February 12, 1998   
This Date's Issues: 2058 •2059  • 2060

Johnson's Russia List
#2058
12 February 1998
davidjohnson@erols.com

[Note from David Johnson:
1. Maureen Argon: Vlasovskis.
2. Dmitri Gusev: Shevardnadze and Pipes.
3. Roman Serbyn: WW II: Whom are we forgetting?
4. Anne Williamson: Crime of the Century.
5. Anders Aslund/Peter Reddaway/Paul Saunders exchange.
(Re Anders' WHY THE DOOMSAYERS ARE WRONG ABOUT RUSSIA).
6. Rossiiskaya Gazeta: Alexei Kolesov, PRESIDENT'S LINE, 
NOT PRIMAKOV DOCTRINE.
7. RFE/RL NEWSLINE: RUSSIA DENIES ALLEGATIONS IN "WASHINGTON 
POST" and NEMTSOV WARNS OF DANGERS OF OLIGARCHY...SAYS YELTSIN 
AGREES WITH HIM.] 

********

#1
Date: Wed, 11 Feb 1998
From: momaid@mail.interlog.com (Maureen Argon)
Subject: Vlasovskis

Would it be possible to run this in your list?

I am the daughter of a Vlasovski, one of the hundreds of thousands of Red
Army POWs who served, willingly or not, in General A.A. Vlasov's Russian
Liberation Army. He was taken prisoner by the Wehrmacht at Baranovichi in
June, 1941. He was held in Luneberg, near Hamburg, until 1944, when,
willingly or not, he joined the Vlasov army being formed in the suburbs of
Berlin.

After VE Day, he survived the forcible repatriations of Soviet citizens
back to the USSR pursuant to the Yalta protocols by changing his name from
Akimov to Argon and falsifying papers which 'proved' his birth in the strip
of territory that was Polish, Soviet, German-held, and then Soviet again.

My father only spoke of his war time experiences once, without much detail,
shortly before his death. That conversation explained much of his silence,
a silence not unlike that of a Holocaust survivor. The last time he saw his
family in Russia was in 1940, the last letter he received from them was in
1952, upon his arrival in Canada. My father died in December 1988.

In 1994, my father's family contacted mine via the International Red Cross.
Two of my father's 10 siblings were still living and I visited them in
1996. Vlasov is still a taboo subject in Russia.

My husband and I are writers and filmmakers. We are researching a project
about survivors and families of survivors of the forcible repatriation of
Soviets (civilian and military) to Stalin's GULAG at the end of World War
II.
We are particularly interested in those men who served, willingly or not,
with General Vlasov's Russian Liberation Army.
We are also interested in hearing eye witness testimony from Allied
military personnel involved in the repatriating the "Vlasovskis" or German
POW held with Vlasovskis in the USSR.

I can be contacted at momaid@interlog.com or by phone at (519)272.2193

Thank you for your help,

*******

#2
Date: Wed, 11 Feb 1998
From: dmitri gusev <dmiguse@cs.indiana.edu>
Subject: Shevardnadze and Pipes 

I would like to comment on the Feb. 11 material
from LA Times by Vanora Bennett dealing with
the failed attempt on the life of Shevardnadze.

The article says,
> Post-Soviet Georgia fought and lost a conflict with
>Russian-backed separatists in its seaside region of Abkhazia in
>1992 and 1993. 

This is reminiscent of what Pipes wrote on that conflict.
I objected then, and I want to object again, because
history is being rewritten here!

Separatists in Abkhazia enjoyed military support of Dudayev's
Chechens, who had already proclaimed themselves independent 
from Russia by then. Dudayev also sheltered Zviad Gamsakhurdia, 
the first president of the independent Georgia, who was 
overthrown by joint forces of Tengiz Ketovani and Jaba Ioseliani, 
whom the LA Times article indirectly mentions as 

> Georgia's two most notorious former warlords [...] jailed
>after a 1995 assassination attempt at Shevardnadze.

Ironically, it was Ketovani and Ioseliani who brought 
Shevardnadze back to Geogia as an alternative to Gamsakhurdia
and means of getting international recognition.
They failed to make Shevardnadze their puppet, and
he eventually won a complicated power struggle against them.

It was Shevardnadze himself who allowed Russian troops in,
which made the opposition accuse him of being pro-Moscow.
In particular, Russian troops first separated South
Ossetians from Georgians, and then Abkhazs from Georgians,
ending two bloody ethnic conflicts.

Gamsakhurdia fought against Shevardnadze's forces in
Western Georgia and died in an ambush. Dudayev was later
killed in a Russian rocket attack during the Chechen 
war.

Gamsakhurdia was the one who started the conflict in
South Ossetia. Ioseliani was among those who helped
to stop the conflict in South Ossetia. The primary
responsibility for the conflict in Abkhazia lied, I believe,
on Ketovani and Ioseliani on the Georgian side and
Ardzinba on the Abkhaz side. Dudayev supported
Ardzinba and Gamsakhurdia, the Russians supported
Shevardnadze.

>Since then, the 70-year-old Shevardnadze, a former Soviet
>foreign minister, has been painstakingly restoring order to his
>ethnic homeland. 

>Russia is sheltering another Georgian, Igor Giorgadze, a former
>security service chief who was also implicated in [the 1995] attack. 

While it may very well be the case that Giorgadze was among
the organizers of the 1995 assasination attempt, it does not
necessarily mean that Russian officials who dealt with this
matter were quite satisfied with what was offered as proof
by the Georgian side. Extradiction is not always easy. 

> "There are practically no groups left in Georgia capable of
>carrying out this kind of attack," Shevardnadze said. Monday's
>violence must therefore have been organized from abroad, he
>concluded. 
> He recalled Georgia's rivalry with Russia for a lucrative
>contract exporting Caspian oil. 
> The first oil is being exported down a Russian pipeline

Notice, however, that many important pipelines in the region 
go through Chechnya, which used to do a lot of oil refining. 

>Russia has a documented post-Soviet history of stirring up local
>discontent by funding one side or another in ethnic conflicts--
>notably in Nagorno-Karabakh, Chechnya and Abkhazia--to keep the new
>regimes of the south weak and divided and to ensure its own
>continued dominance of the region it ruled until 1991. 

This is false, with the notable exception of Chechnya,
where the Russians initially gave military support to opposition 
to Dudayev in a couple of the northern regions of the breakaway
republic. Eventually, the resulting conflict grew into a full-blown
war, and Russia lost it. However, unlike Nagorno-Karabakh and 
Abkhazia, Chechnya formally is part of Russia.

Post-Soviet history of Russia's policy in the Caucasus region
is not so well-documented. Instead, it is often distorted.
I am not saying Russia's policy in the region is any good,
it has been a definite failure so far. All I am saying,
stop the flow of misrepresentations. 

> On Tuesday, Russian officials, including President Boris N.
>Yeltsin, made statements deploring the attack and vowing to
>fight international terrorism. 
> But these remarks were not enough to satisfy furious
>Georgian lawmakers, who asserted that the mystery gunmen
>had escaped to a Russian military base in Georgia and
>demanded that all Russian bases be sealed off. 

Yeltsin has always been sympathetic to Shevardnadze, but
who really is in charge of what's happening at the Russian
military bases in Georgia these days is an open question. 

> Movladi Udugov, the Chechen foreign minister and a leader
>of his region's 1994-96 war for independence from Russia, also
>blamed "the long arm of Moscow" 

Chechens have grown their own "long arms" in the course 
of their fight for independence. Furthermore, nowadays
we see rivaling factions among Chechens, who do not
coordinate their actions all that much. The "arm of
Moscow", in the meanwhile, cannot even reach Grozny
anymore.

> * The Russian passport found on the one gunman who did
>not manage to fade away into the dark streets of Tbilisi after the
>attack failed. Killed by a shot in the back, presumably from
>someone in his own group, the man turned out to be carrying
>documents indicating that he was a Russian citizen and
>ethnically Chechen. 
> While Russian media made much of the gunman's alleged
>Chechen ethnicity--as well as hinting that the assassination
>attempt could be a violent local response to Shevardnadze's
>latest anti-corruption campaign--Georgian officials were
>skeptical of the passport. They believed that it could have been
>planted to divert blame to Russia's object of hate in the region,
>the Chechens. 
> "Of course it looks pretty fishy for a terrorist to carry his
>passport during an assassination attempt on a state leader,"
>Abashidze said. "Investigators are treating this piece of
>evidence with open suspicion." 

Georgian opposition could have pulled that trick, too. One
cannot reach any definite conclusion based upon such shaky
evidence, so let's not rush to judgment.

Pipes is doing his best trying to perpetuate the myth of 
the Russian military threat despite a clear lesson of
the Chechen war. To make his arguments look stronger,
he rushes to rewrite history of recent conflicts
(which is admittedly a mess) as soon as he thinks 
that the real events are forgotten. For whatever
reason, he wants Russia to look much more like 
a strong Evil Empire than it really is. I find this
unfortunate, because he is listened to, and his
mischaracterizations start to live lives of their own,
getting repeated over and over.

******

#3
Date: Wed, 11 Feb 1998 
From: serbyn.roman@uqam.ca (Roman Serbyn)
Subject: WW II: Whom are we forgetting?

Ira Straus wrote on Tue, 10 Feb 1998
> Just in case anyone forgot, in the midst of all the recent Russia vs.
>America polemics re WWII on JRL -- we were on the same side in WWII. As we
>were also in WWI.

I find it rather amusing that six years after the breakup of the Soviet
Union, which dramatically reminded the world that Russia was not synonymous
with her Soviet empire, an academic disussion on who helped whom during WW
II can still be carried on as if Russia and the Soviet Union were
identical. Can we get the full picture when we neglect the input of the
non-Russian population and the non-Russian republics? Since some
commentators enjoyed speculating on what would have happened to Russia
without western help, perhaps they would like to reflect on Russia's
chances against Germany without the human and economic ressources of
Ukraine, Azerbaijan, etc.?

Roman Serbyn
History Departement
Universite du Quebec a Montreal

******

#4
Date: Wed, 11 Feb 1998 
From: Anne Williamson <awilliamson@mcione.com>
Subject: Crime of the Century

In the current exchange on JRL regarding crime, I am compelled to join
Michele Berdy and Jonas Bernstein in support of Peter Reddaway’s remarks
concerning Anders Aslund’s nefarious contentions which The Weekly Standard
surprisingly saw fit to publish.
The following material [DJ: Carried separately on JRL} is one chapter
from my just-completed book, How America Built the New Russian Oligarchy.
My effort follows privatization and the development of the securities
market and the financial industry generally while examining the West’s
assistance efforts via USAID (Harvard University), the IMF and the World
Bank. “Crime” is inadequate as a word and even as a concept to describe
what these people perpetrated and continue to perpetrate in Russia.
The principal criminal debacles from which all others flowed are Jeffery
Sachs’s and Yegor Gaidar’s shock therapy and voucher privatization. The
preceding chapter, “Foreign Manners”, deals with Sachs’s and Aslund’s 1992
macroeconomic “reforms” and the attached chapter is the one that deals with
voucher privatization as executed by Harvard’s minions. Later chapters
detail Shares-for-Loans and other scams, swindles and robberies in which
Harvard Management, which invests the university’s endowment, and the
billionaire speculator philanthropist moralist George Soros loom large as
beneficiaries.
However, it is the crime of voucher privatization that needs to be
understood in its specifics before anyone can possibly understand the
totality of what the US did in Russia. Everyone seems to have skipped
these details or to have forgotten them, but they are critical.
(Journalists who write dismissively of Russians that they “sold their
vouchers for a bottle of vodka” do truth no service and only compound the
injustice the US and Harvard foisted upon a then-trusting people in the
name of American citizens whose good intentions they dishonored.)
The chapter, I think, stands alone, however, the following people with
whom readers might be unfamiliar are introduced earlier:
Ardy Stoutjesdijk - Head of the World Bank Moscow mission from late 1991
through 1995.
Bill Potrin - Head of Deloitte and Touche from 1989 through 1996 who
worked with Chubais et al on the design of voucher privatization in 1992.
Andrei Kortunov - Former analyst at the Institute for the Study of the
USA and Canada, who today is with the Ford Foundation.
Leonid Grigoriev - Russia’s representative to the World Bank from 1992
through 1997.
Aleksandr Prokhanov - editor of the nationalist broadsheet, Zavtra.
Aleksandr Omelchenko - a Moscow-based Russian attorney.
As for myself, I have covered Russia since 1987 for a wide range of
publications, everything from the Wall Street Journal to SPY magazine. My
initial efforts focused on the art world, especially the film industry,
where it will be recalled perestroika began. I switched to the economic
story in 1992 and signed the contract to write the book with Farrar, Straus
and Giroux in 1993 and have worked professionally on that effort
exclusively ever since.
As a final note regarding crime, the most egregious current one from US
citizens’ and taxpayers’ point of view is the continued funding of Jonathan
Hay and his innamorata Beth Hebert and their partner-in-crime Dmitry
Vasiliev at the Federal Securities Commission via World Bank lending and of
Jeff Sachs’s HIID and Anders Aslund in Ukraine via another USAID
noncompeted agreement for which Sachs, Aslund and George Soros lobbied
behind closed doors in 1996 after Ukraine initially rejected USAID’s offer
of yet another assistance contract. This latter result was made possible
despite a wary Congress’s protest thanks to a national security waver
issued by a collection of Clinton Administration Treasury and National
Security Council appointees, all of whom have significant ties to Harvard
University.
As Peter Reddaway wrote, it is “odd, indeed shameful, for Aslund to
smear Mr Boldyrev and the report (on privatization) by claiming that the
Accounting Office is ‘controlled by the Communist-dominated parliament’”.
The Harvard crowd’s long-standing habit has been to cloud the truth
concerning their deeds with shameless red baiting whenever challenged and
it is really disgraceful of Aslund to continue in this vein when the
Accounting Office is the only organization within the Russian government
striving for accountability regarding public officials, programs and funds.

******

#5
Date: Wed, 11 Feb 1998 
From: 105660.3437@compuserve.com (Peter Reddaway)
Subject: Aslund/Reddaway/Saunders exchange.

The Weekly Standard
December 29, 1997
WHY THE DOOMSAYERS ARE WRONG ABOUT RUSSIA
By Anders Aslund

On November 19, an editorial in the New York Times demanded the ouster
of Anatoly Chubais, the leading free-market stalwart in the Russian
government, for accepting a book advance of $90,000. Though politically
foolish, the book deal was probably legal -- indeed, the relatively modest
sum involved suggests a concern for propriety. It also pales in comparison
with the financial machinations of some other top Russian officials. Prime
Minister Viktor Chemomyrdin probably made a few billion dollars on the
privatization of the state gas company, which he had managed back in Soviet
days. Former first deputy prime minister Oleg Soskovets signed decrees
relieving Trans World Metals, a company with which he had close ties, of
hundreds of millions in taxes. Another former first deputy prime minister,
Vladimir Potanin) president of Oneximbank, a tax break worth $1 billion for
one of his businesses in exchange for joining the government.
But the Times, apparently, does not mind if Russian senior officials
steal by the billion. To call for Chubais's ouster while ignoring
self-defeating on a gargantuan scale is effectively to support the crony
capitalists. Such remarkable lack of perspective is chronic in the
treatment of Russia's transition in the U.S. mass media.
It is notable that post-Communist Russia attracts almost no rave reviews
in the United States. Crime and economic decline dominate the news.
Pundits predict difficulties ranging from popular uprisings, the break-up
of the Russian Federation, domestic chaos, economic implosion, and
starvation to military coups and expansion. There is the nagging fear that
maybe Russia is not reformable.
Most Americans find President Boris Yeltsin incomprehensible. Although
prominent figures in his successive governments, notably Chubais and Yegor
Gaidar, stand for democracy and market economics, few voices are raised in
their defense, either in Russia or the West. Foreign observers fail to
appreciate that the reformers have never had free rein, but instead have
operated within coalitions and faced massive resistance from an entrenched
elite. Yet in spite of reform has made great headway. For all the drama of
the last few years, Russia has actually proved surprisingly stable.
Nevertheless, a cottage industry of doom-prediction has sprung up,
manned largely by Sovietologists whose intellectual capital fell with the
Soviet Union. A telling example is Dimitri Simes, the widely quoted
president of the Nixon Center for Peace and Freedom. He has persistently
opposed the real reformers in favor of various "moderates" and "Russian
patriots" such as the gray apparatchik Yuri Skokov, already forgotten, and
General Alexander Lebed who is without credible commitment to democracy.
In 1996, Simes firmly predicted that President Yeltsin would steal the
presidential election. He has condemned "Russia's experiment with
democracy" as "a brief interlude born of confusion and weakness." He
foresees Russian aggression sooner or later. "Russia's alienation from the
West," he writes, "could easily contribute to its empire-building
tendencies. It may not take too much time or effort to see Russian tanks
on the Polish border again..." For all that he was born and raised a
Russian, Simes makes pronouncements that cannot withstand scrutiny.
Another reason for the prevailing disparagement of Russia's progress is
that few remember how bereft the country was in 1991. Its crisis was
total. The Soviet government had printed money freely but kept prices low,
so there was nothing to buy in the stores. Since people could do little
with their money, many stopped working, and production plunged. Law and
order were on the verge of breakdown, and the Soviet Union defaulted on its
international payments.
Today, Russian society has come together in signicant ways. Inflation
and the national budget are under control. More than 70 percent of GDP is
produced in the private sector. Prices are set by the market, and the
economy probably started growing in 1997. Military expenditures have
fallen from about one quarter of GDP in Soviet days to some 3 percent
today, and the debacle in Chechnya shows that Russia cannot possibly pursue
an expansionist war for many years to come. Two Communist-nationalist coup
attempts have been foiled, and the Communists seem to have sunk in the
polls for good. The social cost of the transition has been great, but the
new Russia has a market economy based on private property and an elected,
if imperfect, government.
Even on the crime front, progress is being made. Crime
statistics-including secret Soviet statistics, now widely published,
contradict the dire view that Russia is controlled by mafia and gripped by
skyrocketing lawlessness. It is true that the Russian crime rate
doubled--but it did so from 1988 to 1992, primarily in the last years of
communism, when the powerful were grabbing what they could and repression
no longer deterred. The crime rate was flat after 1993, then fell by 5
percent in 1996 and another 9 percent in the first nine months of 1997.
With the sloppiness characteristic of so much writing about Russia, a
recent report on organized crime published by the Center for Strategic and
International Studies contains no crime statistics in its 90 pages, yet
concludes that "the anticrime program of the Russian government has been a
failure."
Strangely, many persist in believing that the Soviet Union was a
law-abiding society- But Soviet ideology opposed the rule of law on
principle, as constraining the discretionary power of the Communist party.
Soviet statistics show that Russia has had a very high homicide rate for a
long time- In 1985, it equaled the U.S. rate of 8 per 100,000. One reason
this has passed largely unnoticed is that it was not a big city phenomenon:
The murder rate was twice the Russian average in Siberia and the Far East,
where deported criminals were numerous. Now, many deportees have returned
to the cities, and urban dwellers and foreigners are more aware of crime.
While Russia's murder rate remains high, it dropped by 2 percent in 1995
and 7 percent last year.
As in the United States, the falling crime rate is a result of energetic
government efforts. The Russian government spends ever more on law and
order--about 2 percent of GDP, more than any Western country. The number
of prison inmates is rising sharply, and an impressive 88 percent of
reported murders are being solved. thus, the picture is improving, contrary
to most reporting, even if the contract killings associated with high-level
corruption remain a very serious problem.
One of the most frequent complaints about Russia's reforms is that
privatization has facilitated crime and the concentration of wealth. The
CSIS report goes so far as to call the organized-crime syndicates "the
principal beneficiaries of privatization." Those who managed that
privatization process are accused of giving away the countries wealth to
the managers of state enterprises, bankers, and criminals. But is this true?
Most privatization of large and medium-sized enterprises took peace in
1993 and 1994 through a voucher process. By 1996, about 17,000 enterprises
had been privatized this way. An extensive survey reported in Kremlin
Capitalism by Joseph Blasi, Maya Kromova, and Douglas Kruse shows that in
1996, enterprise managers owned- 18 percent of the privatized capital. In
April 1996, total market capitalization was $21 billion, so the voucher
auctions awarded the managers of privatized enterprises capital worth
barely $4 billion, or less than 1 percent of GDP. Contrary to popular
belief, it is remarkable how little property former state enterprise
managers acquired through voucher privatization.
Much of the concern stems from the way a few unusual enterprises were
privatized. Half the stock of the giant gas monopoly, Gazprom, was sold to
insiders, including Chemomyrdin. And fifteen large companies were
privatized in closed auctions at the end of 1995; in particular, big blocks
of shares of the oil companies Sidanko, Yukos and Sibneft were sold at low
prices to new banks. Still, these privatizations were not the rule, and.
in several cases the stock was not sold at a discount. Chubais was forced
to go along with these arrangements at a time when voucher privatization
was no longer politically feasible. As a rule Chubais fought to spread
stock ownership as widely as possible and to limit the benefits flowing to
insiders.
How, then, did some Russians get very rich as communism fell apart? The
principal means was arbitrage. Buy something cheap at the controlled state
price and sell it high on the free market. Arbitrage flourished in 1991 and
1992, when Russian raw materials could sometimes be bought for less than 1
percent of the world price. In 1992, about 30 percent of Russia's GDP was
derived from export arbitrage in oil, natural gas and metals.
Another source of wealth was import subsidies. In the winter of
1991-92, when starvation threatened, the Russian government lacked the
clout to abolish import subsidies. Importers paid only 1 percent of the
official exchange rate for the hard currency needed to import essential
foods. No less than 15 percent of Russian GDP went to import subsidies in
1992. They were financed with Western commodity credits, which the Russian
state would eventually have to repay.
A third source of enrichment was subsidized credits, which mushroomed in
1992 and 1993, The reform- ers never succeeded in winning control of the
Central Bank from the communist-dominated Supreme Soviet and the bank fed
the state enterprises' appetite for loans to such an extent that net credit
expanded by 33 percent of GDP in 1992. Worse, most of these credits were
heavily subsidized. Issued at interest rates of up to 25 percent per year
at a time when inflation was 2,500 percent, they were virtual gifts from
the state.
Incredibly, the gross benefits flowing to a well-connected few from
these three sources alone amounted to some 75 percent of Russia's GDP in
1992. None of these subsidies can be defended as a social good.
Furthermore, the division of spoils entailed a great deal of violence. The
fortunes made in these ways vastly exceeded the total gains managers would
reap from voucher privatization in the ensuing two years.
These findings match the general public's beliefs about who got rich in
Russia's transition. New bankers made lots of money from commodity trading
and inflationary practices like subsidized credit, but benefited little
from voucher privatization. The managers of the state oil, gas, and metals
companies sold their own commodities to their own trading companies, a form
of theft. Admittedly, those who prospered also bought stocks, but that
isn't how they made their fortunes.
The period when communism was crumbling and a market economy was being
born was an aberrant interlude, whose anomalies permitted the accumulation
of great wealth. As the market developed, the early distortions were
eliminated. Gaidar, Chubais and another young reformer, Boris Fedorov,
abolished subsidized credits in September 1993 and import subsidies by the
end of that year. They dismantled export regulations piecemeal,
effectively ending them in 19'95. This year, Chubais and his first deputy
prime minister Boris Nemtsov finally halted a number of lucrative
privileges enjoyed by "authorized banks." In every instance, the reformers
had to overcome fierce resistance, not only from parliament but also from
bankers, the energy lobby, commodity traders, and state-enterprise
managers--all of them well represented in the halls of power. The decisive
struggles occurred inside the government.
And, as we leave seen, the reformers rarely succeeded. They brought
inflation down to about 13 percent in 1997 and saw the economy apparently
edge into growth. While income differentials rose sharply in the early
1990s, they have been stable since 1995. Even worrisome health trends
improved slightly after 1995. The conclusion seems obvious that Russia's
chief social and economic problems sprang not from moving to rapidly to a
market economy, but from eliminating too slowly distortions of the market
rooted, in the old socialist system.
Why then do so many blame the top reformers for the problems of the
Russian transition? Understandably enough, members of the old Communist
elite see Gaidar and Chubais as the enemies who dismantled their paradise.
To Grigory Yavlinsky, leader of the liberal opposition party Yabloko,
Gaidar and Chubais are rivals to be held accountable for every problem.
Yavlinsky accused Chubais of bringing crony capitalism to Russia, even
though such capitalism flourished 1991, before Chubais was a minister.
In the run-up to the 1996 presidential elections, most anti-Communists,
apart from Yabloko--notably, the democratic Right and the new
capitalists--joined forces to fight the Communists. But their coalition
was short-lived. In the summer of 1997, several leading businessmen who
had made money off the government came out against First Deputy Prime
Ministers Chubais and Nemtsov for abolishing privileges for capitalists and
conducting open privatization auctions.
In a recent interview, Nemtsov emphasized that the struggle in Russia is
no longer between communism and capitalism but over what kind of capitalism
will prevail. Moscow mayor Yuri Luzhkov stands for
"nomenclatura-bureaucratic capitalism," said Nemtsov, under which "all
power, all property and money shall belong to civil servants." Luzhkov
keeps prices high in Moscow by limiting competition through the strict
licensing of businesses. The second model is oligarchic crony capitalism,
in which a privileged group of corporations and individuals controls most
property and all power. Its main proponent is former deputy national
security adviser Boris Berezovsky. The third model is the reformer's
ordinary free-market system.
The Russian public debate is colorful, and foreign observers sometimes
mistake or misrepresent its hues. Writing in the Washington Post on August
24, 1997, Peter Reddaway, a professor at George Washington University,
quoted Mayor Luzhkov as claiming that 'Chubais's conduct of privatization
was so dubious that it required criminal investigation.' But Luzhkov is
actually opposed to most privatization; he wants his city officials to hold
onto their power and property. Reddaway goes on to cite approvingly
Luzhkov's propaganda sheet, Moskovsky Komsomolets, calling Chubais "a much
bigger Communist than Zyuganov," and one who uses "authoritarian, purely
Stalinist methods." Needless to say, it can hardly be Communist to oppose
what the Communists want or Stalinist to insist on democratic elections.
Luzhkov is simply angry with Chubais because his free enterprise program
threatens Luzhkov's monopolistic regime. Reddaway sides with Luzhkov.
Equally astounding, Paul Saunders, director of the Nixon Center for
Peace and Freedom, strongly supports Boris Berezovsky in a letter to the
editor of the Wall Street Journal on November 13, 1997. Responding to a
balanced news report of Berezovsky's ouster from the Security Council,
Saunders argues that Berezovsky's "record of support for Yeltsin's reform
efforts... is nearly perfect." In fact, Berezovsky is a shady character
who made a lot of money on a car dealership that colluded with the
management of Russia's biggest auto company to buy cars at rigged low
prices. He went on to become king of one of the most mafia-infested
sectors of the Russian economy. As deputy national security adviser, he
tried to use the powers of office to facilitate the insider privatization
of the oil company Rosneft (valued at up to $2 billion), to his own
benefit. He made virtually none of his money in legitimate business and
has been accused publicly a of hideous crimes. Naturally enough, he
strongly opposed Nemtsov and Chubais for to level the playing field, while
he praises Western European social democracy, whose far-reaching regulation
holds the potential for insider deals. One of Berezovsky's newspapers
reprinted Reddaway's tirade against Chubais, as did a Communist newspaper.
Journalists and Russia-watchers need to do a much better job of
evaluating their sources. Regrettably, the enemies of reform dominate the
Russia media, and far too often, propaganda hostile to the reformers is
reported as truth in the United States. Periodic reality checks help set
matters straight.
At decisive moments, the Russian People have invariably opted for
democracy and the market economy. Four times, in votes that amounted to
referendums on the system, the forces of reform have carried the day, with
majorities ranging from 54 percent to 58 percent. The electorate has been
the great mainstay of Russia's democratic capitalist revolution.
Another pillar of the new Russia is President Yeltsin. Though his
skills are denigrated in the West, he has proven himself a visionary. He
has succeeded in transcending his environment and reaching out to new
worlds--even as he faced down two attempted coups. A formidable democratic
politician, Yeltsin knows both how to lead and when to compromise.
Finally, the third pillar of reform comprises the committed young
technocrats like Gaidar and Chubais. Thanks to them, the economy is
predominantly in private hands--a giant accomplishment that will go far to
guarantee the survival of Russia's political and economic freedom.

-------

FROM RUSSIA, WITH LOVE
By Peter Reddaway

Let me limit myself to just a few of Anders Aslund's controversial
points ("Why the Doomsayers Are Wrong About Russia," Dec. 29/jan. 5). He
claims, strangely, that "few voices are raised" in the West in defense of
Russian reformers like Anatoly Chubais and Yegor Gaidar. Yet they have
hardly ever been criticized by mainstream Western opinion and have almost
invariably been supported by, among many others, the Washington Post, the
Wall Stree tJoumal, the Economist, the U.S.-Russia Business Council, and
most Western governments, notably those of Bill Clinton and Helmut Kohl.
Aslund claims that in light of "the falling crime rate," the law and
order picture "is improving" in Russia. First, he ignores the strong
evidence that the official statistics, e.g., on homicide, are being
cooked-as Konstantin Zavoisky recently showed for Moscow in the democratic
weekly Ekspress-Khronika (Nov. 28, 1997). Second, he fails to note some of
the most disturbing aspects of the crime picture. For example: Opinion
polls show the public still to be deeply worried by the crime situation;
almost all Russian businesses except for the biggest, which employ heavily
armed private armies-routinely pay extortion money to the mafia or the
police, having lost faith in the justice system's ability to defend them;
the police and mafia are, according to government reports and the media,
increasingly cooperating with each other and "growing together." Most
disturbing of all, the corruption of the very core of the post-Soviet order
that this "growing together" epitomizes is not being seriously tackled.
This is because the whole system is too corrupt to do the job, and, as a
Russian friend who occasionally sees Yeltsin told me, the president
fatalistically accepts this to be the case. Significantly, not a single
one of the thousands of highly placed politicians and businessmen on whom
the police have lengthy dossiers has yet-after six years of largely phony
drives against organized crime and corruption-been convicted and jailed.
Referring to the mayor of Moscow and an article I wrote about Chubais in
The Washington Post (Aug. 24, 1997), Aslund ridicules me because I "cite
approvingly Luzhkov's propaganda sheet, Moskovsky Komsomolets, calling
Chubais 'a much bigger communist than Zyuganov' and one who uses
'authoritarian, purely Stalinist methods."' I cited these words because
they reflect certain sides of Chubais-for example his tendency, under
pressure, to tough things out with the most brazen lies (significantly,
Aslund does not try to explain these away). The cited words reflect, too,
Chubais's equally Bolshevik and well-documented habit (also passed over by
Aslund) of ordering the media, on pain of drastic reprisals, to, suppress
information that discredits him. Here the evidence comes from Chubais's
allies as well as his enemies. Oleg Poptsov, for instance, a democrat of
integrity and a political ally of Chubais who long headed the State
Television and Radio Company, spoke at a recent forum on the press.
Commenting on the previous speaker, an editor who had quoted Chubais as
telling a closed meeting of top press people that "bones would be broken'
if they disobeyed the government Poptsov said: "Chubais is a bright,
clever, talented person, but with his own neo-Communist style. That's a
fact. The way he's conducted meetings with editors should not be a
surprise to anyone. The government is now ours, but it behaves like the
previous [Soviet] one. There's no difference in the way such meetings are
conducted. The Party Central Committee used to summon a larger group [of
editors], whereas now a narrower group is called in. But the methods are
the same" (Novaya gazeta, Nov. 24, 1997). - Aslund also claims that
"Reddaway sides with Luzhkov." He refers to Luzhkov's view (summarized by
me) that "Chubais's conduct of privatization was so dubious that it
required criminal investigation' and suggests that I support Luzhkov's
approach to privatization. This is simply untrue. I have never expressed
any approval of this approach. I quoted Luzhkov only because he was one of
many people who believed that criminal conduct was involved in the
privatization programs presided over by Chubais. Among these people were
the officials of Russia's independent, government-financed Accounting
Office, which is no ally of Luzhkov and which, after investigating
privatization in depth, found it permeated with massive fraud. I referred
to this report, as well as to Luzhkov.
Also, Aslund hints that because one of the Russian papers that
translated my article is controlled by the shady magnate Boris Berezovsky,
I supported him in his battles against Chubais. This is not true. I have
always shared Aslund's view of Berezovsky, and recently it in an interview
expressed in Ekspress-Khronika (Oct. 18, 1997).
To conclude, Chubais organized Yeltsin's reelection skillfully (if with
illconcealed contempt for the law), an has played a key role in reducing
Russia's rate of inflation. He is also an authoritarian and a liar who is
widely hated in Russia and who stimulates anti-Americanism. Many of his
policies have helped create the crony capitalism and the acute, chronic
problems with tax collection, wage arrears, and the black economy that
plague Russia today. At best, in my view, Russia faces a future of
restricted markets and minimal democracy. By contrast, Aslund believes
that Chubais's and Gaidar's policies "will go far to guarantee the survival
of Russia's political and economic freedoms." Time will tell which of us is
nearer the mark.

-----

By Paul Saunders
Nixon Center
Washington DC

Although I cannot speak for others attacked in Anders Aslund's article,
I must point out that the views attributed to me by Aslund are entirely
without foundation.
Remarkably for one who insists that "journalists and Russia-watchers
need to do a much better job of evaluating their sources," Aslund is quite
willing to quote the work of others entirely out of context, as he did in
writing that I "strongly support" the Russian tycoon Boris Berezovsky. Had
Aslund represented my November 13, 1997, letter in the Wall Street Journal
fairly, the reader would have seen that I in fact argued not that
Berezovsky is a model reformer but that his behavior is not so different
from the conduct of first deputy prime minister Anatoly Chubais, and that
Americans need to stop pretending that there are only white hats and black
hats in Moscow with nothing in between.
It is also somewhat disingenuous on Aslund's part to write a three-page
defense of Chubais's economic policies while identifying himself solely as
senior associate of the Carnegie Endowment for International Peace, when
another of his affiliations-his past long-term service as a close adviser
to Chubais-is much more relevant to his article. Interestingly, Aslund's
own evaluations of the progress of political and economic reform in Russia
in recent years have tracked Chubais's presence in or absence from the
Russian government quite closely. For example, he wrote in the New York
Times on February 13, 1996-after Chubais had been dismissed from his
previous government service-that even Communist leader Gennady Zyuganov
would make a better president than Boris Yeltsin. "Russia needs a change
of government," Aslund wrote, and "unfortunately, the Communists are the
only alternative."
Now that Chubais is back in the cabinet, however, "the doomsayers are
wrong about Russia." Aslund is even prepared to defend Chubais's acceptance
of a $90,000 book advance from a publishing house affiliated with one of
the major beneficiaries of his management of privatization on the basis
that "the relatively modest sum involved suggests a concern for propriety"
and that others in government have gotten more. And he quietly sidesteps
the question of whether the $90,000 advance is all that Chubais has received.
Aslund is definitely right, however, about the chronic "lack of
perspective" in American discussions of developments in Russia. Perhaps a
little distance from his friends in Moscow would help him to gain some
perspective of his own.

-------

ANDERS ASLUND RESPONDS: 
The key dispute in Russia today is whether a small number of tycoons
should enjoy special benefits in politics, taxation, and privatization, or
not. Chubais and Nemtsov publicly attack such privileges, while Berezovsky
openly favors them, and his two TV channels and newspapers savage Chubais
and Nemtsov every day.
According to Forbes magazine, Berezovsky has made a fortune of $3
billion largely through sweetheart deals. To stand up to such characters,
you need to be a great deal tougher than a saint. Yet, if Chubais had done
anything worse than the book deal, which he himself considers a big
mistake, Berezovsky's muck-raking journalists would presumably have found
it out.
It of course helps knowing these people as I do to understand the
situation, but the debate is very public, though one must figure out who
speaks for whom. I appreciate much of Peter Reddaway's response, but
"Russia's independent, government-financed Accounting Office" is alas
controlled by the Communist-dominated parliament.
Economic reforms are mostly spearheaded by a few leaders-in Russia by
Yegor Gaidar, Anatoly Chubais, Boris Fedorov, and Boris Nemtsov. In 1996,
when none of these men was in government, no reform whatsoever was
undertaken, underscoring their importance. (I resigned as a government
adviser in early 1994.)
In his letter to the Wall Street Journal Saunders stated. "The real
political battle is not between reformers and tycoons like Mr. Berezovsky,
but between one group of tycoons . . . and another. . . . " That is also
Berezovsky's view, but I disagree.

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#6
>From RIA Novosti
Rossiiskaya Gazeta
February 12, 1998

PRESIDENT'S LINE, NOT PRIMAKOV DOCTRINE
By Alexei KOLESOV

It seems to be a rule of international relations
that whenever a country has no clearcut foreign
policy line of its own, the international community
tends to ignore, so to speak, the country and its
foreign office chief.

On the other hand, whenever a country has a stance of its
own which is based on the principle of protecting national and
state interests and is actively upheld, the country and its
foreign office head become the talk of the world and subject to
numerous publications. True enough, the publications are not
always free of bias, but still...
When Yevgeni Primakov occupied the top office in the
Russian foreign ministry highrise in downtown Moscow's
Smolenskaya Sq., the media zeroed in on Russia and its stance
in the international arena. 
The Iraqi crisis has served to further whet the attention
of the media. Many publications are critical, especially when
the focus is on Russia's foreign minister. 
One aspect that seems to be overlooked is that Primakov is
not conducting a personal foreign policy, but rather that of
the Russian state and that this line is largely specified by
Russia's president personally. 
The US media, not used as they are to their country's
foreign policy moves being questioned or, God forbid,
criticised, make believe the Russian minister is not constantly
stating his readiness to discuss with his American counterpart
the most acute international situations where the interests of
either, or both, Russia and the US are at stake. 
Instead, the American media criticise the Russian foreign
ministry's international moves, as if forgetting that Russia's
foreign policy line is not, nor can be, that of the US - and
vice versa.
One example is the article entitled The Primakov Doctrine
by Ariel Cohen, a senior staffer of the Heritage Foundation in
the newspaper The Washington Times. 
The author believes that by refusing to back up a power
solution of the Iraqi problem Moscow undermines the coalition
built to contain Saddam Hussain and explains that Primakov's
views are central to Russia's current strategy which aims to
counter America's hegemony in the matters of global security. 
Cohen holds that Primakov is skilfully exploiting
anti-American sentiments. He is currently courting Iran's
theocracy and France's diplomatic elite in a bid to make their
traditional anti-Americanism serve his multi-polar diplomacy. 
The objective is said to weaken the might of the US and
promote Russian-Chinese strategic partnership which may be
eventually joined by Iran. 
The coalition, as Cohen sees it, would challenge the US in
two vital regions of the world - the Persian Gulf and the
Strait of Taipei. The next objective of the Primakov foreign 
policy doctrine is said to make Russia equal to the US in the
Middle East and in parallel force it out of the post-Soviet
states. 
Russia is said to seek a place in the sun in a world that
is growing out of the cold war ruins, and Primakov, to
endeavour to distance Russia from the West. He therefore makes
more difficult his country's attempts to integrate into the
global economy, and to get access to the markets of capital it
needs so badly, to foreign investments and the latest
technologies. 
Cohen notes that by building an anti-American coalition,
maintaining friendly relations with dictators in the Middle
East and strengthening China's defenses, the Primakov doctrine
endangers the Russian-American interrelationship, international
peace and international security. 
Conclusion? Foreign minister Yevgeni Primakov is real
good, for he places Russia's interests above those of the US.
The US vision is opposite, of course.

*******

#7
RFE/RL NEWSLINE Vol 2, No. 29, Part I, 12 February 1998

RUSSIA DENIES ALLEGATIONS IN "WASHINGTON POST." The Foreign Ministry has
denied allegations in the "Washington Post" on 12 February that Russia has
sold to Iraq equipment that could be used for producing biological weapons,
Interfax reported. "Ministry sources" are quoted as saying that the Russian
government has concluded no agreements with Iraq and that there have been
no deliveries. The sources added this is "another attempt to shift the
blame from the guilty to the innocent." The "Washington Post" reported that
Russia signed a contract to deliver a 5,000-liter fermentation vat that is
ostensibly for manufacturing animal feed but has the potential to produce
biological weapons. BP

NEMTSOV WARNS OF DANGERS OF OLIGARCHY... First Deputy Prime Minister Boris
Nemtsov says it is "dangerous" when a handful of large companies make up a
large share of a country's GDP. In an interview published in "Russkii
telegraf" on 11 February, Nemtsov argued that the recent financial crisis
in Southeast Asia occurred because those countries developed "oligarchic"
economic systems, in which large financial-industrial groups had close ties
to the government. He argued against concentrating resources in a few large
Russian corporations, which, he said, currently account for too great a
proportion of GDP. During the last six months, Nemtsov has repeatedly
pledged that the government will enforce a level playing field for all
companies. He has also accused former Security Council Deputy Secretary
Boris Berezovskii of trying to use his government contacts to enrich
himself and his LogoVAZ business empire. LB

...SAYS YELTSIN AGREES WITH HIM. In the same interview, Nemtsov claimed
that Yeltsin "understands that Russia will never tolerate the arrogance of
the super-wealthy." He added that the president has increasingly recognized
the "danger of excessive closeness between business and the authorities"
since bankers "violated" an agreement reached with the president last
fall. (In September 1997, Yeltsin summoned six top bankers to the Kremlin
and urged them to stop "slinging mud" at one another and at government
ministers.) Nemtsov also denied that the recent redistribution of duties
within the government had reduced his authority or that of First Deputy
Prime Minister Anatolii Chubais (see "RFE/RL Newsline," 16 and 19 January
1998). Oneksimbank fully owns "Russkii telegraf," which has provided
favorable coverage of Nemtsov and Chubais since it began publication last
September. LB

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