Johnson's Russia List
#6085
19 February 2002
davidjohnson@erols.com
A CDI Project
www.cdi.org
[Note from David Johnson:
1. Luba Schwartzman: ORT Review.
2. Interfax: Pollsters say 39% of Russians think TV news is often biased.
3. Reuters: Reluctant on democracy, Uzbeks eye economic reform.
4. Moscow Times: Boris Kagarlitsky, Housing Reform: What For?
5. RFE/RL: Francesca Mereu, Russia: Nuclear Security System Comes Under
Question.
6. Vek: Andrei Ryabov, WHY DID PRESIDENT PUTIN VISIT THE GENERAL
PROSECUTOR'S OFFICE?
7. Robert Otto: Re: Aslund and Reddaway//Glinksi.
8. Moscow Times: Valeria Korchagina, Goskomstat Rewrites Economic History.
9. National Press Club: Susan Eisenhower, Terrorism and the Nuclear
Question.
10. Moscow Times: Lyuba Pronina, Duma Seeks Probe Into Army Spending.]
*******
#1
ORT Review
www.ortv.ru
Compiled by Luba Schwartzman (luba7@bu.edu)
Research fellow at the Institute for the Study of Conflict, Ideology and
Policy at Boston University
HEADLINES,
Monday, February 18, 2002
- Iranian Foreign Minister [Kamal Kharrazi] will visit Moscow to discuss
joint energy projects, military-technical cooperation, and questions
concerning the Caspian Sea.
- Russian President Vladimir Putin and Interior Minister Boris Gryzlov
discussed measures to control the entry and exit of foreigners in and out
of Russia. President Putin also pointed out the necessity of changes to
the laws concerning migration.
- The restoration of the socio-economic sphere in Chechnya was on the
agenda of today's Security Council meeting. More attention will be given
to the subject next week.
- Russian General Prosecutor Vladimir Ustinov announced that investigation
work onboard the Kursk nuclear submarine has been completed. The precise
cause of the sinking of the submarine has not been determined. Experts
will now analyze the information that has been gathered.
- Four police officers have been taken hostage in Georgia's Pankisi Gorge.
The kidnappers are demanding the release of local drug-lord and crime boss
Yuri Bagashvili. Georgian President Eduard Shevarnadze has appealed to
the Pankisi Gorge fighters to release the hostages. He also delegated
Georgian Interior Minister Koba Narchemashvili to the region to personally
oversee the operation to free the policemen.
- Two weeks ago, 15-year-old Zarima Inarkaeva almost became a suicide
bomber. She had been captured by Chechen fighters who ordered her to
carry a bag into the Zavodsky region Interior Ministry Department,
threatening to kill her and her mother is she refused to cooperate. The
remote-controlled detonator was set off, but the trotil-hexane hidden
inside a soccer-ball in the Chechen girl's bag did not explode. Inarkaeva
is in custody; four men suspected of planning the terrorist act have been
detained.
- Russian Security Council Chairman Vladimir Rushailo met an American
congressional delegation headed by James Saxton. Cooperation in the
struggle against international terrorism was at the top of the agenda.
- President Putin has appointed Ilya Klebanov minister of industry,
science and technology, freeing him from his duties as deputy prime
minister.
- Schools on the Sakhalin Island have been closed due to an influenza
epidemic.
- Renowned film director Lev Kulidzhanov, whose films included Crime and
Punishment and The House I Live In, passed away at the age of 78.
- President Putin chaired today's Cabinet meeting; he criticized the work
of the ministers on socio-economic questions.
- Poaching is on the rise in the Khabarovsk krai. The State Fishery
Inspectors fine dozens of illegal fishers every week.
- The Maritime Region Tax Police is carrying out a major operation to
uncover companies that falsified or evaded taxes. About 400 firms that
committed tax crimes have been found over the past two months.
- The Russian Accounting Chamber has began a financial inspection of the
Russian State Duma.
*******
#2
Pollsters say 39% of Russians think TV news is often biased
MOSCOW. Feb 18 (Interfax) - According to pollsters, 43% of Russians believe
that news they hear from television is objective, 39% think it is often
biased, 32% consider televised news exhaustive and 56% regard it as
insufficient.
The Public Opinion foundation, which made the statistics available to
Interfax, said it had questioned 1,500 people from both urban and rural
areas on February 10.
*******
#3
Reluctant on democracy, Uzbeks eye economic reform
By Dmitry Solovyov
TASHKENT, Feb 19 (Reuters) - Washington's new Central Asian ally Uzbekistan
still turns a deaf ear to Western calls for democracy. But it appears it
may swallow grudgingly the bitter pill of economic reforms prescribed by
its new friend.
Uzbekistan, where the press is muzzled and thousands of political opponents
are in prison, came under the spotlight last year after embracing the U.S.
"war on terror" in Afghanistan and allowing American troops to stay at its
Khanabad airbase.
But official displays of warm relations are almost overshadowed by
Washington's increasingly strong call for economic reforms in this
authoritarian country.
"Progress on economics is an integral part of our cooperation in security
matters," said U.S. Assistant Secretary of State Elizabeth Jones during a
visit to Uzbekistan last month.
"The U.S. government is very confident that reforms, including liberalising
access to foreign exchange, will unlock the enormous potential of the Uzbek
economy and its people."
The mostly agrarian nation, which could have a boom economy because of its
big reserves of oil, gas and metals, has been shunned by investors put off
by tight state regulation, limited access to foreign exchange
convertibility and slow privatisation.
The International Monetary Fund has cut its presence in Uzbekistan to a
minimum in protest at official reluctance to scrap the multiple-rate
exchange system and bolster reforms.
But this month Uzbekistan's mass media published the full text of a letter
of intent and a memorandum on economic policies until June 30, 2002 sent by
top officials to the IMF with unambiguous plans to put in place drastic
market changes.
"The events of September 11 and the subsequent increased international
focus on the Central Asian region have provided a unique opportunity...to
implement market reforms," wrote Deputy Prime Minister Rustam Azimov,
Finance Minister Mamarizo Nurmuradov and Central Bank Chairman Faizulla
Mulladjanov.
Again, the prompting for such reforms comes from outside.
"The main pressures for change are almost entirely political and
diplomatic," said an influential Western banker in Tashkent.
"The next six months may be a window of opportunity for the Uzbek
government and the international community to decide if they go together
and implement some important economic reforms."
REFORMS FINALLY ON THE AGENDA
The letter sent to the IMF said: "President Karimov has been briefed on the
measures included in the memorandum on economic policies and fully supports
the objectives of the programme."
Karimov himself told a government meeting this month that having a unified
rate was "the key element of the whole economic strategy for 2002 and a
matter of paramount importance."
The authorities now pledge to the Fund to scrap the current multiple-rate
foreign exchange system and ensure current account convertibility of the
national sum currency by end-June.
Uzbekistan now has two official rates: the central bank's 700 sums per
dollar and a street cash exchange rate of some 1,250 sums. The black market
still thrives, eagerly buying the greenback at 1,550 sums.
The sum has been de facto devalued twice since late last year, which has
helped reduce pricing distortions.
The government has also lifted the requirement for small and medium sized
export companies to surrender their hard currency, a measure expected to
diversify the structure of exports and viewed as an encouragement for the
nascent private sector.
Following its talks with a visiting IMF mission last December, the
government has promised to end any interference in the country's fragile
banking sector and discontinue its routine pressure for soft loans to a
number of selected companies.
The authorities also pledge to ensure a greater degree of the central
bank's independence and transparency. The official refinancing rate is to
become an important financial indicator and will be adjusted to become
positive in real terms.
The government also plans to boost privatisation and increase its
procurement prices for cotton and wheat this season and bring them closer
to those on international markets.
REGIONAL AMBITIONS, CLAN INTERESTS TO CLASH
Apart from Western pressure, another reason is often said to be behind
Tashkent's tacit acceptance of the prescribed reforms.
Karimov, who has been described as a regional bully by some leading Western
publications for his criticism of the policies of his neighbours, may be
feeling unease that his country is not playing the role of regional leader
that he feels it should.
Neighbouring Kazakhstan has come to the forefront in the vast region,
boasting an influx of foreign direct investment and a fast growing
financial and banking sector. In line with a government order last year,
Kazakhstan wants its commercial capital Almaty eventually to become a
regional financial centre.
Analysts say that despite some positive signs, 63-year-old Karimov, who has
ruled the country since 1989, may find it difficult to loosen the grip of
powerful clans of influential families or industrialists who run whole
sectors of the economy.
"I personally do not expect from this country and its authorities quick
reforms in one day," said a Western economist.
"There are very influential clans, and like in many other states Mr Karimov
will soon face the hard task of dividing the cake properly."
A limited group of privileged people have free access to convertibility
according to the artificially low exchange rate. Others are said to have
been in control of huge industrial enterprises since the Soviet era.
Privatisation of large enterprises, announced with much pomp last March,
has been very slow, partly due to a general slowdown in business activity
worldwide and partly because the government often wants to retain
controlling shares.
Added to all this is the fact that the economy is in thrall to cotton, both
in terms of its importance in export earnings and in the way the whole
country is mobilised when it comes to harvest time and the state buys up
the crop at give-away prices.
"A tiny white and fleecy animal is raping the whole country," is the way in
which ordinary Uzbeks often describe their attitude to cotton every year
when schoolchildren, intellectuals and workers are forced to go out and
pick it.
"In 2000, Karimov was indeed ready to move with all these changes but he
was stopped in the middle of the year, probably by some of these
influences," the banker said.
"Does he have the political clout and support internally or internationally
now? Does he himself want to go in this direction? This remains to be seen."
*******
#4
Moscow Times
February 19, 2002
Housing Reform: What For?
By Boris Kagarlitsky
What does the government need housing reform for? Sure, we've heard the
line about increasing efficiency and all that. But what's the real reason?
The more I watch the weary faces of bureaucrats as they explain to the
populace that everything will work out in the end, the more I lose heart.
The worst part is that they show no enthusiasm. How different things were
when the oil industry was privatized. Back then the suits at the State
Property Committee had a gleam in their eyes. Svyazinvest provoked an
information war and people were killed in the fight for the aluminum
industry. But who needs the housing sector?
No one, when you get right down to it. The sector is deeply in the red, and
only a fool would dream of making any money there in the next 20 years. Yet
the government's stubborn desire to carry out reforms does not derive from
the sorry state of the housing sector, or even from ideological
considerations. The real problem lies elsewhere. During the years of high
oil prices the government handed out tax indulgences right and left. For
two years now, public service announcements have reminded us that we have
the lowest income tax rate in Europe. But people are not any more
conscientious about paying their taxes.
For 10 years, Russian business complained constantly that its taxes were
too high. In northern Europe, on the other hand, taxes are significantly
higher, yet companies manage to meet their obligations to the government
and still turn a profit. This does not mean these corporations like high
taxes. Nokia, for example, is currently trying to blackmail the Finnish
government into changing its tax laws. But it never occurs to the Finns to
cook the books and stop paying taxes altogether. Some companies in Russia
-- often foreign ones -- that operate above board, without double-entry
bookkeeping, have proven that this approach can work here, too. It should
be noted that these companies are usually among the most efficient.
Widespread tax evasion would be impossible if the government were not
itself complicit -- that is, if the government were not deeply convinced of
the injustice of forcing business to give something back to pay for social
programs. The possibility of tax evasion constitutes an illegal subsidy
which the government extends to Russian business at the expense of the
public. This subsidy can also be taken away for bad behavior, i.e.
political disloyalty.
Back in the days when petrodollars were gushing in, the government tried to
legalize a part of this unofficial subsidy. Tax rates were cut to the bone,
after which the bureaucrats reported higher rates of tax collection. Budget
revenues did in fact rise, but for another reason entirely: The economy was
growing and export earnings, which are hard to hide, were up. But all good
things must end. By early 2002, the government revealed that its fiscal
policies had created a sizable hole in the federal budget.
The budget gap has to be closed, and fast -- without raising taxes, of
course. And the billions of rubles currently spent on housing would really
do the trick. But in that case the populace would suffer --the same
populace that received little or no benefit from earlier budget
experiments. The propagandists' argument about the people receiving
"assistance" from the government does not stand up to scrutiny. If water
and gas are flowing through the pipes, and the heat comes on from time to
time in the winter, then someone has already paid the bill. That "someone"
is the taxpayer. No one is planning to give the people a tax rebate.
As for competition, cooperatives and condominiums can already hire private
firms to service their buildings, but this is not cost-effective because
they gain access to housing subsidies when they go through the public
sector. Hence the repeal of subsidies is essential to promoting
competition. Judging by the polls, however, the population still prefers
low housing costs and no competition to competition but paying through the
nose.
The main problem affecting the state of the country's housing is not the
lack of competition, but the lack of investment. By regularly putting its
revenue sources in private hands, the government has lost the wherewithal
to invest in housing. We are promised that after reforms are completed,
revenue will start flowing in from the private sector. That is, if
renovating entryways and replacing broken lightbulbs becomes more
profitable than oil fields and contraband weapons, for example.
As they say in Odessa: Don't make me laugh!
Boris Kagarlitsky is a Moscow-based sociologist.
*******
#5
Russia: Nuclear Security System Comes Under Question
By Francesca Mereu
Liberal Russian lawmaker Sergei Mitrokhin, a lawmaker from the liberal
Yabloko party, says he encountered no problems entering a secret nuclear
waste dump in central Siberia -- despite having no authorization to be
there. At a press conference on 15 February in Moscow, Mitrokhin said his
action was aimed at demonstrating that Russia is not ready to begin its
proposed plan to import nuclear waste for reprocessing. The lawmaker, who
described the country's nuclear safety standards as "non-existent," said
the situation has made Russia an easy target for nuclear terrorists.
Moscow, 18 February 2002 (RFE/RL) -- Sergei Mitrokhin, a lawmaker from the
liberal Yabloko party, last week warned that Russia's nuclear waste
facilities lack proper security and could be an easy target for nuclear
terrorists.
On 9 February, Mitrokhin -- in broad daylight and accompanied by two
Greenpeace activists and three NTV cameramen -- entered a high-security
nuclear waste processing plant near the central Siberian city of
Krasnoyarsk with no intervention by security personnel. At a press
conference on 15 February, Mitrokhin described how easy it was to enter the
facility.
"We got close to the [nuclear waste] storage area of the Krasnoyarsk Mining
and Chemical Complex, and we met with no opposition from either the
security system or the security guards. After this expedition, if I were
asked whether Russia's nuclear security system is good or not, I would
answer that the system is neither good nor bad. It is simply non-existent."
Mitrokhin says it took his team a little over an hour to walk to the
plant's reservoir facility, which holds 3,000 tons of spent nuclear fuel.
Mitrokhin, whose remarks came the day after NTV broadcast the Krasnoyarsk
footage, said he was "shocked" to discover the apparent ease with which
anyone can approach the reservoir -- which is scheduled to receive
thousands of additional tons of spent nuclear fuel from abroad according to
Russia's new waste-import program.
Last July, Russian President Vladimir Putin signed into law the
controversial plan allowing Russia to import and store some 20,000 tons of
the world's spent nuclear fuel. The law has attracted widespread
condemnation among environmentalists, who believe Russia will be
transformed into a nuclear dustbin.
Mitrokhin says the Krasnoyarsk complex -- also known as the Gorno-Chemical
Plant -- is a crucial cog in the import program, a plan the Nuclear Power
Ministry has said will bring in some $20 billion to the nation's coffers.
"The Gorno-Chemical Plant is the place where [41 tons of] spent nuclear
fuel from Bulgaria are today being stored. It is also the place where a new
reservoir for spent nuclear fuel, intended to store nuclear waste from all
over the world, is going to be built. [Moreover, authorities] want to build
a so-called RT-2 nuclear-waste reprocessing plant there."
Mitrokhin says such ambitions -- combined with the apparent disregard for
safety he encountered during his trip to the plant -- make for a deeply
perilous situation. If Russia continues to leave its nuclear facilities
unguarded, the lawmaker says, the country will easily become "a potential
target for acts of retaliation by terrorists." As a member of the
international antiterror coalition, he adds, Russia is duty-bound to take
responsibility for the safety of its nuclear facilities.
Vladimir Chuprov, a nuclear expert with Greenpeace, says sites like the
Gorno-Chemical Combine are extremely vulnerable to terrorist attacks. The
results, he says, would be devastating.
"In the instance of a terrorist act, it is possible that there would be an
explosion like the one at Chornobyl. Experts say it would only take a few
dozen kilograms of common explosives."
Mitrokhin, a member of the presidential commission on controlling imports
of spent nuclear fuel, says officials from the Nuclear Power Ministry,
speaking before the Duma (lower house of parliament) earlier this month,
said there were no security risks at any of Russia's 96 nuclear facilities.
But Ivan Blokov, another Greenpeace activist (Blokov and Chuprov were not
the two Greenpeace employees to travel to the Gorno-Chemical Plant with
Mitrokhin. Greenpeace has refused to release the names of the individuals
who did go), says greater transparency is needed regarding the activities
of the Nuclear Power Ministry, which he described as operating "outside
state control and doing what it likes." Moreover, Blokov says few of the
country's nuclear plants and research centers receive enough money from the
federal budget to maintain even modest security standards.
"An interesting example is offered by the Krasnoyarsk Audit Court, which
supervised what was going on at the Gorno-Chemical Plant. It turned out
that the [plant] had financial problems. The money that the plant receives
for spent fuel -- earlier it was $350 for a kilogram, now it's $620 a
kilogram -- is enough to pay only part of the expenses. It's not enough
money to pay for everything."
RFE/RL was not able to reach officials from the Nuclear Power Ministry for
comment. But Mitrokhin says he intends to send President Putin a copy of
the footage shot by NTV at the Krasnoyarsk plant.
********
#6
Vek
No. 7
February 15, 2002
WHY DID PRESIDENT PUTIN VISIT THE GENERAL PROSECUTOR'S OFFICE?
President Putin supports the General Prosecutor's Office
Author: Andrei Ryabov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
ACCORDING TO VLADIMIR USTINOV, THE GENERAL PROSECUTOR'S OFFICE DOES
NOT NEED ANY SPECIAL AUTHORITY TO RESTORE THE EFFECTIVENESS OF THE
RUSSIAN LAW ENFORCEMENT SYSTEM. USTINOV IS CONVINCED THAT THE ONLY
THING NEEDED IS POLITICAL WILL. AND GOVERNMENT LEADERS NOW HAVE THIS
WILL.
According to analysts, the fact that President Vladimir Putin
personally attended the expanded meeting of the General Prosecutor's
Office board - and moreover, made a speech there - is a sign that the
president plans to pay special attention to the prosecutor's office as
the key institution in upholding the law and the rights and liberties
of Russian citizens. What is so special about it? Over the past decade
law enforcement bodies have periodically replaced one another at the
front of the fight against crime. However, the aforementioned
situation is most unlikely to be a simple relieving of guards - as is
known, recently President Putin used to distance himself from the
General Prosecutor's Office. Something has changed here.
It should be noted that over the past two years the mechanism for
making political decisions at the very top has also changed. In the
late Yeltsin period, when the court was filled with all kinds of
favorites, only those who had special channels to the ears of the head
of the state had a chance to be heard. The process of decision-making
was becoming more and more shadowy.
Under Putin, this process started to gradually moving to the
sphere of official institutions' activity. By the way, all influential
groupings very fast noted this innovation. Before in any conflict
situation they tried to present their position to the president as
convincing as possible - they had to make it public with the help of
the media. Now they have to think of promoting the necessary for them
decisions using law enforcement bodies. In these terms, it is clear
that the General Prosecutor's Office that has the key role in
initiating all investigations is the center of attention for all
opposing groupings in the top echelon of the power. And if the head of
the state does not publicly support the General Prosecutor's Office it
is highly likely to turn into a political weapon for various top
authority clans and all the plans for establishing united rules of the
game for the whole country are to be crossed out. Consequently,
without such rules, the social and economic reforms, as well as
structural reconstruction of the economy will never move further than
words.
Construction of the notorious power hierarchy encounters many
difficulties in many spheres of political life of the country. The
presidential envoys to federal districts are hardly able to influence
economic, social, or political processes in the regions. The situation
with electronic media also leaves much to be desired: redistribution
of the television market after the TV-6 scandal made it obvious that
the gamblers at this market are the same: powerful oligarchic clans.
At present they support the president - consequently, electronic media
are also loyal to him. However, what is to happen if tomorrow the
relations between the president and tycoons deteriorate?
The work of the presidential administration is also complicated
by opposition of interest of various groupings inside the body -
moreover, very often their interests do not coincide with the
interests of the head of the state at all. Finally, the new United
Russia party that claims to be the presidential support is so far an
image party only.
So if the General Prosecutor's Office manages to convince the
strong that there will no longer be the caste of absolutely immune
officials in the country and that all will have to follow the same
rules, it will be much easier for the president to construct the power
hierarchy and other political configurations for his long-term
political aims.
P.S.: In the middle of the week General Prosecutor Vladimir
Ustinov met with the heads of the leading Russian media. Ustinov
opened with a joke: "It is our third meeting - a tradition, or
speaking in legal terms, a second offence." The General Prosecutor
told journalists about the results of the latest board of the General
Prosecutor's Office. According to Ustinov, today the major objective
of the law enforcement system is to first of all protect the interests
of ordinary law-abiding citizens. Talking about crime in Russia,
Ustnov shared very disturbing figures and assessments with media
leaders. For instance, according to the results of 2001 the number of
unsolved murder cases is 7,700, while fifteen years ago this figure
did not exceed 400. Ustinov also said that the General Prosecutor's
Office is concerned about distortion of the real crime rate, and
covering up of tens of thousands of crimes. The general prosecutor
also said that his department has a number of serious claims to the
Interior Ministry, the tax police, and the customs service. It should
be also mentioned that Ustinov never idealizes his subordinates:
Ustinov says that the prosecutor corps does not use 100% of his
capacity, and it is first of all necessary to make them work.
According to Ustinov, the General Prosecutor's Office does not need
any special authority in order to restore the effectiveness of the
Russian law enforcement system. Ustinov is convinced, "All is
restorable, we only need political will for that. And there is such
will now - both the nation's leaders and law enforcement bodies have
it."
(Translated by Arina Yevtikhova )
********
#7
From: "Robert Otto"
Subject: Re: Aslund and Reddaway//Glinksi
Date: Mon, 18 Feb 2002
In the discussion of Aslund's attack on Glinski’s and Reddaway’s book "The
Tragedy of Russian Reforms" and on Reddaway personally, no-one has yet made
a crucial point. Not only is Reddaway not, as Aslund asserts, "disappointed
by the failure of his red-brown heroes to seize power," but also the
authors do not do what Aslund claims, i.e., "side with the Russian
parliament's armed uprising in October 1993." In reality, they do the
opposite, a point that would be clear to anyone who takes the time to read
the book.
On page 428 the authors write:
“We should stress that none of our criticism of Yeltsin implies that a
military victory by the White House forces would have set Russia on a
better path than it in fact took. That seems most improbable. Our aim,
rather is to emphasize, the enormity of the damage done to Russian
democracy by two decisions that Yeltin made: first, to eschew serious
negotiations with the opposition in the summer of 1993 that could have
focused on the zero option and even could have involved foreign mediators;
and, second, to violate the constitution, dissolve the legislature, and
again to refuse to negotiate in earnest, thus provoking the fatefully
destructive confrontation with the Parliament.”
In a similar vein -- but you would have to read the book to know this --
Glinski and Reddaway hold no brief for the White House leadership. Both
parliamentary speaker Khasbulatov and Vice President Rutskoy are
criticized, in the severest terms, for abusing their powers and inexcusable
failures of judgment (see, for example, pages 337, 347, 374, 385, and 420).
In fact, if the authors evince sympathy for any Russian politician, it is
for Grigoriy Yavlinskiy because of his consistent adherence to democratic
values. Of course, Yavlinskiy has earned the opprobrium of Aslund’s hero,
Anatoliy Chubays, whom he calls an “amazing politician” combining
“ideological principle” with “effective execution.” (See page 315 of
Aslund's “How Russia Became a Market Economy”). Let me note in conclusion
that this “amazing” politician condemned Yavlinskiy as a traitor for his
early and principled opposition to the current Chechen war, an attack
that’s on the same moral plane with Aslund's own against the authors.
*******
#8
Moscow Times
February 19, 2002
Goskomstat Rewrites Economic History
By Valeria Korchagina
Staff Writer
The government has quietly rewritten history, burying a statement several
pages deep into one of its official web sites that says the economy
recovered from the 1998 financial crisis even faster than previously
reported.
Economists were confounded Monday by the news that the State Statistics
Committee, or Goskomstat, the government's official numbers cruncher, had
posted on its site (www.gks.ru) an announcement that the nation's gross
domestic product grew not by 3.5 percent in 1999 and 8.3 percent in 2000 --
figures that have been used by officials, institutions and economists the
world over -- but by 5.4 percent and 9 percent, respectively.
It is not clear when the announcement was posted, and committee officials
declined to answer faxed questions from The Moscow Times on Monday. But
news agencies quoted deputy chairman Alexander Surinov as saying that the
new figures were due to a reweighting of various industries and a
recalculation of the impact of small- and medium-sized enterprises on the
economy.
"We included new estimates on industry and made a new count of small
businesses, which also influenced the GDP revisions," Surinov said. He did
not elaborate, however, save to say that further changes to the key
official figures would be made once information "on budget execution and
some other data are approved and received."
Economists were perplexed both by the statistics committee's revisions and
Surinov's vague explanation for them. The 54 percent increase in economic
growth in 1999 is of particular importance, since the government last year
decided to change its base year for such calculations from 1995 to 1999.
A new GDP number for the new base year effectively alters the whole
economic perspective in terms of trends, said Taras Kabushko, an economist
with the Organization for Economic Cooperation and Development.
The World Bank's chief economist for Russia, Christof R?hl, said that he
couldn't think of a country that has ever made major revisions to official
GDP data this long after the fact. "Of course, in many countries minor
revisions have taken place, but definitely not three years later and not to
such a large extent," he said, adding that the State Statistics Committee
should say exactly why the revisions took place.
But while committee officials have been known to fiddle with numbers in the
past -- former chairman Yury Yurkov and other top officials were arrested
in June 1998 for allegedly manipulating companies' economic data to reduce
their tax liabilities and for selling classified corporate information --
economists said they doubt that this is the case now.
"It is unlikely that Goskomstat is playing any kind of political game, said
Oleg Vyugin, chief economist at Troika Dialog.
"If the results of last year or some current figures were to be changed
then, yes," said Vyugin, a former deputy prime minister who was Russia's
chief negotiator with the International Monetary Fund in 1998.
Vyugin said the revisions were likely triggered by the change of base
years, which was done in response to the structural changes in various
industries that followed the August 1998 financial meltdown.
Since that decision was taken last June, the committee has been revising
official figures -- first for industrial growth and then for aggregate
indexes for the whole economy.
Vyugin said that while economic statistics in general are full of
approximations, in Russia they are even more so. Basic factors such as
production and consumption, for example, usually do not match, leaving
considerable room for estimations, he said.
Part of the problem stems from the size of the so-called gray economy,
which operates largely out of the government's view.
Economists estimate that the gray economy is roughly one-fifth the size of
the real economy.
Compounding the difficulties of measuring the economy, said Vyugin, is
Russia's tendency to change too radically and too quickly to assemble
accurate data.
"I think that Goskomstat undervalued Russia's economic growth in the past
and continues to do so because there is a gray sector of the economy, but
nobody knows where is it heading."
Vyugin also questioned the government's claim of higher tax collections,
which also affect final GDP figures. Just because tax collections are up
doesn't mean that "suddenly everyone started paying their taxes," he said,
adding that there is still a significant number of companies still
operating in the gray economy that isn't reflected in statistics.
"In the insurance industry, for example, half of all premiums are salary
schemes" that allow companies and employees to avoid paying taxes -- and
avoid being counted by the committee, he said.
In one of the more popular salary schemes, companies buy life insurance
policies for their employees, who receive monthly annuities from the
insurance company in lieu of salaries. Life insurance annuities are tax
exempt as long as the term of the policy is for more than five years. Thus,
the company avoids paying social taxes, and employees earn tax-free income.
Yet the State Statistics Committee remains the most reliable source, even
if its data is not perfect, but "it would be nice if it explains the reason
for the revisions -- if not for the average person, then at least for
professionals," Vyugin said.
The State Statistics Committee has not changed its preliminary estimate for
2001 GDP growth, which remains at 5 percent.
******
#9
Susan Eisenhower
President, The Eisenhower Institute
"Terrorism and the Nuclear Question"
Address to the National Press Club
Broadcast Live on National Public Radio and C-SPAN
February 11, 2002
www.eisenhowerinstitute.org
President Bush declared that the war on terrorism was the first war of the
21st century, and we are beginning to understand what that feels like.
While still in mourning for the victims of the September 11th tragedy,
everyday Americans are bombarded with threat assessments that outline every
conceivable and unspeakable scenario of future attack. Yet we are told to
go back to work and lead a normal life. Is normal life, after September
11th, really possible?
If we are going to win the war on terrorism and bring life back into
balance, we are going to have to employ some 21st century thinking, along
with some good old-fashioned common sense.
My generation grew up in the age of bomb shelters and duck and cover
drills. It is not surprising, then, that among the most upsetting and
terrifying mental images we have are thoughts of a nuclear explosion in one
of our cities-an event that would make, as a colleague of mine said,
"September 11th seem like a day at the beach."
Less than two weeks ago we were warned of possible attacks on domestic
nuclear power plants and every day we hear scenarios about "dirty bombs"
that could kill and contaminate, and loose nukes that might end up in the
hands of rogue nations. Many of us may wonder why we ever converted our
fallout shelters into storage rooms!
Having seen part of the closed Russian nuclear weapons complex, I can
attest to the challenges facing the Russian Federation and the
international community in curbing nuclear proliferation to assure that
nuclear capabilities do not fall into the wrong hands. The Department of
Energy estimates that with the collapse of the Soviet Union, Russia
inherited 603 metric tons of highly enriched uranium (HEU) and plutonium in
forms that make them attractive for theft. To put this into perspective, it
only takes 25 kilos of HEU or 8 kilos of plutonium to build a nuclear bomb.
I just returned from Russia a few weeks ago, where I had the opportunity to
visit a closed site run by the Russian Ministry of Defense's 12th
Directorate, which is responsible for the transportation and storage of
non-deployed nuclear weapons. Previously, as part of the Baker-Cutler
Commission, I also traveled to Russia's preeminent secret nuclear weapons
facility in the Urals-known during Soviet times as Chelyabinsk-70- to
evaluate the effectiveness of US taxpayer programs aimed at securing
nuclear materials and providing non-military economic opportunities to the
country's weapons scientists.
Our programs, known broadly as Nunn-Lugar programs after the Senators who
sponsored the legislation in the early 1990s, have met with some success.
Nunn-Lugar Cooperative Treat Reduction programs at the Department of
Defense have spent $3.6 billion dismantling and securing weapons and
destroying their delivery vehicles. In addition to other programs, they
also helped make the de-nuclearization of Ukraine, Kazakhstan and Belarus
possible. Also, the Department of Energy has secured 32% of the nuclear
material at risk. However, there is still much to do. The Department of
Energy program that is responsible for enhancing the security of these
dangerous materials will not finish its work until 2020.
Despite this, as the General Accounting Office's report outlined, there are
some needed reforms. For example, the Nuclear Cities Initiative, which was
established to provide economic alternatives to weapons scientists, spent
70% of its money in the United States. Such programs need readjustment,
especially after September 11th.
The United States also needs to look for ways to build upon Russian
cultural assumptions. Too many of the programs I evaluated make complete
sense to any American, but are at odds with the way things are in Russia.
Russian "buy in" at every level is of critical importance.
Adapting systems and plans for long-term sustainability is also crucial.
The United States will not be engaged in this work forever.
The whole basket of Cooperative Threat Reduction programs run by the United
States needs high-level political oversight and coordination-a key
recommendation of the Baker-Cutler Commission that has yet to be addressed.
During the years of the Gore-Chernomyrdin working groups, high-level
attention was given to the development of these programs, which often
brought an important boost when progress bogged down. After this framework
was disbanded during the second Clinton administration, bureaucratic
logjams mounted to the point that today, hundreds of millions of dollars
are stalled in the Department of Defense pipeline, awaiting resolution of a
number of issues.
Some of the issues that created these logjams are still outstanding, such
as access to sensitive facilities. The Russians are concerned about
maintaining some secrecy around their most sensitive sites at the same time
they are trying to provide the verification that is a prerequisite of
Congressional funding. Valuable time is being lost. That is why new
creative ideas need to be advanced, and I mean quickly. Consolidated
storage sites should be a made priority and other forms of verification,
short of site visits, should be an acceptable compromise to these
unreciprocated tours that we require. Flexibility needs to be a priority.
We also need to do what it takes to move the Russians from a "paper only"
system of nuclear accounting to using advanced modern systems that will
manage the storage and movement of these materials. The Russian paper
system is part of the reason the Russians have been unable to tell us
conclusively whether or not any of their weapons are missing. Both the
Russian Ministries of Defense and Atomic Energy keep two different sets of
paper inventories. Implementing the US program to address this urgent need
must be expedited.
With the Cold War over and with US nuclear deterrence still in place, we
can afford to take some risks in Russia. US concerns that Russia will
modernize its nuclear arsenal with the money they do not have to spend on
threat reduction is "old think" and so is the government's position that
our programs cannot provide any equipment that has dual-use potential. If
we are concerned about using our equipment that might have dual uses, why
not expand the use of Russian indigenous equipment? It would not only help
their economy but it would also provide sustainability over time.
New ideas should be called for and considered. Powerful, well-placed
non-governmental organizations like the Nuclear Threat Initiative and the
Russian and American Academy of Sciences are making indispensable
contributions. But the important work that they do cannot be a substitute
for government effectiveness. And, speaking only for the United States, our
government cannot successfully engage the Russians on these most pressing
and sensitive issues by embedding the suspicion on our side into the
process. Today, Russia is our ally in the fight against terrorism and the
United States and Russia cannot afford to fight, simultaneously, both the
remnants of the old Cold War and this new war on terrorism.
We must remember that we are not threatened today by a possible nuclear
exchange as we once were with the Soviet Union; we are threatened today by
terrorist or rogue nations that might be able to lay hands on these
materials. Logjams due to inflexibility-on both sides-ensure that nothing
happens. But no progress means vulnerability. Only Russia's cooperation
can assure Russia's assistance in securing Cold War stockpiles of weapons
of mass destruction. Given their sovereignty, we work on this threat to
our national security at their will.
As hard and as controversial as it might be for Americans to see, a new
21st century reality is now in place-a reality that is at complete odds
with the reality of the Cold War, when a hostile Soviet Union could
annihilate us.
Ironically, today Russia is critical to us not because of how they might
threaten us, but because of how they can help protect the individual safety
of each and every American citizen. Indeed, Russia is now more crucial to
our security than most of our NATO allies.
By dint of geography alone, Russia remains a pivotal force. But their
experience with Islamic extremism, as well as their protracted fight in
Afghanistan, comes with insight, as well as usable intelligence. The United
States has already been the beneficiary of that experience and expertise.
The Russians provided indispensable intelligence-such as cave maps-for our
bombing and Special Forces campaign in Afghanistan. Russian military
assistance to the Northern Alliance was also important, perhaps even
crucial in our fight for decisive places like Mazar-e-Sharif.
Since September 11th, the Russians have posed no objections to the United
States' request to base troops in Central Asia, and they have moved quickly
in some areas important for the progress of Cooperative Threat Reduction,
though mostly through Department of Energy programs. As we speak, however,
US actions could have a negative impact on our ability to manage the
nuclear question in these ways:
· There is a feeling of suspicion in Moscow that the United States has been
planning to "pull one over on them" when we suggested that instead of
radical reductions in nuclear weapons, the United States might store the
warheads as a reserve or a "hedge." In protest, Russian Minister of
Defense, Sergei Ivanov, has called for "real radical verifiable transparent
arms reductions."
· The US decision to abandon the ABM Treaty could create chaos in the
nuclear area unless there is a written, legally binding, agreement
outlining the mutually agreed upon principles. Otherwise the Russians,
according to their law, will no longer be subject to START II. Since
Cooperative Treat Reduction involves securing weapons scheduled for
dismantlement, we could loose our ability, over time, to work with the
Russians in securing their arsenal.
· As expansion of NATO goes forward, there are concerns that the United
States is withdrawing from earlier suggestions that Russia might be
incorporated into some kind of European security framework. Failure to do
so makes Russia, like it or not, more reliant on nuclear weapons,
especially tactical nuclear weapons.
· US talk of pre-emptive action against the "axis of evil" has also created
tensions, not only with Russia, but also with our allies. Even during the
Cold War the United States stepped back from political pressure to take a
preemptive strike against the Soviet Union while we were still in sole
possession of the bomb.
We should think long and hard about the costs and the benefits of each one
of the steps we are advancing and ask ourselves if they are worth
jeopardizing our relationships with Russia and the international coalition,
especially at this time.
I would now like to say a word about good old-fashioned common sense. This
great attribute always seems to be in short supply when we feel either
overwhelmingly threatened or we take our good luck or good fortune for
granted. Panic has made us conclude that simply throwing money at the
problem of security will buy us safety. Common sense tells us that there
is no such thing as absolute security and, by the way, no such thing as
limitless resources. To meet the challenges of this "war," especially over
the long haul, we will have to be smarter, more diplomatic, and better able
to prioritize the use of our resources. How long can we, for instance,
sustain military expenditures at the currently proposed level before
Americans demand money for other priorities such as the coming baby-boom
retirement bombshell and the related health care crisis that will accompany
it-or any number of other long deferred issues? And how will our economy
adapt to the loss of efficiency brought about by time-consuming security
precautions that are, in some cases, gratuitous and sometimes illogical?
In order to assign priorities, we need to place the potential for a nuclear
attack-or any other attack-into a common sense matrix that will help
determine where, on a scale of potential threats, it rests. This will help
us to make choices.
To undertake any nuclear attack successfully would require knowledge,
capacity and opportunity. Fortunately, so far it appears that the
terrorists have only a rudimentary understanding of nuclear bomb making,
which in turn depends on the existence of a nuclear infrastructure and a
sophisticated knowledge of physics and engineering. Like the cooperation
we have with Russia, we must work hard with the countries that have these
capabilities to ensure that they remain on our team, especially Pakistan.
Also fortunate is the fact that dirty bombs are difficult to successfully
deploy, both for reasons of stealth and physics. But since we know that
terrorists will use whatever means they have at their disposal, there are
still significant immediate concerns:
· The United States and Russia must begin the difficult but necessary
effort to reduce and secure the most dangerous of all nuclear devices:
tactical nuclear weapons. They can be small, mobile and vulnerable to theft.
· The United States must also take measures to develop a system to protect
America's nuclear power plants-installations that marry the destructive
potential of nuclear power with a ready-made target for any hijacked
commercial airliner.
· Most important of all, we have limited resources over time and will
therefore not be able to go the course without leveraging the efforts of
others to maximize our security. Ultimately, this means that the most
powerful weapon we have in our own arsenal is our ability to retain and
strengthen the international coalition. Without our allies, it is hard to
imagine how we would be able to gather intelligence, police borders, and
operate globally with any efficiency.
This is the first time in our history that I can think of when we have had
all of the world's major players on our team. Teamwork only succeeds when
members understand the objective, when they are treated with respect, and
when they are allowed to feel a stake in the outcome. That is why the
United States has to reassure the international community that we have a
focused mission. We also have to convey that we understand the difficulties
that they face and convince them that a unified effort will bring peace and
stability to everyone, not just the United States. As long as we retain
our influence with others, we can shape thinking and engage in cooperative
efforts. Holding together the coalition is within our conscious
decision-making power.
This commitment to the coalition might curtail at least some of the
administration's new objectives. It may also require a course correction
on some of the issues that I have mentioned here. But ultimately, it could
be worth it. We cannot win this war on terror without the help of the
international community, including countries that have not been our
traditional allies. And we cannot prevail as a society without the bravery
of ordinary citizens and the political will to trust others, and to take
chances on that trust. In the first war of the 21st century, we have no
other options.
******
#10
Moscow Times
February 19, 2002
Duma Seeks Probe Into Army Spending
By Lyuba Pronina
Staff Writer
The State Duma has asked the Audit Chamber to look into how the military
spent much of its money last year.
The Duma is questioning whether the 57 billion rubles ($1.9 billion)
allocated for arms procurement, research and development in 2001 was spent
as intended, and it wants to know what happened to the hundreds of millions
of dollars earned from commercial space launches.
Basing his statement on data provided by the League of Assistance to
Defense Enterprises, Deputy Speaker Georgy Boos of the Unity and Fatherland
Party told the Duma on Friday that only 67 percent of the procurement
program was financed. Research on missile programs got only 2 percent of
what it was allocated, while enterprises that delivered Topol-M
intercontinental missiles got only 18 percent of what they were owed, he said.
An overwhelming majority of 405 deputies in the 450-member chamber
responded by voting Friday to ask the Audit Chamber to check the
government's figures not only for 2001 but going back to 1997. The Duma's
appeal does not specify whether it suspects the money was mismanaged,
caught up in payment delays or simply stolen.
But as a result of defense enterprises not being funded in full and on
time, "many important defense projects are not financed and research and
development programs are not carried out, which weakens the defense
capability of the Russian Federation," the parliamentary request said. The
Duma said it also was concerned about rampant wage arrears in the industry,
which in turn create social tension and lead to an exodus of specialists
from the sector.
The Duma's request follows repeated assurances from government ministers
that the procurement program had been fully financed.
Anatoly Dolgolaptev, president of the league representing defense
enterprises, said Monday that at least 6 billion rubles of the 2001
procurement money went to pay off debts from past years.
Andrei Astakhov, the Audit Chamber official in charge of overseeeing state
arms procurement, said it was possible some of the money had gone to pay
debts. Another possibility is that some of the money transferred in
December may not have reached the enterprises yet, he said Monday.
Also on Friday, the Duma, with 361 votes, asked its budgetary watchdog to
look into how the Strategic Missile Forces used the revenues from
commercial launches at Baikonur, Plesetsk and Svobodny from Sept. 1, 1997,
until June 1, 2001 -- the period when the Space Forces were under its command.
"It was four years of stagnation," said Deputy Alexander Venediktov, who
asked for the vote. "New space systems were not created, while revenues
from the commercial launches were flowing."
For instance, Svobodny carried out three commercial launches at a cost of
$50,000 each, while charging no less than $500,000 per launch, Venediktov
said by telephone Monday. "Where did the rest of that money go?" he wondered.
Kommersant reported Saturday that the missile forces had received some $200
million in revenue from the launches, of which some was spent on repairs to
its headquarters and some on the forces' 40th anniversary celebrations in
1999. No representative of the missile forces could be reached Monday for
comment.
n The Audit Chamber on Monday began a six-week investigation into the
finances of the State Duma.
The audit, which was initiated by a group of deputies from the so-called
centrist bloc headed by the Unity and Fatherland Party, will cover Duma
spending in 1999-2001.
Deputy Speaker Lyubov Sliska complained that the financial operations of
the Duma's sprawling administrative apparatus were "far from transparent,"
Interfax reported.
A preliminary Duma report cited by Interfax said that federal funding for
the apparatus nearly doubled over the past year, rising from 528.6 million
rubles in 2001 to 1.4 billion rubles for this year.
Duma Speaker Gennady Seleznyov welcomed the audit and said such inspections
were done annually. However, Sliska said a "comprehensive" audit has not
been done in the past three years.
When the attempt to revamp the apparatus began about three weeks ago,
Kommersant said the centrist bloc wanted to arrange a personnel reshuffle
to free the apparatus from Communist control and, thereby, ensure the
smooth passage of important bills this spring.
Staff Writer Natalia Yefimova contributed to this report.
******
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