Johnson's Russia List

#4003

2 January 2000

davidjohnson@erols.com

[Note from David Johnson:

  1. The Sunday Times (UK): Mark Franchetti, Yeltsin slinks from stage with an immunity deal.

  2. New York Times editorial: Russia's Flawed Reformer.

  3. The Guardian (UK): Tsar Boris's many faces: the fool, the patriot, the crook. John Sweeney opens up the nest of bizarre Yeltsin dolls.

  4. The Electonic Telegraph (UK): Philip Sherwell, Moscow's fight for oil cash fuels Chechen conflict.

  5. Washington Post: Mark Kramer, Russia Without Yeltsin.

  6. New York Times: Richard Pipes, Yeltsin Goes, Uncertainty Remains.

  7. Stratfor.com: Presidents & The Price of Pardon.

  8. Ha'Aretz (Israel): Isabella Ginor, Putin's deal and potential undoing.

  9. Stratfor.com: How the West Killed Yeltsin.

  10. Frank Durgin: A query.]

*******

#1

The Sunday Times (UK)

January 2, 2000

[for personal use only]

Yeltsin slinks from stage with an immunity deal

Mark Franchetti, Moscow

TO THE casual observer, it appeared to be little more than a regular meeting

of senior Kremlin advisers. When a fleet of black Mercedes limousines with

flashing blue lights rolled up last month at a secluded presidential dacha on

the outskirts of Moscow, they disgorged some of the most powerful figures in

Russia.

Boris Yeltsin was among them. So, too, was Vladimir Putin, the hawkish young

former KGB spy whom the then Kremlin leader had already anointed as his heir.

The meeting, which went on for hours, was far from routine, however.

Yesterday, as Putin marked his first full day as acting president after

Yeltsin's startling New Year's Eve resignation, the significance of what

happened behind the closed doors of the dacha began to emerge.

Russians did not know it yet, but those present had hammered out the terms of

an unprecedented deal whereby the ailing Kremlin leader would step down and

pave the way for Putin, named as prime minister four months earlier. An epoch

in Russian history was about to end.

Yeltsin's wife, Naina, and Tatyana Dyachenko - his daughter and one of his

closest political advisers - appeared to have accepted months earlier that

the president, first elected in 1991, would find it difficult to serve out

his second term, which was due to expire in June.

With his health eroded by a string of ailments ranging from heart disease to

a bad back - and exacerbated by a predilection for vodka - Yeltsin had long

been a shadow of the energetic leader who had climbed defiantly aboard a tank

in Moscow to lead opposition to the failed hardline communist putsch of

August 1991.

Although he was assured of his place in the history books as the man who

finally broke Russia's links with its Soviet past, members of his entourage

were concerned at the treatment he - and they - would receive at the hands of

whoever took his place in the Kremlin.

For months, both Yeltsin and Dyachenko had been at the centre of a

multi-million-pound corruption scandal following disputed allegations that

bribes were paid by Mabetex, a Swiss construction company, in return for

lucrative contracts to refurbish it.

Together with other close aides, they had been accused of personally

profiting from state contracts through the use of foreign bank accounts and

credit cards paid off by Mabetex. The Kremlin has denied any wrongdoing.

Yeltsin also feared being prosecuted in a witch-hunt orchestrated by his

communist enemies for overseeing the break-up of the Soviet Union at the end

of 1991 and starting the 1994-96 war in Chechnya, the breakaway republic,

where the Russian army is again fighting Islamic rebels.

The deal - reached in the dacha and confirmed in one of Putin's first

initiatives as acting president - gave the Family, as they have become known

in Russian political circles, all the guarantees they needed. Yeltsin was

granted immunity from prosecution for any crimes committed during his nine

years in office. He cannot be detained or arrested and his premises cannot be

searched. Nor can he be interrogated or subjected to a body search.

In addition, he and all future outgoing Russian presidents are entitled to a

pension equal to 75% of their salary, personal bodyguards for themselves and

members of their family, medical care, a state residence and car and a staff

of aides. In what could be the ultimate guarantee of the outgoing president's

untouchability, Putin also agreed to retain Dyachenko and Alexander Voloshin,

the head of Yeltsin's Kremlin administration, as advisers.

"Yeltsin, but especially his wife and daughter, were terrified of what their

enemies could do to them once he lost power," said one former Kremlin aide.

"In the end that became the main reason why he hung onto power so

desperately. For months they searched for the right man to guarantee them a

safe future. Then they found Putin. He is their man.

"The deal was straightforward. Yeltsin would make Putin his crown prince, but

it was made clear he would only have his chair provided he made it a priority

to look after him. It was an offer Putin could not refuse."

The dramatic move appeared to have been carefully timed to ensure Putin could

win the presidential elections he will have to face after three months as

acting leader.

Had Yeltsin waited until June before stepping down, there was a danger the

tide of the war in Chechnya would have turned against the Russian army,

sending Putin's popularity plummeting as fast as it had risen. A March

election will reduce that risk.

When Putin, 47, a former KGB spy and life-long apparatchik, became prime

minister in September, few ordinary Russians had even heard of him. Four

months later, he looks virtually unbeatable.

Having benefited hugely from the ferocious war in Chechnya, which most

Russians support, he is seen as a leader capable of the decisive action that

has been lacking in Yeltsin's latter years.

His approval ratings at the polls have skyrocketed from 2% to 45%, and

two-thirds of Russians profess confidence in his abilities. About 40% said

last week they expected the year 2000 to be successful - against 16% the year

before.

In recognition, perhaps, of the debt he owes the war for his popularity,

Putin immediately cancelled plans to celebrate the new millennium at the

Bolshoi in Moscow, travelling instead to Chechnya to visit troops.

As state television broadcast proceedings live, he presented officers in

Gudermes, the breakaway republic's second city, with medals and hunting

knives and delivered a patriotic speech thanking them for their support in

the war.

"I want you to know that Russia highly appreciates what you are doing," he

told them. "This is not just about restoring the honour and dignity of

Russia. It is rather more important than that. It is about putting an end to

the break-up of the Russian Federation. That is the main task."

His wife, Lyudmila, was at his side. It was only the second time that

Russia's new first lady, a university lecturer about whom very little is

known, had been seen in public: she had first appeared with Naina Yeltsin at

the lying-in-state of Raisa Gorbachev, the wife of the former Soviet

president.

Plumes of black smoke, meanwhile, hung over Grozny after low-flying Russian

jets dropped scores of bombs on the Chechen capital in one of the fiercest

bombardments of the campaign.

Putin's first official engagement as acting president will come today when he

meets party leaders in the state Duma, the recently elected lower house of

parliament. Three days later, he will attend a special session of the upper

house, the Federation Council, that is expected to confirm March 26 as the

date for presidential elections.

With less than three months to go until the vote, however, Putin remains in

many ways an unknown quantity. Few voters know exactly what he stands for -

with the exception of the ruthless continuation of the war in Chechnya.

"He is not affable and not particularly charming, despite his attempt to

break the ice during meetings with the odd joke," said one western ambassador

last week.

"His background makes him pretty impenetrable and cold, but not in a sinister

way. Rather, he is a man with little experience in dealing with the West. He

is not driven by any strong ideology. Instead, he is highly pragmatic and

rational. We know little about him and it will take time."

Many observers, including Leon Aron, a leading Washington-based expert on

Russian politics, remain convinced that his instincts on economic reform, at

least, are liberal. "During a recent visit to Moscow, I met a number of

leading Russian reformers and they were uniform in the complete confidence

they had in Putin," Aron said. "They said he was a man they could work with."

Putin's lead in the opinion polls - coupled with the advantages of incumbency

- look almost certain to guarantee him election victory, provided there is no

turn for the worse in Chechnya. Judging by last month's parliamentary

elections - which saw unparalleled personal attacks on all sides - the

presidential race will undoubtedly be a dirty one.

Dyachenko and Voloshin were personally credited with orchestrating a vicious

media campaign that severely damaged the chances of the Kremlin's two main

rivals, Yuri Luzhkov, the bullish mayor of Moscow, and Yevgeni Primakov, a

former spy master and foreign minister who recently announced he would run

for president. "Right now if I were Luzhkov or Primakov, I would give up,"

said one of Russia's leading pollsters. "Putin has given Russians a chance to

start shrugging off their inferiority complexes, a chance to begin to feel

better about themselves, despite all the hurdles ahead.

"That is a difficult achievement to beat. There is little they can do, but

this being Russia, Putin knows how suddenly the wind can turn against you. No

matter how strong he is, he will seek to avoid confrontation with his

opponents.

"If Yeltsin, a man for whom power was like a drug, could be talked into

giving it up with the right deal, then anything can be worked out in Russia.

The time of cutting deals is not over."

*******

#2

New York Times

January 2, 2000

Editorial

Russia's Flawed Reformer

In suddenly resigning as Russian president on Friday, Boris Yeltsin showed

once again why he will be remembered as a practitioner of the unexpected

political stratagem. Like so many of Mr. Yeltsin's gambits over the years,

the move upended expectations and scrambled Russian politics.

It also came with a promise of immunity from prosecution for Mr. Yeltsin for

any misdeeds of his government. That will likely roil the coming presidential

campaign, a fitting legacy for a courageous but disappointingly erratic man

who guided Russia through the first years of a turbulent, still unfinished

journey from tyranny to democracy.

Mr. Yeltsin's action immediately lifted the presidential prospects of the

politician he hopes will succeed him, Prime Minister Vladimir Putin. Under

the Russian Constitution, Mr. Putin became acting president when Mr. Yeltsin

stepped aside, and the date for new elections was advanced from June to

March. That gives Mr. Putin the powerful advantage of campaigning as an

incumbent at a time when his popularity is surging because of the Russian

military offensive in Chechnya.

Mr. Yeltsin, for one last time, seemed to be betting that an impulsive, bold

move would turn Russia toward a more promising future. As with earlier

Yeltsin surprises, a positive outcome is far from assured. For one thing, the

political terrain could shift abruptly even by March if Russians became

disillusioned with the attack on Chechnya.

Mr. Putin's political instincts also remain unclear. He is a former K.G.B.

officer and head of Russia's domestic intelligence agency. As prime minister,

he has prosecuted a brutal assault on Chechnya. Yet he has encouraged

economic reform, has talked of the need to improve relations with the West

and is allied with some of Russia's most progressive politicians.

After Mr. Yeltsin's uneven leadership, Russia could use a steady,

reform-minded president who knows how to run an efficient government. Mr.

Yeltsin was the first freely elected leader of Russia. His great strengths

were an iron will and a daring vision for remaking Russia into a free-market

democracy. He was fearless in his drive to rid Russia of Communism, and his

stand against an attempted coup in 1991 kept reform alive. Later that year he

engineered the end of Communist rule in Moscow and the collapse of the Soviet

empire. History will honor him for these acts.

But Mr. Yeltsin proved indifferent at governing. Economic reform was stunted

by corruption, his government failed to collect taxes, and his penchant for

sacking prime ministers often left the Kremlin in disarray. Opposition in the

parliament made governing difficult, but Mr. Yeltsin lacked the discipline to

manage a complex government.

Though he broadly pursued closer ties with the West, and played a helpful

role in ending the war in Kosovo last year, Mr. Yeltsin could be inconsistent

in dealing with foreign issues. His preoccupation with Chechnya wounded

Russia at home and abroad. Weakened by heart problems and respiratory

ailments, he was in recent years a shell of the leader he had been in the

early 1990's.

Many Russians will doubtless question the sincerity of the apology Mr.

Yeltsin offered on Friday for the mistakes he made and the economic hardships

that so many of his countrymen have endured. More information will be needed

before anyone can judge whether the decision to spare Mr. Yeltsin from

possible prosecution was warranted or wise.

However, Russians ought not to forget the singular achievement of Boris

Yeltsin. For all his maddening weaknesses, he led his nation toward democracy

after 1,000 years of tyranny.

*******

#3

The Guardian (UK)

2 January 2000

[for personal use only]

Tsar Boris's many faces: the fool, the patriot, the crook

John Sweeney opens up the nest of bizarre Yeltsin dolls

The Tsar of all the unpredictables, Boris Nikolayevich Yeltsin, stunned the

world yet again, this time with news of his sudden exit from power on New

Year's Eve.

His legacy is very much like a set of Russian matryoshka dolls, though ones

pickled in 70° proof vodka. Beneath the gutsy fighter for democracy doll, the

doll that believed in a new kind of Russia, the hero to the free world who

stood on a tank and dared the neo-Stalinists to seize him, was the

world-class alcoholic doll.

In the annals of East-West détente, diplomats the world over will treasure

the memory of Boris's engagement with the nabobs of Ireland. Kremlin One

landed on Irish soil, but Boris was so fantastically pissed that his

bodyguards would not allow him off the plane. The plane flew off, and all the

dipomatic hoo-hah was cancelled. Beneath the drunk doll was a cunning

operator of the old Soviet era, who had managed to climb up the greasy pole

of the kleptocracy in the dying days of the old Soviet empire under Leonid

Brezhnev, and later became the boss of Moscow, no mean achievement.

Beneath that doll was a clown, an oaf with his hands on the nuclear trigger,

who would happily jiggle his buttocks on stage with a Siberian version of

Abba. Beneath the clown doll was a corrupt chancer, his hands so deeply in

the till with Russia's treasure that at the end of his reign he stood at the

head of a near-gangster state, with crime the country's greatest and most

terrifying export.

Beneath the gangster doll was a warlord, happy to send young Russian lads -

and countless wretched civilians - to their deaths in not one but two bloody

adventures in the Caucasus. And the final doll? A son of Mother Russia, a

patriot, yes, and one, thank God, whose impetuousness stopped short of

hitting the nuclear button in the middle of some wild vodka binge.

But Boris Yeltsin will go down in history as the man who launched a New

Russia, which had hoped to be democratic and free and not mired in poverty,

and then drank himself into a stupor as the whole glorious adventure went

rotten from the core. Yeltsin turned out to be too drunk, too sick, too

choleric, too greedy and too corrupt to make old Russia embrace the open

society. His chosen successor, Vladimir Putin, is a thin-lipped, near-silent

ex-spy, an old KGB man with all the hallmarks of an assassin. Not much of a

result for democracy, then; still less a legacy for his country.

There is no doubting Yeltsin's guts, or that he has always been a proper

Russian. In 1930, Ignaty Yeltsin, a well-off peasant of Butka village, in the

Urals' main town of Sverdlovsk, was declared a kulak - a land-owning peasant

- all but a death sentence under Stalin's rolling terror. His house, mill,

farm animals were confiscated by order of the State. His grandfather fled. On

1 February, 1931, a grandson was born to the disgraced family, Boris

Nikolayevich. Soon afterwards the family moved to Kazan, in the land of the

Tartars.

When young Boris was only three, his father, Nikolai Yeltsin, was arrested

and convicted of 'anti-Soviet agitation'. He served three years in Stalin's

notorious gulag, and Boris's mother made ends meet by working as a

seamstress. The young Yeltsin was never a quiet stay-at-home. He blew off two

fingers on his left hand while playing with a live grenade. Boris played

volleyball and graduated in construction at the Ural Polytechnic in

Sverdlovsk. In 1956, three years after Stalin's death, Yeltsin married his

college sweetheart, Naina Iosifovna Girina. They have two daughters, Yelena

and Tatiana, born in 1957 and 1959 respectively.

Yeltsin drank and worked and drank and played tennis and ground his up way

through the stultified hierarchy of the old Soviet Union. He joined the

Communist Party in 1961, and from then on he was firmly planted on the up

escalator of power. A seemingly boring list of job promotions forms the

official history. The real one is more Kafkaesque. In 1977 Yeltsin received

an order from the Kremlin to destroy the beautiful and historic Ipatyev

House, the site of the Bolsheviks' killing of the last Tsar, Nicholas II, and

his family in 1918. Yeltsin obeyed. By morning every brick, including the

foundations, had been taken to the city dump and the site was paved with the

smoothest asphalt.

In 1985, Yeltsin was moved to Moscow. He was a construction boss, brilliant

at energising workers and getting the factories and houses up. In late 1985,

as the torpor and decay of the old Soviet Union seemed ever more obvious,

Yeltsin was made city boss of Moscow.

But Yeltin's impetuousness got the better of him. In October 1987 he lashed

out at his fellow party bosses, condemning the slow pace of reform. The

knives were out for him and he fell from power. Heart trouble followed. Two

years later he came powering back, elected to the old Soviet parliament as

member for Moscow. In 1990 he was elected Speaker, recognised as the most

reform-minded politician in the country. He scented the change in the air

which the leadership, under Mikhail Gorbachev, feared to act on. In July,

Yeltsin left the party that had broken his grandfather. The Soviet Union

started to splinter. A year later, Yeltsin was elected President of the

Russian Federation. The old, neo-Stalinist guard struck on 20 August, 1991,

seizing Gorbachev in the Crimea and seeking Yeltsin's resignation.

Instead Yeltsin drove down to the centre of Moscow, stepped on tank number

110, and told the coup plotters to get stuffed - or words to that effect. The

coup crumbled, but Gorbachev was finished too. Yeltsin stepped smartly into

the power vacuum and created the new Russia. As was his right, he became its

first President, but the economy, freed from the grip of dirigisme, all but

collapsed. Crime grew rampant and Yeltsin signally failed to get a grip on

the State's finances. The wags called the first stage of his economic reforms

'shock without therapy'.

Worse was to follow. But the old guard had not had their final say. They

seized the White House of Russia. Yeltsin called in the army and the building

was shelled with tanks and set on fire. The plotters gave in.

The economy was not so easy. On Black Tuesday, 11 October, 1994, the rouble

lost over a fifth of its value in one day. Yeltsin started to back off from

the liberal reforms he had supported earlier and a horrible mutant emerged, a

kind of Leninist-Capitalism, its new, almighty barons the gangsters of a

violent kleptocracy. Word started to seep out of the Kremlin that Yeltsin

might also be on the take.

Under threat at home for his economic failures, the close of 1994 saw the

start of a miserable adventure: the first war in Chechnya. Badly led troops,

often 19-year-old conscripts, were picked off by the Chechen fighters. In

1995 Yeltsin's heart started to pack in. He had two heart attacks, but the

doctors patched him together.

The closing years of the Yeltsin rule were ignoble. Prime Ministers were

appointed, then fired, with bewildering speed. The core problems - the

gangsters, the inertia of the Soviet mind-set, a lack of honesty from top to

bottom - lay untackled.

International investigators on the trail of Russia's dirty money kept on

coming across the names of his family, cronies, and that of Yeltsin himself.

In a final throw of the dice, he got himself a new Prime Minister,

VladimirPutin. The secret deal behind the public palaver is that Putin gets

power now, ahead of the pack of rivals for the presidential elections;

Yeltsin gets immunity from prosecution, now. Whether Putin will stick with

the deal, or throw Yeltsin to the dogs when it suits him, we shall see. For

the moment, one can only note the passing of an old, sick doll that had

finally run out of tricks.

*******

#4

The Electonic Telegraph (UK)

2 January 2000

[for personal use only]

Moscow's fight for oil cash fuels Chechen conflict

By Philip Sherwell in Tbilisi

AS Russian troops fought their way through the streets of Grozny last week,

strategists in the Kremlin had their eyes on a different - and highly

lucrative - target several hundred miles to the east: the vast oil deposits

beneath the Caspian Sea.

Moscow is waging more than a military campaign in Chechnya. It is also

fighting for access to the Caspian Sea oil reserves pumped to the West

through the former Soviet state of Georgia by a British-headed consortium,

the Azerbaijan International Oil Company. The region's pipeline politics are

a striking parallel to the latest James Bond film, The World is Not Enough,

in which tycoons, terrorists and spies vie for control of the Caspian's oil

in the former Soviet Union.

There are two pipelines running from Baku, the bustling Azerbaijani capital

known to Western expatriates as "Oil Dorado". The original route - north-west

through Dagestan and Chechnya to the Russian Black Sea port of Novorossiysk -

was closed this year, a few months before the current conflict began. But, to

the fury of Moscow, the Baku-based AIOC consortium, headed by BP Amoco, built

a second pipeline to skirt Russian territory, removing Moscow's political

control over the oil flow to the West and the millions of pounds it earned

from tariffs.

Plans to build another AIOC pipeline from Baku through Georgia and south to

the Turkish Mediterranean port of Ceyhan have heightened the belief in Russia

that the West is attempting to impose its political and economic writ over

the southern flanks of Moscow's dwindling empire in the Caucasus and central

Asia. In the region's power politics, Turkey is firmly in the West's camp.

Russia is now fighting back and the Transneft oil transport company last week

announced that the first stage of a Baku-Novorossiysk pipeline by-passing

Chechnya has been completed. However, the costs of the new route will be

prohibitive if the company cannot woo foreign investors.

And that means that winning the war in Chechnya is crucial for Moscow's oil

politics. Victory would give back control of the troubled northern pipeline

through Grozny. Just as significantly, it would also allow the Kremlin to

resort to its old trouble-making tactics in Georgia: a tactic that could harm

the country's pivotal role as a transit route to the West for Caspian oil.

With its ethnic pot-pourri and separatist movements, Georgia is the most

unstable of the Caucasian states that gained independence eight years ago.

Moscow is already believed to have backed assassination attempts on President

Eduard Shevardnadze and sponsored separatist groups in flashpoint areas.

The confrontation between Russia and Georgia is deepening. Moscow has accused

Tbilisi of backing "terrorists" for refusing to agree to joint

Russian-Georgian border patrols along the Chechen frontier and for accepting

Chechen refugees. Georgia countered that Moscow's helicopters and jets had

routinely breached its air space and that Russian rockets had slammed into

Georgian territory.

A Western oil analyst said: "Part of the Russian strategy is to reassert

their influence in the Caucasus. They have been sidelined there for the past

five years and their involvement in Caspian exploration is minimal.

Regaining

control of the pipeline through Chechnya is undoubtedly a reason for the

Russian offensive."

But the realities of international geo-politics leave no other pipeline

options. Washington refuses to countenance a southern route through Iran,

while few in the West would want to be dependent on oil delivered via Russia.

BP, which merged with Amoco last year, has invested more than £300 million in

Azerbaijan over the past decade.

The current Georgian pipeline carries about 100,000 barrels of Azeri crude

oil a day, a figure that can be increased several-fold, even if the new route

through Turkey - a project that could cost up to £2.5 billion - is not

completed.

In the office of the AIOC's Tbilisi partner, a sticker proclaims: "Happiness

is multiple pipelines." But the machinations and plotting of the new Bond

film provide a more accurate backdrop to events in the Caucasus.

******

#5

Washington Post

2 January 2000

[for personal use only]

Russia Without Yeltsin

By Mark Kramer

The writer is the director of the Harvard Project on Cold War Studies.

After eight years in office as the first president of an independent Russia,

Boris Yeltsin chose the final day of 1999 to resign. His health had been poor

for many years, but virtually no observers inside or outside Russia had

expected that he would voluntarily relinquish power.

The odds-on successor to Yeltsin is the prime minister, Vladimir Putin, who

has taken over as acting president. In the past four months, Putin has

achieved remarkably high popularity ratings in a country that usually regards

its politicians with great cynicism. Putin will face one or two strong

challengers, but unless something goes drastically wrong between now and the

time presidential elections are held in March, he will almost certainly win

by a wide margin.

Politically, Yeltsin achieved a good deal. Although Russia is not yet close

to being a liberal democracy, the country is vastly better off than it was

during the many years of Soviet dictatorship. Three sets of parliamentary

elections have been held since the early 1990s, and a second presidential

election will be held next year. (Yeltsin's resignation means the election

will be held a few months earlier than scheduled.) For the first time in its

history, Russia will experience a peaceful transfer of executive power.

The advent of regular, free elections has been accompanied by the emergence

of a lively press. Although Russia's law on state secrets hinders the media,

and although many journalists are beholden to corporate interests, state

censorship is no longer a serious issue in Russia. For that, Yeltsin deserves

much credit.

There is little indication that Putin will seek to reverse these political

accomplishments. Although Putin made his career in the Soviet KGB and its

successor agency, he has displayed no inclination to do away with elections

or to reimpose state control of the press. One of the most heartening results

of the Yeltsin era is that all politicians of any standing in Russia--with

the possible exception of the Communists--now accept free elections and an

independent press as the only acceptable means of running the country. Even

the Communists compete avidly in elections.

Against Yeltsin's political achievements, his economic record is dim. For a

few months after taking office at the end of 1991, he pursued a radical

economic program. But in the early spring of 1992, he made the momentous

decision to back away, and Russia has been paying the cost ever since.

Given the onerous economic situation Yeltsin inherited from the Soviet

regime, it would have been difficult for anyone to turn the economy around.

But the ill-considered, half-hearted reforms that Yeltsin ended up pursuing

made things worse. During his tenure, corruption and criminality pervaded the

Russian economy, and millions of workers and pensioners went for months

without being paid.

This economic legacy will pose a formidable challenge for Putin. He has no

background in market economics, and he has been relatively subdued in his

statements about economic policy since taking over as prime minister in

August.

Nonetheless, there are grounds for optimism. Russia's economy in 1999 began

to show the first signs of a tentative recovery from the crash of August

1998. That circumstance, combined with Putin's soaring popularity ratings,

should give the new president a substantial window of opportunity to adopt

the radical reforms that Yeltsin was never willing to undertake. This window

may not be open long, but Putin's decisiveness as prime minister and his

astute approach to politics will work to his advantage. Russia may be able to

return to the bold reform program that Yeltsin abandoned in early 1992.

Putin's willingness to back the pro-market party known as the Union of Right

Forces in the recent parliamentary elections gives further reason for hope

about his economic policies. Although it would have been better if the

Yabloko party had gained more of the vote, the Union of Right Forces is the

next-best alternative. Together with the Unity party that Putin sponsored,

the Union of Right Forces may be able to craft a genuinely workable program

that will put Russia on the path of true market reform.

Both economically and politically, then, Yeltsin's departure should be good

for Russia. Even on the question of Chechnya, it is unlikely that Yeltsin's

departure will make things worse. Yeltsin himself vehemently supported both

the current war and the tragic conflict against Chechnya in 1994-1996, in

which tens of thousands died. It is troubling that Putin's popularity in

Russia has risen mainly because of his decisiveness in overseeing the

destruction of Chechnya, but there is no indication that Russian policy

toward Chechnya would be any different if Yeltsin stayed in office.

On balance, Yeltsin's resignation should bode well for everyone who wants to

see liberal democracy and a prosperous market economy in Russia. Those goals

will not be accomplished any time soon, but Yeltsin's departure should make

the future brighter for Russia.

******

#6

New York Times

January 2, 2000

[for personal use only]

Yeltsin Goes, Uncertainty Remains

By RICHARD PIPES

Richard Pipes, a research Baird research professor at Harvard, is the author

of "Property and Freedom."

CAMBRIDGE, Mass. -- Boris Yeltsin's unexpected resignation was a brilliant

political ploy, and one with worrisome implications for the West.

The move was clever because it enhanced the presidential prospects of Mr.

Yeltsin's chosen successor, Vladimir Putin; it will improve the chances of

Mr. Yeltsin's being remembered as a patriot rather than a leader who put

ambition ahead of the nation's interests; and it allowed Mr. Putin to give

Mr. Yeltsin immunity against corruption charges.

It also went over well internationally. Once they got over the shock,

President Clinton and other Western leaders welcomed the decision as

insurance of a smooth transition of power and the continuation of reforms.

In some respects, optimism is warranted.

In last month's parliamentary elections the two parties sponsored by Mr.

Putin gained a greater share of the vote than did the Communists, promising

the kind of cooperation between the executive and the Duma that heretofore

has eluded the Kremlin. And Mr. Putin quickly pledged close cooperation with

the West.

Yet closer scrutiny of how he came to power and of what he tells his domestic

political audience reveals cause for anxiety.

The main pro-Putin faction, the Unity Party, gained nearly one-quarter of the

vote in the parliamentary elections, yet it presented no platform. Its appeal

consisted entirely of support for the Chechen war, which Mr. Putin says is

necessary to save Russia's "honor." He dismissed out of hand foreign protests

of the war, calling it an internal Russian matter. In other words, the

party's program consisted mostly of appeals to chauvinism and

anti-Westernism.

Moreover, in a statement on a government Internet site in December, Mr. Putin

declared that Western-style democracy was not suited to Russia. Russian

society, he explained, "wants a restoration of a guiding and regulatory role

of the state." Russians are "not ready to abandon traditional dependence on

the state and become self-reliant individuals," he noted, and thus the

country needs "a comprehensive system of state regulation of the economy."

These sentiments hardly point to further political and economic

liberalization.

Indeed, in a speech two months ago, Mr. Putin said that to improve the

economy Russia needed to beef up its defense industries -- a bizarre

statement given that the Soviet economy was ruined by runaway military

expenditures. He pledged to increase military spending by 57 percent, "to

respond to new geopolitical realities, both external and internal threats."

Even more worrisome was the paean to Russia's secret services he delivered on

the anniversary of Lenin's creation of the Cheka, the first Soviet secret

police. "Several years ago," he said on this occasion, "we fell prey to an

illusion that we have no enemies. We paid dearly for this. . . . The organs

of state security have always guarded Russia's national interests." This

praise was lavished on the Cheka, the O.G.P.U., the N.K.V.D. and the K.G.B.,

indispensable instruments of Communist terror that deprived millions of

Soviet citizens of their lives and liberties, and kept the rest in constant

fear.

Yes, Mr. Putin is certainly an anti-Communist, but Soviet-style Communism no

longer poses a real threat to Russia -- only a fraction of those who vote for

the Communist Party want a return to the past. The danger is authoritarianism

fused with nationalism and imperialism: a government that respects some basic

economic and civil freedoms, because they enjoy popular support, but

represses political expression and exploits anti-Western sentiments to

isolate Russia from the world.

It is possible, of course, that should Mr. Putin win the presidency he will

prove a pragmatic politician and steer a reasonable course. But his political

rhetoric makes clear that we can't take anything for granted.

******

#7

Stratfor.com

1 January 2000

Presidents & The Price of Pardon

Russian President Boris Yeltsin did not simply resign. He resigned and was

then pardoned by Prime Minister Vladimir Putin in a manner reminiscent of

Richard Nixon's resignation -- except that the pardon came a lot faster this

time. And this pardon means a lot more. It not only removes a president from

office but serves as a trial balloon for other members of the elite tainted

by this year's scandals.

Since Putin became prime minister in August, Russian politics has revolved

around scandal. Immediately upon Putin's ascension, the world was swept with

reports of financial irregularities -- of monumental proportions -- involving

Russian banks, businessmen and, most important, the Yeltsin family itself.

The most public of these scandals revolved around the Bank of New York, where

billions were reportedly laundered. At the same time, rumors of a wide range

of financial improprieties involving Yeltin and his family started to surface.

The timing was no accident. As chief of the FSB, the Russian successor to the

KGB, Putin had a front row seat to the financial shennigans. He could see the

scandals unfold because of his job; he also had important previous

connections. In the 1980s, Putin may have been involved in technology

transfers from the West. This involved creating businesses for the purchase -

even theft -- of technology. These businesses and relationships became, after

the collapse of communism, the seed out of which many of Russia's private

enterprises grew. Knowing better than anyone what was going on, Putin used

his dossier on Yeltsin to finesse him out of office. Apart from his

tremendous lack of popularity and his poor health, the fear of investigation

clearly motivated Yeltsin to step aside. The pardon was the key payment that

Yeltsin demanded.

The pardon now places Putin in a simultaneously powerful - and yet vulnerable

-- position. Putin makes it clear that he has the power to pardon and is

prepared to use it. He also makes it clear that there is a price: Yeltsin had

to give up something very dear, his office. Now, Yelstin is still not out of

the woods. His family has not received pardons. More important, the oligarchs

who fattened themselves through their relationship with Yeltsin and his

regime have not received pardons.

As important, the pardon is a trial balloon for a much wider audience. Putin

has now stated the price of a pardon for a member of the elite tainted by

scandal. One must give up position -- but probably not everything. This is

important. Putin is walking a fine line. On the one hand, he must shake free

the massive capital that has been diverted overseas and hidden in Russia. On

the other hand, he cannot put extremely powerful men in the position of

losing absolutely everything. Prosecutions would trigger a blowback that

Putin himself might not be able to survive.

Now, Putin's real test begins. Getting the oligarchs to give up their vast

wealth, particularly the wealth that is sequestered overseas, is critical to

Russia's future. Will the oligarch's be willing to cut a deal in return for

pardons? Putin is himself in a difficult spot, cleaner than most certainly

involved to some extent in the process that eviscerated Russia's economy.

That is why he is trying to devise a scheme that will save the Russian

economy without triggering a vicious backlash from the oligarch's and the

Russian mafia. The formula: return most of what was stolen, keep enough to

ensure a very comfortable life style, get a pardon.

This was an insider's solution to the problem, engineered by the

quintessential insider, Vladimir Putin. If this doesn't work, the only other

solution is to act without giving the oligarchs room for retreat: massive

expropriations amidst a terror campaign. But Putin is in no position to do

that. He is too compromised by the system.

With Yeltsin's resignation, Putin has painted the outlines of rectification

within the system. He has declared himself to be Kerensky, the revolutionary

who didn't want to go too far. Kerensky failed and Lenin came from nowhere,

the revolutionary who had no limits. The situation in Russia is, in our view,

on the knife's edge. Putin is trying to contain the situation as well as

possible. We are not optimistic.

However, Putin now holds out the carrot. If he shows that he can also wield a

stick, he may just save what little is left of the post-Communist reforms. If

not, Russia will enter a revolutionary situation.

*****

#8

Date: Sat, 01 Jan 2000

From: Gideon Remez <remgin@mail.netvision.net.il>

Subject: Putin's deal

Putin's deal and potential undoing

Commentary forthcoming in Ha'Aretz, January 2, 2000

By Isabella Ginor

(Translated from Hebrew)

Commentators will be busy for days to come analyzing the explanation

Boris Yeltsin gave on Friday for his sudden resignation: "I am leaving,

not because of health reasons, but due to the whole set of problems."

The obvious interpretation of that is a deal between the interests of

the incoming and outgoing regimes: on the one hand, Premier Vladimir

Putin's interest to bring forward the presidential election while he

manages to keep up the astronomic poll rating of 46%. This support stems

from  public unawareness of the scope of Russian casualties from Putin's

war in Chechnya, and the official reports minimizing them can hardly be

sustained for long. The opposing interest was that of the "Family", the

clique of Yeltsin's relatives and cronies, who were preventing his

departure until they, in addition to the old and sick president, were

guaranteed sweeping immunity from corruption charges. Yeltsin was

offered a similar deal last summer by Yevgeny Primakov and Yuri Luzhkov,

who then seemed to be the certain winners of the Duma election. But they

were willing to promise only immunity for the president himself, so the

Family saw to it that by election day two weeks ago the Primakov-Luzhkov

ticket, "Fatherland -All Russia" had lost its advantage.

Now, thanks to Putin, immunity will be enjoyed not only by Yeltsin, his

daughters and sons-in-law who all live, officially, at the same Oseniaya

Street address. All the other members of the Family are now protected,

formally or otherwise, from excessive prying: paymasters Boris

Berezovsky and Roman Abramovich gained parliamentary immunity with their

election to Duma seats. Anatoly Chubais has become Putin's presidential

campaign manager. Alexander Voloshin, who resigned as presidential chief

of staff following Yeltsin's resignation, was reappointed in one of

Putin's first decrees as Acting President. Valentin Yumashev will

presumably stay in London to supervise the schooling not only of his own

daughter but probably also that of Boris Yeltsin jr.,  son of the

ex-president's younger daughter Tatiana Dyachenko. Only Pavel Borodin,

business manager of the presidency's vast assets, has anything to worry

about: in 1996 Putin was his deputy, and thus must know everything about

the Kremlin's contracts with the "Mabetex" construction company, which

this year has been implicated in large bribes to Yeltsin and his family.

If Putin's very selection on August 9 as Prime Minister and presidential

heir apparent stemmed from his involvement in these deals or his

knowledge of other people's roles, then an expose of Putin's own

possible contribution may be one of the few real threats he now faces on

the way to victory in the election -- which makes Borodin an undesirable

witness.

So the Family is now betting on Putin, along with the defense

establishment brass, new regional nomenklatura and some of the oligarchs

who are uneasy about close investigation of privatization procedures and

other sources of their wealth. But despite Putin's links to the Family,

his allgiance to it is limited because his identification by the public

as the favorite of Yeltsin -- once an admired leader, now widely

despised -- can only diminish his electoral prospects. Despite his

amazing popularity being built exclusively on the war in Chechnya, Putin

lost no time in visiting the troops there on millennium night -- and, in

addressing them,  crediting Yeltsin with the war.

As of his appointment to the Premiership, Putin has been endowed with

all of Russia's human and economic resources. But no money could buy,

even for the former FSB commander, the image of an iron fist enforcing

public order and the rule of law. The opportunity for that was provided,

shortly before previous Premier Sergei Stepashin was replaced by Putin,

by the incursion of Chechen gunmen into Dagestan. Several accounts in

the Russian media attributed that to an agreement between Voloshin and

Chechen warlord Shamil Basayev. After Putin's appointment, the bombing

of three Russian residential buildings provided justification for an

offensive against Chechnya itself. Then too rumours circulated about a

provocation by  the regime, especially after some of Putin's former

subordinates at the security service were caught planting explosives in

a fourth building. Publication of proof for such a scandal is another of

the few things that might yet trip Putin up.

In his resignation speech Yeltsin explained the timing with the "magic

number" of year 2000. But the real magic number is March 26, the new

date of the Presidential election instead of June 4. Bringing the

election forward not only shields Putin from possible failure in

Chechnya; it also cuts the election campaign to 2-1/2 months and hobbles

the organization efforts of his rivals. Only one of them has already

established a campaign HQ: General Alexander Lebed, Governor of

Krasnoyarsk, who fielded no list for the Dume election and is -- today

-- considered a marginal contender. But Lebed is still Putin's chief

competitor for the support of defense personnel outside the high

command.

Yeltsin's apparent ouster after a session with the heads of "power

ministries"  was reminiscent of Nikita Khrushchev's forced retirement;

Putin's rise reminds one of Yuri Andropov, another former KGB commander

who took over after the years of Leonid Brezhnev's decay. In retrospect,

the seemingly dour Andropov was portrayed as a closet liberal who paved

the way for perestroika, which ended with the dissolution of the Soviet

Union.  Putin, while presenting hunting knives to soldiers for bravery

in Chechnya, declared the purpose of the war there was "not restoring

the honor of the state, but stopping the dissolution of Russia."

******

#9

Stratfor.com

2 January 2000

How the West Killed Yeltsin

President Boris Yeltsin's resignation from office can be viewed as the

logical result of a nearly year-long decline in stature and power, ending in

a bid for a swift and safe exit from the Kremlin's intrigue and scandals. But

ultimately, Yeltsin's demise is in large measure due to the actions of the

West. Wittingly or not, the West played a large role in destroying its last

true friend in Moscow.

Yeltsin had banked everything on his relationship with the West in general --

and the United States in particular. In a sense, he owed his office to the

United States, whose intelligence services had warned him of the impending

coup attempt of 1992, allowing him to save himself and Russian democracy.

Yeltsin banked on Western investment pouring in to integrate Russia with the

West and initiate an unprecedented era of prosperity. Toward this end,

Yeltsin was prepared to subordinate Russian geopolitical and strategic

interest to the West, so long as Western money continued to flow.

But by late 1998, the flow of money dried up. The financial crisis of August,

1998 made the drought of investment permanent. Yeltsin, nevertheless, was

hopeful of restarting the pump and worked assiduously to placate the West.

But his efforts were rebuffed. The U.S. and British bombing of Iraq in

December 1998 - despite Moscow's vigorous opposition -- was the first sharp

slap in the face. At home, Yeltsin was seen as acquiescing to foreign policy

humiliations, without getting the cash that might justify it.

What finally destroyed Yeltsin, though, was Kosovo. It was not only the

decision to bomb Kosovo in opposition to Russian wishes that undermined

Yeltsin. The treatment of Russian diplomacy was the most humiliating and

deadly part of the equation. The Russians had been called in to negotiate

between NATO and the Serbs. They did and forged the G-8 agreeement. Part of

that agreement stipulated that the occupation of Kosovo would take place with

heavy Russian participation and joint control. But instead of being treated

as vital partners, the Russians were treated as marginal irritants. The West

rejected a significant role for Russia in post-war Kosovo.

Yeltsin was exposed. At American urging, he had dumped the anti-American

prime minister Yevgeny Primakov in the middle of the war. Yeltsin's reward

was the complete humiliation of Russia in the implementation of the accords.

With that, President Clinton effectively destroyed Boris Yeltsin.

The selection of Vladimir Putin as the new prime minister in August was not

Yeltsin's choice. Putin was forced on the president by the military and

intelligence sectors who wanted one of their own in control. Putin

immediately began to reclaim some of Russia's strategic standing. Since

serious financial support was not coming from the West, he had little to

lose. What he had to gain was halting the disintegration of the Russian

Federation and beginning the resurrection of a psychology of Russia as a

great power, if a poor one.

Putin's policy has been manifested most clearly in Chechnya, where the prime

minister drew the line on disintegration. Putin's brutal campaign against the

rebels has been enormously popular among Russians. Indeed, it has been one of

the few issues around which Russians could rally in recent years. But the

issue that rallied Russia was not simply Chechnya; rather, it was the idea

that Russia was reclaiming its place as a great power, prepared to challenge

the West -- and the United States.

Putin rose on his foreign policy even as Yeltsin fell to his lowest ebb, seen

as a weakling and a discredited tool of the West. Putin has now sown the wind

of Russian revanchism. It is not clear that he will be able to personally

ride the whirlwind.

But this much is clear. The fall of Yeltsin represents the end of the period

of automatic Russian subordination to Western strategic initiatives. It will

usher in an era of greater confrontation with the West. Yeltsin was

Washington's last real friend in Moscow. With Kosovo, President Clinton

killed him politically. It was the last humiliating straw in the West's

relationship with Russia.

******

#10

From: "Frank Durgin" <durgin@maine.edu>

Date: Sat, 1 Jan 2000

Subject: A query

I wonder if  anyone on the lis can  tell me where the estimateed

$150 billion in capital that has flowed out of Russia since 1991

went. It has been argued on another list that it went into US stocks

and has played a sigificant role in fueling  the Wall Street

Boom.