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CDI Library > Johnson's Russia List

Johnson's Russia List
 

 

January 15, 2000    
This Date's Issues: 4037 4038 4039



Johnson's Russia List
#4038
15 January 2000
davidjohnson@erols.com

[Note from David Johnson:
1. Moscow Times editorial: In Response To Kremlin, Gut NATO.
2. Financial Times (UK): John Thornhill, Right seeks Tsar appeal.
3. AFP: PROSECUTOR ACCUSES PUTIN OF PROTECTING CORRUPT KREMLIN AIDES.
4. Kommersant: Putin Has Appointed His Successor.
5. www.smi.ru: BEREZOVSKY PUSHES LEBED TO TAKE PART IN THE ELECTION? 
6. Interfax: COMMUNIST LEADER CALLS FOR END TO CONFRONTATION.
7. St. Petersburg Times: Jen Tracy, Russia's Electronic Police Get Carte Blanche.
8. Moscow Times; Brian Whitmore, Putin Playing Power Games.
9. Foreign Policy Research Institute: Graham Humes, VLADIMIR VLADIMIROVICH PUTIN IN 1994: A PERSONAL RECOLLECTION.
10. Transitions Online: Luke Allnutt, Hacking Away. (Review of book The eXile: Sex, Drugs, and Libel in the New Russia by Mark Ames and Matt Taibbi)]

*******

#1
Moscow Times
January 15, 2000 
EDITORIAL: In Response To Kremlin, Gut NATO 

For a good part of the 20th century, Moscow has insisted it will never deploy 
nuclear weapons first. Now this week, acting President Vladimir Putin's 
Kremlin Security Council has announced it can see using an atomic bomb simply 
"to repel armed aggression" - and the wider world has gasped in horror. 

Moscow's long-running pledge of "no first use" of nuclear weapons was never 
terribly meaningful. It was simply something to wave around to shame 
Washington, which doggedly (and honestly) insisted it would use its nukes as 
it saw fit. Peacenik rhetoric aside, that was surely always Moscow's plan as 
well. 

Nor does this new concept of national security offer much new insight into 
president-in-waiting Putin. After all, it could have as easily come from 
Gennady Zyuganov or Yevgeny Primakov; and, just a few weeks ago it was Boris 
Yeltsin who, from an arm chair in Beijing, reminded U.S. President Bill 
Clinton he possessed "a full nuclear arsenal" and did not cotton to carping 
about Chechnya. 

Instead of joining the tsk-tsking in Washington and Brussels about the 
"belligerent" Russians, we'd suggest asking how the Russians got that way. 

For one answer, consider NATO. Better yet, consider a June 1999 op-ed by New 
York Times writer Thomas Friedman, which quotes a senior NATO official at 
headquarters in Brussels freely admitting, "Ever since the Cold War ended, 
NATO planners have been groping for a new mission." 

"In order to survive, an international organization can't just have a 
conceptual mission," the official continues. "Organizations seek out action. 
They need to do things. That's why NATO needs the Balkans as much as the 
Balkans need NATO." 

The official goes on to say he has attended six years of nearly all 
high-level NATO meetings in Brussels, of which maybe 85 percent dealt with 
the Balkans. He adds that NATO toyed with fighting against drugs, terrorism 
or organized crime, but concluded "The Balkans is one security issue that 
NATO can actually do something about. ... We have a product that they want - 
peacekeeping and providing security." 

If this is accurate, it is an astonishing account. Just think: NATO's need 
for a post-Cold War justification surely influenced the mule-like U.S. 
position that only a NATO-led force, not a UN force, could be parked in 
Kosovo. After all, the UN already has a mission (one we all democratically 
agreed upon, by the way - unlike NATO's mission creep.) 

The Kremlin has opened a debate on the architecture of international 
security. We'd suggest citizens of the Western democracies respond by 
demanding NATO better justify its existence - its massive expense, its spread 
through Central Europe - or stand down. 

*******

#2
Financial Times (UK)
15 January 2000
[for personal use only]
RUSSIA: Right seeks Tsar appeal 
By John Thornhill

Russia's rightwing politicians have discovered a new hero: Alexander III, the 
little-known 19th-century Tsar. They suggest his policies could provide a 
model for Vladimir Putin, Russia's acting president, who now seems almost 
certain to be elected to a four-year term in March.

The bear-like Alexander III, who could reputedly straighten horseshoes with 
his bare hands, succeeded to the Russian throne in 1881 following the 
assassination of his reformist father, Alexander II. Hailed as the great Tsar 
Liberator for abolishing serfdom, Alexander II had presided over one of the 
most liberal eras in Russian history until he was killed by a revolutionary's 
bomb.

Alexander III was determined to restore law and order and introduced a series 
of reactionary counter-reforms under the banner of Orthodoxy, nationality, 
and autocracy. He brutally suppressed the revolutionary movement, 
strengthened the bureaucracy and judiciary, and helped attract the immense 
foreign investment which stoked Russia's late 19th-century economic expansion.

It is not hard to understand the appeal of such a man to the modern 
generation of Russian politicians grown tired of the "lawlessness" associated 
with President Boris Yeltsin's liberal reforms and the country's humiliating 
economic and international decline.

Like Alexander II, Mr Yeltsin may also be regarded as a Tsar Liberator for 
having helped free Russia from the slavery of the Soviet Union. But under 
both leaders, liberty gave way to licentiousness, leading to calls for the 
return of a firm hand.

Mr Putin may not be able to bend horseshoes, but he is presenting himself as 
a new strongman who can throw his opponents around on the judo mat. He 
promises to suppress terrorism in Chechnya, restore respect for the state, 
and reassert Russia's national interests abroad. However, there is no 
evidence he shares Alexander III's wild anti-Semitism.

The current obsession with Alexander III was fired up by Nikita Mikhalkov, 
one of Russia's best-known and politically active actors and film directors, 
who played the mighty Tsar in his latest film, The Barber of Siberia.

The pro-Putin Unity movement, which ran the Communist party a close second in 
last month's parliamentary elections, then adopted Alexander III as its 
favoured role model. A series of articles in the Nezavisimaya newspaper has 
gone on to explore the parallels between the political climate of the 1880s 
and the present day.

There are certainly echoes of Alexander III's thinking evident in Mr Putin's 
political programme, which was published on the internet at the end of last 
year.

Alexander III once famously declared: "We can have no policy except one that 
is purely Russian and national." Mr Putin, too, suggests that Russia must 
rediscover a sense of patriotism and create a new national idea, rejecting 
the notion that Russia can ever become a "second edition" of the US or 
Britain, with their centuries-long traditions of political liberalism.

Both leaders would also appear to subscribe to the view that the state should 
play the central role in political and economic life. "A strong state is not 
an anomaly for Russians," Mr Putin recently declared. "On the contrary, [it 
can be] the source and guarantor of order, the initiator and main engine of 
any change."

Mr Putin may also resemble Alexander III in the international arena: the Tsar 
who stood up for Russia's interests but favoured a policy of cautious 
pragmatism. During his reign, Russia enjoyed a rare period of peace, enabling 
it to attract much foreign investment.

However, not everyone is convinced the parallels bear close scrutiny. Elena 
Nemirovskaya, director of the Moscow School of Political Studies, says it is 
fanciful to draw too many comparisons between the two epochs. In so many 
respects, modern Russia is a completely different country from what it was 
under Alexander III.

Ms Nemirovskaya argues it would be extremely difficult to restore rigid 
authoritarianism in a country which now boasts functioning democratic 
institutions, a free press, and an estimated 2m internet users - even 
assuming Mr Putin was intent on any such thing. She also argues that the 
forces of globalisation will relentlessly draw Russia into the international 
community.

"Russia will return to its European roots and pursue the universal values of 
a democracy and a market economy," she says. "I think that process is 
inevitable although it will not be simple."

After the near-anarchy of the Yeltsin era, the pendulum of Russian history 
will almost certainly swing back towards a more assertive state and a more 
disciplinarian society. The question is: how far will it swing? If Ms 
Nemirovskaya is right, it will stop well short of Alexander III's vision of 
Russia.

******

#3
PROSECUTOR ACCUSES PUTIN OF PROTECTING CORRUPT KREMLIN AIDES
Agence France Press
January 13, 2000

Russia's sidelined chief prosecutor, Yury Skuratov, accused acting President 
Vladimir Putin of protecting senior aides to
former head of state Boris Yeltsin, reports said Thursday. "Putin is still
linked to the corrupt who still remain in the Kremlin," Skuratov told the
Sevodnya daily, singling out Kremlin chief of staff Alexander Voloshin. "Putin
is trying to cover the former president of Russia and the closest members
of his entourage," charged Skuratov, who has said he could contest March 26
presidential elections in which Putin is the hot favourite. 

Skuratov has been a constant thorn in the flesh of the presidential 
administration since launching a probe into Kremlin graft, an inquiry which 
triggered moves by Yeltsin to sack
him. The public prosecutor, whose "Mr Clean" image was tarnished when he
himself became embroiled in a sex-and-videotape bribery scandal, also branded
as illegal Putin's first act as interim head of state - to grant Yeltsin
immunity from prosecution. Under the terms of the decree, signed within hours
of Yeltsin's surprise December 31 resignation, the 68-year-old former
president
may not be arrested, arraigned before a court, interrogated or subjected to
searches of his person, property or offices, mail, documents and luggage.

"Granting immunity to a president who has resigned is absolutely
unconstitutional and illegal," said Skuratov. The self-styled crime-buster has
accused Yeltsin and his two daughters, Tatyana Dyachenko and Yelena
Okulova, of
accepting credit cards from construction firm Mabetex, a little-known Swiss
outfit which won lucrative Kremlin refurbishment contracts. Former Kremlin
property manager Pavel Borodin, who like Dyachenko has been relieved of his
presidential post by Putin, is also under investigation for graft. All have
denied any wrongdoing. Yeltsin fired Skuratov last February shortly after the
prosecutor's office began an investigation into Mabetex, saying that Skuratov
had abused his office. Days later, a videotape was aired on national
television purporting to show Skuratov cavorting with prostitutes that the 
Kremlin alleged were sent to him by mafia bosses. Skuratov has never denied 
the authenticity of the tape but branded it an attempt to blackmail him over 
his private life. The tape led to a criminal probe into Skuratov's alleged 
activities. 

The Federation
Council, the upper house of parliament, has three times refused to endorse
Skuratov's dismissal, as required by law. That forced the Constitutional Court
to rule on whether the Yeltsin decree took precedence over the parliamentary
vote. On December 1 the court said Yeltsin had been within his rights to
temporarily sideline Skuratov, citing a lack of clear jurisprudence on what
should happen should the country's top law officer become the subject of a
criminal probe. A Moscow court in October quashed a criminal probe into
Skuratov, whose status remains in abeyance. 

*******

#4
Russia Today press summaries
Kommersant
January 14, 2000
Putin Has Appointed His Successor
THE GOVERNMENT WORKING SHORT-STAFFED

Summary
Three days ago, two first vice-premiers - Victor Khristenko and Nikolai 
Aksenenko were demoted. Nikolai Aksenenko managed to preserve the post of the 
Railroads Minister and Victor Khristenko became a vice-premier.

According to Kommersant sources in the government, the government reshuffle 
took place as follows: Vladimir Putin conducted talks with oil tycoon Roman 
Abramovich, who, in this case, spoke as an advisor of the presidential 
administration. The acting president communicated his wish to get rid of 
Aksenenko, who compromised himself with the scandalous dismissal of Transneft 
President Dmitry Savelyev. Besides, Putin apparently did not like the fact 
that at one time Aksenenko was considered his contender for the post of 
Yeltsin's successor. The acting president knows that Aksenenko has close 
contacts with Abramovich, and thus, he wished to hear Abramovich's opinion on 
the issue.

As the result of the consultation, they decided to dismiss Aksenenko from the 
second post in the government but to leave him the richest natural monopoly 
of Russia - the railroads that have a $15 billion yearly turnover. Besides, 
they decided to dismiss Victor Khristenko to balance Aksanenko. Since 
Khristenko is the protegee of UES head Anatoly Chubais, the latter was also 
attracted to the consultations. Chubais made another personnel proposal - his 
protegee, First Deputy Finance Minister Aleksei Kudrin, has, in fact, become 
the head of the Finance Ministry.

But the most important outcome of the consultation with Abramovich became the 
ascension of Finance Minister Mikhail Kasyanov to the post of first 
vice-premier. However, Kasyanov's chances to become prime minister in the 
future are low because of Russia’s obvious economic problems Russia.

*******

#5
www.smi.ru
January 14, 2000
Elections
BEREZOVSKY PUSHES LEBED TO TAKE PART IN THE ELECTION? 
A group of specialists from the Young & Rubicam advertisement company have 
arrived in Krasnoyarsk, APN reports, quoting a source in circles close to the 
Administration of Krasnoyarsk Region. The main purpose of the group's visit 
is preparing a tentative conception of the participation of Alexander Lebed 
in the presidential campaign. According to the APN source, General Lebed may 
prove to be Vladimir Putin's only serious rival in the March 26 presidential 
election. Sources close to the head of Krasnoyarsk Territory are inclined to 
think that Lebed may make use of the objectively existing electoral 
expectations much more effectively than Putin, especially if the offensive of 
the Russian troops in Chechnya gets bogged down. 

Comment: One can discern the following scenario. On Monday, quoting 
well-informed sources, "Pravda on-line" predicted that a campaign against a 
number of Russian politicians and businessmen close to the Union of Rightist 
Forces (URF) would be soon launched in the media. The action was allegedly to 
be carried out by the "PR-Center", headed by Mr. Ruga, a person closely 
connected with Boris Berezovsky. The reason behind the campaign would be that 
"Berezovsky has evidently been refused to head Vladimir Putin's electoral 
headquarters. Therefore he is starting a war against the Acting President's 
entourage". Accordingly, it hardly makes sense to wage such a bitter war 
simply to settle scores with the Rightists. Berezovsky needs an alternative. 
Is he to make a "demand" for Lebed? And didn't Lebed himself say exactly that 
he would wait until there is a demand for him?... The only drawback of this 
theory is that there is too much of the animated cartoon about it. Besides, 
so far there have been only two news stories on Lebed's desire to take part 
in the election, both of them presented by APN. The first one appeared on 
December 23 and said (quoting a source in the youth socio-political movement 
"Lebed") that the headquarters for Alexander Lebed's presidential campaign 
had begun to be formed in Krasnoyarsk.
As to Young&Rubicam, they are very serious people. But it is quite doubtful 
that Y&R was really the main service provider in organizing Lebed's election 
campaign against Governor Zubov in Krasnoyarsk Region in the spring of 1998 
(as alleged, e. g., by APN).
APN: Alexander Lebed Has Started Preparations for the Presidential Election 

*******

#6
COMMUNIST LEADER CALLS FOR END TO CONFRONTATION

MOSCOW. Jan 14 (Interfax) - Communist Party of Russia leader
Gennady Zyuganov will officially propose of a "nation-wide pact" on
Saturday, Zyuganov has told the press.
The main purpose of this pact is "to end the confrontation and the
continuation of the old politicking," Zyuganov said in a reply to an
Interfax question. All the country's "influential forces" should realize
the need for rallying around the vitally important problems facing
Russia, he said.
Zyuganov spoke critically of the policies pursued by acting
President Vladimir Putin and stressed that Putin is the heir of his
predecessor Boris Yeltsin, whose actions "we did not support and even
regarded as criminal." Putin has said nothing about his own policies so
far, he noted. Furthermore, as a result of the federal operations "we
are up to our neck in Chechnya," he said.

*******

#7
St. Petersburg Times
January 14, 2000 
Russia's Electronic Police Get Carte Blanche 
By Jen Tracy
STAFF WRITER 

Under an obscure bit of legislation quietly approved by acting President
Vladimir Putin, the nation's major law enforcement and security bodies -
from the tax police to the Border Guards - are to be technically equipped
to enjoy instant real-time access to e-mail and other electronic traffic. 

Seven law enforcement bodies named in the new law are now to join the
Federal Security Service - the main KGB successor agency and acting
President Putin's alma mater - in being hard-wired to Russia's Internet
service providers. 

These authorities are still required by the Russian Constitution to obtain
a court warrant before tapping phones, opening e-mails or accessing other
private correspondence between citizens or organizations. But for all of
them, e-mails, e-commerce transactions and other Internet traffic will be a
mere mouse-click away - easily perused without anyone ever knowing,
regardless of what the courts or the Constitution may say. 

"This means Russia has officially become a police state," Yelena Bonner,
the human rights activist and wife of the late Soviet dissident Andrei
Sakharov, said in a telephone interview on Wednesday from Boston, where she
has been visiting for the past few months. "And this wartime police state
came about unnoticed when Putin rose to power on Dec. 31." 

Putin signed the legislation - an amendment to the 1995 Law on Operational
Investigations that passed the State Duma on Dec. 1 - on Jan. 5. It took
force Jan. 6 upon publication in Rossiiskaya Gazeta, the official
government newspaper. 

The original 1995 law gave the security services the right to monitor all
sorts of correspondence, from postal deliveries to cell phone
conversations, provided they first obtained a warrant. 

With the growth of the Internet, the FSB and the State Communications
Committee have issued new regulations - based on their interpretation of
the 1995 law - that force Internet service providers to link their
computers to those at FSB headquarters. 

Internet service providers do not like to talk about the FSB's so-called
SORM project - the acronym stands for Sistema Operativno-Rozysknykh
Meropriyatii, or System for Operational-Investigative Activities. But many
of them have already quietly complied. 

The costs to the Internet service provider of installing the equipment are
estimated from $10,000 to $30,000, not including any future upgrades.
That's enough to shut down some smaller providers, and some SORM-watchers
argue that the big Internet players actually welcome SORM as it helps them
consolidate their market share. 

The new amendment doesn't mention SORM by name or detail the new technical
requirements for Internet service providers. But it does extend the FSB's
hard-wired access to electronic traffic to seven other agencies: the tax
police, the Interior Ministry, the Border Guards, the Customs Committee,
the Kremlin security service, the presidential security service, the
parliamentary security services and the Foreign Intelligence Service, or SVR. 

Internet experts interviewed on Wednesday said they expected the additional
security organs could simply piggy-back on the FSB's SORM technology, which
has already been installed at the expense - and expertise - of the providers. 

Human rights activists worry that the FSB - and now the seven other
security organs - will not bother getting a court order when they can see
private information at a whim. And if once they placed some faint hopes on
the FSB simply not having the manpower to systematically track mass
quantities of e-mail and other traffic, the situation has drastically
changed now that eight security organs can in theory be working at once,
perhaps even in cooperation. 

"It was bad enough that the FSB had unlimited control over confidential
correspondence, and now it is multiplied eight times," said Boris
Pustintsev, chairman of St. Petersburg-based Citizens' Watch rights group. 

"The FSB alone had some problems implementing SORM as NGOs
[non-governmental organizations] were fighting it. Now, it will be routine
[to get SORM set up and functioning], as you can't fight a monster with
eight heads." 

The FSB says SORM will help law enforcement track and capture criminals
ranging from tax evaders to pedophiles, because such people may conduct or
discuss their business electronically. 

Human rights groups counter that the Russian security services are cannot
be trusted with such power. They argue that agents will abuse SORM to
assemble political dossiers and to steal and sell commercial secrets -
something that could line the pockets of agents and organizations who have
not fared well under post-Soviet budgets. 

In the nationally televised New Year's Eve address in which he acknowledged
Boris Yeltsin's resignation and took on the duties of the presidency, Putin
promised he would be a generous patron to Russia's security services. 

"The potential of the special services will not just be maintained but
increased," Putin pledged then. 

The FSB and the tax police did not reply to questions faxed by The St.
Petersburg Times. 

*******

#8
Moscow Times
January 15, 2000 
PARTY LINES: Putin Playing Power Games 
By Brian Whitmore 

Intent on turning the March 26 presidential election into a coronation, 
Vladimir Putin seems to be leaving little to chance. 

Not only is the new Kremlin leader receiving predictable endorsements from 
allies like Unified Energy Systems CEO Anatoly Chubais, he is also getting 
open - as well as passive - support from former opponents. 

It is still unclear whether deals are being cut or whether Russia's elite is 
simply lining up behind the new boss. But the past week has left the 
impression that serious horse-trading has been going on. 

Take, for example, the ringing endorsement Putin received in his hometown of 
St. Petersburg on Thursday from Governor Vladimir Yakovlev. A leading member 
of the opposition movement Fatherland-All Russia, Yakovlev had previously 
supported that party's leader, Yevgeny Primakov. 

In the run-up to last month's State Duma elections, Yakovlev - along with 
Primakov and Fatherland leader Yury Luzhkov - was among the 
Kremlin-controlled media's favorite targets. ORT television aired a weekly 
segment called "St. Petersburg: Criminal Capital" that focused on corruption 
in Yakovlev's City Hall. 

Yakovlev's new-found admiration for Putin looks even stranger in light of the 
years they spent together in Petersburg politics - both served together in 
the administration of former St. Petersburg Mayor Anatoly Sobchak, and they 
did not part on good terms. 

When Yakovlev defeated Sobchak for St. Petersburg's top job in 1996, he 
reportedly offered Putin a job in his government. Putin, who had helped run 
Sobchak's campaign, refused. "It's better to be hanged for loyalty than 
rewarded for betrayal," Putin was quoted in various press reports as telling 
Yakovlev at the time. And after Putin moved to Moscow and began his meteoric 
rise, rumors in St. Petersburg persisted that Putin, Chubais and others were 
plotting possessively to put somebody more loyal to them in charge of their 
hometown. 

So after all this, suddenly Yakovlev is embracing Putin. Is he getting 
something in return then? According some media reports, Putin has told 
Yakovlev he will not oppose plans to move the city's gubernatorial elections 
forward to March 26 to coincide with the presidential vote. Is that his 
reward? 

Or consider Primakov, whose behavior also suggests Putin is cutting some 
back-room deals with his former opponents. Widely considered the only 
candidate who could conceivably challenge Putin for the presidency, Primakov 
has been keeping a stony public silence since Boris Yeltsin's shocking New 
Year's Eve resignation. 

Some of Primakov's allies have been saying that the former prime minister 
will not run for president in March - which, if true, would give Putin even 
more of a free ride. Primakov himself was standing next to one such ally, 
Agrarian Mikhail Lapshin, when Lapshin said he doubted his friend Yevgeny 
would run; when reporters turned expectantly to Primakov, he left the room. 

On Thursday, members of Fatherland-All Russia said Primakov would be their 
nominee for speaker of the State Duma. But still, not a word from Primakov. 
Segodnya newspaper and others suggest the Kremlin is haggling with Primakov - 
offering the speaker's chair in exchange for bowing out. Putin has proposed 
his own candidate, Lyubov Sliska of the Unity faction, but that might just be 
a bargaining position - as well as an effort to appear progressive by 
proposing a woman as legislative leader. 

If Putin's Kremlin is indeed cutting deals with the (former?) opposition, 
this may cause some dissension in the ranks of his own loyalists. 

Sources in St. Petersburg close to Chubais have been saying for years that 
the former privatization chief would like to be governor of Russia's second 
city. In St. Petersburg, if nowhere else in Russia, Chubais could be 
electable. 

Putin's dilemma right now is one of tactics vs. strategy. Getting opponents 
like Yakovlev and Primakov on board now will all but assure Putin's victory 
in the first round of the presidential election, giving him at least the 
appearance of a sweeping mandate. 

Is Putin ready to cede the Duma and St. Petersburg to the hands of potential 
foes - simply for the sake of making his all-but-certain landslide win all 
but more certain? If so, the Kremlin's experience with Moscow Mayor Luzhkov - 
once a full-throated Yeltsin supporter, then his most dangerous foe - can't 
be far from his mind. An old KGB hand, after all, must know that today's 
tactical allies could turn into tomorrow's most dangerous threats. 

*******

#9
Foreign Policy Research Institute
A Catalyst for Ideas

E-Notes
Distributed Exclusively via Fax & Email

VLADIMIR VLADIMIROVICH PUTIN IN 1994:
A PERSONAL RECOLLECTION
By Graham Humes
January 13, 2000

Graham Humes served as General Director of CARESBAC-St.
Petersburg from 1993 to 1995. He is a Philadelphia
investment banker and a trustee of FPRI.

In the early 1990s, St. Petersburg's First Deputy Mayor
Vladimir Vladimirovich Putin was a powerful figure in Mayor
Sobchak's liberal administration, often regarded as acting
mayor. Without his help my American-owned company would
probably have disbanded. Because of his keen interest in
attracting business investment to his native city, and his
formidable political skills, our nonprofit company was one
of the first in northwest Russia to invest in small Russian
businesses.

In June 1993, I was appointed General Director (and founder)
of CARESBAC-St. Petersburg, which was wholly owned by
CARESBAC, Washington, D.C., an independent nonprofit that
had been formed by CARE employees to turn gifts of excess
frozen U.S. butter into assistance, initially to Poland,
Russia, and Bulgaria. Our charter was to accept shipments
of frozen butter in St. Petersburg, sell the butter on the
commodity exchange, and invest the proceeds (to be about $9
million) in non-control positions in small Russian
businesses. We were to operate as a nonprofit, reinvesting
any proceeds into new investments. However, Russia has had
no provision for nonprofit corporations (the whole concept
is confusing to them) so that we were constituted as a
regular Russian corporation.

Within six weeks of my arrival, after depositing our first
$2.1 million butter proceeds in a Russian bank, we were
notified that something called the Russian Humanitarian Aid
Commission in Moscow believed we were about to violate the
law. Immediately, my Washington colleague and I flew to
Moscow to meet members of the Commission.

The meeting was so disastrous that we believed our project
might be terminated by their actions. Several very grumpy,
self-righteous, old men laughed at the idea that investing
in small companies was any remote type of "humanitarian
aid." We referred them to Russian versions of the
Department of Agriculture's agreements with the Russian
government, which stipulated our use of our proceeds without
taxation (or confiscation). These men happily informed us
that if we invested $1 without their approval our entire
deposits would be forfeited under a relatively new law. At
the end of two hours of our stubborn attempts to appeal to
them, we were completely discouraged. I asked one more
question: "Is there any other way we can escape
confiscation?" The chairman laughed at my naivete and
chortled in Russian: "Get Boris Yeltsin to write a law
exempting you!"

Thirteen months later Vladimir Putin, Mayor Sobchak, and I
were toasting each other at the Mayor's favorite St.
Petersburg restaurant. Prime Minister Chernomyrdin had
signed a bill exempting us from the confiscation provision.
And the St. Petersburg Dental Clinic #1 had $1.5 million
worth of new American-manufactured Siemens dental equipment.
That was the Putin-Humes deal worked out in the months
following our appearance before the Russian Humanitarian Aid
Commission.

Our initial steps to avoid confiscation were very
disappointing. The U.S. Consulate commiserated, but seemed
not interested in helping a company constituted as a Russian
for-profit company, even though we were as nonprofit in our
format and operation as the NGOs (Non-Government
Organizations) that they regularly worked with. The U.S.
State Department and Department of Agriculture said to give
the Commission half the money (as similar companies had
done). Half of our projected $9 million would have been
insufficient capital for sustained operations, so we kept
floundering.

We met one day with Richard Torrance, a New York City public
relations official working for Sobchak as Deputy to the
Mayor. Gingerly, my American lawyer colleague and I
proposed asking Mayor Sobchak to intercede with President
Yeltsin. We said we preferred to donate funds for
legitimate needs in St. Petersburg rather than to build
dachas for bureaucrats at their benighted Commission.

Either no one believed we really had the money, or the
prospect of getting Chernomyrdin to sign ad hoc legislation
was dim. We struggled up from the bottom of the
bureaucratic ladder trying to get an audience with Mayor
Sobchak, who was often out of town. (Deputy to the Mayor
Torrance arranged his speaking trips to the United States.)

We finally had the meeting with Vladimir Putin that the U.S.
Consulate said they could not arrange. With Marina Shilina,
my office manager and ever- reliable translator, I explained
to Putin and aides the effect that this punitive law was to
have on us.

The City Hall was in the Smolny Institute, the former elite
girls school that Lenin had appropriated as his headquarters
in 1917. The building and grounds are majestic. Putin's
office on the second floor was next door to Mayor Sobchak in
a long and sparsely furnished room. Seated at the long
conference table, Putin listened intently to our story. He
then said he did not think there was such a law, but as a
lawyer, he would check for us and call us back.

Several days later, we again went through the security
checks and sat at his conference table. He told us sternly
that the law was valid and that the way he read it, he could
confiscate the money for St. Petersburg before Moscow got to
it. But he said, with a smile: "We are going to do it your
way. We will try to get you an exemption so that St.
Petersburg can benefit both ways."

As Putin initiated his discussions with Chernomyrdin
(through Sobchak we believed) we continued to meet with him
to iron out details of our gift to the city. In
conversations with Washington CARESBAC (now Small Enterprise
Assistance Fund) we determined to offer to the Mayor's
office about half of what the U.S. State Department had
suggested we abandon, or about $2.2 million. Maybe less
money might work, but unless we really got their attention,
I would be on my way home with nothing accomplished. We
told Putin the money had to go for a people-to-people
project, which did not include funds here and there to
apparatchiks.

We were told the Mayor wanted a new Dental Clinic to stop
AIDS-related deaths in antiquated facilities. A German
company, Siemens, manufactures such equipment in the States
and had offered it to St. Petersburg at half price. I had
negotiations with Siemens about what constituted half price,
and the deal was cut.

Meanwhile, we were being told Chernomyrdin found opposition
for our bill from a majority of his (Moscow) cabinet
members. Months went by during which we could not invest.
In February 1994, a shipment of tons of butter to us was
detained at Customs at the St. Petersburg docks. There was
great consternation as the eighteen wheelers lined up in the
-20F weather, motors idling for three days, waiting for
Customs' approval, which apparently was held up at the
personal request of the Russian Humanitarian Aid Commission.

We had several more negotiating meetings with Putin. At the
last meeting in his office, he was optimistic about getting
Chernomyrdin's signature on our legislation. During our
negotiations there was a phone call for Putin from the Mayor
in Moscow. Putin politely excused himself and walked across
the large room to his desk. When he picked up the phone we
could hear Sobchak shouting. Putin smiled and held the
phone at arm's length. When the noise subsided, Putin said,
"I think we can both hang up our phones. I can hear you
fine without it." Thus Putin confirmed our impression of
the power he wielded.

In late November, Prime Minister Chernomyrdin paid a state
visit to St. Petersburg to honor Sobchak's work on the new
Constitution. Though he had said he could not get approval
for our bill, late in the day he said to Sobchak and Putin:
"What can I do for St. Petersburg?" Putin had prepared a
copy of the proposed bill. He put it under Chernomyrdin's
pen and said "sign this." The next morning Putin invited me
to Smolny to receive my official copy of the ad hoc
legislation. During the first week in December 1994, the
new Dental Clinic #1 was opened with ribbon cutting by the
Mayor and a round of applause for CARESBAC and its General
Director.

At the celebratory dinner the next week I sat between Deputy
Mayor Putin and one of his aides. Many toasts were made to
CARESBAC. When I rose to toast Mayor Sobchak for his help,
I compared him to successful American politicians. Then I
asked why he did not ask for even more money in the style of
American politicians. During the translation, Sobchak
looked confused. Putin whispered in his ear. Sobchak rose,
toasted me again and asked for an additional $500,000, which
in fact was part of my original deal with Putin. I
graciously toasted Sobchak and said "You've got it." Putin
thoroughly enjoyed the exchange, especially since many in
the room thought I had given a new gift.

We did not meet with Putin again, but we had significant
negotiations with his office concerning our proposal for a
direct sale of butter to City hospitals. Many of our
Russian friends became aware of our Putin dealings and asked
us what we thought. In contrast to many dealings we had
with officials from the City and the surrounding state of
Leningrad, Putin had been direct and very businesslike, not
lacking in humor but maintaining a control of each meeting
that gave a strong impression that he could be a difficult
foe. Not one Russian connected with his office ever
suggested any variant of our negotiations which might have
diverted any money from the Dental Clinic. Russian friends
of ours said then and affirm today that Putin had earned
widespread respect for working for the best interests of the
City and for maintaining a low profile. Unlike Sobchak, he
has never appeared to benefit personally from the job. He
had and has almost no detractors which is phenomenal in
today's Russia.

In the spring of 1996, Vladimir Yakovlev, the other First
Deputy Mayor, junior to Putin, ran against Sobchak for
Mayor. Sobchak had made enemies by that time and had spent
much time in Moscow chairing the Commission to write the new
Constitution. Some of our friends who had earlier backed
Sobchak switched to Yakovlev. Putin backed Sobchak, one of
the reasons Sobchak describes Putin as above all loyal.

Most of the U.S. press coverage of Vladimir Putin ignores
his ten or more years in St. Petersburg, from the time he
left the KGB in East Germany to return to St. Petersburg Law
School for a degree in International Law and to become
Assistant on External Affairs to the Principal of Leningrad
State University. His mentor was Professor Sobchak who
recruited his recent graduates for his Mayoralty campaign.
During that campaign Putin was an economic advisor to the
candidate and then became First Deputy Mayor. Eight years
later, when Yakovlev was elected Mayor (now called
Governor), Putin left the administration. He was then
appointed Head of the Chief Auditing Department of the
President of the Federation. In the spring of 1998, he
became the First Deputy of the Head of the Administrative
Office of the President. Soon after, he was appointed
Director of the Federal Security Service, the former KGB.

In my experience with Putin, I considered him to be
professional and skilled in political tactics, enabling him
to dance around the old apparatchiks in order to achieve a
St. Petersburg opening for foreign capital to benefit
fledgling Russian businesses. To "Peterburgers" he is a
highly cultured man of the new generation who should be
given credit for his record of public service.

*******

#10
>From the January issue of Transitions Online 
(www.transitions-online.org)

Hacking Away
by Luke Allnutt 
10 January 2000 

The eXile: Sex, Drugs, and Libel in the New Russia 
by Mark Ames and Matt Taibbi
Cambridge: New York: Grove/Atlantic, Inc., 2000. 240 pages

Journalists often manage to escape the tentacles of accountability, and are
as lame, incompetent, and motivated by factors other than the desire to
tell the truth, as any other profession. With its acerbic criticism of the
Western press corp in Moscow, the eXilea Moscow-based, English-language
newspaperis adhering to Thomas Jefferson's oft-quoted maxim that "the price
of liberty is eternal vigilance"but probably not quite in the way he would
have intended. 

Mark Ames and Matt Taibbifounders and editors of the bi-weekly that began
in 1997are being touted as the leaders of a new generation of gonzo
journalists. Their first book, the eXile: Sex, Drugs, and Libel in the New
Russia, provides a potted history of the paper's inception along with
high-and-low lights from their first year. Scattered through the pages are
the paper's articles, editorials, and cartoons. The formula that has served
the paper so wellpungent satire, crudity, and unabashed hedonismshould
ensure those after the next Hunter S Thompson or William Burroughs won't be
disappointed. Rolling Stone called them "cruel, caustic, and funny," and
the blurb on the back cover boasts how the authors play "hysterically
vicious practical jokes, racking up innumerable death threats, and
ingesting a motherlode of speed." Tales of drug-induced nights on the edge
and sexual conqueststhe fruits of minor celebritydom are a dime a dozen. 

But, as is frequently the case, the philandering and drug-taking wear a
little thin. The eXile's strength and appeal come from its sheer gall: not
in baring breasts, or showing pictures of the decapitated victims of serial
killers, but in its relentless critique of the West's support for
"reformers" like Anatolii Chubais and the so-called St. Petersburg clan.
Tales of nights on the town appear a little dull alongside their biting
dissection of the Western press's coverage of Russia. 

AIDING AND ABETTING 

The authors discuss the effects of the 1995 "sale of the century," where
state assets were sold off for a song, resulting in the creation of an
all-powerful oligarchical class and new and more inventive types of
corruption. At the time the eXile was prepared to say something different
than the majority of the Western press: "We weren't going to write that
Russia was 'on the right path,' as an official U.S. government editorial
[broadcast on Voice of America] put it. ... We were going to tell the
truth." The truth, according to the authors, was that the country was being
run by a handful of crooks with the West's (read the U.S.'s) complicity. 

Indeed, it is the West's complicity that the book revels in most. Their
1997 headline screamed "BogUSAID: How USAID Helped Anatoly Chubais Screw
Russia"; the story, which Taibbi admits he had done little original
research for, was based largely on the writings of Janine Wedel, professor
of anthropology at George Washington University. Her book, Collision and
Collusion: The Strange Case of Western Aid to Eastern Europe 1989-1998,
argued that aid to Russia had done little more than fund the shady
activities of a rent-seeking kleptocracy. 

Donor-bashing has become a fashionable sport in recent years. Attacking the
philosophy or veracity of the West's decision to channel cash through
non-governmental agencies has beenespecially among those who feel they
ought to have been consulted over Eastern Europe's transitiona ripe topic
for debate among academics and policy makers. But in Moscow, attacks on the
aid communitants, spearheaded by the eXile, had a particular acrimonious
intensity. The discussion was less abstract and the protagonists were real.
"All of this was reprehensible and sick," writes Taibbi, referring to the
loans-for-shares scandal, where unregulated auctions sold off state assets
to private investors at bargain basement prices. "But what was more
offensive were all the Americans in town who were apologizing for the
corrupt officials in the Russian government who'd pull heists like this off." 

The authors take great relish in berating Moscow's ex-pat community. Their
take on the modern-day missionaries come to spread the "gospel of fair-play
and law-based economics" is hyperbolic and downright nastybut often rings
uncomfortably true. "If they'd come to town in Vikings costumes or swastika
armbands it probably wouldn't have bothered Mark or me so much. But to come
in and preside over the rape of so many people with a big smile on your
face and an attitude of benevolence and righteousness was almost too
offensive to comprehend." 

MEDIA WATCHDOGS 

Outside Russia the eXile began to make its nameor at least gain
notorietywhen its press reviews were distributed on Johnson's Russia List,
a daily e-mail service and newsgroup for Russia watchers. Twice, attempts
were made to have the press reviews banned from the list after a
close-to-the-bone article in the paper that many argued advocated rape.
After list master David Johnson queried his subscribers, the eXile received
support from numerous academics and journalists. The press reviews,
summarized in the chapter "Hacks," stayed on the list. 

In them Taibbi picks apart the tricks of the trade. He highlights the
regurgitation of feature stories, the sparsity of good investigative
reporting, and the fact that most major U.S. cities have only one paper
with a full-time Moscow correspondentmeaning stories with dubious facts or
a skewed spin usually go unchallenged. He attacks the "herd reporting"
mentality and lambastes journalists for recycling wire stories. Taibbi
reels off a litany of examples that show the types of stories Western
reporters gravitate toward: ones which, he says, have to have a dramatic
story-line, a high level of irrelevance to real political events, and a
stream of compelling evidence illustrating Russia's inferiority to the
West. The "crippled Mir space station" story from 1997 is an illustrative
example. 

Taibbi also lampoons modifier-happy journalists for over-simplifying their
stories for a mass domestic audience. To journalists straining to make
their copy at least appear original, Taibbi's assortment of modifiers
describing the West's darlings in Russia will make them chuckle and
probably sweat. All of them"tycoon," "reformer," "young-reformer,"
"crusader," "anti-corruption campaigner," "technocrat," "Harvard-educated
economist"are at best euphemisms, at worst, doublespeak. 

The eXile is at its best when lampooning, exposing, and mud-slinging but,
despite their claim to be Moscow's only alternative, they rarely advocate a
decent one. Their reflections on the West's love affair with the "young
reformers" are witty, colorful, and thoughtful, (Taibbi writes that
"reform" simply came to mean "one of many teams competing for the few
remaining slices of pie that were left to be divvied up in the
privatization process") but they fail to answer the big question: what was
the West supposed to have done and who were they supposed to have worked
with? Bearing in mind the post-89 triumphalism and the West's shifting
relations with Russia it is unsurprising that donors were attracted by
Western-leaning politicians who could not only speak English but could
converse in the patter of market reform, or the new parlance of
safeguarding human rights. 

Often their gripes in the press review sound like the usual complaints of
the specialistor at least keen-followerwho doesn't feel his subject is done
justice, or perhaps has been misinterpreted, in the popular domestic press.
Their pedantry can appear a little labored and at times clutches at straws.
Sometimes you can't help wondering whether both authors are hiding behind
their punk-rock personas. If fate had taken a different turn, it is easy to
imagine both Ames and Taibbi involved in heated academic exchanges about
the provenance of an illuminated manuscript, or the dating of a rock
formation. The obviously gleeful compendium of oversights,
overgeneralizations, and glaring inaccuracies tends sometimes to ignore the
time constraints or editorial temperance that journalists writing for wire
services or dailies encounter. Mistakes and inaccuracies occur less when
writing from the luxury of a bi-weekly (as the authors freely admitted with
their headline "We Suck," the quality of their paper nose-dived after
switching to a weekly format). In their March 1998 editorial, "Greed Not
Funny," Ames and Taibbi admit that their failed attempt at going weekly was
motivated purely by greed: "No one wanted to read the eXile once a week."
They added, "We will still suck, but will do it less frequently." 

But despite everything else, they're funny. Their pranks are mostly first
rate. Posing as reporters from Moskovskaya Svoloch, (roughly translated as
"Moscow Bastard") they got Charles Blitzerwho had been the World Bank's man
in Moscow for two years in the early 1990sto speculate about the effects El
Nino would have on the Russian market. A European Bank for Reconstruction
and Development official requested a copy of the transcript, apparently
with the intention of distributing it among his colleagues and embarrassing
Blitzer. The eXile also entered negotiations with an aide to Mikhail
Gorbechev in an attempt to recruit the former general secretary as a
consultant for a badly performing American football team because of his
previous experience in restructuring. 

The book is most refreshing for its honesty, lack of pretense, and for
saying the unsayable. As the Boston Globe Moscow Bureau Chief David Filipov
said in a November 1997 interview for Transitions, "the eXile is like the
bratty little brother who blabs family secrets at the dinner table. You
want to wring his neck, but that doesn't make what he says any less true."
Taboo subjects like pornography and mass murder (common themes in the
paper) seem relatively tame alongside such gargantuan admissions as
journalists being uncomfortable answering questions. According to Taibbi, a
journalist put on the spotwho usually spends time berating his interviewees
for caginess and avoiding the questioninstantly becomes an "evasive,
hostile, doublespeaking twit even the p.r. department of Exxon would be
glad to hire." 

As much as the book is about the founding of a newspaper, or a low-level
media war in a foreign city, it's about both of the authors. It is about
their escape, their self-imposed exile, their insecurities, their foibles.
At times, the endearing whiff of self-deprecation becomes the stench of
self-loathing. Their constant referral to college keg parties, or the BBQ
morality of white middle-class America is a metaphorical thread running
through every chapter. It says as much about their distaste for the
"beigism" of suburban America, as it does about fitting in. It explains the
eXile. The sad irony for Ames and Taibbiwhose humility and frankness are
immensely likableis that when they finally did find somewhere that made
them happy, the Americans they were trying to escape followed them on
over-generous ex-pat packages. 

*******


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