April 9, 1998  
This Date's Issues: 2141• 2142 • 

Johnson's Russia List
#2142
9 April 1998
davidjohnson@erols.com

[Note from David Johnson:
1. AP: Russian Workers Launch Labor Action.
2. Rossiiskaya Gazeta: Vladimir KUCHERENKO, KIRIYENKO'S CHANCES GROW.
3. Reuters: Deputy Speaker: Duma Will Reject New PM Friday.
4. Paul Goble (RFE/RL): Moscow Looks East.
5. Time magazine: Profile of Mikhail Gorbachev by Tatyana Tolstaya. 
6. Nezavisimaya Gazeta :GOVERNMENT CHANGED ALONG WITH ITS COURSE.
(Interview with Auditor of the Russian Accounts Chamber, former finance
minister Vladimir 
Pansko.)
7. Moscow Times: Pavel Felgenhauer, DEFENSE DOSSIER: Inside Vulnerable
Bastion.
(Re NATO expansion). 
8. Reuters: Yeltsin wants investor protection bill dropped.
9. Boston Globe: David Filipov, Ex-convict becomes hero while Moscow
annuls vote.
(Nizhny Novgorod).
10. Jamestown Foundation Monitor: CAPITALISM LUZHKOV-STYLE...MAY NOT YET
PROPEL 
LUZHKOV INTO THE PRESIDENCY.]

*********

#1
Russian Workers Launch Labor Action 
By Sergei Shargorodsky
April 9, 1998

MOSCOW (AP) -- Russian trade unions and opposition activists called a day
of nationwide protests today to denounce government economic policies and
to demand payment of back wages. 
Union leaders sought to limit today's protests to labor issues.
Communists and more radical hard-line opposition groups, however, sought to
use the demonstrations to urge the resignation of President Boris Yeltsin. 
Groups submitted requests to hold a total of 901 rallies and marches
across Russia, which they said were expected to involve 1.8 million people,
according to the Interior Ministry. 
Mikhail Shmakov, head of the Federation of Independent Trade Unions,
said ``many millions of working people'' would be rallying throughout the
vast country. 
Actual attendance was expected to be much lower. Government officials
said about 800,000 people were likely to take part in the protest, fewer
than in similar protests last year. 
In the Far Eastern city of Vladivostok, a planned rally of 10,000 people
drew an estimated 3,000 participants, who marched under red communist flags
to the town's central square. Factories and plants in the town stopped work
for two hours. 
Angry pensioners marched in the city to demand an end to Yeltsin's
government. Teacher Galina Volokina complained bitterly about ``going to
work hungry'' after spending 23 years teaching Russian children. 
Government officials said they would be watching the protests carefully
as Yeltsin tries to push ahead with his economic program and win
parliamentary approval for a new government. 
``Public sentiments should certainly be taken into account, especially
now that a new government is being formed,'' presidential spokesman Sergei
Yastrzhembsky said Wednesday. 
The government held a session today to discuss a package of urgent
measures to pay rising arrears in wages to state workers, a problem that
has plagued Russia in recent years. The government owes $1 billion of an
estimated overall $10 billion owed Russian workers in back wages. 
Acting Prime Minister Sergei Kiriyenko told the gathering in Vladivostok
that the government has allocated $117 million to help pay off the debts to
state workers, the Interfax news agency reported. 

Kiriyenko, a 35-year-old ex-fuel minister, was named premier after
Yeltsin dissolved the previous government last month. He is awaiting
approval by parliament, with a confirmation vote set for Friday. 

*******

#2
>From RIA Novosti
Rossiiskaya Gazeta
April 9, 1998
KIRIYENKO'S CHANCES GROW
By Vladimir KUCHERENKO

The recent roundtable meeting saw practically no
bargaining between political parties and blocs regarding their
candidates for the Cabinet posts.
Vladimir Zhirinovsky, leader of the Liberal Democratic
Party, brought in a list numbering 14 people and asked to
accept at least one of them. Communist leader Gennady Zyuganov
also said that his faction had some ideas, but it sounded like
a mere declarative statement. The Our Home Is Russia bloc
wishes to have either several of its members in the new
Cabinet, or only one but holding a very high post.
Sergei Kiriyenko did not let himself be dragged into the
"personnel bargaining" and therefore left the round table with
no commitments taken, but with far-reaching plans in mind. For
instance, some sources have it that a possibility of
cooperation with the Federation of Independent Trade Unions is
to be considered. Its most active members can head the
ministries which deal with social issues and where social
partnership is vital. Admittedly, all the candidates will be
primarily discussed with President Yeltsin.
According to the data available, Kiriyenko is going to
tangibly restructure the departments and committees whose heads
are not officially Cabinet members. (These include the State
Anti-Monopoly Committee, the State Committee for the Support
and Development of Small Businesses, the agencies which control
natural monopolies, the service which handles insolvency issues
and several others.) Plans call for a return to strict
delineation of functions of such departments. The work of the
new Cabinet will start from the distribution of the key roles -
ministers and vice-premiers.
Observers note that Kiriyenko behaves in a very diplomatic
manner: for instance, he tells the truth of the economic crisis
in Russia, but stops short of offering detailed prescriptions
for remedying the situation. A smart person will understand,
while a stupid one will not ask questions. However, his
priority plans are already known: the further balancing of the
federal budget revenues and expenditures plus a clear
definition of the role of the state in a market environment --
where it should interfere or where it should leave the issue to
free competition. The responsibilities of the federal and
regional governments have to be clearly defined as well and the
severely damaged system of state management has to be restored.
Many analysts are optimistic with regard to Sergei
Kiriyenko's chances to be endorsed as Prime Minister. Their
optimism is well grounded.

*********

#3
Deputy Speaker: Duma Will Reject New PM Friday 
Reuters
April 9, 1998

MOSCOW -- (Reuters) Russia's lower house of parliament is certain to reject
President Boris Yeltsin's nominee for prime minister, Sergei Kiriyenko, at
a first nomination hearing on Friday, a deputy speaker said on Thursday. 
"Kiriyenko has no chance tomorrow of getting the support of the Duma.
The parties are in a very tough mood," Vladimir Ryzhkov of the pro-Yeltsin
Our Home Is Russia party told reporters after a meeting of parliamentary
business managers. 

But he added: "There's no need to make a tragedy out of this. A
rejection of Kiriyenko's nomination tomorrow will give more time for
consultations." 
If Kiriyenko fails to sway the Duma, the lower house, with a speech on
Friday morning, Yeltsin is expected to re-nominate him, although he could
in theory put forward a different candidate. 
If the Duma rejects three nominations, Yeltsin must dissolve parliament
and hold new elections, an outcome neither side seems to want, making an
eventual compromise seem likely. 
The Duma's Communist speaker Gennady Seleznyov said he wanted Yeltsin to
put forward a new candidate -- preferably upper house speaker Yegor
Stroyev. Yeltsin has said he has considered Stroyev, but a Kremlin aide
said at the weekend the president would re-nominate Kiriyenko if he failed
on Friday. 
The president named the hitherto obscure 35-year-old technocrat two
weeks ago after sacking veteran Prime Minister Victor Chernomyrdin and his
government. 
The Communists, the biggest party in the Duma with 138 of its 450 seats,
have voiced bitter opposition, saying the former energy minister is too
inexperienced and too liberal. 
Yeltsin's representative in the Duma said on Wednesday that Kiriyenko
was "most unlikely" to win parliament's endorsement at the first attempt.
He needs 226 votes to be confirmed in office. 
Our Home's parliamentary leader Aleksander Shokhin told reporters he
expected Kiriyenko to win no more than about 150 votes on Friday, mostly
from Our Home's 65 deputies and the 51 ultra-nationalist Liberal Democrats,
plus various independents. 
The opposition liberal Yabloko party, which has 45 seats, plans to
abstain from Friday's vote. 
Ryzhkov quoted a Communist official as saying that any member who voted
for Kiriyenko would be expelled from the party. 
Communist deputies will meet later on Thursday to decide whether to
abstain or vote against Kiriyenko. 
Their leaders are keen to impose party discipline but failed on Thursday
in a bid to stop Friday's vote being secret. 
They were embarrassed in 1996 when Chernomyrdin was confirmed by a big
majority in a secret ballot despite their bitter opposition. The count made
clear that significant numbers of Communists had voted for Chernomyrdin. 
Friday's vote will again be secret, business managers ruled on Thursday.
Normally, deputies vote by pressing a button on their desk and the Duma
computer can identify how each voted, but the rules for voting on a prime
minister call for anonymity. 
This can take two forms, either electronic or on paper. 
Shokhin said it was most likely to be a paper ballot using voting booths
set up in a corridor outside the chamber. Even in anonymous electronic
voting it is possible to see which of the two table-top buttons, "For" or
"Against," a deputy presses. 

*********

#4
Russia: Analysis From Washington -- Moscow Looks East
By Paul Goble

Washington, 8 April 1998 (RFE/RL) -- Even as the Russian government works
to limit the expansion of NATO and the European Union in Europe, Moscow is
seeking to improve and expand its ties with India, China and Japan, the
three major powers in Asia. 


By expanding its relationships with these countries, Russia gains both
economically and geopolitically. On the one hand, it gains markets for both
its natural resources and its industrial products. And on the other, it
restores Russian influence in India and dramatically increases it in China
and Japan, thus tilting the geopolitics of the Pacific rim in Moscow's favor. 

Russian efforts in this direction have been going on for some time, but the
past week has brought some dramatic results in all three countries. 

On Tuesday, Russian officials announced that Moscow would supply 16 Russian
X-35 anti-ship missiles to India. India will also begin early next year to
produce under license the Russian Su-30 jet fighter after New Delhi takes
delivery of still more of the planes that it as already purchased from
Russian firms. 

These missiles and planes will allow India to project power across the
Indian Ocean, a goal that Indian leaders have long pursued despite the
concerns of its neighbors. But more than that, these latest arrangements in
effect reconfirm the long-standing strategic relationship between New Delhi
and Moscow. 

Also on Tuesday, there was a breakthrough in Russian relations with China.
The two sides announced that they had agreed to cooperate in promoting
navigation along the rivers that form the borders between them. And they
agreed to step up efforts to promote crossborder ties. 

To appreciate how dramatic these steps are, one need only remember that
during the Sino-Soviet conflict, these same rivers had been the site of
military confrontation between the two communist giants and even battles
between their troops. 

In a signal that China recognizes just how important this new warming trend
is, the Xinhua news agency last Friday issued a statement noting that
cross-border ties between China and Russia had improved considerably in the
period since the collapse of the Soviet Union. 

But the most remarkable shift has been in the relationship between Moscow
and Tokyo, a warming that has been somewhat obscured this week by two
developments: 

Russian President Boris Yeltsin decided to delay his summit with Japanese
Prime Minister Ryutaro Hashimoto one week to April 18-19 in order to remain
in Moscow until the Duma confirms his new prime minister. 
Both Russian and Japanese media have noted that Yeltsin does not seem
likely to be willing to make concessions on the territorial dispute between
the two countries that some had expected as a necessary step toward a
broader peace agreement between Moscow and Tokyo. 
As a result, some commentators in both countries have begun to speak of a
shadow over the upcoming summit. But to do so is to miss what has been
happening in bilateral relationship between Russia and Japan. 

Following the Yeltsin-Hashimoto meeting in the Russian Far East last year,
Russian-Japanese ties have expanded but never more than during the last ten
days. In that period, and as part of the run-up to the summit in Japan, the
two countries have agreed to cooperate in the exploitation of space and on
the issue of global warming. 


They have indicated plans to expand bilateral trade and Japanese
investment in Russia. But the most politically significant accord may be
the one that calls for Russia to supply Japan with processed uranium for
its nuclear power industry. 

Both individually and collectively, these expanded bilateral relationships
will simultaneously give Russia a larger voice on the Pacific rim,
challenge American influence in a region already unhappy with many of the
demands of Western financial and political institutions, and increase the
freedom of action of these states by allowing them to play off Russia
against the West. 

To the extent that this week marks a watershed in Russia's move to reclaim
and expand its influence in Asia, it is also likely to mean that Moscow
will have an important new resource in its geopolitical efforts elsewhere
as well, one that countries focused only on European events are almost
certain to miss. 

*********

#5
Time magazine
April 13, 1998
[for personal use only] 
LEADERS & REVOLUTIONARIES OF THE 20TH CENTURY 
Twenty people who changed the world 

Mikhail Gorbachev
By gently pushing open the gates of reform, he
unleashed a democratic flood that deluged the
Soviet universe and washed away the cold war 

BY TATYANA TOLSTAYA 
Russian novelist Tatyana Tolstaya's most recent book is Sleepwalker in the
Fog 

In 1985, when the first rumblings of Gorbachev's
thunder disturbed the moldy
Soviet silence, the holy fools on the street--the
people who always gather at flea
markets and around churches--predicted that the
new Czar would rule seven years. They assured
anyone interested in listening that Gorbachev
was "foretold in the Bible," that he was an
apocalyptic figure: he had a mark on his
forehead. Everyone had searched for signs in
previous leaders as well, but Lenin's speech
defect, Stalin's mustache, Brezhnev's eyebrows
and Khrushchev's vast baldness were utterly
human manifestations. The unusual birthmark on
the new General Secretary's forehead, combined
with his inexplicably radical actions, gave him a
mystical aura. Writing about Gorbachev--who he
was, where he came from, what he was after,
and what his personal stake was (there had to
be one) became just as intriguing as trying to
figure out what Russia's future would be. 

After he stepped down from his position as head
of state, many people of course stopped thinking
about him, and in Russian history, that in itself is
extraordinary. How Gorbachev left power and
what he has done since are unique episodes in
Russian history, but he could have foreseen his
own resignation: he prepared the ground and the
atmosphere that made that resignation possible.

Gorbachev is such an entirely political creature,
and yet so charismatic, that it's hard to come to
any conclusions about him as a person. Every
attempt I know of has failed miserably. The
phenomenon of Gorbachev has not yet been
explained, and most of what I've read on the
subject reminds me of how a biologist,
psychologist, lawyer or statistician might
describe an angel. 

Gorbachev has been discussed in human
terms, the usual investigations have been
made, his family tree has been studied, a
former girlfriend has been unearthed (so
what?), the spotlight has been turned on his
wife. His completely ordinary education,
colleagues, friends and past have all been
gone over with a fine-tooth comb. By all
accounts, Gorbachev shouldn't have been
Gorbachev. Then the pundits study the politics
of the Soviet Union, evoke the shadow of
Ronald Reagan and Star Wars, drag out tables
and graphs to show that the Soviet economy
was doomed to self-destruct, that it already
had, that the country couldn't have gone on
that way any longer. But what was Reagan to
us, when we had managed to overcome Hitler,
all while living in the inhuman conditions of
Stalinism? No single approach--and there have
been many--can explain Gorbachev. Perhaps
the holy fools with their metaphysical scenario
were right when they whispered that he was
marked and that seven years were given to
him to transform Russia in the name of her as
yet invisible but inevitable salvation and
renaissance. 

After the August 1991 coup, Gorbachev was
deprived of power, cast out, laughed at and
reproached with all the misfortunes, tragedies
and lesser and greater catastrophes that took
place during his rule. Society always reacts
more painfully to individual deaths than it does
to mass annihilation. The crackdowns in
Georgia and Lithuania--the Gorbachev regime's
clumsy attempts to preclude the country's
collapse--led to the death of several dozen
people. Their names are known, their
photographs were published in the press, and
one feels terribly sorry for them and their
families. Yeltsin's carnage in Chechnya, the
bloody events in Tadjikistan, the establishment

of feudal orders in the central Asian republics
and the massive eradication of all human
rights throughout the territory of the former
Soviet Union are, however, regarded
indifferently, as if they were in the order of
things, as if they were not a direct
consequence of the current regime's
irresponsible policies. 
Corruption did exist under Gorbachev; after
Gorbachev it blossomed with new fervor.
Oppressive poverty did exist under Gorbachev;
after Gorbachev it reached the level of
starvation. Under Gorbachev the system of
residence permits did fetter the population;
after Gorbachev hundreds upon hundreds of
thousands lost their property and the roofs
over their heads and set off across the country
seeking refuge from people as angry and
hungry as they were. 

No doubt Gorbachev made mistakes. No doubt
his maneuvering between the Scylla of a
totalitarian regime and the Charybdis of
democratic ideas was far from irreproachable.
No doubt he listened to and trusted the wrong
people, no doubt his hearing and sight were
dulled by the enormous pressure and he made
many crude, irreversible mistakes. But maybe
not. In a country accustomed to the ruler's
answering for everything, even burned stew
and spilled milk are held against the Czar and
are never forgiven. Similarly, shamanism has
always been a trait of the Russian national
character: we cough and infect everyone
around us, but when we all get sick, we throw
stones at the shaman because his spells
didn't work. 

When Gorbachev was overthrown, for some
reason everyone thought it was a good thing.
The conservatives were pleased because in
their eyes he was the cause of the regime's
demise (they were absolutely right). The
radicals were happy because in their opinion
he was an obstacle to the republics'
independence and too cautious in enacting
economic reforms. (They too were correct.)
This man with the stain on his forehead
attempted simultaneously to contain and
transform the country, to destroy and
reconstruct, right on the spot. One can be
Hercules and clean the Augean stable. One
can be Atlas and hold up the heavenly vault.

But no one has ever succeeded in combining
the two roles. Surgery was demanded of
Gorbachev, but angry shouts broke out
whenever he reached for the scalpel. He wasn't
a Philippine healer who could remove a tumor
without blood or incisions. 

Strangely enough, no one ever thought
Gorbachev particularly honest, fair or noble.
But after he was gone, the country was
overwhelmed by a flood of dishonesty,
corruption, lies and outright banditry that no
one expected. Those who reproached him for
petty indulgences at government expense--for
instance, every room of his government dacha
had a television set--themselves stole billions;
those who were indignant that he sought
advice from his wife managed to set up their
closest relatives with high-level, well-paid state
jobs. All the pygmies of previous years, afraid
to squeak in the pre-Gorbachev era, now, with
no risk of response, feel justified in insulting
him. 

The pettiness of the accusations speaks for
itself. Gorbachev's Pizza Hut ads provoke
particular ridicule, and while the idea is indeed
amusing, they pay his rent. The scorn reminds
me of how the Russian upper crust once
castigated Peter the Great for being unafraid to
roll up his sleeves and get his hands dirty.
Amazingly, in our huge, multinational country,
where the residents of St. Petersburg speak
with a different accent from those of Moscow,
Gorbachev's southern speech is held against
him. After his resignation, Gorbachev suddenly
became very popular in an unexpected quarter:
among young people. He became an element
of pop culture, a decorative curlicue of the
apolitical, singing, dancing, quasi-bohemians.
It was fashionable to weave his sayings into
songs: in one popular composition Raisa
Gorbachev's voice says thoughtfully,
"Happiness exists; it can't be otherwise," and
Gorbachev answers, "I found it." 

In the 1996 election, 1.5% of the electorate
voted for him. That's about 1.5 million people. I
think about those people, I wonder who they
are. But I'll never know. The press hysteria
before the election was extraordinary. Ordinary
people no longer trusted or respected the

moribund Yeltsin, but many were afraid of the
communists and Gennadi Zyuganov, so the
campaign was carried out under the slogan the
lesser of two evils or better dead than red. 

All my friends either voted for Yeltsin, sighing
and chanting the sacred phrases, or,
overcome by apathy or revulsion, didn't vote at
all. I asked everyone, "Why not vote for
Gorbachev?" "He doesn't have a chance," was
the answer. "I would, but others won't, and
Zyuganov will be elected as a result," some
said. This, at least, was a pragmatic
approach. But it turns out that there were 1.5
million dreamers, people who hadn't forgotten
that bright if short period of time when the
chains fell one after another, when every day
brought greater freedom and hope, when life
acquired meaning and prospects, when, it
even seemed, people loved one another and
felt that a general reconciliation was possible. 

*********

#6
>From RIA Novosti
Nezavisimaya Gazeta
April 9, 1998
GOVERNMENT CHANGED ALONG WITH ITS COURSE
Auditor of the Russian Accounts Chamber, former finance 
minister Vladimir Panskov believes that young but not 
"green" professionals are needed
By Vladimir MALEVANNY

Question: What impedes the creation of the middle class in
Russia? What is its optimal share in society, generally
speaking? 
Answer: Optimally prosperous people must constitute 80-90
per cent of the entire population. This is what we do not
observe. The reasons are well-known. We improperly carried out
privatisation. Many people became rich "honestly" thanks to the
incorrectly (and unjustly) established principles and laws.
Everything has been bought out almost for a song. Many heads of
enterprises became their owners, including by way of buying up
privatisation vouchers at a price below their nominal value. 
Question: Is it the invention of Chubais? 
Answer: Of course, all blame could be placed on Chubais
since he was the ideologist of such privatisation. But he was
not the only one to take such decisions. Where were all the
rest at that time? The majority of responsible officials
supported that course of privatisation! 
... Today it is clear to everyone that the methods, which
were used to carry out privatisation of state property, were
incorrect. We need real owners instead of nominal holders of
privatisation cheques or shares. However, the problem of the
efficiency of privatisation emerged back in the Soviet period,
about ten years ago. You should recall that at the time state
authorities permitted to establish cooperatives at factories
and all the money of enterprises began to be pumped into them.
The basic financial flows went through small companies
established by directors, individual bureaucrats, their

relatives or acquaintances. 
Question: Society pins great hopes on the new
constitutional body for our country - the Accounts Chamber of
the Russian Federation. You have been elected one of the twelve
state auditors. What do you have to deal with? Have you again
been assigned to a difficult area of work? 
Answer: Each auditor has its own area of control over
state budget expenditure. My direction involves control over
the revenue part and compliance with legislation in the field
of taxes and revenues. The Accounts Chamber has drawn up the
results of the federal budget replenishment in 1997. We held 19
control and a number of expert and analytical measures and
reported to the board of the Accounts Chamber on the reasons,
revealed by us, for the shortfall of taxes and other receipts
during the execution of the budget. 
Question: What kind of a new Government would you like to
see? 
Answer: Today it is necessary to change the course of
reform. If this is not done, then why merely change figures in
the Cabinet of Ministers? The Government needs young but not
quite green professionals, who have both knowledge and life
experience. 

*********

#7
For more articles from The Moscow Times, check out their website at


www.moscowtimes.ru

Moscow Times
April 9, 1998
DEFENSE DOSSIER: Inside Vulnerable Bastion 
By Pavel Felgenhauer 

Many high-ranking Russian generals have for some time been saying in 
private that the Founding Act between NATO and Russia signed in Paris 
last May was a Western sham that would only be to Russia's disadvantage. 
Now their worst fears are materializing. Last week the North Atlantic 
Treaty Organization told its military committee chairman, General Klaus 
Naumann, to negotiate setting up a military liaison mission at the 
Russian Defense Ministry and General Staff headquarters in Moscow. 

"It's an important political gesture for the Russians to show they 
accept reciprocity on this, and we wouldn't want them to drag their 
feet," said a NATO source. "We don't want to get into the cosmic 
top-secret control room, but neither did the alliance want a hut at the 
bottom end of the car park." 

Western officials point out that under the terms of the Founding Act a 
dozen Russian officers have been stationed at NATO's headquarters in 
Brussels, and the Russian military liaison mission in Mons, Belgium, is 
just a few doors away from the office of NATO's supreme commander 
Europe, General Wesley Clark. They are now asking for reciprocity. 
But the Russians believe there is no "reciprocity" at all in such a 
deal. A Western military team with an office in the Russian General 
Staff could pry open all of Russia's military secrets, including codes 
to launch strategic nuclear missiles, while not offering any real 
"openness" in return. 

On one hand, a conflict in Europe has been made virtually impossible 
since the demise of the Soviet Union, and so NATO headquarters do not 
contain any essential military secrets. 

On the other hand, the Russian Defense Ministry contains information on 
all of Russia's military plans and present activities. The General Staff 

is also where the central command facility that controls all of Russia's 
nuclear weapons is located, and can at any time send orders to launch 
nuclear ballistic missiles. 

The security system in the Defense Ministry, however, is old-fashioned. 
No one carries security tags in Russia, and if you get through the outer 
security perimeter it is possible to wander almost anywhere unchecked. 

The Russian Defense Ministry has even organized press briefings on the 
premises of the nuclear central command several times simply because 
briefing rooms in other, less sensitive locations happened to be 
occupied. In any case, most of the correspondents were totally ignorant, 
and wandered through the shabby corridors, not knowing that they where 
actually just steps from the old-fashioned mainframe computers that 
could begin a global nuclear war in no time. 
Specially trained Western "liaison" personnel would hardly be that 
complacent. And even if the Russians managed to keep them out of high 
security areas, these Westerners could easily make contacts with 
officers from the nuclear central command and other potential sources of 
devastating intelligence leaks in the Defense Ministry cafeteria, the 
bookstore and other public places. 

Of course, in today's world, in which nobody in the East or West appears 
to be preparing to go to war with anyone, opening military institutions 
seems to be not a threat, but a blessing. The more former military 
enemies are informed, the more they know that nobody wants to attack. 
But openness should be equal. And equality is what the West constantly 
denies Russia. 

If the West really wants to open a military mission in the Russian 
Defense Ministry it should also allow Russia to have a constant military 
presence in the Pentagon and in all other NATO defense ministries. 
Russian military attachés -- most of them seasoned scouts -- could move 
camp from Russian embassies to official Western defense institutions and 
come home to their former offices only to send coded messages to Moscow. 
This would truly be "reciprocity and equal openness." 

If the West prefers not to open its own military secrets and wants only 
to get Russia's, then the best place for a NATO military mission in 
Moscow would be the former Warsaw Pact headquarters at 41 Leningradsky 
Prospekt. The building now houses military missions from the countries 
of the Commonwealth of Independent States. One more mission would not 
change that drowsy place. And this would not violate any agreements, 
since the Founding Act is vague. It simply says: "NATO retains the 
possibility of establishing an appropriate presence in Moscow, the 
modalities of which remain to be determined." 

Pavel Felgenhauer is defense and national security affairs editor of 
Segodnya. 

*********

#8
Yeltsin wants investor protection bill dropped
By Kevin Liffey 

MOSCOW, April 8 (Reuters) - President Boris Yeltsin has urged the lower house
of parliament to abandon a draft law to protect investors in the Russian
securities market, the presidential press service said on Wednesday. 
Yeltsin sent a message to the speaker of the State Duma, Gennady Seleznyov,

telling him that most of the bill's provisions were covered by a separate
securities market law, and legal mechanisms to regulate the market and protect
participants were already in place. 
"One can conclude that completion of work on the draft and its passage are
pointless," Yeltsin wrote, sharply reducing the bill's prospects of passing. 
The bill, which had already passed the first of three readings and has the
backing of the Duma's budget committee, would markedly boost the enforcement
powers of Russia's securities regulator by giving it the right to impose fines
and compensation payments. 
Yeltsin earlier in the year ordered his government to track down and punish
major violators of investors' rights, and foreigners have closely followed the
securities watchdog's mixed attempts to do so. 
Planned fines that could be levied by the Federal Commission for the
Securities Market under the bill ranged between 50 and 1,000 times the minimum
monthly wage -- around 83 roubles ($14). 
The law would prevent market professionals offering or selling
securities to
private investors that were not approved for sale to all private investors,
and would set strictly limited criteria for such approval. 
The law would allow potential investors to request detailed information
about
an issuer and its securities. 
Western economists were disappointed at the news and said foreign
investors in
particular felt the need for additional safeguards for investors. 
"I'd expect the market to see this quite negatively," said Julia Dawson,
head
of Russian research at ING Barings in London. 
"There's a feeling that existing laws are ineffective, and you do want
to have
a kind of (U.S.-style) SEC to protect the shareholders." 
Economists said current investor protection legislation was not considered
sufficient for U.S. authorities to let their mutual funds invest in Russian
securities. 
Dan Wilson, head of research at Creditanstalt in Moscow, took the same
view.
"Anything that could boost the degree of actual enforcement of investor
protection is seen as critical, especially for foreign investors," he said. 

********

#9
Boston Globe
April 9, 1998
[for personal use only]
Ex-convict becomes hero while Moscow annuls vote 
By David Filipov

NIZHNY NOVGOROD, Russia - As Russia's Cabinet crisis moves into its third
destabilizing week in Moscow, in this Volga River industrial center a drama
is unfolding that portends a more serious threat to the country's fragile
democracy. 
Can an ex-convict millionaire under investigation for fraud be carried
to power by Russia's dispirited, disaffected voters? Evidently so. And can
Boris Yeltsin's Kremlin annul a democratic election because it does not
approve of the result? Apparently, it can. 
These are the conclusions to the story of Andrei Klimentyev, who found
himself the duly elected mayor of Russia's third most important city one
day, deposed and summarily thrown into jail the next. 
It is a tale that turns upside down the stereotypical Western view of
Russia as a country where a valiant band of reformers fights for democracy
against legions of Soviet-style bureaucrats and gun-toting mafiosi who stop
at nothing in their quest for money and power. 
In Nizhny Novgorod, all of these roles have been reversed. The unlikely
hero is Klimentyev, a freewheeling industrialist and casino owner who has
spent 9 1/2 years in prison and is currently being tried for allegedly
embezzling $2 million from a government loan. 

In the minds of many observers, the bad guy is played by Boris Nemtsov,
a potential successor to Yeltsin known as one of Russia's most prominent
reformers. But analysts here and in Moscow say he is the mastermind of a
high-handed Kremlin ploy to cancel illegally Klimentyev's election victory. 
And a city considered a showcase for what market reforms can achieve in
Russia is turning out to be a cauldron of political intrigue and popular
despair. 
But the larger question raised is Yeltsin's commitment to the democratic
insitutions that are the most encouraging legacy of his seven-year
presidency. Like the unpredictable Russian spring weather that yesterday
dumped eight inches of snow on Nizhny Novgorod, Yeltsin has always blown
hot and cold on his own reforms. 
But the timing of his move to annul Klimentyev's victory is unnerving.
Russia is preparing for the presidential vote in the year 2000, which will
be the country's first peaceful transition of power by election. Whether
this happens will depend largely on Yeltsin's Kremlin. 
''This is a serious precedent when at any minute and without
justification the authorities can annul an election because they don't like
the results,'' observed Nikolai Petrov of the Carnegie Center for
International Peace studies in Moscow. 
Klimentyev won the March 29 vote by a slim 34 percent to 32 percent
margin over the incumbent, government-backed candidate. To understand how a
third of the residents of one of Russia's most important cities could elect
an ex-convict mayor, consider that he was jailed by the Soviets in the
1980s for petty offenses: cardsharping and distributing pornographic
videos. These are no longer crimes in Russia. 
Also, in a country with centuries of bad government, a candidate with a
criminal record is not necessarily noteworthy. No one interviewed in Nizhny
Novgorod seemed to mind the embezzlement charges. Many people said they
believe Klimentyev's claim that it was Nemtsov who took the money. Nemtsov
denies the charge and has threatened to sue Moscow journalists for libel if
they print it. 
Klimentyev played on his reputation as a man who knows how to make
money. Portraying himself as a Russian Robin Hood, he promised to put his
business acumen to work setting up discount stores for the needy and
providing money for Nizhny Novgorod's underfunded hospitals, schools and
police force. One particularly effective campaign poster showed the
candidate against a backdrop of ruined factories, bedraggled pensioners and
scrawny children. 
It was hardly the image of Nizhny Novgorod that attracted foreign
investors and dignitaries during the privatization and agrarian reforms
carried out by former Governor Nemtsov, now acting first deputy prime
minister in Yeltsin's caretaker Cabinet. 
But for many Nizhny Novgorod residents, Nemtsov's reforms did little to
improve living standards. 
''What reforms?'' asked Stanlislav Smirnov, news editor of the local
daily Nizhegorodskaya Pravda. ''People here don't get paid for months on
end. What do they have to be thankful to Nemtsov about?''
In Moscow, Nemtsov called the election ''a mistake.'' Yeltsin, whose
numerous campaigns to rid government of corrupt officials have met with
scant success, expressed ''deep concern.'' For public consumption, Yeltsin
sent his deputy chief of staff, Yevgeny Savostyanov, to find out what was
going on. 

The real purpose of Savostyanov's visit became clear last Wednesday,
when the local election committee reversed an earlier decision and ruled
Klimentyev's election invalid. 
''If in our country people with criminal connections are getting into
power it has to be stopped,'' Savostyanov said last week. He accused
Klimentyev of seeking office for the immunity from prosecution that the
position provides. 
The official justification was that Klimentyev's camp had breached
electoral standards by promising voters material improvements in their
standard of living if he became mayor. This charge looks dubious given that
such promises are an integral part of many elections, including Yeltsin's
in 1996. 
The next day, Klimentyev was arrested on the charge of ''instigating
civil disobedience,'' apparently for saying his supporters would take to
the streets to protest the invalidation of the election. Yeltsin also fired
his personal representative in Nizhny Novgorod, who protested the
cancellation of elections. 
With Klimentyev behind bars, the question is whether he will be found
guilty of embezzlement before a new election is held in three months.
Observers said that if Klimentyev is allowed to run, he will definitely win. 
'"Popular opinion has swung toward Klimentyev,'' Smirnov said. 
That is the plan for Viktor Pelageyev, a former metal shop worker who
tired of waiting months for a paycheck and now works as a taxi driver.
Pelageyev did not vote March 29. 
''I didn't see the sense of it, not in our country that doesn't know the
meaning of democracy,'' he said. ''But when they just outlawed the
election, I said, to hell with that. Now I'll definitely vote for
Klimentyev.''

*******

#10
Jamestown Foundation Monitor
April 9, 1998

CAPITALISM LUZHKOV-STYLE.... Mayor Yuri Luzhkov has forged a model of
paternalistic capitalism that has brought Moscow stability and prosperity.
His model, however, now appears to be reaching its limits. It is unlikely to
sustain Luzhkov in a presidential bid in 2000. This was the conclusion of
Virginie Coulloudon, an associate of the Davis Center for Russian Studies,
in a talk at Harvard on April 8.

Since his appointment as mayor in 1992, Luzhkov has maintained tight control
over the capital's political and economic life. Moscow was exempted from the
federal privatization program, and--instead of a quick distribution of
state-owned assets at low cost--Luzhkov choose to retain most of the
capital's property and enterprises in municipal ownership, selling off a few
shares at a time or leasing properties at lucrative rents. He also
maintained tight control over commercial development. In doing so, he
created elaborate licensing procedures that could be waived in return for
contributions to the city's "charitable" foundations. 

In addition to the official $400 million annual budget, the city has 300
plus off-budget funds whose contents and distribution are now available only
to Luzhkov and his cronies. Holding companies with ties to the municipality
have moved into a dominant position in many business arenas, from funeral
homes and gas stations to hotels and casinos. Proceeds are channeled into

city-owned media outlets and prestigious projects such as the Cathedral of
Christ the Savior and the $150 million business center. 

These nefarious operations are protected by laws passed by the Moscow city
parliament, which is slavishly loyal to Luzhkov. Court challenges to
Luzhkov's operations have gone nowhere. 

...MAY NOT YET PROPEL LUZHKOV INTO THE PRESIDENCY. Luzhkov's success in
Moscow may not translate into a successful bid for the presidency, for three
reasons.

First, ask the question of how Luzhkov was able to create this powerful
empire. Above all, Coulloudon argued, Luzhkov's success has been due to
support from President Boris Yeltsin, who offered Moscow "unprecedented
privileges in return for its wholesale support." In the light of the chaos
of 1991, Yeltsin could not afford to have disorder in the streets of the
nation's capital. Luzhkov has no other friends in the governing elite. If
Yeltsin leaves office, he may find his privileges removed, as they are
resented both by reformers and by regional leaders. 

Second, the Luzhkov model can only work in Moscow, seat of the federal
government, headquarters for most corporations and gateway for foreign
investors. It is all too clear that a great deal of Moscow's wealth is
siphoned from the profits of energy and metals enterprises whose production
activity takes place hundreds of miles away. Regional leaders who try to
emulate Luzhkov's model will never have the political and economic
privileges Moscow enjoys. If Luzhkov is to win support outside the Moscow
beltway, therefore, he will have appeal to something beyond his
paternalistic economic model--such as nationalism over Crimea.

Third, there are signs that Moscow's bubble economy may soon burst. Too much
construction with too few secured occupants has left many expensive new
buildings now empty. Luzhkov's efforts to take over industrial enterprises,
such as the Zil auto plant, have both failed and drained the city's coffers.
Finally, foreign and domestic businessmen seem to be tiring of Luzhkov's
payoffs, and indicate interest in starting businesses in other Russian
cities. Of the Russian bankers, only Menatep is still backing Luzhkov. 

Still, Luzhkov has proved himself a skillful and dynamic politician. It
would be premature to rule him out of the national political scene. He may
yet have some tricks up his sleeve that could paper over the cracks of
Moscow's "economic miracle" until the year 2000.

*********