Johnson's Russia List
#6116
6 March 2002
davidjohnson@erols.com
A CDI Project
www.cdi.org
[Note from David Johnson:
1. Reuters: Russia TV tycoon fingers Putin in 1999 bomb attacks.
2. MEDIA RELEASE - ISSUED BY BORIS BEREZOVSKY, CO-CHAIRMAN, LIBERAL RUSSIA:
PUTIN'S RUSSIA - STATE TERRORISM?
3. Interfax: FSB does not plan to engage in polemics with Berezovsky.
4. RIA Novosti: RUSSIAN PROSECUTOR GENERAL'S OFFICE SUSPECTS BEREZOVSKY OF
SPONSORING CHECHEN TERRORISTS.
5. Interfax: Russians think a woman's main quality is beauty.
6. Ekspert: Anna Narinskaya, Sleep Well, My Beauty! Being a woman in Russia
can be pleasant, but humiliating.
7. Carnegie Endowment for International Peace summary of meeting: Michael
McFaul, Future of Democracy in Russia.
8. gazeta.ru: Kremlin Adviser Sees Economy in Recession. (Illarionov)
9. Jerry Hough: Re: 6115-Yasin Interview.
10. Vremya MN: Gennadiy Voskresenskiy, Are We Threatened With Nuclear
Terrorism?
11. Moscow Times: Yulia Latynina, No Glut of Heroes on Business' Seamier
Side.
12. Financial Times (UK): Robert Cottrell, New-look upper chamber in Russia
fails to convince. FEDERATION COUNCIL MANY SENATORS HAVE WEAK REGIONAL LINKS.
13. UPI: Sam Vaknin, A Russian Roulette -- Devolution.
14. eurasianet.org: Igor Torbakov, DOES MOSCOW'S REACTION TO DEVELOPMENTS
IN
GEORGIA HERALD THE END OF EURASIA?]
*******
#1
Russia TV tycoon fingers Putin in 1999 bomb attacks
March 5, 2002
By Kate Kelland
LONDON (Reuters) - Ousted Russian media tycoon Boris Berezovsky said Tuesday
he believed Moscow was behind a series of 1999 bomb attacks in Russian cities
and was sure President Vladimir Putin knew about the campaign.
Berezovsky told a news conference in London that former FSB intelligence
agents, investigative journalists and explosives experts had convinced him
that Russia's FSB domestic intelligence service carried out the series of
apartment block blasts which killed around 300 people in 1999.
The explosions were used by the Russian government to justify a new war in
the breakaway republic of Chechnya and aided President Vladimir Putin's
meteoric rise to power.
"The FSB thought that Putin would not be able to come to power through lawful
democratic means," Berezovsky said. "I am not saying that Putin ordered the
attacks...but what I am saying is that he knew such things were taking
place."
Berezovsky was once a powerful adviser to former Russian President Boris
Yeltsin and a key aide in coordinating victory for his protege Putin in 2000
elections.
Since then he has fallen out of favor with the Kremlin and now lives in
self-imposed exile in Europe.
In January, Berezovsky's TV6 television company -- then the only nationwide
network not under Kremlin control -- was closed down, giving the Kremlin de
facto control of all nationwide television channels for the first time since
the Soviet era and sparking international protests about civil liberties.
Berezovsky showed part of a film entitled "Assassination of Russia" in which
two French filmmakers link the bomb attacks on Sept. 4, 9 and 13, 1999 in
Moscow with another attack on Sept. 16, 1999 in Volgodonsk, and with an
attempted bombing in Ryazan, 125 miles southeast of Moscow, on Sept. 22,
1999.
The film, and a book also unveiled at the news conference entitled "Blowing
up Russia," say the Ryazan incident was a failed attack by the FSB which
security authorities later explained away as an "exercise."
Berezovsky and his team produced date- and time-stamped pictures which they
said showed the detonator found at the Ryazan site was real. They said local
police experts had confirmed that traces of real explosive were also found.
Ex-FSB member and ex-acting director of the Russian Conversion Explosives
Center Nikita Chekulin told the news conference he had documentary evidence
showing large amounts of explosives were withdrawn from military bases by
Russian authorities during 1999 and 2000.
Tatyana Morozov, 30, told how a bomb attack ripped through her apartment
block in Moscow Sept. 9, 1999, killing her mother and badly injuring her
sister.
"No one has been found to blame. No one has been brought to justice to
justice for this crime," she said. "I demand to know on behalf of all
citizens of Russia...who is guilty of this murder. I still hope to find
justice.
Berezovsky said repeated calls for an independent investigation into the
attacks had gone unheeded, but urged Putin to order an inquiry and set the
record straight.
"Ever since Putin came to power, people have been asking: Is he really a
democratic president of Russia or simply an old-style dictator putting on a
show for the West?....Why does he continue to block investigations into the
deadliest terrorist attacks in our history?" Berezovsky asked. "I am calling
for an open and independent investigation."
*******
#2
From: "Jennifer Morgan"
Date: Tue, 5 Mar 2002
Subject: Embargo 3pm Berezovsky: Putin's Russia - State Terrorism?
Embargo: 3:00pm March 5 2002
MEDIA RELEASE - ISSUED BY BORIS BEREZOVSKY,
CO-CHAIRMAN, LIBERAL RUSSIA
PUTIN'S RUSSIA - STATE TERRORISM?
New allegations are made today that the Russian state has been sponsoring
acts of terrorism which have killed hundreds of innocent Russian citizens in
order to create a pretext for Russia's ongoing war in Chechnya, and to
justify a crackdown on civil liberties and press freedoms inside Russia.
Today, independent investigators and film-makers came forward with
documentary evidence linking explosions in apartment blocks in 1999, which
killed over 300 people, with Russia's security services.
French television journalists Charles Gazelle and Jean-Charles Deniau have
uncovered new evidence linking these explosions to Russia's security
services. This is revealed in a new documentary film being compiled by
them, extracts of which were shown in London today.
"After we had interviewed eye-witnesses and others involved in these attacks,
we were convinced that there was some kind of cover-up," said Deniau. "In
any liberal democracy these allegations would warrant a full-scale
investigation at the highest level."
These allegations were backed up by journalist Yuri Felshtinsky who is
co-author of 'Blowing Up Russia', a book which documents in detail acts of
terror, abductions and contract killings organised by the Federal Security
Services of the Russian Federation.
Said Felshtinsky: "We spent two years painstakingly combing through the
inconsistencies and contradictions in the official account of these bombings.
There is compelling evidence that the state security agencies effectively
declared war on the Russian people - unleashing the first and second Chechen
wars to divert Russia away from the path of democracy and towards militarism
and dictatorship."
Also speaking up was Tatyana Morozov, whose mother died in the explosion that
destroyed an apartment building in Moscow and killed 94 on September 9.
Morozov and her sister are taking legal action against the Russian Government
in a bid to force them to open the records and conduct a proper
investigation. "We want to know what really happened on that night, and who
murdered our mother. The longer this goes on and the more we run into
official silence, the more I believe our own leaders were behind this
atrocity," she said.
Sergey Yushenkov, co-chairman of the all-Russia movement, 'Liberal Russia',
said that moves to open an investigation into the bombings had twice been
blocked in the state Duma, and that he was now determined to bring the case
to the Council of Europe in Strasbourg.
Boris Berezovsky, one-time Kremlin loyalist and now outspoken critic of
Russia's increasingly repressive regime and co-chairman of Liberal Russia,
said: "Ever since President Putin came to power, people have been asking: 'Is
he really a democratic President of Russia or simply an old-style dictator
putting on a show for the West? Does he authorise these acts of terror or
just turn a blind eye? Why does he continue to block investigations into the
deadliest terrorist attacks in our history?'
"Today, fittingly on the anniversary of Stalin's death, I am calling for an
open and independent investigation into the 1999 bombings - applying the same
rigour with which the Lockerbie and Oklahoma bombings were investigated and
the evidence marshalled that brought Slobodan Milosevic to trial in The
Hague."
********
#3
FSB does not plan to engage in polemics with Berezovsky
MOSCOW. March 5 (Interfax) - The Federal Security Service does not intend to
engage in any polemics with businessman Boris Berezovsky, who said at a press
conference in London on Tuesday that Russian special services were involved
in organizing the explosions of apartment buildings in Moscow.
"We don't find it proper to engage in polemics with the private citizen
Boris Berezovsky, whom the Russian law-enforcement agencies suspect of
financing the illegal armed formations in Chechnya, being involved in
kidnappings, assisting in the misappropriation of property, money-laundering
and other crimes," an FSB spokesman told Interfax on Tuesday.
He described as "groundless and lacking in common sense" Berezovsky's
assertions that the Russian special services were involved in organizing the
explosions of Moscow apartment buildings.
"Berezovsky's conduct is predictable. Anticipating accusations for the
crimes committed in Russia, he is trying in advance to picture himself as a
victim and a fighter for political freedoms in Russia," the spokesman said.
*******
#4
RUSSIAN PROSECUTOR GENERAL'S OFFICE SUSPECTS BEREZOVSKY OF SPONSORING CHECHEN
TERRORISTS
MOSCOW, March 5th, 2002 /from a RIA Novosti correspondent/ -- Well-known
Russian magnate Boris Berezovsky, who left Russia last year, can be included
in the international wanted list as a financial sponsor of the Chechen
terrorists, said on Tuesday deputy head of the department for investigating
especially important cases of the Russian Prosecutor General's Office Pavel
Barkovsky. According to him, the Prosecutor General's Office is now
collecting and checking the information about the magnate's complicity in
financing illegal armed units in Chechnya.
According to the data of the Prosecutor General's Office, Berezovsky
transferred money to the terrorists in two ways - either "under the pretext
of ransoming people who were kidnapped by the militants, or under the pretext
of financing the rehabilitation of the Chechen economy." However, Pavel
Barkovsky admitted that so far the Prosecutor General's Office does not have
enough evidence.
The prosecutors believe that Berezovsky's accusations of the Russian
leadership are connected with his desire "to prevent accusations in his
address of financing bandit units." The disgraced Russian entrepreneur has
declared that on Tuesday he will show a documentary film in London about the
complicity of the Russian secret services in a series of apartment building
explosions in the autumn 1999 in Moscow. These explosions gave rise to the
beginning of a new armed operation in Chechnya.
*******
#5
Russians think a woman's main quality is beauty
MOSCOW. March 5 (Interfax) - Almost half of Russian men and women (48%)
believe that the main quality of a woman is beauty, while only 4% of those
surveyed said they believe that attractiveness is the main quality of a man.
This information was provided to Interfax by the All-Russian Public
Opinion Research Center. It was obtained by polling 1,600 respondents several
days before March 8, International Women's Day.
Forty-six percent of the Russians surveyed believe that consideration is
characteristic of women and only 32% said they believe it is characteristic
of men. Forty-one percent of the respondents believe women are characterized
by industriousness and 61% of the respondents said industriousness is
characteristic of men.
Forty percent of those polled said they believe faithfulness is
characteristic of women and only 19% believe it is characteristic of men.
Thirty-six percent of the respondents believe that cleanliness is
characteristic of women and only 10% believe it is characteristic of men.
Other qualities mentioned are as follows: responsibility (21% of the
respondents said it is characteristic of women and 38% said it is
characteristic of men), reliability (13% and 21%), flippancy (12% and 11%),
creativity (7% and 16%), ability to think logically (6% and 19%), laziness
(3% and 15%), promiscuity (2% and 14%) and untidiness (1% and 9%).
Men and women differ considerably in the way they assess representatives
of their own sex and the opposite sex. For example, women tend to
characterize themselves as caring, industrious and beautiful, and men believe
that women are characterized in the first place by beauty, consideration and
faithfulness.
*******
#6
Ekspert
March 5, 2002
Sleep Well, My Beauty!
Being a woman in Russia can be pleasant, but humiliating
By Anna Narinskaya
(therussianissues.com)
March 8th, which Russia marks as International Women's Day, is approaching.
Happy holiday! To everyone, without exception. Men will have the chance to
please women by acting like "real gentlemen" at least once a year. Children
will be happy because their parents will be busy flirting and will leave them
in peace for the whole day. Cats and dogs will be lucky enough to get the
leftovers from holiday dinners. And finally, women themselves should also
receive warm wishes on their holiday. Various women with various ambitions.
Women like the singer Lolita who also likes painting and thinks that she
could easily become president because she has already accumulated vast
experience in influencing broad masses of people through her paintings. Women
like cosmonaut Svetlana Savitskaya and human rights advocate Valeria
Novodvorskaya who hold radically different views and convictions. And even
women like the lady in the racoon coat from a Moscow courtyard who was
scolding her son at the playground.
"Stop moaning like a girl," she hissed. The boy was trying to keep his tears
back as hard as he could. Being a girl is a big embarrassment. Time will
pass, perhaps quicker than the woman's coat wears out, and her own boy will
one day remind her that being a woman, in general, is as humiliating as being
a girl. Perhaps it is not humiliating, but naturally it is not as
distinguished as bearing a severe male dignity. All that the mother will be
left to do will be to wave her arms around or, at worst, to wipe away her
tears - in short, behave herself like a "real woman."
By and large Russian women are themselves to blame for the situation. They
give birth to children and later teach them that women are an inferior or, at
least, a different race. A different race usually means slightly inferior,
though.
Russian women watch and take part in a moving television program about family
and personal life. It is worth noting that the program is conducted by a male
host who is not just a man, but the personification of the "best" male
qualities (something like a kilogram of platinum and iridium from the
International Bureau of Weights and Measures in Sevre, France). It happens so
rarely that merits like a glossy moustache, broad shoulders and charm are
combined in one person. From the height of these male qualities, the host and
his excited audience discuss one theme: "How we, women, should keep men by
our side."
The stories told by some women are really shocking. "My husband left me and
started living with my mother, while I cook breakfast for them every morning
and take it to their bed," a bespectacled creature of an indefinite age, but
of a definite sex complains. "How could you let that happen?" the indignant
host asks. "You ought to have been more tender with your husband. Perhaps he
lacked tenderness and turned to your mother in search of maternal love," he
went on to say. Other ladies in the room were more tolerant. "Don't be too
upset. Make your breakfasts even more tasty. Then your husband will
understand who loves him more and will return to the family," they advised.
In America, referring to which is no longer fashionable in this country, this
kind of gathering would have been accused of sexism and dispersed altogether.
The splendid host would also have a hard time of it when two dozen crazed
women lied in wait for him at the studio entrance to tousle his beautiful
moustache. However, it doesn't mean that emancipated American women never
resort to purely "female" tactics and strategy. I remember how a Jewish woman
in America taught another woman how to overcome difficulties in her personal
life. "Do you want to catch a Protestant and keep him by your side? Then
listen to me," she said in a dry and businesslike manner. It seemed that she
was not talking about a man but about some "abstract" Protestant. It may well
be that the same Protestant was asking his male friend for advice about how
to keep a woman of the Jewish faith. Therefore, that wasn't about gender; it
was about religion.
Our women don't solve their problems this way. Not because they don't know,
how but simply because they don't want to. They've accepted being inferior to
men. Therefore, only a complete fool could raise any human rights abuse issue
under these circumstances. Here, no one needs these rights. The problem is
not in having few women politicians, as Western observers reproachfully say.
The thing is that they occupy special "female" places. Women here have two
major functions: to be a mother and to be a beauty. Vice Prime Minister
Valentina Matviyenko embodies the image of the mother, while Deputy Speaker
of the State Duma Irina Khakamada is the beauty. We don't need and,
therefore, don't have a third alternative.
In conclusion, let's talk about something more pleasant. About hot countries,
for example. Have you ever been to the United Arab Emirates? My personal
knowledge of this country is limited to the Dubai Airport. Apart from a small
mosque, a large duty free shop and several cafes, the airport has a game room
for children. While we were waiting for a flight, my little daughter went
into the playroom and started playing Lego blocks with some unknown boy. I
was about to go to a cafe when someone addressed me in perfect English. I
turned around and lost my speech in amazement. What I saw was a woman wrapped
up in long clothes with an iron mask on her face. That ghost with an Oxford
accent invited me for a chat while our children were playing in the game
room. The woman looked at me through the narrow apertures in her mask and
said that her husband's family considered a veil to be insufficient and
prefers to see women wearing iron masks. I didn't go to drink coffee. We
chatted for an hour and that, perhaps, was one of the most interesting
conversations in my life. For example, my interlocutor said that the gap
between ethics and politics had resulted in total renunciation of all moral
values and that she liked wearing her mask and feeling that every minute of
her life and her death were in her husband's hands.
She didn't speak about equality and didn't tell me that I should also put on
a mask. She didn't say that a different way of life was stupid or
hypocritical, although deep in heart she might have considered it a sin. My
female compatriots in Russia think that pretending that a man should not be
"caught and kept" is hypocritical and that thinking that the way to his heart
does not lie through the bed or stomach is stupid. Well, that's how they want
it.
One famous literary character used to say that chaos is not in closets, but
in minds. Apparently, women's equality is also there.
*******
#7
Carnegie Endowment for International Peace
www.ceip.org
summary of meeting
Future of Democracy in Russia
Michael McFaul
February 28, 2002
(Audio also available at www.ceip.org/russia)
Michael McFaul is a senior associate at the Carnegie Endowment and an
assistant professor of political science at Stanford University and a Hoover
Institution Fellow. McFaul is widely regarded as a leading authority on
domestic political developments inside Russia. His new book, Russia's
Unfinished Revolution: Political Change from Gorbachev to Putin, was released
in October 2001 by Cornell University Press. McFaul just returned from a trip
to Russia and shared his views on the current domestic political climate and
the positive and negative changes that have occurred in the country during
the Putin presidency.
McFaul began his remarks commenting on the weakening of the party system in
Russia. According to McFaul, this began with the 1999 Duma elections. The
passage of the Law on Political Parties and the creation of the new Unity
party - a large political party that supports Putin - has further weakened
the party system. At present, the party system is far less representative of
the multitude of societal interests than it was even two years ago. The
process of political consolidation continued with the recent enfeeblement of
the upper house of the Russia's parliament - the Federation Council. By the
estimates of the Carnegie Moscow Center, almost half of the members of the
Federation Council are appointed directly by Putin himself or by his
administration, although they formally represent Russia's regions.
In McFaul's opinion, the government's conduct of the Chechen war shows its
wanton disrespect for human rights. In regards to the Russian media and
freedom of the press, there can be disagreement about the legitimacy the
ambiguity over the government take-over of the Media-Most group and its NTV
station. However, in McFaul's words, the fate of TV6 was "a slam-dunk case of
the roll back of independent media" and was "a real tell-tell sign" of the
direction and the intentions of those against free speech. The tender that is
going to take place in March 2002 will show whether the consortium of
investors and the team of journalists led by Yevgeny Kiselyov will be able to
get a license to broadcast. Although there's some reason to be optimistic
about their chances, the journalists are so backed up into a corner, that
even if a new TV6 were to come into being it would not resemble its
predecessor or the old NTV. As far as the freedom of speech is concerned, the
harassment of the critics of the state has continued. The FSB's most recent
harassment of outspoken journalist Anna Politkovskaya for her investigation
of abuses in Chechnya is another demonstration of an anti-democratic use of
state power.
Returning to the role of politics, McFaul noted that the balance of power
between the central government and regional governors had shifted towards the
center. This may be good for democratic consolidation and state coherency,
but is a negative tendency for those who support the principle of federalism
and multiple centers of power. The state has become much more interested in
civil society primarily because it wants to replace the slow drip of foreign
assistance with even more limited state assistance and thereby control what
kind of civil groups are being financed. Although the creation of
state-sponsored Civic Forum means that certain civil society activists will
receive attention from the Kremlin, McFaul expects to see a negative
trajectory in the development of state-civil society relations.
McFaul pointed out the unprecedented rise of the FSB's role in governing the
country. The FSB is now changing the balance of power and becoming a decision
making body in Russia. Numbers of the FSB are growing throughout the
ministries and within the presidential administration. All this is causing a
growing crescendo of worry among some of Putin's formerly very close
advisors, who now find themselves edged out of power by members of the FSB.
Moreover, the recent arrest of the managers of Sibur (a large petrochemical
and gas company) sent tremendous shock waves through the oligarch community.
In the past it was assumed that businesses were safe as long as they remained
loyal to Putin, but the arrests proved that it is not only political, but
also economic rules that are up for re-negotiation.
Speaking on positive developments in Russia, McFaul mentioned recent changes
in economic reform and foreign policy. Focusing on the political regime in
Russia, the speaker noted some important improvements. Putin, unlike Yeltsin,
does go to work everyday and seems to care what the people of his country
think as he reads the polling data everyday. Putin has ended the ineffective
leadership and quasi-anarchy that characterized Yeltsin's second presidential
term. Indeed, there had to be some strengthening of the state after a period
of a very weak state, and one cannot assume that this is synonymous with a
dictatorship.
The president is popular, which shows that the people respect their
government and like their leader. However, Putin has not done much in terms
of what the society really cares about, and it will be interesting to look at
the polling data, when the real structural reforms that are going to take
place begin to affect people's lives. A promising legal reform is underway in
Russia, but courts are still being manipulated. And by all accounts,
corruption is still rampant.
Analyzing why Russia has not succeeded in transition to liberal democracy,
McFaul cited two of the most common explanations. The first explanation is
cultural; it underlines the lack of democratic experience in the history and
culture of Russia and the Russian people. The second argument is more
actor-centric and its thrust is that the chance for democracy in Russia was
destroyed by anti-democratic forces that came to power. While recognizing
that both explanations are partially correct, McFaul believes that the answer
lies somewhere between these two explanations.
The Russian case is particularly unique because of an extremely large agenda
of change that was not present in other transitions to democracy. In the
Soviet Union and Russia this agenda included contestation over where the
borders of the state should be, contestation over the nature of property
rights, economic institutions and the political regime. Not only was this
agenda broad but the things that were being contested were not easily
divisible, thus making it difficult to make a bargain. At the same time,
distribution of powers between political actors was relatively equal and both
sides, democrats and communists, were tempted to fight because they thought
that they had a reasonable chance to win.
Democrats barely won victories in 1991 and 1993, and they had to cut deals
with the army, the KGB and the Ministry of Interior. The limited attempts to
change the law-enforcement agencies from the top have failed and as a result
of this kind of transition, the unreformed, Soviet-style institution lingered
for a very long time and came back to fill the institutional vacuum in 1999 -
2000. As the individual power of Boris Yeltsin weakened towards 1998 - 1999,
the formal institutional power of the presidency established in 1993 did not.
The same institutional rules allowed President Putin to exercise a great deal
of personal control over developments in the country. However, a possible
future political weakening of the presidency may facilitate democratization
in Russia.
McFaul concluded that there is hope for democracy in the country, largely
because no one yet has articulated an alternative way for governing Russia.
The issues dividing the society became much smaller, and so did the risk of
overthrowing the system. According to the polling data, the majority of the
Russian population believes that democracy has its problems but it is better
than any other form of government.
Summary by Marat Umerov, Junior Fellow, Russian and Eurasian Program.
********
#8
gazeta.ru
March 5, 2002
Kremlin Adviser Sees Economy in Recession
By Olga Proskournina
Russian GDP growth rate may start to decline as early as this year, unless
the government revises its economic strategy. Such is the opinion of Andrei
Illarionov, top economic adviser to the Russian President and predictor the
financial collapse of August 1998. He says the essence of the problem is the
same it was four years ago.
According to Illarionov, the economic downturn in 2002 may still be averted.
Moreover, under certain circumstances Russia could have been enjoying seven
years of steady growth. The August 1998 crisis could have been prevented as
well, the adviser says. In short, living in Russia today could have been
somewhat more pleasant, if not for the serious flaws in the economic policy
of the state and the falsely set priorities in 1995. The same is with the
year 2002.
Judging by the latest report presented by Andrei Illarionov on March 4 the
consequences of those flaws may be briefly described as following: today the
Russian ruble is overvalued, and further forced increase thereof will produce
a negative impact on the national economy.
In particular, that will imminently result in the GDP slump, since the
volumes of industrial and agricultural production, as well as the freight
traffic will decline.
Furthermore, the exports of Russian goods will drop, as well as the imports
of machinery and equipment from "far-abroad" (non-CIS states). In the
meantime, the share of primary goods production in the GDP will become even
more swollen, while the manufacturing sector will shrink.
Thus, in the light of Andrei Illarionov's conclusions, the allegations by
certain left-winged politicians who warn that Russia gradually turns into a
"raw materials appendix" of the West sound far better substantiated, than
before.
But, unlike the Communists, the presidential aide for economic affaires has a
clear and precise plan of actions. Yet, of course, some may consider his
proposals quite radical.
Actually, Mr.Illarionov has invented no new magic recipes. According to the
adviser, it is necessary to reduce the tax burden (from present 40% GDP to
15-20%GDP) and to cut state spendings.
Also, he suggests, that a special stabilization fund should be set up to
safeguard the national economy from the negative consequences of the unstable
world oil market.
The presidential economist is convinced, that the state authorities should
exercise strict control over the tariffs and costs of the natural monopolies,
in order not to stimulate the inflation.
And, after all, natural monopolies need to be reformed. This will help to
eventually decrease the non-market sector of the Russian economy. The
excessively large non-market sector, holds Andrei Illarionov, is the key
problem for the national economy, the problem, which entails all others,
including the overvalued national currency. The main thing is not to confuse
the real rate of exchange with the nominal rate.
As he dwelt on the problem of the overvalued exchange rate and its negative
impact on the economic growth, the presidential aide bitterly noted that as
soon as these words are uttered, the media would start accusing him of
calling for devaluation of the ruble. But this is not the case, he said.
In the opinion of Andrei Illarionov, the fluctuations of the real rate of
exchange do not have any negative impact on the retail trade, real income of
the population, state budget revenues, foreign debt repayment, direct foreign
investment, level of capital flight, volume of bank credits to the real
sector of economy… But if the real rate of exchange is deliberately forced
up, the GDP declines.
The adviser pointed out to the fact that in the times when the state
authorities deliberately kept the Russian currency exchange at a certain rate
(the so-called "currency corridor" before August 1998), that led to decline
in GDP. The same thing happens now, in 2002.
"I do not call for ruble devaluation, what I propose is to reduce the real
exchange rate, by reducing the volume of the non-market sector, the volumes
of state loans and state expenditures," the presidential aide explained.
And finally, Andrei Illarionov emphasized that cuts in cuts in Russian oil
production threaten economic growth.
On the same day when the OPEC secretary general Ali Rodriguez began his visit
to Russia in hope to persuade it to maintain a 150,000 barrels-per-day oil
export cut for Jan 1 to March 31, into the second quarter of 2002, the top
economic adviser Andrei Illarionov resolutely warned against yielding to
persuasion.
The continuation of the policy of restricting Russian oil exports in the
second quarter of the year may slow down economic growth, holds Illarionov.
Illarionov said that oil extraction and processing are the sectors that
continue to boost output. The restriction of oil exports may bring these two
into the group demonstrating a production decline, he said. This "does not
meet the interests of the national economy", because it reduces Russia's
share of world production, brings down real incomes and consequently reduces
living standards in Russia, he said.
Illarionov stressed that Russia is not an OPEC country, and therefore "it is
not bound to take part in the steps those countries have planned for
themselves". He added that even OPEC countries failed to stand by their
obligation to reduce oil deliveries to world markets in January.
If Russia cuts exports, its place on the world market will be occupied by
neighbouring countries, mainly Kazakhstan and Azerbaijan, which raised
exports of oil and oil products in January, when Russian exports slipped. The
current Russian share in world oil exports does not exceed 7 per cent, while
15 years ago it stood at 12 per cent. At the present time, "it is not a
question of increasing Russia's share on world markets, but of gradually
restoring its old position", Illarionov said.
*******
#9
Date: Tue, 5 Mar 2002
From: "Jerry F. Hough"
Subject: Re: 6115-Yasin Interview
Dear David:
It is a shame that you did not publish the Yashin interview first
and put it in capital red letters. Yashin was after all a top Yeltsin
adviser and minister, and he is talking about the reality of Russia.
I am mainly working in archives on US foreign policy 1932-1950 (my
US presidency book is done), but am also looking at a U.S.-South America
comparison as part of a larger project on building of institutions.
Argentina and US were big commodity exporters a century ago and Argentina had
the 7th largest GNP in the world. It and US were relying on similar
immigrants (that is, Argentina did not have an Indian population), and it was
expected to be a great succcess. The question is why it then had a lost
century. A lot of reasons are given, but a key one is that it did not make
the transition to manufacturing to supplement commodities as the US was doing.
Lenin was right on the problems of commodity exporters in Imperialism,
but wrong on the reason. Those "semi-colonial" Pacific Rim countries
that did not have the commodities to export have generally done extremely
well. It is not just that the West tries to limit their manufacturing.
On the contrary, it wants to invest in that manufacturing. I think that
the real reason is that unproductive corruption is too easy with commodity
export. Productive corruption requires politician-businessman-military
investment in domestic manufacturing. In commodity producers there is
too much money to bribe off the military, and any coup is mainly
interested in getting control of the flow of dollars.
Russia will go down as the extreme case. The reason it has a
problem with OPEC on oil exports and with the US on steel exports is that
it is not using commodities at home. My own feeling is that the elite is
positively opposed to industrial and agricultural growth because that will
lessen the amount of corruption available from commodity export.
The interesting question is the influence of the West. At least
the former colonies learned the realities of Western business and law when
those colonial powers were in the manufacturing stage. Russia had no
experience with markets and learned them from America when it was in the
post-manufacturing, financial capital stage. We said they should have
American rule of law, and, in fact, they adopted the American practice
of rule of law in the one sector with which they came into contact--that
sector based on financial transactions, accounting manipulation, con men
salesmen of stocks and bonds. Tatneft, Gazprom, Lukoil used American
accounting firms; those who sold--and now promote--Russian stocks and bonds
in the West are as shameless in distorting reality as those who sold
Enron.
How does Russia learn about the America of Walmart, General
Electric, General Motors, Deere, Home Depot? God knows. How does it
get a presidential system that works better than commodity exporters such
as Argentina and Venezuela--and that does not continue to operate that way
for a century. God knows. The notion that the Leningrader Putin, who
seems mainly concerned with getting the team of another Leningrader
Chubais in charge of Gazprom and its flow of money, is a savior seems
far-fetched. Probably the only solution is for OPEC to really flood the
market and drive oil down to $5-$10. Maybe that will teach that
commodities are supposed to be used at home, not just exported.
*******
#10
Nuclear Terrorism Seen as Growing Threat in Russia
Vremya MN
1 March 2002
[translation for personal use only]
Article by Gennadiy Voskresenskiy: "Are We Threatened With Nuclear Terrorism?"
By decision of the Supreme Court, products of
processing nuclear waste from the Hungarian AES [nuclear power plant]
Paksh can no longer be stored on the territory of Russia.
It is entirely probable that a similar fate may also befall other
deals which allow the import of spent nuclear fuel (OYaT) into the
country from abroad. And the matter centers not only around the
problematic "benefit" of such agreements for Russia's economy, but also
around the fact that the atomic producers themselves cannot be sure of
the absolute reliability of the system of protection of nuclear
facilities and OYaT against outside encroachments.
The reality of nuclear terrorism is understood very well by those who
are called upon to oppose it in the course of their official duties.
The FSB [Federal Security Service] Department on Combating Terrorism has
created a special Administration "B", with its own special assignments
for protecting nuclear hazardous facilities. The MVD [Ministry of
Internal Affairs] troops in charge of protecting nuclear facilities of
the weapons and energy complexes of Minatom [Ministry of Atomic Energy]
are also creating special assignment groups. The 12th Main
Administration of Minoborona [Ministry of Defense] is forming groups for
effective response to attempts at taking over nuclear materials storage
facilities.
In the opinion of Aleksandr Rumyantsev, associate of the RNTs
[Russian Scientific Center] Kurchatov Institute, "after 11 September of
last year, the time has come to drastically review the effectiveness of
the system of physical protection of nuclear facilities." And what
about Russia? According to official representatives of Minatom, "the
system of protection of Russian nuclear facilities is constantly being
improved in order to increase its effectiveness." Nevertheless, nuclear
scientists are prepared, albeit with certain stipulations, to challenge
this statement by the "atomic" department. Only seven out of 30 power
generating units of Russian nuclear power plants have so-called
"protective casings"--so as not to allow the spread of radiation in case
of routine and irregular situations. Will such casings be able to
withstand the impact of, say, aircraft of the Tu-154 or Il-86 type?
That we do not know.
The nuclear facilities of Russia, and primarily its nuclear power
plants, are guarded "along the perimeter." That is, the entire
territory around their tall fences is controlled with barbed wire. It
is believed that this is entirely sufficient. But alas, "despite an
outwardly strong protection, our nuclear power plants which are located
on the banks of water reservoirs are entirely unprotected against attack
from the direction of their water basins--rivers and lakes," Aleksandr
Koldobskiy, associate of the Moscow Engineering-Physics Institute says
with genuine concern.
The situation with irradiated nuclear materials also evokes no
optimism. After the September events, the transport of any radioactive
materials, including OYaT, has been suspended in the "nuclear countries"
for an indefinite period of time. Meanwhile, Russia has been accepting
trains loaded with OYaT, and moving them through the entire country to
the processing enterprises in Chelyabinsk Oblast and Krasnoyarsk Kray.
Where is the assurance that nothing will happen with these "nuclear"
trains?", nuclear specialists ask.
In their opinion, Minatom has not taken full measures to ensure the
effective functioning of this system. The fact that it is
insufficiently effective is evidenced by the increased number of
"incidents" with nuclear materials in the past 2 years, as cited in the
official statistics. Particular concern is evoked by the system of
protection of radioactive materials from atomic submarines. According
to certain data, from 1992 through 1996 there were around 30 reported
cases of misappropriation of these materials from Minatom facilities.
Later, 52 cases of misappropriation were reported. It is unclear which
of these figures is correct. Nevertheless, it seems clear to scientists
that "in fact, there may be 2-3 times more cases of misappropriation of
nuclear materials."
*******
#11
Moscow Times
March 6, 2002
No Glut of Heroes on Business' Seamier Side
By Yulia Latynina
The latest business scandal has hit Russia.
It would appear that the almost-completed deal to sell Ingosstrakh, Avtobank
and Nosta to Roman Abramovich and Oleg Deripaska has been halted. The parties
are accusing one another of racketeering and murder, and the whole thing has
become politicized; Avtobank was purchased by oligarchs close to the
"family," while the former owner of Avtobank, Andrei Andreyev, a veteran of
the Soviet-era agency that dealt with the theft of state property, has found
support among the St. Petersburg chekists.
The scandal became public almost by chance, which makes the light it casts on
the seamier side of Russian business all the more terrible.
Andreyev was not the owner of Avtobank initially. He was merely the head of
Avtobank's security department, while the real owner was Yury Belov. Belov's
two other partners, it seems, were Avtobank head Natalya Rayevskaya and
Rodion Gamzayev -- otherwise known as Radik -- who allegedly has ties to
organized crime.
However, Belov died in strange and suspicious circumstances at the end of
1999 and his shares passed over to Andreyev, as all of the shares in the
holding company were nominally held by Avtobank cleaners and drivers -- and
the latter were all informers in the pay of the security department, which
was under Andreyev's complete control.
Andreyev's arrival on the scene at Nosta in 1999 was marked by the contract
killing of Yury Grishin, owner of 63 percent of Nosta shares.
Andreyev's empire started to crumble, however, when one of the partners
booted out of Nosta by him tried to bankrupt the metals company. Nosta's
bankruptcy also threatened to bankrupt Avtobank, which had lent the
enterprise more than $100 million. This concerned Gamzayev, who resolved to
get out of the business and demanded $50 million from Andreyev for his share.
Andreyev couldn't cobble this kind of money together and evidently sought to
resolve his differences with Gamzayev by other means. The difficulty was that
previously Gamzayev had been the man who resolved this kind of problem for
Andreyev, and now he was to be the victim. The by-now flabby security
department flinched at this tricky assignment and chose instead to surrender
one of its bosses (Andreyev) to the other (Radik).
Andreyev, who was looking at a prison sentence for ordering a killing,
transferred two thirds of the holding's shares to Radik and Rayevskaya,
sanctioned their sale and even signed a piece of paper to the effect that he
renounced all claims on the shares. Anton Malevsky -- another of Andreyev's
partners, a co-owner of Nosta and a businessman reputed to be the leader of
the Izmailovo criminal group -- brought this piece of paper to the buyers. In
return, the buyers promised to pay Andreyev $4.8 million and to pay off all
his debts (including a multimillion-dollar debt to Malevsky).
Only after Malevsky's death on Nov. 6 did Andreyev go to the police
department dealing with organized crime with a fantastic story about how
Radik had stolen his business by blackmailing him with this contract killing
that had "allegedly" been ordered by him.
The whole story is thoroughly unpleasant, of course. Andreyev himself hardly
comes out smelling of roses as the security department head who mysteriously
inherited the empire from its dead owner; and all his partners are either
dead, dumped or under investigation. Deripaska, who didn't have too many
qualms about buying a "stolen" metals company, doesn't come out looking too
good, either.
But it is the law enforcement agencies which halted the deal that arouse the
least sympathy.
It would seem that they were not too bothered by the fantastic absurdity of
Andreyev's statement, nor the authenticity of the film establishing his
guilt, nor the fact that rather than going to the police initially Andreyev
went to complain to Malevsky. The astronomic figures quoted by Andreyev for
his broken business empire made the small-fry policemen's heads spin. And all
of this was perfectly seriously called -- citing Andreyev's recent Vedomosti
interview -- "a fundamental break with crime and the criminal division of
property."
Yulia Latynina is a journalist with ORT.
******
#12
Financial Times (UK)
5 March 2002
New-look upper chamber in Russia fails to convince. FEDERATION COUNCIL
MANY SENATORS HAVE WEAK REGIONAL LINKS
By ROBERT COTTRELL
It was planned in a hurry and it may not last, commentators say. But the
new-look upper house of the Russian parliament, the Federation Council, is
now in session, offering both a refuge and a tribune in Moscow to a diverse
troop of businessmen, generals, bureaucrats and "resting" politicians.
The chamber does have one or two rising stars. They include Mikhail Margelov,
chairman of the foreign affairs committee, a Kremlin loyalist and an
influential voice in Russian foreign policy. But the overall result of
President Vladimir Putin's reorganisation of the upper house falls far short
of capturing the popular imagination. A recent opinion poll found that 70 per
cent of Russians had no idea what the Federation Council actually did. And
the latest model certainly looks set to do less than it did under President
in Boris Yeltsin.
Mr Yeltsin filled it with governors and local parliamentary speakers from
Russia's 89 regions. Their combined authority and democratic credentials made
them a real counterweight to the lower house of parliament, the Duma, which
was often at loggerheads with the Kremlin.
But when Vladimir Putin succeeded Mr Yeltsin in 2000, one of his aims was to
regulate the powers of regional leaders and to curb their role in politics.
That made the Federation Council one of his first targets for reform. As of
this year, the local leaders have lost their seats there. Instead, each
region sends two full-time representatives to the upper house - one nominated
by the governor, the other by the local parliament.
This preserves the constitutional requirement that the upper house represent
the regions. But it also means endless tussles between the Kremlin, big
business groups and local bigwigs fighting to get "their" people into
parliament. Many of the new senators have only tenuous links with the regions
they are suppose to represent, and some none at all.
According to the Russian newspaper Izvestia, one or two senators have even
bought their seats, paying up to Dollars 5m for the privilege of being
nominated.
In exchange, they get prestige, the chance to influence legislation and
immunity from prosecution. They can delay or block bills coming from the
Duma. But with both chambers now deeply deferential to Mr Putin, such
confrontation is unlikely. They can also appoint and dismiss the
prosecutor-general, appoint judges to the constitutional court and even
remove the president himself on evidence from the Duma.
Gordon Hahn, a US expert on Russia, has called it a "setb ack for democratic
representation" that such powers are now vested in a chamber no longer made
up of elected officials.
Alexander Khloponin, governor of Taimyr, says the new system is more
efficient than the old. "It means I can concentrate more of my time on work
here in the region," he says. "My representative is my delegate and I trust
him." Others are less happy. Alexander Lebed, governor of Krasnoyarsk, says
he would much rather represent the interests of his region directly. Trying
to work through an intermediary, he growls, is like "trying to lick up sugar
through a pane of glass".
*******
#13
A Russian Roulette -- Devolution
By Sam Vaknin
UPI Senior Business Correspondent
SKOPJE, Macedonia, March 5 (UPI) -- Russia's history is a chaotic battle
between centrifugal and centripetal forces -- between its 50 regions, 2
cities (Moscow and St. Petersburg), 6 territories, 21 republics, and 10
departments -- and the often cash-strapped and graft-ridden paternalistic
center.
The vast landmass that is the Russian Federation (constituted officially in
1993) is a patchwork of fictitious homelands, rebellious republics, and
disaffected districts -- all intermittently connected with decrepit lines of
transport and communications.
Since 1991, the republics -- national homelands to Russia's numerous
minorities -- have their own constitutions and elected presidents. Elected
governors run regions and territories, a novelty, since president Yeltsin
appointed governors until 1997. They are patchy fiefdoms composed of
autonomous okrugs. "The Economist" observes that the regions are either very
rich (e.g., Yamal-Nenets in Tyumen, with 53 percent of Russia's oil reserves)
-- or very poor and, thus, dependent on federal handouts.
In Russia it is often "Moscow proposes -- but the governor disposes" -- but
decades of central planning and industrial policy encouraged capital
accumulation is some regions while ignoring others, thus irreversibly eroding
any sense of residual solidarity.
In an International Monetary Fund working paper ("Regional Disparities and
Transfer Policies in Russia" by Dabla-Norris and Weber), the authors note
that the ten wealthiest regions produce more than 40 percent of Russia's
gross domestic product, and contribute more than 50 percent of its tax
revenues, thus heavily subsidizing their poorer brethren.
After the fall of the Soviet system, output contracted by 90 percent in some
regions -- and only by 15 percent in others. Moscow receives more than 20
percent of all federal funds, with less than 7 percent of the population. In
the Tuva republic, three quarters of the denizens are poor, compared to less
than one fifth in Moscow. Moscow lavishes on each of its residents 30 times
the amount per capita spent by the poorest region.
Nadezhda Bikalova of the IMF notes that when the Soviet Union imploded, the
ratio of budgetary income per person between the richest and the poorest
region was 11.6. It has since climbed to 30. All the regions were put in
charge of implementing social policies as early as 1994 -- but only a few
(the net "donors" to the federal budget, or food exporters to other regions)
were granted taxing privileges.
As Kathryn Stoner-Weiss has observed in her book, "Local Heroes: The
Political Economy of Russian Regional Governance," not all regions performed
equally well, or equally dismally, during the transition from communism to
capitalism. Political figures in the relatively prosperous Nizhny-Novgorod
and Tyumen regions emphasized stability and consensus (i.e., centralization
and co-operation). Both the economic resources and the political levers in
prosperous regions are in the hands of a few businessmen and "their"
politicians. In some regions, the movers and shakers are oligarch-tycoons --
but in others, businessmen formed enterprise associations, akin to special
interest lobbying groups in the West.
Inevitably such incestuous relationships promote corruption, impose
conformity, inhibit market mechanisms, and foster detachment from the center.
But they also prevent internecine fighting and open, economically
devastating, investor deterring, conflicts. Economic policy in such parts of
Russia tends to be coherent and efficiently implemented. Such
business-political complexes reached their apex in 1992-1998 in Moscow
(ranked #1 in creditworthiness), Samara, Tyumen, Sverdlovsk, Tatarstan, Perm,
Nizhny-Novgorod, Irkutsk, Krasnoyarsk, and St. Petersburg. As a result, by
early 1997, Moscow attracted over 50 percent of all foreign direct investment
and domestic investment while St. Petersburg got another 10 percent.
These growing economic disparities between the regions almost tore Russia
asunder. A clunky and venal tax administration impoverished the Kremlin and
reduced its influence commensurately. Regional authorities throughout the
vast Federation attracted their own investors, passed their own laws often in
defiance of legislation by the center, appointed their own officials, levied
their own taxes, only a fraction of which reached Moscow, and provided or
withheld their own public services.
Yeltsin's reliance on local political bosses for his 1996 re-election only
exacerbated this trend. He lost his right to appoint governors in 1997, and
with it the last vestiges of ostensible central authority. In a humiliating
-- and well-publicized -- defeat Yeltsin failed to sack the spectacularly
sleazy and incompetent governor of Primorsky krai, Yevgeni Nazdratenko (later
"persuaded" by Putin to resign his position and chair the State Fisheries
Committee instead).
The regions took advantage of Yeltsin's frail condition to extract economic
concessions: a bigger share of the tax pie, the right to purchase a portion
of the raw materials mined in the region at "cost" (Sakha), the right to
borrow independently (though the issuance of promissory notes was banned in
1997) and to spend "off-budget" -- and even the right to issue Eurobonds
(there were three such issues in 1997). Many regions cut red tape, introduced
transparent bookkeeping, lured foreign investors with tax breaks, and
liberalized land ownership.
Bikalova (IMF) identifies three major problems in the fiscal relationship
between center and regions in the Yeltsin era: "(1) the absence of an
objective normative basis for allocating budget revenues, (2) the lack of
interest shown by local and regional governments in developing their own
revenues and cutting their expenditures, and (3) the federal government's
practice of making transfer payments to federation members without taking
account of the other state subsidies and grants they receive."
Then came Russia's financial meltdown in August 1998, followed by Putin's
disorientating ascent. A redistribution of power in Moscow's favor seemed
imminent. But it was not to be.
The recommendations of a committee, composed of representatives of the
government, the Federation Council, and the Duma, were incorporated in a
series of laws and in the 1999 budget, which re-defined the fiscal give and
take between regions and center.
Federal taxes include the enterprise profit tax, the value-added tax (VAT),
excise, the personal income tax (all of it returned to the regions), the
minerals extraction tax, customs and duties, and other "contributions." This
legislation was further augmented in April-May 2001 (by the "Federalism
Development Program 2001-2005").
The regions are allowed to tax the property of organizations, sales, real
estate, roads, transportation, and gambling enterprises, and regional license
fees (all tax rates are set by the center, though). Municipal taxes include
the land tax, individual property, inheritance, and gift taxes, advertising
tax, and license fees.
The IMF noted that "more than 90 percent of sub-national revenues come from
federal tax sharing. Revenues actually raised by regional and local
governments account for less than 15 percent of their expenditures." The
federal government has also signed more than 200 special economic "contracts"
with the richer, donor and exporting, regions -- this despite the
constitutional objections of the Ministry of Justice. This discriminating
practice is now being phased out. But it has not been replaced by any
prioritized economic policies and preferences on the federal level, as the
Organization of Economic Cooperation and Development has noted.
One of Putin's first acts was to submit a package of laws to the State Duma
in May 2000. The crux of the proposed legislation was to endow the president
with the power to sack regional elected officials at will. The alarmed
governors forgot their petty squabbles and in a rare show of self-interested
unity fenced the bill with restrictions. The president can fire a governor,
said the final version, only if a court rules that the latter failed to
incorporate federal legislation in regional laws, or if charged with serious
criminal offenses. The wholesale dismissal of regional legislatures requires
the approval of the State Duma. Some republics insist that even these
truncated powers are excessive and Russia's Constitutional Court is currently
weighing their arguments.
Putin then resorted to another stratagem. He established, two years ago, by
decree, a bureaucratic layer between center and regions: seven administrative
mega-regions whose role is to make sure that federal laws are both adopted
and enforced at the local level. The presidential envoys report back to the
Kremlin but, otherwise, are fairly harmless -- and useless. They did succeed,
however, in forcing local elections upon the likes of Ingushetiya - and to
organize all federal workers in regional federal collegiums, subordinated to
the Kremlin.
The war in Chechnya was meant to be another unequivocal message that
secession is not an option, that there are limits to regional autonomy, and
that the center, as authoritarian as ever, is back. It, too, flopped
painfully when Chechnya evolved into a second -- internal -- Afghani quagmire.
Having failed three times, Putin is lately leaning in favor of restoring and
even increasing the Federation Council's powers at the expense of the Duma.
Governors have sensed the changing winds and have acted to trample over
democratic institutions in their regions. Thus, the governor of Orenburg has
abolished the direct elections of mayors in his region. Russia's big business
is moving in as well in an attempt to elect its own mayors for instance, in
Irkutsk.
Regional finances are also in bad shape. Only 40 out 89 regions managed, by
February, to pay their civil servants their December 2001 salaries (raised 89
percent -- or 1.5 percent of GDP.) Many regions had to go deeper into deficit
to do so. Salaries make three quarters of regional budgets.
The East-West Institute reports that arrears have increased 10 percent in
January alone -- to 33 billion rubles (about $1 billion). The Finance
Ministry is considering declaring seven regions bankrupt. Yet another
committee, headed by Deputy Head of the Presidential Administration, Dimitri
Kozak, is on the verge of establishing an external administration for
insolvent regions. The recent housing reform -- which would force Russians to
pay market prices for their apartments and would subsidize the poor directly
(rather than through the regional and municipal authorities) -- is likely to
further weaken regional balance sheets.
Luckily for Russia, the regions are less cantankerous and restive now. The
emphasis has shifted from narcissistic posturing to economic survival and
prosperity. The Moscow region still attracts the bulk of Russian domestic and
foreign investments, leaving the regions to make do with leftovers.
Sergei Kirienko, a former prime minister, and, currently the president's
envoy to the politically mighty Volga okrug, attributes this gap, told Radio
Free Europe, to non-harmonized business legislation between the center and
regions. Boris Nemtsov, a member of the Duma, and former deputy prime
minister, thinks that the problem is a "lack of democratic structures" --
press freedom, civil society, and democratic government. Others attribute the
deficient interest by foreign investors in the regions to a dearth of safety
and safe institutions, propagated by entrenched interest groups.
Small business is back in fashion after years of investments in behemoths
such as Gazprom and Lukoil. Politicians make small to medium enterprises a
staple of their speeches. The European Bank for Reconstruction and
Development has revived its moribund small business funds and grants up to
$125,000 loans to eligible enterprises. Bank lending is still absent together
with a banking system -- but foreign investment banks and retail banks are
making hesitant inroads into the regional markets. Small businessmen are more
assertive and often demonstrate against adverse tax laws, high prices, and
poor governance.
Russia is at a crossroads. It must choose which of the many models of
federalism to adopt. It can either strengthen the center at the expense of
the regions, transforming the latter into mere tax collectors and law
enforcement agents -- or devolve more powers to tax and spend to the regions.
The pendulum swings. Putin appears sometimes to be an avowed centralist, and
at other times a liberal.
Contrary to reports in the Western media, Putin failed to subdue the regions.
The donors and exporters among them are as powerful as ever. But he did
succeed to establish a modus vivendi and is working hard on a modus operandi.
He also weeded out the zanier governors. Russia seems to be converging on an
equilibrium of sorts -- though, as usual, it is a precarious one.
*******
#14
eurasianet.org
March 5, 2002
DOES MOSCOW'S REACTION TO DEVELOPMENTS IN GEORGIA HERALD THE END OF EURASIA?
By Igor Torbakov
The Russian government's reaction to the US decision to send military
advisors to Georgia highlights a dramatic shift in Russia's geopolitical role
in Central Eurasia. President Vladimir Putin has acquiesced to the basing of
US troops in Central Asia, and now in the Caucasus. Some analysts in Moscow
speculate that these developments herald the "end of Eurasia" with Russia as
the region's center of gravity.
While attending a March 1 CIS summit in Almaty, Putin clarified the Kremlin's
policy on US advisors training and equipping Georgian soldiers for
anti-terrorist missions. "Every country, in particular Georgia, has the right
to act to protect its security," Putin said, adding that Tbilisi could
certainly do what Central Asian governments have already done - accept US
military assistance. Putin also said that Russia would support an
anti-terrorist operation in Georgia "no matter who took part in it - American
partners, European ones, or our Georgian colleagues."
These statements have prompted some commentators in Moscow to pose the
question of how relevant the terms 'post-Soviet space' and the 'former Soviet
Union' are nowadays. The most significant development arising out of
Georgia's crisis, argues the political analyst Vitalii Portnikov, "is the
disappearance of the post-Soviet space as a geopolitical factor."
"In the new [post-September 11] global configuration, Russia rather looks
like a state that is being surrounded along the perimeter of its borders by
the Western sphere of influence, and that is being incorporated into this
sphere as an important actor, but not as the one that has the final say,"
Portnikov writes in the influential business daily Vedomosti.
Most neighboring Eurasian countries, regional analysts say, had been
orienting themselves toward Russia in recent years not because of nostalgia,
but because Russia was indeed a key power broker in Central Eurasia. In the
new international environment created by the US-led global war on terror, the
nations of Central Eurasia, especially those on Russia's southern rim, have
suddenly found themselves in the spotlight - primarily as potential zones of
terrorist activity.
This shift of global attention toward Central Eurasia has revealed a dramatic
disparity in Russia's and the West's capabilities. America has been able to
offer its new partners in Central Asia - and now in the Caucasus - security
and generous financial aid. The only thing Russia can offer its former
colonial borderlands, bitterly notes one Moscow commentator, is "eternal
friendship." That is why, he adds, it is not hard to predict what kind of
long-term foreign policy priorities Russia's southern neighbors are going to
shape.
Some Kremlin advisors, especially those who favor a more radical change of
Russia's international identity, contend that Moscow itself will benefit from
the limited US military presence in Georgia. "With every American blow on our
enemies we are increasing our security, saving the lives of our soldiers, and
gaining time for our own rearmament," Gleb Pavlovskii, head of the Efficient
Policy Foundation, said in an interview with Strana.ru internet journal.
"This advantage should be used and instantly converted into adequate foreign
and domestic policies," he added.
Pavlovskii also indicated that many of his fellow Russian experts were
mistakenly interpreting the US announcement on military advisors as a
demonstration of Washington's desire to establish a permanent presence in the
region. "We have this strange idea here in Russia that the Americans are
going to pay for all the incompetent regimes of Eurasia," the Interfax news
agency quoted him as saying.
The awareness of the country's military and economic weakness as well as of
its inability to follow the aggressive instincts of Russia's historical
predecessor, the Soviet Union, appears to influence Putin's current policies.
"As a pragmatic politician, Putin - unlike [former President Boris] Yeltsin -
knows what's possible and what's not," says Deputy Director of the USA and
Canada Institute Viktor Kremenyuk, commenting on the Russian president's calm
response to the forthcoming US deployment in Georgia.
"He wouldn't like some vexing [political] episodes to cause any damage. For
us, it's more important to retain good relations with the United States,"
adds Kremenyuk.
Indeed, so far Putin seems to be sticking to the pro-Western course that he
adopted in the aftermath of the September 11 attacks. It is his clear hope
that Russia will eventually benefit more from improved relations with the
West, than if Moscow engaged in geopolitical bickering with Washington over
the US military's presence in Central Asia and the Caucasus.
However, there do seem to be limits to Putin's ability to accept the growth
of US influence in Central Eurasia. Even Putin's supporters have started
voicing concern over what they call Russia's "disinterested policies." Many
in Russia's political establishment already complain that Moscow has received
few strategic or economic benefits in return for its support of the
American-led anti-terrorism campaign.
The frustration of Russia's political class seems destined to grow. In the
Caucasus, the regional analysts say, Moscow is pursuing two interrelated
strategic goals - securing the Caspian oil transit routes that would be
advantageous to Russia, and suppressing the separatist revolt in the
breakaway republic of Chechnya. Both goals, some commentators argue, are now
threatened by the imminent US deployment in Georgia. "The fact that Georgia
has invited American Special Forces units to fight terrorists on its
territory and ignored the analogous offers made by the Russian side only
signifies that our country suffered a serious defeat in the [pipeline]
battle," writes Sergei Chugaev in the Komsomolskaya Pravda daily.
"Not only will Russia lose billions of dollars. The war in Chechnya and all
its victims will prove senseless," Chugaev added.
However, some Moscow strategists point out that Russia - even in its present,
weakened state - still has "the means for rearguard action" in the Caucasus.
In Georgia's case, Russia could opt to utilize its political allies in the
separatist regions of Abkhazia and South Ossetia to exert pressure on
Tbilisi.
Putin is on record as unequivocally supporting Georgia's territorial
integrity. Nevertheless, some political thinkers close to the Kremlin appear
to be planning for a variety of scenarios. "The situation in Abkhazia and
South Ossetia resembles the situation in Kosovo," director of the Institute
for Political Studies Sergei Markov told the Nezavisimaya Gazeta newspaper.
"I think that in the process of building a de-facto independent Abkhazian
state it would be worthwhile - in order to avoid international isolation - to
use a tight linkage to the Kosovo status."
Meanwhile, State Duma Speaker Gennady Seleznev dismissed calls from some
conservative MPs that the Russian legislature consider recognizing Abkhazia's
independence. In a radio interview March 4, Georgian President Eduard
Shevardnadze warned that if Moscow took any action that acknowledged
Abkhazia's independence, it could "mark the start of the disintegration of
Russia itself."
Shevardnadze, in a separate radio interview, suggested that Russian policies
towards Georgia during the past decade often caused damage to Moscow's image.
Shevardnadze specifically cited Russia's stance on the division of the former
Soviet Union's military assets, saying Moscow's unilateral action contributed
to the Georgian military's lack of preparedness concerning existing security
challenges. "You left [us] just a few dilapidated tanks and took away
everything else, including an air force squadron and navy boats, even without
asking us," Shevardnadze said, referring to Russian leaders. "You simply made
the most out of the turmoil in Georgia."
Editor's Note: Igor Torbakov is a freelance journalist and researcher who
specializes in CIS political affairs. He holds an MA in History from Moscow
State University and a PhD from the Ukrainian Academy of Sciences. He was
Research Scholar at the Institute of Russian History, Russian Academy of
Sciences, Moscow, 1988-1997; a Visiting Scholar at the Kennan Institute,
Woodrow Wilson International Center for Scholars, Washington DC, 1995, and a
Fulbright Scholar at Columbia University, New York, 2000. He is now based in
Istanbul, Turkey.
*******
Web page for CDI Russia Weekly:
http://www.cdi.org/russia
Archive for Johnson's Russia List:
http://www.cdi.org/russia/johnson
With support from the Carnegie Corporation of New York and
the MacArthur Foundation
A project of the Center for Defense Information (CDI)
1779 Massachusetts Ave. NW
Washington DC 20036