June 21, 2001 

This Date's Issues:   5312 • 5313 • 5314

Johnson's Russia List
#5314
21 June 2001
davidjohnson@erols.com

[Note from David Johnson:
1. Boston Globe: David Filipov, Putin now mired in Chechnya. Hopes evaporate for closure to war.
2. Interfax: US diplomats leaving Russia in tit-for-tat measure.
3. Reuters: Russian Duma rejects media limits for foreigners.
4. AP: Russia OKs Political Parties Bill.
5. Financial Times (UK): Robert Cottrell, Kremlin denies threat over missile defence.
6. The Times (UK) editorial: Putin's ploy. Russia's leader deploys charm better than do America's allies.
7. Reuters: U.S. senators criticize Bush endorsement of Putin.
8. Financial Times (UK): Padma Desai, Putin's bluff: Russia's economic problems leave it with no alternative but to accept US plans for a missile defence system.
9. Ben Aris: Revenge of the Geeks.
10. Moscow Times: Tatyana Matsuk, Making the Poor Pay.
11. Chicago Tribune: Colin McMahon, Siberian city balks at reform. Old-style subsidies keep town alive, to Russia's dismay. (Norilsk)
12. The National Interest book review: Anatol Lieven, Poltergeist Economics.]

*******

#1
Boston Globe
21 June 2001
Putin now mired in Chechnya
Hopes evaporate for closure to war
By David Filipov, Globe Staff

MOSCOW - President Vladimir V. Putin, who rose to power in late 1999 on the
promise he would solve Russia's problem in Chechnya once and for all, does
not like to talk about the breakaway republic these days.

For the second time in five years, Russia is waging war to keep the rebel
region under its control, but Putin's army is in a quagmire. His aides now
say the conflict will drag on for many years, even decades. Military and
political observers increasingly doubt that the Kremlin has any strategy
for ending the war.

The war Putin undertook to put down Chechen ''bandits'' and the one he
finds himself fighting have turned out to be two very different things. The
Russian president is having trouble explaining the kind of conflict that
Chechnya has become, in which unseen assailants launch deadly hit-and-run
attacks on the Russian military from places where no rebels should be.

''I think Putin does not know what to do with Chechnya, and he is probably
just drifting,'' said Ruslan Khasbulatov, an ethnic Chechen who is the
former speaker of the Russian parliament.

Last month, Moscow was forced to halt a planned withdrawal of most of its
80,000 troops after only 5,000 had left Chechnya; instead, the Kremlin said
it was sending troops back to the war-shattered region.

A year after Russian military commanders declared victory there, federal
losses continue to mount at a rate of one soldier killed and several
wounded every day in increasingly bold hit-and-run attacks by small groups
of guerrillas. The military and police have responded by sealing off entire
villages and rounding up everyone suspected of rebel sympathies. Many never
come back.

Officials of the pro-Moscow Chechen government, widely unpopular in the
region for its inability to protect civilians from the roundups, have
become targets of the rebels, too - dozens have been killed or wounded in
recent attacks; others have resigned in fear.

Frustrated by the continued heavy casualties, General Gennady Troshev,
commander of Russian troops in Chechnya, this month called for public
execution of rebels. It was Troshev who declared one year ago that ''the
war, as such, is over.'' Now, he is calling for Russian troops to conduct
sweeps for rebels outside Chechnya itself, in the region to the west.

Following a summit meeting with President Bush in which he responded to
American criticism of Russia's military campaign, Putin told reporters
Monday that he is ''getting tired'' of explaining what he's up to in
Chechnya and that it would take ''a dumb person'' not to understand the
Kremlin's actions, the Associated Press reported.

But many Russian politicians themselves are having trouble making sense of
the Chechnya campaign. One of them is Alexei Arbatov, deputy chairman of
the Russian parliament's defense committee, who was wounded when a military
helicopter carrying him was hit by rebel gunfire near the border of Chechnya.

Arbatov told reporters that the army's presence in Chechnya, and the
recurring violence against civilians, were turning local people against
Moscow. He said he was surprised to learn that troops were having more
difficulty controlling Chechnya's plains than its remote mountain areas,
and that rebels were moving freely across the republic's borders.

In order to defeat the rebels, Arbatov said, federal troops must find a way
to distinguish civilians from rebel fighters.

''Their mission is to show the population that federal authority is better
for them and to win the population over to our side,'' Arbatov said in a
recent interview. ''Only then will we be able to rob the militants of their
base of support and be done with this war and with this illegal separatist
armed movement.''

But the reality, said Aslanbek Aslakhanov, the representative from Chechnya
in the Lower House of the Russian parliament, is that ''the army treats the
population as a potential enemy.''

On Wednesday and Thursday last week, 20 civilians were reported murdered by
troops in Chechnya. In an unusually swift response, Russian security forces
rounded up 19 soldiers suspected of involvement in the killings, which
human rights groups complain have been routine. Authorities have in the
past questioned soldiers in connection with massacres, but so far only one
officer has been put on trial, for the murder of a Chechen girl.

''You can destroy the population, but you cannot win their sympathy by
these methods,'' Aslakhanov said.

The Kremlin's plan for Chechnya used to be that with major cities and towns
under control, troops would crush remaining rebel bands and round up their
leaders. But despite constant security sweeps, the top rebel commanders
remain at large. The head of Russia's Federal Security Service, Nikolai
Patrushev, said last month that troops could not get to the leaders without
risking heavy losses.

Rather than call the previous policy a failure, Patrushev suggested that
the Kremlin's mission in Chechnya had changed. No longer was Moscow's goal
to kill or arrest rebels; instead, the idea was to ''prevent Chechnya from
being a base from which terrorists could launch attacks.'' Putin echoed
this sentiment in his interview Monday.

Whether this new strategy has been successful is debatable. Rebel attacks
continue. On Tuesday, three car bombs in Chechnya killed three civilians
and wounded 34, adding to the untold civilian casualties.

The Kremlin admits to 3,096 Russian deaths since the campaign began in
October 1999; independent observers suggest the toll might be double that.

Meanwhile, the cost of the war has risen. Pavel Felgenhauer, an independent
military analyst in Moscow, recently estimated that operations in Chechnya
had cost $2 billion in 2000 alone. That is almost a third of the entire
Russian defense budget. Clearly, the money was not coming from the budget,
but from the windfall that Russia, an exporter of oil and gas, reaped from
high world energy prices.

''But if oil prices tank, where is that going to come from?'' asked Fiona
Hill, a Russia analyst at the Brookings Foundation. ''Who's going to suffer
in Russia to keep this war going in Chechnya?''

Support for the war is starting to slip. At the end of 1999, two-thirds of
Russians approved of a military solution, but a recent survey by pollster
Yury Levada found that 58 percent now support halting the fighting and
holding peace talks with the rebels.

Still, Hill suggested that the Kremlin may prefer a costly, low-scale
conflict to the alternatives. The Russians are not willing to grant the
Chechens independence. That, they believe, would re-create the situation
that existed before the current conflict, when Chechnya became a haven for
kidnappers and gangs who launched raids on Russian territory.

The Kremlin has publicly ruled out peace talks with the separatists'
fugitive president, Aslan Maskhadov, and top rebel commanders, whom it
blames for the kidnappings and raids.

Unable to win the war on the ground, the Kremlin has tried to take control
of its media in an attempt to win the propaganda war, by muting dissent and
sanitizing what news gets through.

''Add economic difficulties to the dead-end policy in Chechnya and Putin's
rating would begin to melt,'' veteran Moscow political observer Otto Latsis
wrote in the English-language Russia Journal recently. ''The people in his
administration seem to have realized this danger and to have decided that
if it is to happen, the later people find out what is going on, the better.''

*******

#2
US diplomats leaving Russia in tit-for-tat measure
Interfax

Moscow/Washington, 21 June: All members of the US diplomatic missions'
staff, who have been requested to leave Russia by 1 July, will depart on
time, American diplomats told Interfax today.

They have already started to leave Russia, the sources said. The diplomats
made no more comment on the matter.

The on-going departure finalizes a large diplomatic scandal, which happened
in late March. Back then Washington announced its plan to expel a large
group of employees of the Russian diplomatic missions in the United States.

Moscow regarded the decision as unfounded and took commensurate measures.

Four Russian and four American diplomats, declared as personae non gratae,
left the host countries by early April.

Washington said that 46 members of the staff of Russian diplomatic missions
in the United States would be sent away by summer. Russia told the same
number of American diplomats to leave by July.

Moscow "mirrored the US expulsion of a group of Russian diplomats", sources
told Interfax.

After the mutual expulsion of four diplomats, Moscow and Washington said
that the incident was settled. The decision of Washington to expel 50
diplomats was the first large-scale expulsion of foreign diplomats from a
host country in the 21st century.

Back in 1971 the British government expelled 105 members of the Soviet
diplomatic missions' staff.

France expelled 47 Soviet representatives in 1983.

The American authorities expelled 80 members of Soviet missions' staff in
1986.

Judging by the American information as of late March 2001, the US
diplomatic missions in Russia had 500 American employees, among them 325
diplomats. The missions also employed about 700 Russian citizens.

The United States has an embassy in Moscow and general consulates in St
Petersburg, Vladivostok and Yekaterinburg.

*******

#3
Russian Duma rejects media limits for foreigners

MOSCOW, June 21 (Reuters) - Russia's parliament voted down at its second
reading on Thursday a law limiting foreign interests in the country's main
television stations, with both leftists and liberals rejecting its
watered-down provisions.

The bill failed to win the required approval of 226 deputies in the
450-seat State Duma lower chamber in three votes.

The legislation was proposed by a group of parliamentarians during a
prolonged struggle for financial control of Russia's independent NTV
television station.

The debt-ridden station has now passed into the hands of a branch of gas
giant Gazprom <GAZP.MO>. At one point, NTV's founder, media magnate
Vladimir Gusinsky, was holding negotiations to sell a large share to CNN
founder Ted Turner.

President Vladimir Putin refused to become involved in the row over NTV,
saying it was purely a commercial dispute. But the European Union and the
United States have expressed concern for media freedom under his leadership.

The rejected bill would have barred foreigners from founding Russian
television stations broadcasting to more than half of Russian territory and
limited stakes held by foreigners, stateless persons or those with dual
nationality to 50 percent.

The text approved on first reading in April applied the restrictions to all
outlets, including radio stations, magazines and newspapers.

Communist deputies and their allies rejected the bill on grounds that its
provisions should be extended to other media and tightened to limit foreign
participation to 30 percent.

Liberal members said the rules were too restrictive and would impose
restraints on programmes with foreign content.

The bill will now be turned over to a Duma committee for redrafting and is
likely to be submitted to deputies again later in the year.

********

#4
Russia OKs Political Parties Bill
June 21, 2001
By ANNA DOLGOV

MOSCOW (AP) - The lower house of Russian parliament gave final approval
Thursday to a bill that would sharply limit the number of political parties
and make them dependent on government financing.

The bill, which liberals say aims at giving the Kremlin control over the
nation's political forces, follows a series of recent developments that
stoked fears that President Vladimir Putin's administration is seeking to
restrict civil liberties.

The lower house of parliament, the State Duma, voted 238-164 Thursday to
approve the bill. The house, dominated by pro-government moderates,
approved the bill in the first two readings earlier this year.

In contrast to prolonged debates of the bill earlier this year, the vote
Thursday came after only a brief discussion of minor amendments.

The bill still needs to be approved by the Federation Council, the upper
house of parliament, and be signed by Putin to take effect.

Among other measures, the bill strictly curtails private donations and bans
funding from foreigners and international organizations. Opponents warn
that state funding of political parties would make them subservient to the
government.

But Putin has said the new rules would lead to the creation of a few,
strong parties, replacing the cacophony of the more than 200 organizations
Russia now has, most of which exist only on paper.

According to the bill, a political party must have at least 10,000 members
nationwide and no fewer than 100 members in more than half of Russia's 89
provinces. A party must also regularly field its candidates in elections or
risk closure.

To receive state financing, a party would have to receive more than 3
percent of the vote in parliamentary elections. Parties would also be
required to submit regular financial reports to the government, and critics
said the provision would put parties under constant government watch.

In other decisions, the Duma voted 223-149 to reject the second reading of
a bill that would bar foreigners from owning a controlling interest in
Russian media. The bill, which now has to come up for more consultations,
received initial approval this spring.

The prohibitive bill followed the approval last year of the Information
Security Doctrine, a policy document drafted by the presidential Security
Council and signed by Putin. The doctrine warned of ``information weapons''
allegedly used against Russia by foreign powers and called for tighter
controls over media, in language reminiscent of Soviet times.

*******

#5
Financial Times (UK)
21 June 2001
Kremlin denies threat over missile defence
By ROBERT COTTRELL

A Kremlin official said yesterday President Vladimir Putin was not trying to
send any "threat" to the west by discussing this week how Russia might
respond if the US unilaterally breached the anti-ballistic missile treaty by
building a missile defence system.

Mr Putin told US media on Monday that Russia could put more nuclear warheads
on its existing missiles, thus strengthening its offensive potential very
cheaply. This option has been mentioned publicly by Russian officials in the
past.

"Russia's position is very simple," the Kremlin official said. "Russia wants
to act jointly in building a new security system. Russia does not want
unilateral actions. But the president is stressing that if one side does take
unilateral actions, then Russia will protect its vital interests."

Mr Putin made his remarks after returning to Moscow from his summit with
President George W. Bush in Slovenia, which both men said had built mutual
trust.

Much of the summit was given over to US plans for a missile defence system,
and Russian insistence that the US should not breach unilaterally the ABM
treaty of 1972, which restricts such systems.

According to a transcript of Mr Putin's remarks on Monday, released yesterday
by the Kremlin, he said Russia wanted detailed discussions with the US about
strategic threats to both countries now and in the coming 10 to 15 years. It
wanted to establish "in concrete terms" what provisions in the ABM treaty
"prevent us overcoming such threats", Mr Putin said. "So far," he said, "we
don't have a common position on that."

Mr Putin said Russia had taken note of what he called a very serious remark
by Colin Powell, the US secretary of state, to the effect that the US did not
want the complete destruction of the ABM treaty, but did want an effective
but limited missile shield.

Mr Putin repeated Russian scepticism that the US faced any real missile
threat from so-called rogue states. They were armed, he said, with old Soviet
rocketry based on German technology from the last world war. For such
countries to develop modern rocketry capable of threatening the US would take
decades, he said.

Later Mr Putin discussed what Russia might do if the US did abandon the ABM
treaty unilaterally. He said he was confident the US could build nothing
within the next 25 years significantly diminishing Russian national security.
He said Russia could reinforce its arsenal to overcome any shield by adding
more warheads to its missiles. "And it would cost almost nothing," he said.
"By this means, the nuclear potential of Russia would be strengthened many
times."

Mr Putin said Russia was worried by other aspects of US missile defence,
however. He warned that "an uncontrolled arming of other countries would
begin, and many of them would be close to us. That is what worries us".

********

#6
The Times (UK)
June 20, 2001
Editorial
Putin's ploy
Russia's leader deploys charm better than do America's allies

Years of intelligence training have taught Vladimir Putin useful lessons
about diplomacy. Like any good spy, he has learnt that the most effective
way to influence others is to study their habits and adopt their
assumptions. His meeting with President Bush and his subsequent briefing in
the Kremlin of American journalists proved masterful. Americans set store
by frankness, freshness, a pleasant smile and a readiness to listen.
Washington officials had warned President Bush that he would find none of
that in Ljubljana: he would meet a dour, suspicious and secretive man who
was determined to reassert prickly Russian nationalism at the expense of
American influence and security.
Instead, Mr Putin went out of his way to listen, to smile — even for the
photographers — and playfully to practise a little English. Mr Bush was
impressed, and said so. His Administration has dropped its dismissive
attitude and hostile language, now talks of partnership with Russia and has
reassured Moscow that it, too, is looking for a negotiated modification of
the Anti-Ballistic Missile Treaty and will observe its provisions in full
as long as it remains in force. Already there are signs of a struggle
within the Administration between Donald Rumsfeld, the Defence Secretary
who seems willing to ignore Russian opposition, and Colin Powell, who takes
the usual State Department line of seeking accommodation. Mr Bush may now
be a little more inclined to back General Powell.

Charm and personal chemistry go only so far. Mr Putin stretched the
benefits further by professing himself charmed by Mr Bush. By calling
leading American journalists to the Kremlin for his first foreign interview
since his election — a point that he knows will count for much in the
American press — he used the new atmosphere of mutual congratulation to set
out Russian views with an impression of flexibility while in fact conceding
nothing.

Mr Putin insisted that Russia, too, wanted to assess the threat of nuclear
proliferation and rogue states; that countervailing technology was still
compatible with the ABM Treaty; but that Russia accepted that it could not
force the Americans to co-operate, nor would it try. Yet in the same
interview he also suggested that Russia would boost its own nuclear forces
if America did go ahead with its missile shield. He spoke of mounting
multiple warheads on Russia’s new generation of Topol-M missiles — a move
that would breach the Start II agreement, whose main aim was to reduced
Mirvs (multiple independently targeted re-entry vehicles). The implication
is clear: Mr Putin is warning Mr Bush that if he renounces one treaty, the
Kremlin will renounce another.

The threat is hardly real. Mirvs may be a cheaper way of boosting a
rocket’s effectiveness and most Russian missiles still carry up to 10
warheads and decoys. But the cost of adding warheads to single-headed
missiles is probably beyond Russia’s present means. Secondly, Russia places
enormous political prestige on its honouring of treaties. And thirdly Mr
Putin knows that such a move would antagonise the West Europeans — the very
people on whom he is counting to lead the assault on missile defence while
he listens, negotiates and plays for time.

The Putin strategy looks nimble after the clumsy confrontation of America’s
allies. It harks back to the old Soviet dream of the two superpowers doing
deals above the heads of the rest of Europe. After his first bruising
encounter, Mr Bush might find that more attractive than being hectored in
Brussels and jeered in Gothenburg.

*******

#7
U.S. senators criticize Bush endorsement of Putin

WASHINGTON, June 20 (Reuters) - Republican and Democratic senators,
including influential conservative Jesse Helms, criticized U.S. President
George W. Bush on Wednesday for his quick positive judgment of Russian
President Vladimir Putin.

Bush, after a meeting with Putin in Slovenia last Saturday, said he found
the Russian leader "straightforward and trustworthy." As a gesture of
trust, Bush invited Putin to visit him at his Texas ranch.

Helms, a North Carolina Republican, said: "Mr. Putin is far from deserving
the powerful political prestige and influence that comes from an
excessively personal endorsement by the President of the United States."

"Prematurely personalizing this relationship only undercuts the incentives
he has to reorient Russia's domestic and foreign policy goals," Helms told
Secretary of State Colin Powell at a meeting of the Senate Foreign
Relations Committee.

Sen. Bill Nelson, a Florida Democrat, said he shared Helms's concerns about
the label "trustworthy."

The chairman of the committee, Democratic Sen. Joseph Biden of Delaware,
said on Sunday that he personally did not trust Putin. He did not bring up
the subject on Wednesday.

Powell, answering the charges of a rush to judgment, told the committee
that Bush "did not blink" in Slovenia.

"Let's put it in perspective. This is a president who walked into the room
with that gentleman (Putin) and met him for the first time and laid down
his markers," he said.

Bush spoke his mind to Putin on missile defense, Chechnya, the rule of law,
weapons proliferation and the constraints of the Anti-Ballistic Missile
(ABM) treaty, Powell said.

"There was nothing off terra firma about the president's performance... He
went there strong, he came out strong. He made it clear what he believed in
and what he stood for and he didn't blink in the slightest," he added.

Helms said he had criticized officials of the former Clinton administration
for making remarks similar to Bush's.

"We must not forget that under Mr. Putin's leadership, the press has once
again felt the jackboot of repression, arms control treaty obligations
remain unfulfilled and violated ... and a brutal indiscriminate military
campaign in Chechnya continues unabated," the senator added.

But Sen. Chuck Hagel, a Nebraska Republican, supported Bush's performance.

"I put some confidence in the president's personal analysis and I take the
president at his word, but more important than that, it seems to me he
placed some expectations on this relationship between the two of them, and
I don't find that altogether that disturbing," he said.

*******

#8
Financial Times (UK)
21 June 2001
Putin's bluff: Russia's economic problems leave it with no alternative but
to accept US plans for a missile defence system
By PADMA DESAI
The writer is professor of comparative economic systems and director of the
Center for Transition Economies at Columbia University

Many US security specialists thought Vladimir Putin would use Saturday's
summit with George W. Bush to air his outright rejection of US plans to
develop a national missile defence. They were surprised when it did not
happen. But they have only themselves to blame: if they had not lost sight
of Russia's plight, they would have predicted the mildness of Mr Putin's
disapproval long ago.

The Russian bear is trapped between a failing economy and pressing defence
needs on the non-nuclear front. Russia's president has little choice other
than to accept NMD, even if he tries to secure some concessions along the
way.

Mr Putin's post-summit threat to push ahead with deployment of multiple
nuclear warheads in response to a unilateral US decision on NMD is
therefore little more than noise and cheap bargaining. Mr Bush has the bear
over a barrel.

The failure of US security analysts to recognise the importance of economic
factors in undermining Mr Putin's opposition to NMD is particularly
puzzling when one considers that the Bush administration is front-loaded
with many veterans of Ronald Reagan's "bust- their-budget" war against the
"evil empire". They believe, not implausibly, that Mikhail Gorbachev was
pushed - even if willingly - into the dissolution of the Soviet Union and
into glasnost and perestroika because the failing Soviet economy was
incapable of sustaining an enhanced arms race.

Drawing a parallel between the economic circumstances of Mr Gorbachev's
Soviet Union and Mr Putin's Russia is hard to resist. As it did a decade
and a half ago, Russia suffers from severe economic stress. It is true that
the growth rate was 8 per cent last year - but it is expected to fall to
half that in 2001. Few of the reforms needed to attract foreign investment
are in place and infrastructure is crumbling. The country's economic
transition is deeply troubled.

As if that were not enough, Russia's dependence on foreign assistance
continues to be acute, a fact that is not helped by the US's Republican
administration, which is reluctant to give Moscow a "free ride". The 1998
Cox Commission of the Congress, dominated by Republicans, viscerally
denounced the Clinton-Gore approach of ready financial support as naive and
wrong. Realpolitik, rather than active engagement and quid pro quo
generosity, is likely to be the new order of the day.

A close look at the Russian budget is also revealing. The budget is at last
expected to be in balance this year. But this good news reflects the
massive increase in oil revenues because of high oil prices and that is
unlikely to last. Government expenditure in 2001 is planned at Dollars
42bn; one out of every four roubles - rising to one out of three by 2003 -
is earmarked for debt repayment. By contrast, only a paltry Dollars 5bn is
allocated for defence. If defence expenditures are re-evaluated at
purchasing power parity -a dubious procedure in itself - they rise but are
still tiny compared with US defence spending at Dollars 330bn.

Worse for Russia, priorities within this small defence budget have shifted
to reflect the country's growing concerns about neighbours such as
Tajikistan and Georgia to the south - partly a consequence of the costly
mistakes in Chechnya. After a prolonged internal debate in which Igor
Sergeev, the former defence minister, argued for renovation of Russia's
nuclear capabilities while Anatoly Kvashnin, the current joint chief of
staff, fought for building conventional forces, Mr Kvashnin gained the
upper hand.

There is no doubt that Mr Putin must dread the prospect of NMD eventually
destroying the utility of Russia's nuclear stockpiles and turning the US
into a hyperpower with first-strike capability without fear of retaliation.
But the Russian leader has no alternative. After all, he needs US financial
support; his budget cannot possibly find the necessary resources to begin a
nuclear arms race; and his immediate defence needs are focused on the
country's difficult neighbours.

Mr Putin cannot even threaten nuclear proliferation because such a tactic
could backfire through the actions of some Islamic states on Russia's
periphery. To assuage Russia, the Bush administration has suggested buying
surface-to-air missiles for possible deployment in Europe. It may even buy
transport planes and submarines, which Russians produce well - as we know
from the use of the Russian transport plane to bring the disassembled US
spy plane back from China. An economically crippled Russia, with her
conventional defence needs, cannot but look favourably on these sweeteners.

If NMD is to be stopped, the onus will not be carried by Russia. Instead,
it will fall on the Europeans, as well as by the Democrats and others
within the US itself. The war over NMD will be fought not in Moscow but
within the west.

*******

#9
Date: Thu, 21 Jun 2001
Subject: revenge of the geeks
From: Ben Aris <benaris@online.ru>

Revenge of the Geeks
Ben Aris
Moscow
Wednesday, 20 June 2001

President Vladimir Putin¹s long awaited reshuffle began at the weekend ­
sorta. After so much speculation and numerous delays, Putin appointed two
new ministers.

Igor Yusufov becomes minister of energy, filling the post left vacant since
February, when Putin dismissed Aleksandr Gavrin over the Far East
electricity fiasco.

And Vitaly Artyukhov was made minister of natural resources, following the
departure of Boris Yatskevich, who was involved in the high-profile scandals
over licenses.

It is all getting depressingly predictable. Their description fits a pattern
that seems to be set in stone when Putin comes to making personnel
decisions. Firstly they are relative nobodies. Then there is the fact that
they have worked with the security services. Yusufov previously headed some
government structures ³closely connected with state secrets² and under the
aegis of the FSB, according to one of Moscow¹s banks. And Yatskevich has had
several mid-level government jobs since 1983. Finally ­ and the real
clincher on any ambitious Kremlinite¹s CV these days -- both can be
distinguished by their marked loyalty to the president.

Their rise from nowhere of these two men show that all this bosh about Putin
being a dictator is clearly rubbish. It is becoming increasingly clear that
Putin¹s real agenda is put people into power like himself. What is going on
here is the revenge of the Russian geek.

In Soviet days top tier jobs were held by muzhik ­ men of the land, large
and strong, heavy drinkers with perfunctory people skills. They had little
to no time for geeks. But under Putin this stereotype is giving way to a
tea-total, skinny and rather nervous looking kind of man. Look at Putin. He
is no Rambo. Blame Yeltsin if you want, after all he hired both Kiriyenko,
the first top geek, and Putin. Now Putin¹s appointment of Alexei Miller to
CEO of Gazprom last month ­ a man who looks like he would be blown away by a
sneeze ­ was the geeks coming age.

But Putin himself doesn¹t quite fit this image, or does he? He flies about
in Migs and knows judo. Not to mention his slapping down of all sorts of
businessmen and Federation Council types twice his size.

However, its all a clever front dreamed up by the Kremlin press service. His
judo, for one, is obviously the result of environmental selection. Putin is
not a big man. He lived a modest life in St Pete according to all accounts.
And he doesn¹t even have a lot of hair. Image what it must have been like
for him at school when all the other kids were being told the ideal Soviet
worker is the man that can dig up 15 tons of coal every afternoon with a
teaspoon. Putin must have cowered in the corner by the pencil sharper hoping
no one would notice him.

That was when he got into martial arts. As Hollywood and Hong Kong has
taught us time and time again, people who don¹t look like they can fight
learn martial arts. Putin is a geek who learnt how to fight back. Now he is
the super-geek that all of Russian geekdom -- oppressed since Genghis Khan
taught the Russians about being butch -- has dreamt of rescuing them. He has
come to deliver them ­ a sort of geekish messiah.

This throws the whole Gazprom thing into another light ­ a classic show down
between geek and muzhik. The most interesting aspect of the fight that
everyone has missed is that despite Putin triumphing over Vyakhirev he
immediately did everything he could to placate a man he should be sending to
jail. It¹s like sneaking up behind the school bully and hitting him over the
head with a shovel. As soon as he is on the floor you are down on bended
knee doing everything to appease him, because you suddenly realize that as
soon as the stars clear from his eyes you are going to get creamed.

Vyakhirev ended up with a rather nice job as chairman of Gazprom, a medal,
and, oh yes, and about $20bn of state assets if Boris Federov is to be
believed. That medal ­ what exactly was it for? Services rendered to the
country? In that case, ask me. I¹d like to help too.

Putin was just trying to let Vyakhirev down as easily as possible, because
he didn¹t want to take on Rem¹s mates later. Putin doesn¹t want to fight. He
would rather stay home and play with his poodle (which he claims his wife
bought). Poodle. It speaks for itself.

Putin knows that if he beats up too many people they will gang up on him and
do him some serious damage ­ like take his job away. This is Russia after
all. Don¹t think that just because he is president that if all the others
gang up on him, they can¹t get rid of him. Who is going to stop them? The
geeks?

*******

#10
Moscow Times
June 21, 2001
Making the Poor Pay
By Tatyana Matsuk

The consensus is that German Gref, economic development and trade minister,
is the main force behind reform in President Vladimir Putin's
administration. He and his colleagues will soon delight the nation with a
package of reforms that will touch nearly everyone: municipal housing,
social security and pensions. Health care reform is not far behind.

The basic idea is simple. The population must assume the cost of these
social programs. One will have to apply for subsidies, and the poor will
have to demonstrate their poverty. The assumption is that the prosperous
will never collect their documents and stand in line for subsidies, so the
additional revenues the state collects can be used to help the truly needy.
This approach seems reasonable. But anyone who has experienced real life in
Russia has a lot of questions. According to data from Gref's ministry, in
the first quarter of 2001 there were 54.4 million Russians (one in three!)
earning less than $100 a month. Opinion polls show that about 70 percent of
the population feel they have suffered as a result of post-Soviet reforms,
and they were not prosperous to begin with. Given these facts, lines for
housing and other subsidies will start forming immediately all over the
country

Of course people with money won't be there. They will pay whatever is
necessary to get whatever they want without any bother. I hate to think
what will become of the rest of us. My neighbor, a widowed pensioner,
already stands in line for three hours to get a document for her rent
subsidy. I remember reading that the former first secretary of the Moscow
committee of the Communist Party, Viktor Grishin, died of a heart attack
while standing in line for his pension.

How can people holding several temporary jobs to make ends meet demonstrate
their poverty? What about people like me, surviving on unpredictable
honoraria? Are we going to have to make the rounds for documents every
single month? Imagine an artist who sells a painting for $1,000. Who knows
when he might sell another. Is he rich or poor? If the whole population is
wasting time getting documents, how will we have time to make a living and,
God willing, pull ourselves into the middle class? Only thieves and
bureaucrats will make money under such a bureaucratized system.

I currently pay about $10 a month for communal services, gas and
electricity, plus an ever-increasing amount for the telephone. Estimates
are that after reform I will pay about three times more. Compare that
figure with the figures about average monthly incomes cited above, and you
can see what such reforms mean for Russia at present.

What's more, our bureaucrats involve themselves in anything involving money
or a chance to demonstrate power. I recently applied for my taxpayer
identification number. I filled out the form and phoned my local tax office
to ask if I could mail it. "You can," a young man told me helpfully, "but
no one will look at it."

What we will be paying for? Take communal services. When my building
underwent general repairs a few years ago, workers replaced the faucet in
my kitchen and destroyed a good square meter of my tiles. They then told me
I would have to use the neighbor's toilet for a few days, but if I paid
extra they could fix it the next day.

My 78-year-old neighbor had to lug buckets of water from a neighbor's for
more than a month while she waited for a plumber. It took half an hour to
fix when he showed up. A month after I called an electrician to check the
ceiling light in my living room, it stopped working. It took workers two
months to replace our elevator, but it only worked for two days. When I
called the dispatcher, she said, "It'll be quite a while before we get
around to this one." Municipal workers spent two freezing months last
winter replacing the windows in my mother's apartment. In the spring, one
would not close — and the dispatcher could not even find a record of the job.

Pick up any paper in any city of Russia on any day and you will find
similar stories. "If you don't want to deal with municipal authorities,
form a condominium and your own administration," says one of our reformers.
What are they saying? Most of us don't get to choose our neighbors. With
whom should I form a condominium? With the alcoholic on the first floor or
with the single mother next door who goes around the building every month
asking for 10 rubles to pay her electricity bill? Or maybe with the
hooligan upstairs who cursed at me when I tried to have a lock installed at
the common entry?

The present system needs reform, but not this. Instead of taking people's
last kopeks, the state should reform itself. Force our bureaucrats to act
like public servants rather than cash-sucking ticks. We need to remove the
bureaucratic element in the provision of goods and services. Only then will
we know who should pay and what we are paying for. But that would mean
ousting bureaucrats from their cushy posts. It won't happen soon and it
won't be easy.

Tatyana Matsuk is a freelance journalist in Moscow. She contributed this
comment to The Moscow Times.

*******

#11
Chicago Tribune
20 June 2001
Siberian city balks at reform
Old-style subsidies keep town alive, to Russia's dismay
By Colin McMahon
Tribune foreign correspondent

NORILSK, Russia -- Blind in their conviction that socialism could conquer
even nature, Soviet authorities used to pay people to come to this harsh
land north of the Arctic Circle. Now people are paid to leave it.

Hoping to correct one of the Soviet-era mistakes bogging down Russia's
economy, the Russian government is resettling people out of Norilsk. The
World Bank soon will pitch in to help with a multimillion-dollar loan
approved this month.

Authorities hope to impose a kind of corporate restructuring on the Far
North, to energize its economy and make life in Norilsk and other northern
cities, if not pleasurable, then at least manageable.

Like many reforms in Russia, however, the Norilsk turnaround is moving at a
glacial pace. Many of the region's 230,000 residents cannot or will not
leave. New people keep arriving. And Norilsk's main employer has one foot
planted in the communist past even as it plots a capitalist future.

Though Norilsk may seem a small chunk of a country of 145 million people,
the drag it and other Far North communities put on the economy is sizable.

The Russian government spends an estimated 7 percent of its economic output
subsidizing the Far North, accomplishing little more than maintaining a
status quo in which many people's lives are nasty, short and bitterly cold.

The average annual temperature in Norilsk is 6 degrees Fahrenheit. Piles of
ice and snow dot the barren landscape well into June, glistening in bright
sunshine that lasts all night this time of year.

Breathtaking ugliness

Norilsk's industrial tableau is so ugly it can take your breath away, if
the mixture of pollution and lack of oxygen in the Siberian air does not
already leave you gasping. At 50 years, male life expectancy trails the
overall Russian rate by a decade. Health is a constant concern, partly
because Norilsk smelters emit seven times as much sulfur dioxide as the
entire U.S. metals industry.

Built mostly on permafrost, many of the city's apartment buildings are
sinking, literally, into decay. There is not a tree in town.

What draws new people to Norilsk are the same things that keep even those
who might want to leave: higher than average wages and a safety net of
social services and subsidies that recall Soviet times.

Norilsk is a company town writ large, or maybe the Soviet Union writ small.
It subsists because of Norilsk Nickel, one of the largest metals companies
in the world and the economic engine of central Siberia.

Not only does the company employ thousands of geologists, miners and
foundry workers to find, extract and process nickel, copper, platinum and
palladium, it also employs thousands to provide electricity, drive buses,
maintain housing, teach children and treat the sick.

`Island of communism'

"We have an island of communism here," a Norilsk official said with more
pride than irony. "It will show the whole of Russia."

The Norilsk brand of communism works for those with good jobs at Norilsk
Nickel. It leaves a lot of other residents out in the Siberian cold.

Norilsk Nickel's proposed solution to this imbalance, a desire the city
government shares, is to close Norilsk to uninvited job-seekers.

Goal: Cut population

The city wants to cut its population to 160,000 by the end of the decade.
Norilsk Nickel has already trimmed its payroll by 50,000 workers since a
controversial privatization in the mid-1990s. Company officials talk of
shedding another 7,000 or so to get to 65,000.

Russia's economic reformers cheer such goals. It is the talk of communism
and the closing off of cities that exasperates them.

They suggest that rather than deprive people of a constitutional right to
live where they want, Norilsk Nickel and the city government should embrace
Russia's economic realities.

Let the market dictate wages and prices. Those with good jobs and good
wages will stay. Those without will have to leave.

"There are normal and efficient ways to discourage people from going to
Norilsk," said Irina Starodubrovskaya, who helped create the Northern
Restructuring Project and win World Bank approval for the $80 million loan.

"People there do not pay anything even close to the real cost of living.
Many things are subsidized, first of all housing," Starodubrovskaya said.
"By their own policy they have created artificial incentives for people to
come to Norilsk. The residents do not feel the real financial burden of
living in such extreme conditions."

For volunteers wanting to escape those extreme conditions, the World Bank
plans to cover relocation costs from Norilsk, Vorkuta and Susuman. It also
will educate the migrants about possible new destinations in an effort to
ease their fears of the unknown and help them adjust. Finally, the World
Bank will help consolidate residences left in the cities and tear down
unused buildings.

Restructuring economy

"The idea is not to depopulate the north," Starodubrovskaya said. "The
migration is only the first step. It's only the engine to start
restructuring the northern economy."

The World Bank hopes that up to 27,500 people will accept what amounts to a
buyout. More than half of them are to come from Norilsk. Most will be
retirees and disabled people.

Many of these people figured that toughing it out in the Far North during
their working lives would pay off in the end. Hard-won savings and healthy
pensions would afford them a comfortable retirement "on the mainland," as
northerners characterize the rest of Russia.

Yet a decade of inflation and economic crises has gobbled up their meager
savings. Relatively high pensions get cut if they leave the Far North.

Also struggling are new arrivals who have poured into Norilsk in search of
something better than the poverty of much of the former Soviet Union.

"The newcomers run from the worst poverty, where they have no job at all,
but they simply have no idea how things are here," said Zarina Algorova, a
47-year-old machine operator who came to Norilsk nearly 30 years ago.
"There is no future here, no life here."

As an 18-year-old, Algorova was part of the Soviet proletariat who poured
their sweat, hearts and idealism, along with millions of tons of steel and
concrete, into building Norilsk.

Laborers from gulag

Like a lot of communities in Siberia, Norilsk was started by Joseph
Stalin's forced laborers from the gulag. But it was built up from 1953
mostly by young communists motivated not just by ideology but by privileges
and paychecks that were good for the average Soviet citizen.

"I wanted romance, and money," Algorova said. "I found neither."

Algorova can retire in three years but dreads the prospect of relying on
her pension. She hopes her two sons, ages 18 and 23, do not end up like her.

"I want my children to have a bright future on the mainland," Algorova
said. "After my 20 years and more here, to have nothing, it has obviously
been a mistake."

********

#12
The National Interest
Summer 2001
book review
Poltergeist Economics
By Anatol Lieven

Peter Reddaway and Dmitri Glinsky, The Tragedy of Russia's Reforms: Market
Bolshevism Against Democracy (Washington, dc: U.S. Institute of Peace,
2001), 745 pp., $29.95.
Paul Klebnikov, Godfather of the Kremlin: Boris Berezovsky and the Looting
of Russia (New York: Harcourt Brace, 2000), 400 pp., $28.
Stephen F. Cohen, Failed Crusade: America and the Tragedy of Post-Communist
Russia (New York: W.W. Norton, 2000), 304 pp., $21.95.

The Russian revolution of the 1990s was rather like a Hollywood poltergeist
movie. Mysterious, hidden forces moved enormous quantities of property from
place to place, spectacularly destroying much of it and the surrounding
landscape in the process. Colossal industries and vast sums of money
vanished into thin air. So too did millions of lives, but since these
mostly belonged to unimportant extras--pensioners, children, workers,
soldiers, Chechens--the Western audience could gasp with pleasurable horror
while continuing to munch its popcorn.

There is even some sketchy appearance of the obligatory happy ending. What
is left of the property has returned to earth and is firmly tied down by
someone or other. The victims go on being quietly buried. The teenage
poltergeists too have settled down. These "bold young reformers", as the
more gullible or fanatical sections of the Western media never ceased to
dub them, were evidently too young to exercise moral judgment, and must be
left in undisturbed enjoyment of their stolen property. Innocent victims of
forces beyond their control, they are being rehabilitated into the Western
economic community with the help of distinguished American pr firms. And
every Russian can take comfort in the fact that the biggest poltergeist of
all now runs the Russian electricity system.

Peter Reddaway and Dmitri Glinsky's history of this catastrophic process is
the richest and most detailed yet to appear, and is of timeless value as a
record. Its conclusions are supported by Stephen Cohen's interesting, if
one-sided, collection of essays on the same subject, and by Paul
Klebnikov's more popular, well-written and brilliantly revealing biography
of Boris Berezovsky.

It is a striking sign of just how deep Russia's catastrophe has been that
Reddaway and Cohen should have found themselves in much the same camp.
Cohen is a Marxist whose earlier books on Soviet history were written from
the standpoint of support for the (relatively) moderate and humane strand
of communism represented by Nikolai Bukharin, which was bloodily destroyed
by Stalin. Despite his loathing of Stalinism and contempt for the rulers of
the Brezhnev era, Cohen retained an evident sympathy for the basic Soviet
project.

Peter Reddaway, by contrast, is an eminently conservative figure and a
veteran and passionate critic of the Soviet system. In the 1970s and 1980s,
he did more than any other person in Britain to expose Soviet crimes
against dissidents and bring them to the attention of the British public.
However, his hatred for communist rule as a profoundly immoral system was
rooted in beliefs and principles that also explain his hatred of the
post-Soviet order--or disorder--and of the Western role in its creation.

These principles include a deep concern for ordinary Russians and a
profound understanding of the richness of the Russian intellectual and
cultural tradition--as well as of the appalling and deliberate damage done
to it by communism and now by post-communism. This is a welcome change from
the common Western tendency to use "Soviet" and "Russian" as virtual
synonyms and indulge in ignorant contempt for both. It also marks out
Reddaway and Glinsky's work from the grotesque belief of too many Western
reformers in the 1990s that post-Soviet Russia was a "blank slate" on which
to scribble their experimental designs.

However, this awareness does contribute to one flaw in Reddaway and
Glinsky's book: It makes them a good deal too optimistic about the
prospects of a truly democratic alternative to the Yeltsinite order, had it
been given a chance. For this to have succeeded, an alliance would have had
to develop between the more honorable and moderate elements of the old
communist order on the one hand and the dissident tradition on the
other--something that would have been exceptionally difficult to bring about.

As it was, the alternative to Yeltsin's rule by the autumn of 1993 appeared
to be the forces that had taken over the Russian parliament--and these did
not seem at the time to be a viable or positive alternative. It may well be
true, as all three books convincingly argue, that Yeltsin and his staff
deliberately helped the parliamentary radicals to gain the ascendancy and
then maneuvered them into coming out onto the streets--the intention being
to wreck a compromise plan for new elections being prepared by Russia's
governors, and to give the regime a chance to crush the opposition by
force. Given the amount of bigoted Western propaganda against anyone who
questioned Yeltsin's "reforms", Reddaway and Glinsky are correct and
courageous to point out that the parliamentary opposition contained
individuals who were much more honest, patriotic and economically sensible
(from the point of view of Russia, not that of their own pockets) than
their equivalents in the regime.

Nonetheless, when I visited the parliament repeatedly in the weeks and
months leading up to the events of October 1993, I was left--and
remain--profoundly skeptical about that institution's capacity to generate
any kind of effective government. In the event of a parliamentary victory,
it seemed at the time that there was a real risk of Russia going the way of
Georgia in 1990-93, with bitter infighting between different would-be
charismatic leaders, the collapse of central authority, the rule of
nationalist fanatics and street thugs, ethnic revolt and civil war.

For the melancholy truth is that decent communists had by then been badly
overtaken by the speed of change. Most of Russia's truly democratic
intellectuals for their part lacked all administrative capacity and were
fatally given to striking politically irresponsible moralizing poses--while
the ex-communist intellectuals who joined Yeltsin either possessed no
morals to start with (like the brutal and repulsive Gennady Burbulis,
Yeltsin's then chief of staff) or soon lost whatever ones they had.

Yet to say this is certainly not to excuse the character and behavior of
the Yeltsin regime. Yeltsin's own entourage was utterly corrupt, from the
aides who in 1992 sold interviews with the president to the international
media for $30,000 apiece, to the tariff-free import rights given to the
"Sports Fund" headed by Yeltsin's friend and tennis coach, Shamil
Tarpishchev--which led to the biggest vodka-smuggling operation in Russian
history and contributed appreciably to the undermining of Russian health.
Yeltsin's own family was closely implicated in the corruption, especially
via Aeroflot, headed from 1997 by son-in-law Valery Okulov.

The entire privatization process was driven by a curious mixture of
Western-endorsed ideological fanaticism and a manic greed that often
destroyed industries with long-term value in the search for short-term
loot--a very Bolshevik mixture, as Reddaway and Glinsky's title implies.
This process reached its apogee in the autumn of 1995 with the "loans for
shares" deal, brokered by Yeltsin aid Anatoly Chubais, in which Russia's
principal oil and metal-extraction industries were distributed to
Berezovsky and other crony capitalists for a tiny fraction of their true
value. In return, these pledged their (illegal) financial support to
Yeltsin's re-election campaign--a support that they would have had to give
anyway, on the assumption that they did not wish the communists to return
to power.

What of the role of the Clinton administration in all this, which all three
authors strongly condemn? Clinton, Gore, Strobe Talbott and others
certainly wittingly or unwittingly turned a blind eye to Yeltsin's
appalling domestic record, including both kleptocracy and the catastrophic
decision to launch the first invasion of Chechnya in December 1994. For a
long time most of the Western media parroted the official Western line that
"in the end, Yeltsin has always done the right thing."

However, as Reddaway and Glinsky emphasize, the well-being of the Russian
people was only part of what American support of Yeltsin was all about. The
other part was advancing the U.S. national interest in a compliant Russian
external policy. They and Cohen argue that this policy utterly failed, and
that, by attaching the reputation of the United States to such a
discredited regime, Washington helped create the anti-American backlash
that now characterizes so much of Russian policy and public attitudes. This
is certainly true, and sad to see in the wake of the deep respect for the
West held by most of the Russian intelligentsia and much of the population
in the early 1990s.

On the other hand, paying bribes to foreign rulers to gain some kind of
cooperation or compliance is an ancient and legitimate diplomatic tactic.
It seemed to pay off in the case of the Kosovo war, where the Russian
government helped dig NATO out of the hole into which it had wantonly
jumped. If Moscow had backed a diehard Serbian resistance and forced NATO
to launch a ground war, it would have stood an excellent chance of
destroying nato from within. That this path was not taken must owe
something to the assiduous cultivation of Yeltsin and Chernomyrdin by
Clinton and company.

In that sense, at least, the Clintonites may have been "realists" despite
themselves. It is true that they were unable to see the difference between
U.S. interests and Russian ones and thus deluded themselves into thinking
that Yeltsin was good for both. Unlike some of their self-styled realist
critics, however, they recognized that it was not possible to gain Russian
subservience to U.S. policies without having to pay for it.

There has also been an ugly aspect to some of the endless complaints about
the theft of U.S. aid to Russia. This aid was small not only in comparison
to the financial gain to the United States from the end of the Cold War,
but also to the flight of stolen capital from Russia in the Yeltsin years.
And where, pray, did this stolen money go? Pluto? Alpha Centauri? As Paul
Klebnikov brings out, the looting of the Russian economy would not have
been possible without the enthusiastic collaboration of Western banks and
trading houses, and the money went to fuel Western stock market and real
estate booms from which the West in general has benefited. If the
Yeltsinite elite had the morals of whores, then the West certainly provided
their pimps.

Instead of conducting what is in the end a sterile party debate on U.S.
policy in the 1990s, Americans would do better to concentrate on some
deeper lessons of the Russian debacle. Chief among these is the proof that
markets are not "self-regulating." The creation of a "civilized"
free-market state requires not only strong institutions but also ethical
traditions that go beyond the search for personal gain and are credibly
embodied in at least some public figures and other symbols. From this point
of view, the analysts who seek comforting parallels for Russian
developments in nineteenth-century America could hardly be more mistaken:
Abraham Lincoln was not an idle drunkard whose family became obscenely rich
at the expense of the state; Andrew Carnegie did not steal existing state
industries at gunpoint and then consistently fail to invest in them, while
moving most of the profits into foreign bank accounts and spending the rest
on luxuries and sex.

This is where Clinton's pardon of Marc Rich is so damaging. As Klebnikov
demonstrates, Rich's crimes against the American taxpayer are dwarfed by
his role in the criminal plundering of Russia. The pardon is being
portrayed in Russia as additional evidence that U.S. moralizing advice is
deliberate hypocrisy. But that is far from being the worst of it. In
Yeltsin's Russia, ordinary people saw their savings and living standards
destroyed even as their rulers openly looted the country. As a result, for
Russian leaders to ask ordinary people not to steal or take bribes is not
just fatuous, it is downright immoral. A disastrous cycle of omnipresent
corruption has been created with no evident way out.

******

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