantee that this course will
be pursued to the end in the interests of society and the state
will depend on the degree to which Putin will be able to cope
with this task by "peaceful" legitimate methods.
    
********

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