CDI Russia Weekly

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Edited by David Johnson
ISSUE #67 September 24, 1999


The CDI Russia Weekly is an e-mail newsletter that carries news and analysis on all aspects of today's Russia, including political, economic, social, military, and foreign policy issues. With funding from the Carnegie Corporation of New York, CDI Russia Weekly is a project of the Washington-based Center for Defense Information (CDI), a nonprofit research and education organization.


Contents


  1. AFP: Emotional Mikhail Gorbachev bids final farewell to his beloved Raisa.
  2. USIA: Talbott Testimony on Russia at Senate Hearing.
  3. Jamestown Foundation Monitor: RUSSIAN MINISTER EMPHASIZES PRIMACY OF NATIONAL SOVEREIGNTY.
  4. RFE/RL: Andrew Tully, Russia: Lawmaker Questions U.S. Interest In Corruption.
  5. Izvestia: Vladimir Abarinov, Scandal Of America.
  6. Moscow Times: Brian Whitmore, Elections Are Political Y2K For 'Family.'
  7. CDI's Weekly Defense Monitor: Tomas Valasek, War Threatens to Engulf Chechnya.
  8. Christian Science Monitor: Gloria Goodale, Through red-colored glasses. 'Red Files' explores Soviet views of atomic secrets, sports, space race.
  9. American Chamber of Commerce in Russia: Bruce Bean, Foreign Policy by Sound Bite.
  10. Rossiyskaya Gazeta: Albright Seen Promoting U.S.-Russian Cooperation.
  11. The Guardian (UK): Julian Borger, White House under fire for 'covering up' Russian corruption.
  12. Stratfor Commentary: Russia Losing Trans-Caspian Race.
  13. Itar-Tass: Russia Needs New Approach to Armaments: View.

The Center for Defense Information's 1999 Military Almanac is now available in hard copy. The 68 page Almanac, a biennial publication, contains a wealth of information on the U.S. military and military spending, comparisons of U.S. and other significant military forces, and U.S. participation in international agreements and organizations that are concerned with defense and security matters. The Almanac sells for $15. It will be available shortly on CD ROM. Watch for a future message concerning this format. The Almanac can be ordered by calling (202) 332-0600 or writing to Center for Defense Information, 1779 Massachusetts Ave. NW, Washington, DC 20036. Or visit http://www.cdi.org


#1
Emotional Mikhail Gorbachev bids final farewell to his beloved Raisa

MOSCOW, Sept 23 (AFP) - Mikhail Gorbachev bid an emotional farewell to his 
beloved wife Raisa on Thursday, as a host of European dignitaries attended 
the funeral of the Soviet Union's greatest and most glamorous first lady.
Dignified in his grief, Mikhail Gorbachev spent the day on the verge of 
tears, supported by the couple's only daughter Irina and his sister-in-law 
Lyudmilla.


Gorbachev, the last president of the now defunct Soviet Union, only gave his 
permission for a religious ceremony at the convent's cathedral church on the 
eve of the funeral. Despite his Communist past he is himself baptised.


As the cathedral bells tolled, six pall bearers carried the plain wooden 
coffin to the graveside, set in the picturesque grounds of the historic 
Novodevichy monastery.


Orthodox priests struck up in mournful song amid a cloud of sweet-smelling 
incense as the coffin was finally committed to the earth.


Ex-chancellor Helmut Kohl led a high-powered German delegation at the funeral 
which included his long-serving foreign minister Hans-Dietrich Genscher, the 
speaker of the German Bundestag Wolfgang Thierse and Doris Schroeder-Koepf, 
wife of the current Chancellor Gerhard Schroeder.


Former premier Yevgeny Primakov and his successor Sergei Stepashin were among 
Russian personalities to pay their last respects before Raisa's coffin was 
transported to Novodevichy.


France, Italy, Spain and the United States were represented by their 
ambassadors. Britain's ex-premier Margaret Thatcher was not seen at the 
ceremony, despite reports that she would attend.


Naina Yeltsin represented her husband President Boris Yeltsin, while Belarus 
President Alexander Lukashenko was among foreign leaders to file past Raisa's 
body in Moscow's Cultural Foundation which she created.


Raisa, 67, died on Monday after losing a long battle against leukaemia, a 
blood disorder she had spent much time trying to combat through her 
charitable work.


Gorbachev spent two months by his ailing wife's bedside in a clinic in the 
German city of Muenster as doctors fought vainly to save her life.


He was in daily contact with Kohl, who paid a resounding tribute to Raisa and 
the man who played a key role in the reunification of Germany in 1990.


"We spoke every day with Mikhail Gorbachev while he was in Muenster," Kohl 
said. "Raisa played a vital political role, from the beginning of perestroika 
(the reform movement launched by Gorbachev) to the reunification of Germany 
and the arms reductions negotiations.


"When people talked of the Gorbachevs, they said: 'they are a couple'," added 
Kohl, the longest-serving chancellor in German history, underscoring the 
intense personal bond that linked the Gorbachevs during their 46-year 
marriage.


On Wednesday, hundreds of ordinary Muscovites queued patiently to enter the 
ornate building in downtown Moscow where Raisa's body lay in state to pay 
their respects to the woman the business daily Kommersant described as 
Russia's "first First Lady."


The last goodbyes said, Raisa's body, displayed in an open coffin on a podium 
surrounded by wreaths of flowers brought by mourners, was lifted into a 
waiting hearse.


The funeral cortege then left for the cemetery in southern Moscow where the 
great and the good of Russian history are traditionally buried, including 
composer Dmitry Shostakovich, playwright Anton Chekhov, author Mikhail 
Bulgakov and former Soviet chief Nikita Khrushchev.


Reviled during her husband's reign as Kremlin boss for her love of luxury and 
overseas shopping sprees, Raisa was quickly dubbed by critics as the "Red 
Tsarina," whose excesses went down badly in a country of shortages and 
poverty.


However, Raisa's illness triggered a remarkable change of heart among many 
ordinary Russians, who had resented her glamour and influence over her 
powerful husband but who mourned her death.


Mikhail Gorbachev has cut a tragic figure on the nation's television screens 
during his wife's last illness, and his evident love of the woman he married 
in 1953 touched a chord among the sentimental Russian populace.
Back to the top

#2
USIA
23 September 1999 
Talbott Testimony on Russia at Senate Hearing Sept. 23 
(U.S. must "keep moving forward" with aid to Russia, Talbott says)


Deputy Secretary of State Strobe Talbott says the "first and foremost"
objective of U.S. policy toward Russia is to "advance the national
security interest of the United States -- both in the short-term and
the long-term."


He said the test that must be applied "day in and day out, year in and
year out, from one Administration to the next" is whether the American
people are safer as a result of that policy. "This Administration's
Russia policy," he said, "meets that test."


Talbott's remarks came during testimony September 23 before the Senate
Foreign Relations Committee, which -- like the House Banking Committee
-- is looking into the issues of corruption and money laundering in
the Russian Federation.


Corruption is an important issue that the Clinton Administration takes
very seriously, Talbott told the committee, but it is part of a much
larger process in a "vast and complex country" that is undergoing "an
unprecedented transformation," and the American response to the
problem must keep this in mind. He continued:


"All of us are realistic about the difficulties. Russia's
transformation has encountered plenty of obstacles, none greater and
more challenging than the crucial need to create the laws and
institutions that are integral to fighting crime and corruption in an
open society and market economy. Still, the transformation continues,
and so does our commitment to stay engaged. And while there are no
easy answers and no quick answers to what ails the Russian body
politic today, there is one overarching principle that is fundamental
to creating the forces for change that will drive the scourge of
corruption out of Russian society, and that is democracy."


Talbott said the Russian people, and Americans as well, will be better
off if the Russian Federation stays on the course of constitutional
rule and electoral democracy.


"That's the hard-headed essence of why we must continue to support
them in coping with the difficulties they face," he said, "notably
including those that are in the headlines today. That's also why
Russia's current problems with crime and corruption are different from
the corruption so entrenched in Soviet communism. Indeed, today's
problems are a result of an incomplete transition to democracy and
market reform."


He appealed to the committee to reconsider proposed cuts in the
FREEDOM Support Act which funds various democracy-building measures at
the grassroots level in Russia and the Newly Independent States.


"The solution to today's problem," Talbott said, "is to keep moving
forward to realize the full promise of the transformation Russia has
begun."
Back to the top

#3
Jamestown Foundation Monitor
23 September 1999


RUSSIAN MINISTER EMPHASIZES PRIMACY OF NATIONAL SOVEREIGNTY... In an
address which followed predictable lines, Russian Foreign Minister Igor
Ivanov told the UN General Assembly this week that separatist movements in
countries around the world now constitute one of the gravest threats to
international stability. The Russian foreign minister went on, moreover, to
link this "aggressive separatism" to what he called the "monster of
terrorism." Ivanov urged the UN to take decisive action against "any
manifestations of separatism," and to defend consistently "the principles
of sovereignty, territorial integrity and inviolability of national
borders" (AP, Russian agencies, September 21).


Moscow has chosen repeatedly to accent the importance of sovereignty and
territorial integrity over that of human rights. That stance has been
evident especially in Moscow's defense of Yugoslav authorities in
Belgrade--despite their conduct of a long and bloody crackdown in
Kosovo--and in Russia's sharp opposition to NATO's effort to rectify the
situation there through military intervention. Moscow had likewise
emphasized issues of national sovereignty and nonintervention in its
criticism of UN weapons monitoring operations in Iraq, and more recently in
calling for an end to U.S. and British air patrols over Iraq's "no-fly zones."


Mounting unrest in Russia's Caucasus region and a series of deadly bombings
in Russian cities have led more recently to Moscow's denunciations of
"international terrorism" and its linking of that phenomenon to separatist
movements--particularly those in Russia and Yugoslavia. Moscow's arguments
in this area are more than a little ironic, given the efforts of Russian
political leaders and diplomats in recent years to reclaim significant
portions of the Soviet Union's foreign policy legacy. The Soviet Union was,
after all, a key supporter of national liberation movements around the
globe. It was also a clandestine sponsor of international terrorism, with
connections to fundamentalist groups not unlike those that Moscow is
currently blaming for the war in the Caucasus, the bombings in Russia's
cities, and the push for independence in Kosovo.


Moscow's current foreign policy concepts serve its needs nicely, however.
Portraying Russia's crackdown in the Caucasus as an effort to stamp out a
separatist movement underwritten by international terrorist organizations
absolves Moscow for the stupidity of its earlier war in Chechnya and its
subsequent abject failure to address the region's glaring social, political
and economic problems. Those are the more compelling reasons for the unrest
in the region. By simultaneously linking the Chechen rebels to Osama bin
Laden and militant fundamentalist groups, Moscow hopes also to align itself
with Western nations intent on battling international terrorism and thereby
to implicate the West in what is likely to be another war of bloody
repression at home in Russia. The emphasis on "aggressive separatism" and
terrorism, finally, also serves as a justification for Moscow's support of
Belgrade--a key Russian ally in the Balkans--and for its reservations
regarding international military interventions more generally. 
Back to the top

#4
Russia: Lawmaker Questions U.S. Interest In Corruption
By Andrew F. Tully


Washington, 23 September 1999 (RFE/RL) -- A member of the Russian state Duma 
is skeptical about America's sudden interest in financial corruption in his 
country which he says has been around for so long.


Yuri Shchekochikhin, who is also the editor of the Moscow newspaper "Novaya 
Gazeta," testified Wednesday before a Congressional hearing on Russian 
corruption.


American law enforcement officials are investigating whether Russian 
businessmen, criminals and senior officials "laundered" as much as $15 
billion through the Bank of New York. Recent American news accounts say some 
of that money may have included aid from the International Monetary Fund. 


"Money laundering" is transferring illegal profits through many bank accounts 
until the source of the money cannot be traced, and the funds appear to be 
legitimately earned.


Shchekochikhin said recent American news reports about Russian money 
laundering and other corruption remind him of a "bombing attack."


Shchekochikhin said: "The constant publications in the press here, and 
releases, remind me of a bombing attack. ...All of this happened a long time 
ago. ...America knew about this. ...Why only today?...I want to warn you 
about making -- about coming to conclusions about the money-laundering 
situation in the Bank of New York."


Shchekochikhin testified on the second of two days of hearings by the House 
of Representatives Banking Committee, which plans to hold further hearings on 
Russian corruption in the coming weeks.


On Tuesday, U.S. Treasury Secretary Lawrence Summers testified before the 
same committee that Russia's problems with financial corruption should not 
drive the United States to abandon the Russian people. He did say, however, 
that Washington should be stricter in its financial dealings with Moscow.


And the secretary said the administration of U.S. President Bill Clinton 
supports the decision by the International Monetary Fund to loan Russia money 
that can be used only to repay existing debt to the IMF.


After Summers spoke, two members of the Nixon Center, a conservative think 
tank, testified that the Clinton administration was at least in part to blame 
for the current scandal.


Paul Saunders and Dmitri Simes said the administration had been aware for a 
long time that Russian banks were stealing public money, and yet it pushed 
for billions of dollars in IMF loans to Russia anyway.


Wednesday's hearing began with testimony from James Robinson, the U.S. 
assistant attorney general in charge of the Justice Department's Criminal 
Division.


Robinson said American law-enforcement agencies need more resources to fight 
the illegal flow of Russian foreign money into the United States. He said 
such "capital flight" threatens to corrupt Russia's financial institutions.


The assistant attorney general said the meetings last week in Washington 
between U.S. and Russian law-enforcement officials about the money-laundering 
investigation was "productive." Hours later, Russian Foreign Minister Igor 
Ivanov echoed that. Speaking with reporters at the White House, Ivanov said 
Moscow has agreed "to fully cooperate" in the investigation with the United 
States and all other nations involved.


Also testifying at the House Banking Committee hearing on Wednesday was 
Thomas Renyi, chairman of the Bank of New York. He stressed that his 
institution has not been formally charged with wrongdoing. But Renyi conceded 
that the bank was slow to recognize the questionable flow of money through 
one of the accounts involved in the scandal because the holder of the account 
was married to one of the bank's executives.


Otherwise, Renyi said, the Bank of New York acted responsibly and according 
to accepted practice, and he said it has instituted new procedures to prevent 
similar trouble in the future.


Meanwhile, a parallel Congressional investigation into Russian corruption is 
opening in Washington. Deputy Secretary of State Strobe Talbott, the 
second-ranking diplomat in the Clinton administration, is scheduled to 
testify Thursday (today) about the scandal before a hearing of the Senate 
Foreign Relations Committee.


Also on Thursday, U.S. Attorney-General Janet Reno and Summers, the treasury 
secretary, are expected to announce a new joint initiative of the Justice 
Department and the Treasury to fight money laundering. Robinson mentioned the 
program during his testimony Wednesday, but declined to give details.


During Wednesday's congressional hearing, Representative Jim Leach, the 
chairman of the Banking Committee, asked Shchekochikhin why he believes so 
much money is being siphoned out of Russia. The Russian legislator replied by 
recalling the end of World War II, when Charles DeGaulle became president of 
France. DeGaulle, he said, asked the French to put all their money into 
French banks, and promised that "not one centime will be lost."


Shchekochikhin said there is no one in Russia today who can make the same 
assurances to the Russian people.


Therefore, he said, Russians are eager to get their money out of the country.


In his words: "And of course lack of trust in the government is the first or 
the foremost reason."


The Russians do not distrust only their own leaders, Shchekochikhin said. 
They also have become disillusioned with the United States, at part because 
of its conduct in Vietnam, in Iraq, and in Yugoslavia.


"Well, right now, the hope for America in Russia is gone," says 
Shchekochikhin. 
Back to the top

#5
Izvestia
23 September 1999
Scandal Of America 
By Vladimir Abarinov 
 
The current hearings in the U.S. Congress on corruption in Russia are 
motivated by America's own economic interests, writes IZVESTIA. It is not 
accidental that at this very moment the new head of the World Trade 
Organization (WTO), Mike Moore, said that there was no ground so far for 
Russia to become a member of that organization. Moreover, he said that out of 
the big countries China was one of the most likely candidates for membership 
-- it may join the WTO within the nearest few weeks. 


"These words reflect the U.S. official position," the paper points out. "The 
U.S. Administration actively supports the anti- dumping investigation with 
respect to Russia. The obstacles to Russia's admission to the WTO and the 
scandal around the Russian mafia are the best way of delaying the lifting of 
the trade restrictions against Russia, imposed back during the Cold War. 
Moreover, the Clinton Administration promised in public that in September it 
would recognize Russia as a country with a market economy. Now it can safely 
not do it." 


As for the hearings per se, the Russian delegation invited to participate 
wants to receive documents proving that Russian money is really laundered in 
America. The delegation head, Alexander Kulikov (a communist Duma member) 
said flatly on his arrival in Washington: "If such documents are not 
produced, we will have the right to say that the interests of the Russian 
state are discredited purposefully to achieve certain political goals." 


But the American reality is such, the paper notes, that normally the 
Congressmen do not deal with any documents -- they simply hear witness 
testimony. The purpose of congressional hearings is to formulate the problem 
and then decide what to do about it. 


The paper also notes that many important witnesses, such as Natasha 
Gurfinkel-Kagalovskaya and Lucy Edwards from the Bank of New York, Geneva 
banker Bruce Rappaport and Russian financier Mikhail Khodorkovsky refused to 
come to testify in Congress. The suspended Russian Prosecutor General, Yury 
Skuratov, said he was unable to come but promised to cooperate. The former 
Swiss Federal Prosecutor Carla del Ponte was also absent due to her new 
assignment in the Hague. 


As for the U.S. Administration, sharply criticized now for the "loss" of 
Russia, it is represented at the hearings by Secretary of the Treasury Larry 
Summers. The latter tried hard to defend Washington's Russia policies, saying 
that a stable, democratic, prosperous and disarming Russia was in America's 
interest. Other leading U.S. politicians, the architects of Bill Clinton's 
Russia course, such as Madeleine Albright, Strobe Talbott, Al Gore, Sandy 
Berger and Willian Cohen, also vigorously uphold this course in numerous 
public statements, the paper says. 
Back to the top

#6
Moscow Times
September 24, 1999 
PARTY LINES: Elections Are Political Y2K For 'Family' 
By Brian Whitmore
Staff Writer


Russia's super-presidential system was designed back in 1993. And while it 
may now seem incredibly short-sighted, it seems there is a design flaw f a 
bug if you will. The entire system could crash in 2000 when President Boris 
Yeltsin goes. Call it Russia's political Y2K problem. 


The problem is that the fabled "family" f that cabal of Kremlin insiders who 
got rich and powerful due to their proximity to Yeltsin f are bumping into a 
biological reality. One of these days, sooner or later, one way or another, 
Yeltsin is going to leave the Kremlin. The system as set up now works 
beautifully for the family and its state-assets-fattened oligarchs. But when 
Yeltsin leaves, things go a bit haywire f elections are supposed to choose 
his successor. 


For some oligarchs, this is the functional equivalent of the power grid 
crashing, electronic bank accounts evaporating, planes dropping out of the 
sky and other calamities associated with Y2K crises. 


The family f first daughter Tatyana Dyachenko, oil tycoons Boris Berezovsky 
and Roman Abramovich, Kremlin chief of staff Alexander Voloshin and 
presidential ghostwriter Valentin Yumashev f is safe as long as Yeltsin is 
alive and kicking (although the more feebly he's kicking the better). But as 
soon as he goes, they are toast f or so they appear to assume. 


This is what drives all the searches for a suitable successor f Viktor 
Chernomyrdin, Sergei Stepashin, Vladimir Putin, Alexander Lebed f to the same 
inescapable conclusion: no matter how loyal a president-in-waiting appears, 
there is no guarantee that he will not turn on the family once his wait ends. 


Once securely in the Kremlin, what use would Stepashin, Putin or Lebed have 
for Dyachenko, Berezovsky and Abramovich? None whatsoever. Any new president 
who wants to make a clean break in the public mind with the corruption of the 
past decade will need to at least appear to clean house upon coming to 
office. Either way, Berezovsky gets it. Therefore, the family won't trust any 
heir, no matter how loyal he may be to Yeltsin. 


When Sergei Stepashin was appointed prime minister in May, the consensus was 
that the Kremlin valued his "loyalty." There was also his law-enforcement 
background, which would come in handy if the need arose to declare a state of 
emergency. 


Just 82 days after his appointment, Stepashin was cast by Yeltsin on to the 
trash heap of loyal ex-prime ministers. Analysts like the respected 
journalist Alexander Zhilin said Stepashin's ouster came because he refused 
to go along with plans to subvert the Constitution and cancel elections. 


Enter Vladimir Putin. Putin's most attractive attribute from the Kremlin's 
point of view was his loyalty to Yeltsin. And yes, there is also his KGB 
background should emergency rule be needed. 


Putin has been in office for a month and the media is already whispering that 
he is on the way out f to be traded for Krasnoyarsk Governor Alexander Lebed, 
who was a Kremlin security tsar in 1996 and negotiated peace in Chechnya. But 
even if it's Lebed who ultimately comes to power through elections, why would 
he tolerate the family more than Putin, say, or Yevgeny Primakov? 


For the family, Y2K is a systems problem: It all crashes with elections. 
Solving Y2K means rooting the democracy out of the system like a line of 
defective computer code.  
Back to the top

#7
Visit CDI's web site for up-to-date information on the crisis in North 
Caucasus. A new page (http://www.cdi.org/issues/Europe/), to be launched 
Friday, contains day-by-day time line of events, maps, and background 
information on the current conflict in Dagestan and Chechnya.


From
The Center for Defense Information
The Weekly Defense Monitor
VOLUME 3, ISSUE #37  September 23, 1999


War Threatens to Engulf Chechnya
By Tomas Valasek, Research Analyst, tvalasek@cdi.org


The war in Dagestan appears to be over for now as the rebels from Chechnya


withdrew and the Islamic militants holding out in Dagestan abandoned their
positions. But even as Russian and Dagestani troops consolidate their
gains by removing dozens of mines and booby traps, another conflict looms
on the horizon. This time, Moscow seems poised to launch an attack against
hechnya itself.


Russian jets, claiming to be targeting the militants' bases, have
continued bombing Chechnya even after operations in Dagestan ceased. The
intensity of bombing grew to over 100 raids a day this week. Following a
series of bomb explosions throughout Russia, which Moscow blamed on the
Chechens, Russian Prime Minister Vladimir Putin called for economic
sanctions against Chechnya, imposition of a "safety zone" around the
republic and the "destruction" of all Chechen guerrilla bands, along with
the creation of a Chechen government in exile. Russian troops have already
cut off all access points to Chechnya. Moscow is sending new military and
police units to the region every day to bolster the force already there
(officially 13,000 but up to 30,000 by some estimates). While devastating
to Chechnya, the punitive measures could also prove difficult to sustain
for Moscow. If the Putin-envisioned "safety zone" involves creating a
chain of military outposts around Chechnya, these would be vulnerable to
Chechen attacks. Further, any large-scale ground operations against
Chechnya would trigger a nationalist response and likely draw Russia into
another disastrous war. Chechnya's internal divisions do not necessarily
translate into weakness vis-a-vis external enemies. The Chechnya of the
late President Dzhokar Dudayev in 1994 was equally weak domestically, yet
it mustered sufficient resolve and resources to defeat the numerically
superior Russian forces. Moscow's posturing on Dagestan must also be
considered in the light of the upcoming parliamentary and presidential
elections in Russia. It is conceivable that Prime Minister Putin's
statements were intended to shore up support for President Yeltsin's
supporters, such as Putin himself, who seem destined to lose the
elections.


That the war in Dagestan would in the end draw in Chechnya was perhaps
inevitable. The Dagestan conflict as such may have been only an extension
of Chechen domestic politics. Shamil Basayev, the field commander who led
troops on two raids into Dagestan in August and September 1999, is an avid
opponent of Chechen President Aslan Maskhadov. Basayev lost to Maskhadov
in the 1997 presidential elections.


Although Basayev and Maskhadov fought together in the 1994-96 war, their
views of Chechnya's external relations have diverged during the post-war
years. As the president of the country, Maskhadov is charged with
finalizing Chechnya's status vis-a-vis Russia. The 1996 Russo-Chechen
accords signed in Khasavyurt, Dagestan, left Chechnya's political status
open while calling for a final arrangement to be agreed on by 2001. Like
all current Chechen leaders, Maskhadov is a firm advocate of independence.
"Chechnya is an independent state....Only this remains -- that the rest of
the world, including Russia, recognize this independence," Maskhadov
declared shortly after his election. However, political reality dictates
otherwise. The Chechen government has been unable to guarantee order or
provide reasonable living standards for its citizens. Most of the Chechen
population is unemployed or involved in criminal enterprises, and the
civilian authority has almost completely collapsed. Moscow has offered
help -- trade, subsidies -- but only if Chechnya rejoins the Russian
Federation. Maskhadov was due to meet with Boris Yeltsin shortly after
the invasion of Dagestan began. The timing indicates that Basayev may
have launched the operation in order to foil the planned meeting and
prevent any compromises with Russia.


The Dagestani conflict has put Maskhadov in an impossible situation.
Siding with Russia against maverick Chechen commanders, as Moscow
repeatedly urged him to do, would expose the president to the wrath of
his former comrades in arms. Already Maskhadov has ceded most of his
real power to field commanders who run sections of Chechnya as their
personal fiefdoms. If the president allied himself with Basayev he
would almost certainly provoke a Russian military response against
Chechnya -- which is appearing increasingly likely anyway. Faced with
these hard choices, Maskhadov has chosen the implausible path of not
only denying official Chechen involvement, but also denying that any
Chechens were involved in the Dagestan fighting. Maskhadov stated
through his spokesman that the Chechen people "have nothing to do with
what is going on" in the neighboring republic. He later revised his
position to admit Basayev's role in the fighting but it came too late
to appease Russia.


Following the bomb explosions in Russian in August - September 1999,
official Moscow has essentially stopped differentiating between
maverick Chechen commanders and Grozny authorities, and apparently
broke off talks with Maskhadov altogether. While Russia is preparing
for a possible war, fellow leaders of North Caucasus states threw
Maskhadov a lifeline. The presidents of North Ossetia and Ingushetia
met with Maskhadov behind Moscow's back and called on Russian President
Yeltsin to meet with the Chechen leader and solve the dispute
peacefully.
Back to the top

#8
Christian Science Monitor
September 24, 1999
Through red-colored glasses
'Red Files' explores Soviet views of atomic secrets, sports, space race 
By Gloria Goodale, Arts and culture correspondent of The Christian Science 
Monitor 


Cold war secrets are hot all over again. Witness the hoopla over recent 
revelations that a British great-grandmother was a career spy for the Soviet 
Union. 


Most students of the cold-war era know the story of Julius and Ethel 
Rosenberg, the New York couple who were put to death in 1953 for passing 
secrets to the Soviets. But most Americans still don't know about the other 
United States citizens who were guilty of far more overt and egregious 
espionage for the Russians and were never punished. 


Lona Cohen carried American A-bomb secrets in a Kleenex box in 1945, which 
she displayed openly as she journeyed across the country from the Los Alamos, 
N.M., laboratory. 


Of potentially greater meaning to contemporary audiences is the ease with 
which Mrs. Cohen and her husband, Morris, penetrated the most secret 
scientific laboratories of the time. As recent scandals involving the same 
facility suggest, little appears to have changed. 


In a compelling four-part series, Red Files (airing Mondays in one-hour 
segments, Sept. 27-Oct. 18), PBS explores the Russian view of recent history 
through interviews with key Soviet participants, newly released archival 
film, and declassified dossiers. 


The first night examines the group of Americans who helped the Soviet Union 
obtain US atomic secrets. In the second evening, former gymnast Olga Korbut 
tells of the toll the Soviet sports machine took on young athletes. The space 
race is the theme of the third episode, and the final segment looks at Soviet 
propaganda. 


"It's soon that you're not going to find people with any real kind of 
political ideals in Russia" because of the effects of years of propaganda, 
says Russian journalist Vladimir Pozner, who narrates in the final show. 
"They've been lied to so terribly that they no longer have the desire to 
believe in anything." 


Beyond that is a "very strong anti-American feeling" in Russia today, says 
the son of former Soviet leader Nikita Khrushchev, Sergei Khrushchev. 


"The last polls show that 78 percent of Russians all over the country, not 
only in Moscow, have more or less anti-American feelings," the younger 
Khrushchev says. 


That hard truth may be the most compelling reason to tune in to this 
deconstruction of recent history. In order to understand just how far events 
have come since the fall of communism in Russia, it is enormously revealing 
to grasp how they progressed to that point in the mid-1980s. 


In the sports segment, the now middle-aged gymnast Ms. Korbut, who wowed the 
world as a petite 17-year-old wonder in 1972, says she paid the price for her 
uniqueness. 


"I destroyed everything by trying to think, trying to do new," she says. "And 
of course, the government didn't like that." She was banned from travel after 
the 1976 Olympics, where she was overshadowed by the even younger 14-year-old 
Nadia Comaneci. 


Many of her colleagues also share a sense of the political price they paid 
for their prowess. But they also demonstrate a sense of pride about how far 
Russia has come since the fall of communism. 


Perhaps the most curious presence in the series is the younger Khrushchev. He 
says that he was extremely close to his father in later life and is able to 
share many anecdotes about life behind the scenes during momentous historic 
events. 


He explains why his father banged his shoe on the table during his address to 
the United Nations in 1961. Look at the American fly-over of Soviet territory 
the previous year, he says. 


"It was part of the cold war behavior, when both sides tried to show that 
they're equal," the younger Khrushchev says. "America was much stronger, so 
it was much more difficult [for] my father to show that he's equal." 


He also includes a warning note about what he calls the deterioration of his 
native country. 


"The situation there structurally and maybe psychologically is very close to 
what happened in Russia in 1907 to 1917" prior to the Communist Revolution, 
he says, "just the selfish rule of one group of people to control the state 
through ... the Mafia....I'm very pessimistic about the future."   
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#9
American Chamber of Commerce in Russia
http://www.amcham.ru/
AmCham Newsletter
Foreign Policy by Sound Bite
September-October 1999 
Chairman's Report by Bruce W. Bean 


High political season has come both to Russia and the U.S. The media in
both countries bring us sensational stories about presidential elections
and the hopeful candidates. While Russia's elections are important for
AmCham members, they are the business of Russians. As far removed in time
and geography as it may sometimes seem, however, the American presidential
election is very important for AmCham members. 


American political campaigns are seldom the source of thoughtful,
considered analysis of public policy positions. Such campaigns are much
more likely to be characterized by the briefest of sound bites, which must
reduce each complex issue to a 15 second punch line. In this context, the
temptation for candidates from any U.S. political party to make a few
points at the expense of Russia and U.S.-Russian policy is obvious. After
all, much of the American electorate is accustomed to hearing bad things
about Russia and whatever happens here is not expected to have an immediate
effect on local voters in the U.S. 


The mainstream media encourage policy by sound bite by routinely presenting
items about Russia which feature such phrases as "privatization giveaway,"
"criminalization," and "mafia." Disturbingly, the historically more staid
academic community has also weighed in recently. This spring brought us a
new book on U.S. government aid entitled Collision and Collusion. The
summer edition of the Wilson Quarterly 1999 has the conclusory title: Why
Did Reform In Russia Fail? The Jamestown Foundation recently hosted a
conference with a similar title: What Went Wrong with Russia Since 1991 and
Why? Finally, Who Lost Russia? is a convenient, if meaningless, topic that
has recently filled pages in our Congressional Record. 


AmCham does not take political positions here or in the U.S. but I would
like to present some ground rules regarding Russia that responsible U.S.
presidential candidates and their advisors should accept during the coming
political year. 


The U.S. government will not and should not pretend to be able to solve the
problem of economic development in Russia. The American government does not
have the solution. Indeed, there is no answer capable of being reduced to
or expressed in a sound bite worthy of prime time news.  Development of a
competitive market economy in Russia is a process that began in the 1980s,
continues today, however slowly, and will extend over the next generation. 


Russia will develop its own route to an efficient market economy and such
development will take decades. The U.S. can assist in important ways, but
Russian economic development is not on hold pending implementation of the
correct policy from Washington.   


Despite what we read and hear, Russia is not "lost" and while reform has
not yet succeeded, it is incredibly simple minded to conclude that it has
already failed. Future U.S. foreign policy toward Russia must not be driven
by the headlines and evening TV reports generated by the popular press. In
a sound bite our candidates can understand, Russia is at bat in the bottom
of the first. The game is not over; it has just begun. 


As those of us who live here know, Russia contains an enormous reservoir of
goodwill toward America and Americans, which even Kosovo did not exhaust.
Thus, a cornerstone of U.S.-Russia policy should be continuation and
expansion of broad-based engagement with Russia and its people. Training
and education programs such as the Muskie program for graduate level
education and the recent proposal to educate 10,000 Russians in graduate
level accounting and business administration in the U.S. should have the
support of every presidential hopeful. 


One on one contact with Russian citizens is the great advantage AmCham
members in Moscow have over U.S. presidential candidates, their advisors
and the American electorate at large. Expanding opportunities for such
engagement in the U.S., for example by creating a program to have Russian
students in high schools in America, would be a worthwhile initiative for
both parties. Russia is too important for U.S.-Russian foreign policy to
become a political football in the upcoming U.S. election campaign. 
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#10
Albright Seen Promoting U.S.-Russian Cooperation  

Rossiyskaya Gazeta
September 18, 1999
[for personal use only]
Rossiyskaya Gazeta/ITAR-TASS "Direct Speech" report: "Russia Cannot 
Be Lost Like a Watch or a Bunch of Keys. United States Must Now Expand, 
Not Reduce, Cooperation With Russia, Madeleine Albright Says" 


This thought [reference to headline] was the 
leitmotiv of U.S. Secretary of State Madeleine Albright's policy speech 
at one of Washington's most influential research organizations -- the 
Carnegie Endowment for International Peace. The speech confirmed that the 
U.S. Government intends to counter the recent spate of attacks on its 
policy toward Russia. 


Albright could not, of course, avoid expressing concern at the reports about 
corruption in Russia. According to her, the U.S. Administration is 
currently studying them carefully. "The problem is real and must be taken 
seriously," she said, adding that the Russian Government "needs, at last, 
to make fighting corruption a priority." She described the Russian 
authorities' previous approach to this problem as "inadequate." 


The U.S. secretary of state repeated previous assurances that Washington 
"will not support further multilateral aid to Russia until adequate 
safeguards are in place." "We have always closely monitored our bilateral 
aid too," she added. 


"I hope we will bear in mind that Russia cannot be lost like a watch or 
a bunch of keys. It is a country with a population of almost 150 million 
which has ranked among the major world powers for over three centuries. 
The claim made by some that Russia is ours to 'lose' is arrogant. The 
claim that Russia is already 'lost' is simply wrong." Both the main aims 
of Washington's policy toward Moscow -- to strengthen security on the 
basis of disarmament and to assist Russia's democratic and market 
transformation -- remain valid; they have not been fully achieved, but 
they have not been removed from the agenda either. 


"Russia's future course is uncertain. There has been a liberation of forces 
many of which are opposed to each other. The currents of free enterprise 
and initiative are colliding with those of corruption and crime. Impulses 
toward integration and openness are in conflict with trends toward 
isolation and enmity. Time will tell which of these forces prevail. What 
we can be sure of now is that the result will be thoroughly Russian. And 
that it will depend far less on edicts issued from Moscow or on 
foreigners' advice than on decisions made and opinions formed in Russian 
school classrooms, farms, plants, and families. 


"It is inspiring that the Russians take every opportunity to display 
their rejection of both the Soviet past and a dictatorial future, despite 
the gloomy present. They have not yet tasted the fruits of democracy, but 
they have not lost faith in it. U.S. policy toward Russia is based on the 
fact that it is in our own interests that these expectations should be 
fulfilled." 


Albright believes that one of the most eloquent signs of the "revolutionary 
changes" that have taken place in the Russian state and Russian society 
in recent years is the very fact that questions of "corruption, 
incompetence, and other shortcomings" at even the highest echelons of 
power are openly raised and discussed in today's Russia.. Albright 
regards this as grounds for "making greater efforts to cooperate with 
Russia, rather than for halting aid and abandoning Russia, as some people 
suggest." 


To all appearances, this reproach is aimed mainly at the incumbent U.S. 
Administration's main opponents on Capitol Hill. "Unfortunately, Congress 
is proposing to reduce by 25-30 percent the sums that President Clinton 
requested for programs in Russia and the other newly independent states 
next year," Albright said. "This would require us to make unacceptable 
and defeatist compromises." The secretary of state is convinced that the 
programs of cooperation with Russia "promote important U.S. interests and 
values," and she accused the opposition of "ignoring this fact." 
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#11
The Guardian (UK)
23 September 1999
[for personal use only]
White House under fire for 'covering up' Russian corruption 
Julian Borger in Washington 


A Washington consultant told congress yesterday that the Clinton 
administration had covered up a failed CIA attempt to infiltrate a money 
laundering venture run by KGB agents including a former close aide of the 
Russian president, Boris Yeltsin. 


Testifying to a house of representatives committee investigating Russian 
money laundering in the United States, Karon von Gerhke-Thompson said the CIA 
and the White House were well aware of the role played by top Russian 
politicians and intelligence officials in the flow of embezzled funds through 
US banks.


Her evidence provided fuel for critics who argue that the Clinton 
administration, in its unquestioning support for the Yeltsin regime, turned a 
blind eye to blatant corruption in the Kremlin, and thus helped encourage the 
growth of Russian organised crime and money laundering.


Ms Von Gerhke-Thompson, the vice-president of a political consulting firm 
called First Columbia Co Ltd, told the house banking committee she had been 
approached in 1993 by Alexandre Konanykhine, a young Russian tycoon, Yeltsin 
fundraiser and member of the Russian president's entourage on his visit to 
Washington the previous year.


He presented himself as the US vice-president of Menatep Bank, owned by one 
of Russia's most powerful financial oligarchs, Mikhail Khodorkovsky.


"Konanykhine alleged that Menatep Bank controlled $1.7bn [Ł1bn] in assets and 
investment portfolios of Russia's most prominent political and social elite," 
she recalled. She said he wanted to move the bank's assets off shore and 
asked her to help buy foreign passports for its "very, very special clients".


In her testimony to the committee Ms Von Gerhke-Thompson said she informed 
the CIA of the deal, and the agency told her that it believed Mr Konanykhine 
and Mr Khodorkovsky "were engaged in an elaborate money laundering scheme to 
launder billions of dollars stolen by members of the KGB and high-level 
government officials".


She said she agreed to go along with the passport buying scheme and report 
back to the CIA, a claim confirmed by intelligence officials interviewed by 
the Washington Post newspaper. It quoted them as saying Mr Konanykhine was 
one of an elite group of rich young former communists, known as the "miracle 
boys", who helped the KGB move large quantities of embezzled money abroad.


Mr Konanykhine, now 33 and living in New York, denies any links to the KGB or 
claims he was involved in large-scale money laundering. He told a US 
journalist it was normal for Russian businesses to offer clients foreign 
passports in return for big investments. He was granted political asylum 
after saying he would be killed by the Russian mafia.


Ms Von Gerhke-Thompson's attempt to infiltrate the Menatep Bank was cut short 
in September 1993, when Mr Konanykhine and his colleagues broke off contacts. 
She said she was told by CIA officials that her role had been compromised by 
Aldrich Ames, a Russian mole uncovered in the CIA in 1994.


She said Mr Konanykhine had broken off links during a trip to Turkey which 
coincided with a visit there by Mr Ames.


However, Ms Von Gerhke-Thompson told the committee neither the operation nor 
its failure were reported to congress, as stipulated by the national security 
act. The silence, she argued, was to avoid embarrassing US policymakers.


"It seemed to me that it was a 'policy' versus 'intelligence' failure," she 
said.


"Konanykhine's money laundering trail led directly to Boris Yeltsin. It was a 
politically unpalatable situation for the Clinton administration, the Yeltsin 
administration and the CIA."
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#12
Stratfor Commentary
www.stratfor.com
Sepember 23, 1999
Russia Losing Trans-Caspian Race


Citing the ongoing dispute over ownership of Caspian Sea oil, Russia’s 
Foreign Ministry announced on Sept. 20 that Moscow will not recognize 
Turkmenistan’s effort to extend its sovereignty over part of the inland sea. 
Russia’s protest, however, will not stall U.S.-backed efforts to build the 
Trans-Caspian pipeline, nor will it accelerate Russia’s own pipeline project 
in the Black Sea.


The legal status of the Caspian ­ and claims of ownership by Azerbaijan and 
Turkmenistan -- have stalled the Trans-Caspian pipeline project. As Gazprom, 
Russia’s oil monopoly, is trying to outpace the U.S. project and supply gas 
to Turkey’s growing market, this dispute has worked to Russia’s advantage. 


According to Gazprom chief executive Rem Vyakhirev, this is a race for 
control of supply that either Russia or Turkmenistan can win. On Sept. 21, 
Azerbaijani President Geidar Aliev explained to Russia’s Fuel and Energy 
Minister Viktor Kalyuzhny that the international status of the Caspian Sea 
would finally be settled, presumably in early October when the five Caspian 
states hold a meeting in Iran.


After that meeting, Russia’s attempts to contest the construction of the 
U.S.-backed Trans-Caspian pipeline will become irrelevant. The governments of 
Turkmenistan and Azerbaijan will be able to reach a territorial agreement. 
Russia undoubtedly will protest, but will have no legal means to block the 
project further.


The Trans-Caspian project has also gained financial strength over its 
Russian-backed competitor. Support from Royal Dutch Shell, made official in 
August, secures the Trans-Caspian funding requirement of $3 billion. This 
makes Shell a 50-50 partner in the pipeline with the joint venture of General 
Electric and Bechtel’s PSG International. Protest or no, Trans-Caspian will 
be on-line in 2002, and will likely outpace Russia’s ambitions to control gas 
export to Turkey. 


On the other hand, the Black Sea project is threatened by regional 
competition and internal politics. Fuel and Energy Ministry infighting and 
the conflict in Dagestan seriously hamper the schedule. If the Trans-Caspian 
goes through first, Turkmen state-run energy companies TurkmenGaz and 
Turkmenneft will pose a direct threat to Gazprom. They could even usurp 
Gazprom’s regional power. 


In a broader sense, the cultivation of Turkmenistan’s energy sector 
challenges Russia’s traditional role in Central Asia. So long as the 
Trans-Caspian project maintains its schedule, Russia’s energy policy will 
have little effect on Central Asia, and will not subvert U.S.-Turkmenistan’s 
monopoly over oil exports to Turkey and Southern Europe. 
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#13
Russia Needs New Approach to Armaments: View.


MOSCOW, September 22 (Itar-Tass) - The president of Russia's League for 
Assistance to Defense Companies, Anatoly Dolgolaptev, has said the recent 
events in Daghestan call for new approaches to providing the army with 
weaponry. 


Speaking at a conference on Thursday which analyzed the actions by Russian 
troops in Daghestan, Dolgolaptev said the characteristics of weapons used 
against Islamic extremists were comparable to World War II models. 


Russian defense companies are ready and capable of providing the army with 
the most advanced weaponry, especially to the units that have to engage in 
guerrilla-style combat, he noted. 


"The scientists who had analyzed the actions by federal forces in Chechnya 
warned that new wars and conflicts will run in special conditions, where 
there is no clear line of contact with the enemy and where traditional 
weapons are ineffective," Dolgolaptev said. 


However, these views were ignored, and the budget allocates less than 16 
percent of the approved funds for military science, and a mere 6 percent for 
designing and testing, he noted. 


A new system of armaments is needed, because no large-scale or drawn-out war 
are expected in the future, while possible local wars require a completely 
new approach. 


"One should not explain irreplaceable losses by a lack of modern equipment, 
because our industry has a high potential and unique technologies and can 
provide superior weapons to the army," he said. 


Such advanced technologies will also help pull other sectors and the whole 
economy out of the crisis, according to Dolgolaptev. 

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