Johnson's Russia List #9146 11 May 2005 davidjohnson@erols.com and davidjohnson@starpower.net A CDI Project www.cdi.org [Contents: 1. RFE/RL: Claire Bigg, Russia: Social Tension Simmers As Rich-Poor Divide Grows. 2. Vedomosti editorial: A UNITY OF DISSIMILARITIES. Oligarchs, state companies, the bureaucracy: we see no difference. 3. Voice of America: Simon Marks, Russians Worry About Terror Threat to Nuclear Facilities. 4. New York Times editorial: Wowing Them in Tbilisi. 5. Interfax: Most Russians trust UN, support Russia joining EU, WTO - poll. 6. Mosnews.com: Upper House of Russian Parliament Rejects Electoral Reform Bill. 7. pravda.ru: USA has been using Russia for egocentric purposes for 13 years. Urging Russia to take the pro-Western stance inevitably implies the collapse of Putin's regime. 8. Stratfor.com: Debating Russia's Fate. 9. Angus Reid Global Scan: Many Adults In Russia Fear New Break-Up. 10. Itogi: APRIL THESES. Right-wing policies in a left-wing country. 11. RIA Novosti: RUSSIA WANTS TO CONTINUE REFORMS - BUT WHO WILL FINANCE THEM? 12. ITAR-TASS: Russia introducing result-oriented budget. 13. Voice of America: Judith Latham, Authors of ãKremlin Risingä Say Russian President Putin Is Rolling Back Liberal Economic and Political Reforms. (re Peter Baker and Susan Glasser) 14. St. Petersburg Times: Vladimir Gryaznevich, A System Dedicated to Preserving Power Is Prone to External Threats. 15. Financial Times (UK): Martin Wolf, Russia must be helped to be a 'normal democracy.' (re Andrei Shleifer) 16. Branko Milanovic: Another East European voice. 17. James Beadle: An opportunity to enter the 21st century. 18. Vedomosti: WORLDWIDE P.R.. The impact of the 60th anniversary celebrations on May 9. 19. Rossiiskaya Gazeta: STALIN'S SYSTEM SAVED THE WORLD FROM A WORSE FATE. (Leonid Radzikhovsky) 20. Los Angeles Times: David Holley, Putin Blows Off Steam Over Baltics at EU Summit. Though nations adopt an agreement to boost cooperation in trade and security matters, Russian is miffed over disputes with neighbors. 21. Kommersant: Andrey Kolesnikov, Molotov's Sickle. Vladimir Putin shuts the door on apologies to the Baltics. 22. The Charlie Rose Show: A Discussion About Vladimir Putin and George Bush and the Relationship. (with Michael McFaul and Stephen Sestanovich) 23. UPI: Martin Walker, The hollow deals of Moscow. 24. Novye Izvestia: Anastasiya Samotorova, IDLE MONEY. Not trusting banks, Russian citizens are storing $50 billion at home. 25. Los Angeles Times editorial: Poking the Russian Bear. 26. PBS Newshour: FORMER SOVIET REPUBLICS. (with Toby Gati and Adrian Karatnycky) 27. RFE/RL: U.S./Russia: Zbigniew Brzezinski Assesses U.S.-Russia Relations. 28. US News and World Report: Ilana Ozernoy, The Revolution Is On Hold, OK? The U.S. calls Belarus 'an outpost of tyranny,' but many of its citizens are in no rush for democracy.] ********* #1 Russia: Social Tension Simmers As Rich-Poor Divide Grows By Claire Bigg The gap between rich and poor in Russia continues to widen, according to a recent state report on social and economic development. Despite record-high oil prices and rising salaries, much of Russia's wealth still fails to trickle down. While the ultra-rich rake in more millions, a series of social reforms are threatening to push the destitute further into poverty. Is more social unrest on the cards? Moscow, 10 May 2005 (RFE/RL) -- A report by the Federal State Statistics Service shows that the gap between Russia's rich and poor grew in the first quarter of 2005. The report says the richest 10 percent of Russia's population makes 14.9 times more than the poorest 10 percent. This figure has been steadily rising in past years -- Russia's very rich were 10 times richer than the most impoverished in 2001, 13 times richer in 2002, and 14 times richer in 2003. The average monthly wage, however, has increased by 50 percent in the past three years across Russia, reaching 6,832 rubles ($246) per month in 2004. But Natalya Sedova, a living-standards expert at the All-Russian Center for Public Opinion and Market Research, said this does not necessarily mean that Russians are becoming more affluent. Some 40 percent of Russians, she said, rely entirely or in part on secondary sources of income. "Today, salaries are not the only source of income for Russians," Sedova said. "For many, an important source of income, sometimes the only one, is social aids -- especially for the poor -- governmental aid in the form of pensions, allowances, or benefits. Material and financial help from relatives is another source of income for many Russians. These incomes, unlike salaries, are not growing." Meanwhile, high global oil prices have helped Russia move up on a list of the world's millionaires. According to the list compiled every year by "Forbes" magazine, Russia overtook Japan on the list in 2004, and now trails only the United States and Germany in terms of their number of millionaires. The 2004 "Forbes" survey also showed that Moscow is home to more billionaires than any other city in the world. Thirty-three millionaires live in the Russian capital, while only 31 live in New York. But while those who acquired state assets through shady privatizations deals in the 1990s continue to increase their wealth, the majority of Russians have seen little improvement to their living standards. The Center for Public Opinion estimates that between 25 and 30 percent of Russians currently live below the poverty line. The replacement in January of Soviet-era social benefits with cash payments is likely to further impoverish the poor -- particularly retirees -- who claim cash payments are too little to make up for the lost benefits. Sedova agreed that the monetization of the benefits will probably plunge the poorest of Russians into still deeper poverty, although she said it is too early to issue reliable statistics confirming this trend. "The fact that the government is withdrawing from the social sphere and getting rid of its social responsibilities will probably increase the number of those who live in a state of deep poverty," Sedova said. "These people don't have the resources to overcome this poverty, they live solely on state benefits." Experts are also voicing concern over an announced national housing reform that has already been approved by parliament. They say the poor will be the hardest hit by the reform, which plans to make all Russians cover the total cost of housing-related services. These services are currently partly covered by the state budget and include maintenance, garbage collection, and utility services. Following the monetization of benefits, thousands of pensioners staged protests across the country, blocking roads and taking control of buses. After weeks of protest, the government granted retirees a pension raise and introduced a system that in effect restored some of their in-kind benefits. Sedova said the growing income divide, in addition to growing discontent over social reforms, is threatening to spark serious social unrest. "I think that this tendency [income gap] can still grow due to the current social reforms and because the number of poor people will definitely increase, especially in the coming year," Sedova said. "And this is certainly a factor that can increase social tension and protest among Russians." According to the World Trade Organization (WTO), countries where the rich earn over 14 times more than the poor are prone to severe social disorders. This puts Russia in the league of socially explosive countries. Vladimir Pribylovskii is the director of the Panorama think tank in Moscow. He said implementing the housing reform will imperil the country's fragile stability. "In particular, the planned housing reform, if it is not halted, will strip several million people of their flats," Pribylovskii said. "Of course, this bears a threat to stability, at least in the long-term. Stability could already suffer in the next two or three years." A majority of respondents in polls carried out by Center for Public Opinion said they are ready to take to the streets if further social reforms affect their living standards. ********* #2 Vedomosti May 11, 2005 A UNITY OF DISSIMILARITIES Oligarchs, state companies, the bureaucracy: we see no difference Author: editorial [The latest poll done by the Levada Center polling agency, aimed at analyzing Russia's socio-political situation in April 2005, prompts some interesting thoughts. Respondents were asked to name the social strata whose interests are expressed by Vladimir Putin.] The latest poll done by the Levada Center polling agency, aimed at analyzing Russia's socio-political situation in April 2005, prompts some interesting thoughts. Respondents were asked to name the social strata whose interests are expressed by Vladimir Putin. They named four main groups of "beneficiaries" - the security and law enforcement agencies (38% of respondents), the oligarchs (26%), the bureaucracy (23%), and directors of enterprises (20%). The security and law enforcement agencies (siloviki) have always been viewed as Putin's main social support base (38% and 40% of respondents in 2000 and September 2004, respectively); but the bureaucracy has only been included on the list in the past 18 months (22% in September 2004). This makes it all the more unexpected that public opinion is taking a stronger view of enterprise directors (a rise of two-thirds compared to 12% in September 2004) and the oligarchs (a rise of two-fifths compared to 18% in September 2004). These results come as a surprise for big business itself, which is still under pressure from the state. Kremlin sources attribute the poll results to President Putin's latest statements about a more liberal economic policy course. But the poll was done before the president delivered his annual address, and pollsters doubt that the general public pays close attention to the agenda of Putin's meetings with the oligarcs, or to what the authorities are saying and doing in the area of tax liberalization. Experts say it's probably because the break-up of YUKOS and attacks on big business are perceived as a battle among oligarchs, with the president supporting one side against another. In other words, many respondents don't draw a distinction between the oligarchs and others involved in the YUKOS affair: executives from major state- controlled companies and state officials. The Levada Center says that Russian citizens want more than decent living standards. They want to have decent living standards in a great country. And they identify the state's greatness with both the growth of large state-owned companies and a stronger role for large private companies. According to the Levada Center, people are still affected by ideas current in the early years of reforms: the power of a state is largely determined by the presence of large private fortunes and a powerful business community. This has an impact on perceptions of today's realities. In other words, it appears that Russian citizens can simultaneously loathe Anatoly Chubais for giving away the state's property, and despise the oligarchs for how they made their fortunes - while still experiencing some patriotic pride about the fact that "one of us" has bought an entire British football club and made it a champion in England. Citizens lack an understanding of the fact that stronger state- controlled companies do not equal a stronger state. In popular perception, there is a lot of overlap between the interests of the oligarchs, managers of state-owned companies, and the bureaucracy. Thus, it's not suprising that despite the stronger link between Putin and the oligarchs in people's minds, Putin's own approval rating isn't being hurt by this: in April, as in March, two-thirds of respondents said they approve of his performance. All agree that the president is working for a stronger state. Translated by Grigory Malyutin ******** #3 Voice of America 10 May 2005 Russians Worry About Terror Threat to Nuclear Facilities By Simon Marks Moscow, Russia You would not have been able to see images of Russian nuclear facilities just 15 years ago. Not because they didn't exist, but because they were reserved for a handful of select eyes only. The nuclear reactor at the Kurchatov Institute in the northwest of Moscow was once the pride of the Soviet Union. When it opened in 1943, this facility was called simply "Laboratory Number 2" and had one goal: the creation of a Soviet nuclear bomb. Today it's one of 11 nuclear reactors believed operational in the Russian capital. Robert Berls worries about the Kurchatov Institute. He directs the Moscow Office of the Nuclear Threat InitIative -- a non-governmental organization jointly founded by Atlanta businessman Ted Turner and former Democratic Senator Sam Nunn of Georgia. "It's an institute where the U.S. Department of Energy first began doing upgrades of nuclear facilities, and they have several facilities at the Kurchatov Institute. It's a relatively open facility, and a group of terrorists could, I think, easily break into that facility if they tried hard enough. And God forbid if they were ever to get to those research reactors -- what damage they could do and the horror that could be unleashed on Moscow," says Mr. Berls. In a bid to allay those fears, the Russians have been displaying some of the security measures they now deploy at the Kurchatov facility, including special troop carriers that have been converted to monitor levels of radioactive contamination in the event of any incident, and Emergency Ministry troops who are kept on-site around-the-clock. A corporate video has also been produced, designed to set minds at rest. We know with certainty that terrorists have at least considered launching an attack against the Kurchatov Institute. In October 2002, Russian troops stormed the Dubrovka Theater in the center of Moscow, ending a siege by fighters from the breakaway Russian region of Chechnya. For three days 900 theatergoers and performers were held hostage inside the building. The Russians pumped a still-unidentified narcotic gas into the theater in a bid to end the siege -- the move killed the Chechen hostage-takers, but also 129 of their captives. And while that very public military operation was playing out live on Russian television, over at the Kurchatov Institute the Russians were quietly busy. Russian defense analyst Pavel Felgenhauer says, "A friend of mine, a person who I know rather well, worked at Kurchatov, and was called in immediately to the facility as the tragedy in the theater was evolving, to close down the biggest reactor. So when the Russian authorities see real dangers of nuclear facilities being captured several miles from the Kremlin, they act. They act because the threat is serious." Alexander Pikayev has written extensively on the problems securing and safeguarding Russia's nuclear stockpile. He says, "I would say it's simply a matter of luck. Simply a matter of luck because especially in 1990, the situation was so poor that one should be surprised that the worst-case scenario wasn't realized.ä "You cannot say, well, 50 percent is OK. Situation in 99 percent of facilities is OK. Because even if in one facility, which contains probably less than one per cent of the dangerous nuclear materials is bad, the amount of that nuclear material might be enough to make a bomb. So this is still dangerous,ä adds Mr. Pikayev. Both the U.S. and Russian governments have widely publicized the dismantling of elements of their nuclear stockpile. Missiles are broken apart, the fissile material recovered, and then their parts melted down for scrap. A U.S. congressional initiative -- the Nunn-Lugar Co-Operative Threat Reduction Program -- succeeded in deactivating 312 Russian nuclear warheads last year alone. But there is an enormous amount of work ahead: comprehensive security upgrades have not been completed on more than half of Russia's potentially vulnerable nuclear material. And defense analyst Pavel Felgenhauer says decommissioning warheads can create a raft of new problems to resolve. "Decommissioning means that they're dismantled. But the material that they're composed of didn't disappear. That means it's stored somewhere. Most likely stored in less secure conditions than it was when it was a nuclear warhead. So dismantling nuclear weapons is good, but that means that the material is less secure as a result. It's not an easy situation, and it's made worse by a mutual lack of trust, by ambiguity over the direction in which U.S.-Russian relations might develop," says Mr. Felgnhauer. And U.S.-Russian relations, rocky in general over U.S. concerns about Vladimir Putin's rollback of democratic reforms, are tense on the nuclear issue. The Russians won't allow U.S. inspectors to visit some of their most sensitive sites. A response, they say, to Washington's refusal to co-operate with Russian inspections in the USA. Earlier this month, Secretary of State Condoleezza Rice discussed the nuclear issue with President Putin and senior members of his government. In an appearance on a Russian radio station she was asked whether the U.S. is infringing Russian sovereignty by seeking access to the country's nuclear sites. "We do not consider, in any way, the inspections that need to take place, issues of sovereignty. These are issues of cooperation, because we all need to be concerned about what happens as we dismantle the old nuclear weapons arsenals," said Dr. Rice. It isn't only disagreement over how to implement accords on nuclear security that are keeping Russia's so-called "loose nukes" in the headlines. Those seeking a higher priority for the nuclear issue on the U.S.-Russian bilateral agenda also point to strategic realities that they say are contributing to the delay in bringing Russia's potentially deadly materials under control. The U.S. and Russia remain on "hair-trigger" nuclear alert, still capable of mounting a nuclear attack on one another at a moment's notice. "That's a problem that can be resolved only at the level of heads of state, it cannot be done just by confidence-building measures,ä says Pavel Felgenhauer. So, on the 60th anniversary of the allies' victory in Europe at the end of World War II, it is falling to President Bush and President Putin to try and advance the modern nuclear agenda. ******* #4 New York Times May 11, 2005 Editorial Wowing Them in Tbilisi It was heartwarming to see President Bush welcomed warmly in Riga, Latvia, and drawing huge crowds in Tbilisi, Georgia, but his trip through the former Soviet Union hit a home run on public relations while striking out on substance. The one overriding American concern when it comes to Russia is nuclear security and nonproliferation, and on that front, it appears nothing was accomplished. Strong United States support for two of the most democratic former Soviet republics is appropriate and welcome, although it cannot disguise the precipitous decline in American relations with many of the larger countries of Western Europe. But it is Russia, not Latvia or Georgia, that still has more than 10,000 armed nuclear warheads and vast insecure stockpiles of nuclear bomb fuel. And it is also Russia whose willingness to cajole and pressure Iran could help dissuade that country from taking the few remaining steps needed for it to become a nuclear weapons state. The Moscow stop brought no significant new announcements on either nuclear front, just elaborately orchestrated theatrics that were apparently meant to show that despite Mr. Bush's anti-Moscow finger-pointing from beyond Russia's borders, his strong personal bond with Mr. Putin remains intact. In fact, the worrisomely authoritarian Mr. Putin seemed to come off rather better than the incontestably democratic Franklin Roosevelt and Winston Churchill -- in a lunge at historical revisionism, Mr. Bush glibly took those great World War II leaders to task for acceding to Stalin's power grabs in Eastern Europe that they were militarily powerless to halt. Previous meetings between Mr. Bush and Mr. Putin have yielded agreements on sharp cuts in long-range nuclear-armed missiles and bombers. The last time they met, in February, they announced an agreement to combat nuclear terrorism by accelerating joint programs meant to secure poorly safeguarded Russian bomb fuel. What is needed now is final resolution of a dispute over liability that threatens to hold up those vital nuclear security programs, along with joint moves to take thousands of nuclear warheads off hair-trigger alert (Russia's are increasingly vulnerable to a catastrophic accidental launching as its early warning system continues to erode). The two nations should also proceed to overdue reductions in tactical nuclear warheads, which are more easily stolen or bartered than missile-mounted long-range warheads. Measurable progress on these fronts would have been helpful to the struggling Nuclear Nonproliferation Treaty review conference now under way in New York, where nonnuclear nations are increasingly challenging the reluctance of the major nuclear powers to reduce their weapons inventories. Any presidential trip that skirted that issue has to be judged a failure. Still, Mr. Bush is returning home with lots of politically priceless footage from Riga and Tbilisi. ******** #5 Most Russians trust UN, support Russia joining EU, WTO - poll MOSCOW. May 10 (Interfax) - Among all international organizations only UN is trusted by over half of Russians - 54%, while 29% mistrust even this organization, according to a poll of 1,500 Russian respondents conducted by Bashkirova & Partners sociological survey center. Nearly half of Russians - 46% - trust the European Union, and 30% mistrust it. About equal numbers of Russians trust and mistrust the World Trade Organization (WTO) (35% and 38%) and the OSCE (38% and 33%). Only 20% said they trust NATO, while 64% gave the opposite answer. Asked whether Russia should seek accession to some international organizations, 60% said Russia should work to join the EU and 58% the WTO At the same time, only 27% support Russia's accession to NATO, while 56% disapprove of this idea. ******* #6 Mosnews.com May 11, 2005 Upper House of Russian Parliament Rejects Electoral Reform Bill The Federation Council, the upper house of the Russian parliament, has rejected a bill on electoral reforms passed by the State Duma. 86 members of the Council voted for the bill, with 90 votes necessary to approve it. 31 voted against the bill and 21 abstained. A commission made up of members from the two houses will work on the bill. According to the bill, deputies would be elected and distributed proportionally among parties according to the quantity of votes received in each region. The federal party lists would include not more than 500 people; 50 percent of them would not need to be members of the party. ******* #7 pravda.ru May 11, 2005 USA has been using Russia for egocentric purposes for 13 years Urging Russia to take the pro-Western stance inevitably implies the collapse of Putin's regime One has to acknowledge that the USA and Russia differ a lot as far as their attitudes to major international issues are concerned. The two countries hardly have anything in common at this point. It is not ruled out that the dialogue might soon take the "cold war" style, unless Russian and American politicians learn to show mutual respect to each other. Russia and the USA need to turn down the double standards policy in order to be able to continue the cooperation, at least sporadically. Here is a short list of what George W. Bush's administration dislikes about Putin's Russia. President Putin regrets the break-up of the USSR. Putin prevents the USA from "promoting freedom" on the post-Soviet space. Putin is not willing to join the Western perception of freedom and democracy, trying to adjust this concept to the Russian reality. Putin approves arms deliveries to anti-American regimes (nuclear technologies to Iran, missiles to Syria, Kalashnikov guns and helicopters to Venezuela). Russia does not participate in the anti-Hussein coalition and joins France and Germany in their disapproval of the US-led campaign in Iraq. To crown it all, the US administration protests against the process of the Yukos case in Russia. When Condoleezza Rice gave a friendly piece of advice to her Russian colleague, Sergey Lavrov, not to put obstacles on Belarus's way in its quest for freedom and democracy, Ms. Rice heard quite a harsh statement in return - to leave Belarus alone. It is noteworthy that several members of the US Congress asked Russia to acknowledge the illegal occupation of Lithuania, Latvia and Estonia on the threshold of the 60th Anniversary of Victory over Nazism. It brings up the idea that the USA stands alongside with those, who dooms the Russian-speaking population in the Baltic states to semi-genocidal existence. The USA's aggressive strategy has become evident already. NATO continues deploying its army bases around Russia, urging the Russian administration to close military bases in the Transdniestr region and in the former post-Soviet republic of Georgia. It goes without saying that Russia needs to abide by its obligations within the scope of decisions made at the Istanbul summit. On the other hand, it would be good for the North Atlantic Alliance not to build its bases in former Soviet republics too, in Azerbaijan and Kazakhstan, for instance. Once the USA establishes control over Eurasia, Russia's Ural and Siberian regions will find themselves unprotected. In addition, refugees from Central Asia (Muslims) might inundate Russia on account of NATO's presence in the region. The US-led "humanitarian intervention" is likely to become "virus-infected freedom." US Congressman Curt Weldon acknowledged, for example, that the USA has been using Russia for its purposes for 13 years already. It goes without saying that the USA can not come to terms with the "Russian empire" in its promotion of the single-polar world order. The Russian Federation, in its turn, does not at all wish to be a raw materials-producing appendage for the USA either. Russian and American politicians are standing on the line, which separates them from another cold war period. One may say that both Russia and the USA are following the preventive strategy of expectation, the strategy of containment, affecting each other with the help of indirect actions. Urging Russia to take the pro-Western stance inevitably implies the collapse of Putin's regime in the country. Civil wars would tear Russia to pieces, and American interests would turn to might-have-been hopes. One could probably refer to Henry Kissinger's formula in order to ease the tense relationship between the two superpowers: Russia and the USA can follow parallel courses in their policies, being at a certain distance from each other. The new quality of relations needs genuine truth and sincere respect to the interests of the true national security of both Russia and the United States of America. ******* #8 Stratfor.com THE GEOPOLITICAL INTELLIGENCE REPORT Debating Russia's Fate May 9, 2005 It has been 60 years since the defeat of Nazi Germany. The leaders of the nations that participated in that victory, along with those that didn't, have gathered in Moscow to commemorate the anniversary. The gathering has a meaning that transcends the historical. The question on the table is the future of Russia's relationship with the West. The issue is simple: From Moscow's point of view, it is whether the Russians squandered, over the past 15 years, the victory that was won at the cost of more than 20 million killed. From its erstwhile allies' point of view, it is whether to take Russia seriously, not only as a global power, but even as a regional power. How these questions are answered will determine the shape of Eurasia for a generation. From the Soviet point of view, World War II was simultaneously a catastrophe and a triumph. The catastrophe consisted of Josef Stalin's massive diplomatic and military miscalculations, which led to the occupation of vast parts of the Soviet Union by the Germans. The triumph was the fact that the Soviet Union not only won the war (along with its allies), it also emerged from the war as the dominant Eurasian power -- its borders effectively pushing into central Germany -- as well as a global power. It became the only challenger to the other great victor in World War II, the United States. Now the fruits of the victories of 1945 are gone. Moscow's sphere of influence no longer extends to central Germany. In fact, it doesn't extend even through the former Soviet Union. The Baltics, Ukraine, the Caucasus and Central Asia are all slipping from its hands. It is not even certain that the Kremlin can hold all of the Russian Federation. From Moscow's point of view, the current generation has squandered the victory and betrayed the sacrifices of its greatest generation. The leadership of the Soviet and Russian recessional did not undertake this course out of indifference or confusion. Mikhail Gorbachev, Boris Yeltsin and Russian President Vladimir Putin all pursued a calculated policy, dictated in their minds by irresistible reality. Following the analysis of Yuri Andropov, the head of the KGB in the 1960s and 1970s, they recognized that the Soviet Union was -- imperceptibly to many in the West -- slipping into economic and social catastrophe, caused by two things. First, the Soviet economy was inherently inefficient; geography and ideology combined to create a fundamentally flawed system. Second, the decision by the United States in the 1980s to directly attack this weakness by accelerating the arms race created a crisis of unsustainable proportions. The Soviet Union was poor, but geopolitically and strategically powerful. In order to retain that strategic power, it had to devote an enormous amount of economic energy to sustaining its military forces and the economic sectors that underpinned them. The cost of strategic parity with the United States rose and threatened the rest of the economy with collapse. Very quickly, the Soviet Union would be both poorer and weaker. Moscow made a fundamental strategic decision to preserve the Soviet Union by rebalancing the relationship between geopolitics and economics. Gorbachev attempted to implement this policy by effectively ending the Cold War in return for technology transfers and investments from the West. He lost control of the situation for two reasons. First, regardless of the level of Western investment and aid, the economic sclerosis of the Soviet Union was so extensive that Moscow could not effectively utilize the Western funds in any politically meaningful timeframe. Second, the United States was not going to allow the Soviets to recover from their weakness. Washington pressed home its advantage. First, it made alliances, covert and overt, in Eastern Europe that essentially pried the region out of the weakening Soviet grip. Second, the loss of its Eastern European empire created a dynamic that led to Gorbachev's fall and the rise of Yeltsin -- and the collapse of the Soviet Union itself. Retreat fed on itself,until Moscow lost not only what it won in World War II, but also much more. Yeltsin essentially extended Gorbachev's policies and deepened them. He assumed that the economic benefits that Andropov had been searching for would materialize more quickly if Russia were not also responsible for economic conditions in Soviet republics that lagged generations behind Russia itself. In effect, Yeltsin continued to trade geopolitics for economic relations with the West -- having abandoned the drag imposed by, for example, Central Asia. Russians hoped for a massive improvement in their lives. While there was substantial economic activity, wealth was not dispersed. The lives of Russians outside of Moscow and St. Petersburg, as well as the elderly and others who were not among the Westernized elites, went from difficult to extraordinarily harsh. The reasons are complex, but they boil down to this: Capitalism is extremely rewarding, but it demands huge social sacrifices up front -- and Russia, having already paid the price of communism, had nothing more to offer. By this, we don't simply mean money; we mean the social dynamism that capitalism requires. Russia was exhausted by communism.Its social, political and legal structure could not change to accommodate the requirements of capitalism. Theft replaced production as a means of becoming wealthy. Yeltsin could not have done anything about this had he wanted to. It was hardwired into the system. As a result, there was no economic payoff in return for Russia's geopolitical decline. Before the collapse of communism, Russia had been poor but enormously powerful. Afterward, Russia was even poorer and pathetically weak. Moscow had to struggle to hold on to Russia itself. Geopolitics is not a sentimental game, and the United States is not a sentimental country. It did precisely what the Russians had done in the past and would have done had the situation been reversed: It pressed its advantage. Using a variety of mechanisms, such as NATO expansion, the United States first spread its influence into Eastern Europe, then into the former Soviet Union itself, in the Baltics. Washington has increased its influence in the Caucasus via its relationship with Georgia and others.The Americans moved into Central Asia -- first, through the development of energy resources there; then, as a side effect of Sept. 11, through the deployment of U.S. troops and intelligence services throughout the region. Russian weakness had created a vacuum. The United States inexorably moved into it. Putin came to power in the wake of the Kosovo conflict, in which the United States had treated Russian interests with indifference and even contempt. He did not wish to reverse the Andropov doctrine, but intended only to refine it. He expected there never to be a repeat of Kosovo, in which the United States attacked Serbia -- a nation regarded by the Russians as friendly -- without ever taking Russian interests into account. Putin also intended to reverse the consequences of the economic chaos of the 1990s. But he did not intend to create any fundamental change. In other words, Putin wanted to have his cake and eat it too. He did not want to change the foundation of U.S.-Russian relations; he simply wanted to rebalance it. The two goals contradicted each other. The relationship could not be rebalanced: It was built around the reality that Russian leaders had been dealing with for a generation with declining success. Russia didn't have the weight to rebalance the relationship. Economically, it remained crippled. Militarily, it was impotent. The geopolitical consequence -- decline -- could not be stopped. For the past six years, Putin has been searching for the Holy Grail: a no-cost, no-risk solution to Russia's problems. The United States has followed a consistent policy from Ronald Reagan, through the administrations of George H. W. Bush, Bill Clinton and now George W. Bush as well. It has sought to prevent, under any circumstances, the re-emergence of Russia as a regional hegemon and potential global challenger. This has been a truly bipartisan policy. Clinton and George W. Bush have sought to systematically increase American influence in what the Russians call their "near abroad" while at the same time allowing the natural process of economic dysfunction to continue. More precisely, they have allowed Russia's weaknesses to create vacuums into which American power could move. The breakpoint came in Ukraine. Washington took advantage of pro-Western forces there to create a situation in which it, rather than Moscow, was the most influential foreign force in Kiev -- including raising pointed discussions about whether to include Ukraine in NATO. Ukraine lies on Russia's southern frontier; if it becomes a NATO country, Russia becomes indefensible. This, coupled with growing U.S. power in Central Asia, threatens Russia's position in the Caucasus. The situation quickly becomes hopeless for Moscow. This explains why Putin recently referred to the collapse of the Soviet Union as the greatest geopolitical catastrophe in the 21st century. Western leaders expressed shock at the statement, but Putin was simply expressing the obvious. President Bush's travel itinerary surrounding Russia's V-E Day celebrations -- making his first stop in the Baltics and leaving by way of Georgia -- is intended to drive the point home. Discussion of internal Russian affairs -- the status of democracy there -- similarly drives home the inequality of the relationship. So, too, does the attempt to equate the Soviet occupation of the Baltics with the Nazi occupation, with Bush administration leaders saying that the fall of Adolf Hitler did not end oppression. All of this is designed rhetorically to put Russia on the defensive, just as it has been put on the defensive geopolitically. The Russian decline and the U.S. exploitation of the situation have taken us to the breakpoint. If Ukraine is lost to Moscow, if Georgia becomes the dominant power in the Caucasus, if events in Kyrgyzstan are extended to the rest of Central Asia -- all of which are very easy to imagine -- it will be difficult to imagine the survival of the Russian Federation. We will see a second devolution in which parts of the Federation peel off. Russia, as we know it today, will be finished. It is not clear that the Russians have the will to recover. Putin seems to be struggling with internal and external demons, and his heir is not apparent. However, if Russia is going to make an attempt to recover, now is the time when it will have to happen. Another year and there might not be any chance. It might already be too late, but the Russians have little to lose. It is really a case of now or never. Russia will never have a vibrant economy. In the long run, centralized command economies don't work. But neither does capitalism in Russia. A centralized economy can do remarkable things in the short run, however. Russia is particularly noted for short-term, unbalanced spurts -- sometimes with the government using terror as a tool, sometimes not. It must always be remembered how quickly military power can be recovered. Germany went from a collapsed military in 1932 to Great Power status in five or six years. Economic authoritarianism, coupled with a pre-existing skilled officer class, transformed Germany's strategic position. It is not wise, therefore, to assume that Russia cannot recover significant military force if it has the will to do so. It might not become a superpower, but Great Power status -- even with an impoverished population -- is not beyond its capabilities. We have seen Russia achieve this in the past. It therefore makes sense that the United States has been consolidating and extending its position in the former Soviet Union during the past few months. Russia can recover, but only if given time. The United States, having no desire to see Russia recover, doesn't intend to give it time. Washington intends to present Moscow with a reality that is so unfavorable that it cannot be reversed. Russia is close to that situation right now,but in our opinion, not yet there. A window is open that will close shortly. The question is simple: Will the Russians grab what might be a last chance, or are they just too tired to care? ******** #9 Many Adults In Russia Fear New Break-Up May 10, 2005 (Angus Reid Global Scan) ö Many Russian adults believe their country could separate, according to a poll by the Public Opinion Foundation. 52 per cent of respondents believe serious problems might eventually cause the nation to disintegrate. In March 2004, Vladimir Putin won a second four-year term as president, garnering 71.31 per cent of all cast ballots. Last December, Putin signed a controversial bill that effectively eliminates the election of Russiaâs 89 governors by popular vote. In January, protesters took to the streets in several Russian cities to decry a new law that provides Russian war veterans, the disabled and retirees with cash pensions instead of benefits. Finance minister Alexei Kudrin said the demonstrations were mainly motivated by the opposition, saying, "The pensioners are just pawns in a political struggle." The Russian Federation was formed in 1991, when public support shifted to Russian nationalist Boris Yeltsin after an attempted coup severely hampered the authority of then-Soviet leader Mikhail Gorbachev. 30 per cent of respondents believe their country is in great danger of disintegrating. In his Apr. 25 address to the State Duma, Putin declared, "It must be admitted that the collapse of the Soviet Union was the greatest geopolitical catastrophe of the century." Polling Data There is an opinion today that serious problems in Russia may eventually cause the nation to disintegrate. Would you agree or disagree with this view? Agree 52% Disagree 27% Hard to answer 21% Would you consider Russiaâs disintegration to be likely or unlikely? Is this danger great or small? Great danger 30% Small danger 32% There is no danger 20% Hard to answer 19% Source: Public Opinion Foundation Methodology: Face-to-face interviews to 1,500 Russian adults, conducted on Apr. 16 and Apr. 17, 2005. Margin of error is 3.6 per cent. ********* #10 Itogi No. 18 May 3, 2005 APRIL THESES Right-wing policies in a left-wing country Author: not indicated [April 2005 was a watershed month, when a very important trend emerged in Russia's political processes. The nation's leaders reached a decision on the route they will take in the future; the ship of state is turning to the right. Putin will pursue mostly right-wing policies.] April 2005 was a watershed month, when a very important trend emerged in Russia's political processes. The nation's leaders reached a decision on the route they will take in the future; the ship of state is turning to the right. In this context, it is revealing to note the dismissals that have not taken place in the Cabinet headed by Prime Minister Mikhail Fradkov. The ministers were only reprimanded by the Duma for the flawed implementation of monetizing benefits; they were not dismissed. This implies that the government responsible for those reforms is viewed as following the proper course - that is, a right-wing course - and there will be no change of direction. Another significant event took place within the United Russia party, which has been centrist until now: a right wing coalesced within the party. Now this right wing can position itself to the right of the government, and the right-wing members of United Russia will make more proposals in the Duma and intra-party debates. In terms of ideas, President Vladimir Putin's annual address to parliament made everything clear. Putin will pursue mostly right-wing policies, relying on the economically-active part of the population - the societal layer of minor property-owners, those who are prepared to earn their own living rather than expecting handouts from the state. In making this decision, Putin has undoubtedly sacrificed some of his popularity among the politically-active left-wing voters in older age groups. It's a risky move, but there are some weighty political reasons behind it. Essentially, Putin has offered the elites a draft of a non- aggression pact which is intended to provide some insurance for Russia against any attempts to export "color revolutions" from other CIS countries. In order to ensure a constitutional transfer of power, Putin needs to prevent the next elections from turning into a war among the elites. As the experience of our CIS neighbor-states shows, a split among the elites is the factor that makes revolutionary regime change possible. Making the regime harsher, mechanically, will not solve the problem; instead, potential revolutionaries must be provided with self-fulfillment opportunities in more peaceful fields - business, politics, the arts. Guarantees for property rights, freedom of information, freedom of speech: this is the range of measures Putin proposes as the minimal requirements for redirecting the energy of the growing counter-elite into peaceful channels. We should not expect the regime's rightward shift to be very perceptible from below; Putin has never favored drastic movements. There is also the question of the extent to which Russia is prepared to follow the new course. After all, changes in state policy happen quickly, but public opinion is known for its inertia. Polls show that most Russian citizens hold left-wing views, so Putin has to drag the nation into his modernization projects. But this doesn't mean that the right-wing course will encounter substantial resistance from below. The monetization of benefits experience showed that the regime does have the resources to soften the impact of unpopular reforms and avert substantial social unrest. In future, if the shift to the right takes that experience into account, there is every chance that by 2007 our impoverished country will be able to avoid the unacceptable luxury of another revolution with inevitably destructive consequences. Translated by Pavel Pushkin ******** #11 RIA Novosti May 11, 2005 RUSSIA WANTS TO CONTINUE REFORMS - BUT WHO WILL FINANCE THEM? MOSCOW. (RIA Novosti political commentator Yana Yurova) - Budget reforms have forced the Russian government to increase social spending significantly, and as a result there is an obvious shortfall of funding to push economic development during the year. So where will the government find requisite funds? The budget reforms were initially designed for three years. The first stage was intended to make changes to inter-budget relations and re-distribute some federal and regional spending. After that, there were plans to start replacing benefits in-kind (for example, free public transport) with cash payments and to switch from estimate-based budgeting to budget projections based on results. All these measures were expected to free up the state budget from ineffective expenses, including financing of the social sphere. Later, the funds were to have been re-distributed in favor of projects expected to give an impulse to dynamic economic development. However, when the government tried to cut the budget's social expenditures by "monetizing" social benefits, spending actually rose significantly. For example, 240,000 social-security claimants were able to visit sanatoria in the first three months of this year alone, comparable with the total number in 2004, Deputy Prime Minister Alexander Zhukov said. In addition, in the first three months of the year, three times as many free and discounted prescriptions were issued, and three times as much medicine given out than in the whole of 2004. As a result, when the government started to draw up the budget for 2006, it turned out that there was an acute shortage of money required for all spending items. This time, the government faces a much more impressive task: As the Russian proverb goes, The wolves must eat well and the sheep not be touched. Once underway, budget reforms must be concluded and government spending cut. At the same time, the government will have to fulfill its increased social obligations, which it has assumed amid in a worsening social situation. In his state of the nation address, Vladimir Putin set the task of increasing wages in the public sector by 50% by 2008, to make them equal to the national average salary. Interestingly, the government had previously discussed the possibility of doubling wages, but the authorities seem to have realized that the budget would not be able to cope with such an increase in spending, as there are plans to double pensions by that time as well. The government also has to fulfill its much-talked-about task of doubling GDP by 2010. As a result, today the budget commission, which is drawing up a budget for 2006 and also working over the financial plan for the next three years, has reached deadlock. The government has endorsed various scenarios of economic development for 2006-2008 that envisage sectoral reforms. In this connection, government investments are projected to rise from $14.3 billion in 2005 to $23 billion in 2006 and to $32 billion in 2008. According to Ministry of Economic Development and Trade forecasts, in this case, GDP will rise by 5.9% in 2006 and by 6.1-6.2% in the following two years. However, there is not currently enough money for these projects. The 2006 budget is based on new principles: It is divided into obligations that the government has already assumed and new obligations. Naturally, priority goes to the former. However, according to the Finance Ministry, government investment under obligations already assumed can total only $12 billion, and new projects will get government investment of just $2.4 billion. This is a tiny amount compared with new plans estimated at $13.5 billion. These plans include the establishment of an investment fund for infrastructure projects ($2.2 billion), plans for special economic zones ($500 million), federal target programs worth $2.3 billion (including the "administrative reform" target program worth $530 million) approved personally by Vladimir Putin, and other projects. Moreover, doubling pensions by 2008 has not yet been included in the budget. This increase will require another $2.3 billion. The economy will develop sluggishly without large-scale projects and sectoral strategies, and in this case it will hardly be possible to expect GDP growth by more than 4.5% per annum. Obviously, this is not acceptable to the authorities, who will have to look for new development potential. In theory, the necessary money could be taken from the Stabilization Fund, which is expected to accumulate over $36 billion by the end of 2005. The Stabilization Fund receives revenues from oil sales of over $20 per barrel at current prices. Under current legislation, surplus Stabilization Fund money, i.e., anything over $18 billion, can be spent. However, it can be spent only on servicing foreign debt and financing the Pension Fund budget deficit. However, even legitimate spending will clearly push up the level of inflation, which is high already. It seems that the government is pinning its hopes on private investors. In the economic part of his address, Putin spoke exclusively about the need to improve the investment environment in the country. He promised much to entrepreneurs: To cut the privatization review period from ten to three years and to bring tax collection into line with the law. Putin also announced capital amnesty, which, according to State Duma deputy Mikhail Zadornov, could give the country $5-10 billion. Foreign investors are also expected to get clear-cut rules of the game. Therefore, the main task today is to draw more private money into the Russian economy in conditions when government money is obviously not enough. ******** #12 Russia introducing result-oriented budget MOSCOW, May 11 (Itar-Tass) - Russia's budget for the next year will be ãexperimental,ä changes will also be introduced to the Stabilisation Fund and to the principles of forming the country's federal budget. Finance Minister Alexei Kudrin said in an interview published by the Izvestiya newspaper on Wednesday, ãthe wish is to spend, but it causes apprehension, because the result will be inflation.ä He said, ãWe are introducing the budget-oriented principle of the budget.ä According to him, ã2006 is rather experimental and starting from 2007 and even more in 2008 the result-oriented budgeting will really become more widespread.ä The minister recalled, ãEarlier most expenditures of the federal departments were regarded as ãbasicä and were indexed every year and very rarely somebody cared to review them.ä According to Kudrin, ãNow all the expenditures should be assigned to departmental target-oriented programmes.ä ãHowever, in 2006 no more than 30 percent of departmental expenditures will be assigned to target-oriented programmes, but more and more afterwards,ä the minister said. ãMinistries and departments will register expenditures as departmental target-oriented programmes, but at the next stage they will have to provide an account of the planned results,ä the minister specified. Kudrin also said, ãQualitatively new requirements are applied to day to investment expenditures. In no way can it be a commercial project. Commercial projects should be handled by private business.ä Kudrin said the priority budget items are the social policy expenditures and in the educational sphere ö wages to professors, teachers; in the healthcare system ö wages to doctors and specialists.ä ãMoney allowances to military servicemen will be increased, pensions will be bigger. They will rise ahead of inflation,ä the finance minister noted. ãIn addition, the budget top priority tasks remain investments in the infrastructure,ä Kudrin stressed. ******** #13 Voice of America 10 May 2005 Authors of ãKremlin Risingä Say Russian President Putin Is Rolling Back Liberal Economic and Political Reforms By Judith Latham Washington Among those Russia specialists who say President Putin is rolling back liberal economic and political reforms ushered in by his predecessor in the1990âs are the authors of a new book, Kremlin Rising: Vladimir Putinâs Russia and the End of Revolution. Authors Peter Baker and Susan Glasser were Moscow bureau chiefs for the Washington Post from January 2001 to November 2004, and they shared their observations on how President Putin has consolidated his grip on the Kremlin with Press Conference USA host Carol Castiel and VOA senior diplomatic correspondent and former Moscow correspondent Andre de Nesnera. Peter Baker and Susan Glasser said that people in the Kremlin began a campaign in 1999 to find a successor to Russiaâs ailing President Boris Yeltsin, which they later called ãProject Putin.ä And they discovered a little known former KGB colonel, Vladimir Putin, whom they decided to ãcreateä as a major political figure through state television and the power of the state. As Prime Minister under President Boris Yeltsin, Vladimir Putin waged war in Chechnya, positioning himself as a popular figure who would later assume the Russian presidency from Yeltsin. Today, Peter Baker says President Putin has virtually become the head of a one-party state. Susan Glasser described him as obsessed with the power of television, realizing that it is the only means of political communication that matters in modern-day Russia. The authors chronicled how President Putin managed to control state television during the sinking of the Kursk in 2000, the Moscow theater siege of 2002, and the slaughter of the school children in Beslan in 2004. On the political front, according to Peter Baker, President Putin arranged to have his seven ãsuper-governorsä take command from Russiaâs regional governors, and last year he used the Beslan massacre as an excuse to eliminate the election of the governors on the pretext of ãfighting terrorism.ä Susan Glasser said that, as Moscow correspondents, she and Peter Baker witnessed the gradual disappearance of public opposition to President Putin and she explained that ordinary Russians view politics as an area over which they have no control. On the economic front, Peter Baker noted, the Kremlin has realized that it only needs ãto jail a couple of wealthy oligarchsä to make the rest fall in line so it can pursue its own brand of a ãstate-controlled capitalism.ä And the term ãdemocracyä in Russia, according to the authors of Kremlin Rising, has come to mean disorder and economic dislocation. Russian President Vladmir Putin said the collapse of the Soviet Union represented the ãgreatest geopolitical catastrophe of the century.ä Susan Glasser said that Presidentâs Putinâs aim has been to end the revolution in the former Soviet Union, not to start a new one. She suggested that one can look at everything that has happened in the past five years as the Kremlinâs effort to prevent the kind of street uprisings in Russia that have taken place in the former Soviet republics of Ukraine, Georgia, and Kyrgyzstan. Susan Glasser suggested that the Kremlin has done an excellent job of selling Vladimir Putin to the Russian people. According to her, the revolutions in the former Soviet republics are quite unpopular with Russians themselves, who view them as an ãinsultä to Russia. In President Putinâs state-of-the-union speech on April 25th, he said that the collapse of the Soviet Union represented the ãgreatest geopolitical catastrophe of the century.ä And Peter Baker believes that the Russian presidentâs own words ãend up revealing himself,ä despite his lip service to democracy. Mr. Baker reminded that President Putin has always tried to sell his war in Chechnya as an extension of Russiaâs battle against terrorism by Islamic extremists. And he suggested that U.S. officials bought into that theory, especially after 9/11, and they still have trouble making a compelling case against the Kremlinâs campaign to roll back democratic reform. At the same time, President Bush has said that he wants to make the spread of democracy around the world his primary focus. But Peter Baker said that Russia is the one place in the world where ãyou could argue that it has actually gone backwardsä in the last four years. Kremlin Rising: Vladimir Putinâs Russia and the End of Revolution by Peter Baker and Susan Glasser will be published in June. ******* #14 St. Petersburg Times May 10, 2005 A System Dedicated to Preserving Power Is Prone to External Threats By Vladimir Gryaznevich Vladimir Gryaznevich is a political analyst with Expert Severo-Zapad magazine. His comment was first broadcast on Ekho Moskvy in St. Petersburg on Friday. One of the reasons for Russia's troubles is that we have difficulty learning the lessons of our own history. We don't learn from mistakes, even when they are our own. On the eve of the 60th anniversary victory celebration, pollster Public Opinion conducted a survey of citizens views' of the role of Stalin in the victory over Nazi Germany. More than half of respondents (58 percent) said that Stalin contributed a great deal to the victory of the Soviet Union in the Great Patriotic War. In addition, 40 percent said his contribution was positive and only 11 percent evaluated his role as negative. And those who gave these answers were not irresponsible young people, but nothing other than adults. Sixty-eight percent of respondents aged over 55 years said that Stalin's role was positive. That is the most active part of the electorate; they are the people who decide to a large degree who will be elected president or as deputies. This makes it only too clear why we live so badly - our lives are to a great extent determined by people who don't want to learn the lessons of the past. As a result, we keep going round in vicious circles. The true role of Stalin in the Great Patriotic War was explained by Soviet scientists 40 years ago. Strange as it may seem, almost everything was said openly then. In 1966 official Soviet historian Alexander Nekrich wrote a book called "June 22, 1941" about the reasons for the defeats of Soviet troops and the incredible losses at the beginning of the war. The book was not printed in the Soviet Union, but the manuscript was in wide circulation among professional and official circles, including for example at the Communist Party's Institute of Marxism-Leninism. And do you know why party historians reproached Nekrich at the time of his famous evaluation at the end of the Krushchev thaw? You wouldn't believe it, but the stenogram reproduced on the Internet says not for "underrating achievements of the party and government," but quite the opposite - for simplifying his negative role, for not taking account of all the ills that were visited on the country by the regime created by Stalin. For instance, Professor Grigory Deborin, editor of the first volume of "The History of the Great Patriotic War," and his colleges said something like the following: There is no need to mistake Stalin's shortcomings. He was told of the upcoming attack by all sides, but he was so irrational and obstinate that he did not want to believe it. He deliberately made the Soviet Army unmanageable before the war by destroying about 80 percent of is officers. Stalin was not so irrational, at least not at that time, to distrust clear information from the intelligence services. To put it bluntly, Germany's attack threatened his power, which was the thing he most valued in life. It also doesn't make sense to say that he did not want a strong army - it was one of his instruments of repression. This was not about those things, the party historians said, but rather that the administrative system was effective only at maintaining his personal power and was unable to serve the interests of the country, specifically to react to external threats. For instance, Stalin did not receive reports directly from intelligence offices, but rather summaries, interpretations of their reports by the Intelligence Directorate of the General Staff. Its head, Marshal Fyodor Golikov admitted later that information he passed on from Richard Sorge and others was presented as "unrealiable information" since the system was pressured to present facts in a way that suited Stalin. The system was set up in accordance with Stalin's concept of "not provoking the enemy into mounting premature attacks on the Soviet Union." In other words, Stalin was being given disinformation. His machine of government worked similarly in other situations. And that, historians say was not due to the thoughtlessness of the party and the government but an objective defect created by Stalin. If we had studied the lessons of history then we would not tolerate the current attempts to restore the Stalinist system of power. The main evil in the system is not that it shores up the personal power of President Vladimir Putin, but that it is incapable of serving the interests of the country. It is where ineffective reforms stem from, whether they are the replacement of in-kind benefits with cash, pension reform or the reforms of the health system that are only just beginning. This is not to mention the Yukos affair, the decay of the justice system and general, monstrously overgrown corruption. All these events correspond to those that happened in the '30s under Stalin - there are objective results of the actions of mechanisms used by the authorities. The results could also be very destructive for the country - if things outside the country suddenly become difficult, as they did toward the end of the '30s. Stalin lost his war with Hitler. Putin cold lose Russia if, for instance, world oil prices fall sharply. All that remains is to hope that, like our fathers and grandfathers who beat Germany in spite of Stalin, that we will not permit a socio-economic crash - despite all the efforts of the regime to make a crash probable if oil prices fall. ******* #15 Financial Times (UK) May 11, 2005 Russia must be helped to be a 'normal democracy' By Martin Wolf Vladimir Putin's recent remark that the dissolution of the Soviet Union was "the greatest geopolitical catastrophe of the century" reminds us that Russia is not just another country in transition from the communist past. For many Russians, including the former secret policeman who is their president, the loss of their empire, their state and their ideology remains a source of resentment. Yet Russia will only be a normal country when its people welcome their freedom rather than regret their power. The greatest catastrophe of the 20th century was not, in fact, the dissolution of the Soviet Union, but its creation. The Soviet party-state was the organisational model and negative inspiration for Hitler's National Socialism. The heroism of the people of the Soviet Union destroyed that vile regime. For that, humanity must remain eternally grateful. But we must also recognise that the psychopath who controlled the Soviet state made that war far more likely and more costly than it needed to be, not least for his own people. No less is it true that what came to those liberated by the Red Army was not freedom, but four and a half decades of imprisonment. As for the Soviet Union itself, the experiment resulted in the deaths of tens of millions and, in the end, destitution. What then is the proper attitude of the west to contemporary Russia? It is one of admiration for the courage of the Russian people and of gratitude for their contribution to our culture. Yet it is also one of pleasure over the collapse of the Soviet regime and of hope for the emergence of a modern, prosperous and democratic Russia. Unfortunately, an unassuaged desire for a great power's role in the world, for imperial sway in the "near abroad" and for the concentration of power at home is a huge obstacle to that future. Andrei Shleifer, the controversial Harvard economist, denies any reason for concern. Russia is, he insists, "a normal middle-income democracy".* Moreover, he continues, "that Russia today has largely broken free of its past, that it is no longer 'the evil empire' threatening both its own people and the rest of the world, is an amazing and admirable achievement." Professor Shleifer is not altogether wrong. If we ignore Russia's brutal assault on Chechnya (as we should not), we can agree that the empire's dissolution has been astonishingly peaceful. We must admit, too, that Russia has largely accepted its loss of influence over the Baltic states and, more recently, over Georgia and Ukraine. Mr Putin is not a western democrat, but he is also no Stalin. Russia does not have a western market economy, but the centrally planned dinosaur is dead. Yet Prof Shleifer is also not right. After a period of substantial, if limited, progress, there is now significant regress. The recent governance indicators from the World Bank show a marked deterioration in already low levels of "political voice and participation". The rule of law has, suggests the Bank, improved marginally since 2000, but is far below levels in central and eastern Europe (see charts). The onslaught on Yukos, the oil giant, however popular, puts the security of property into question. The concentration of power in the Kremlin similarly undermines the claim that Russia is a working democracy. True, partly because of the past reforms and partly because of the devaluation of 1998, the economy has enjoyed a strong recovery. Measured real gross domestic product rose by 48 per cent between 1998 and 2004. Yet here again are worrying signs. As the latest survey from the Organisation for Economic Co-operation and Development points out, well over half the increase in industrial output since 1998 has been in the resource-intensive sectors. While trend economic growth was 6.6 per cent a year between 1998 and 2004, investment rates have been an unsustainably low 18 per cent. The overall current account surplus of around 10 per cent of GDP is insanely large. After a period of decline, capital flight is again on the rise (see chart). According to the World Bank, Russia now resides between Venezuela and Egypt on voice and accountability. The deterioration since 1996 is similar to that in Myanmar. On all the World Bank's indicators of governance - accountability, stability and lack of violence, government effectiveness, regulatory quality, rule of law and control of corruption - Russia remains well below other big middle-income countries such as Brazil and Mexico, let alone central and eastern Europe and the Baltics. Russia is not a "normal" middle-income developing country. It is a vast Venezuela - with missiles. Yet, even if it is no superpower, Russia remains a pivotal country. It has the capacity to destabilise not just the Eurasian land mass but, given its nuclear arsenal, even the world. The danger is that the increasingly arbitrary exactions of the "party of power" will, whether blessed by Mr Putin or not, further undermine the economy and, in the inevitable search for scapegoats, damage domestic property rights, and destabilise Russia's struggling neighbours. Russia's inability to accept the mediocrity of its circumstances and treat the loss of its empire and its ideology as an opportunity, not a calamity, is a threat to itself and its neighbours. Yet an opportunity is what it is. It would be far better for the Russians themselves, let alone their neighbours, to live in a prosperous, stable and free society than to gnaw on the bones of lost grandeur. The choice can only be made by the Russians themselves. But the west must try to help. It should make clear its determination to help the newly independent countries of the former Soviet Union choose their own path. It should insist on its belief in its own democratic values. And it should offer a free and democratic Russia full participation in the European economic area and the open world economy. Above all, it must remain united in dealing with Russia. Nothing could be more damaging, or more disgraceful, than an attempt by European powers to use an increasingly despotic Russia as an ally against the US superpower. The west needs to oppose Russian abuses not out of hostility, but out of a desire to help the transition. The west cannot determine Russia's future. But it can raise the price of imperial nostalgia and increase the attraction of liberal reforms. That may not be enough. But it is the least we can do. * A Normal Country: Russia after Communism (Harvard University Press, 2005). ******* #16 Date: Tue, 10 May 2005 From: "Branko Milanovic" Subject: Another East European voice Dear David, I hope you will publish this short piece on the Soviet liberation of Eastern Europe. I hope this particularly since similar voices have been silenced, both in their own countries and in the US press, where it seems that only the Baltics and a few odd Poles are allowed to represent Eastern Europe. I will answer a simple question: why was May 8-9 a liberation day? It was the Liberation day because the Soviet army saved countless millions of citizens of Eastern Europe from an almost certain annihilation. People who equate the Nazi conquest of Ukraine, Belorussia, Poland, former Yugoslavia etc. with the Soviet (or Communist) control of these countries are simply ignorant of history·or dishonest. The Nazi occupation of Minsk, Kiev, Belgrade or Warsaw was fundamentally different from the Nazi occupation of Paris and Brussels. We have it no lesser authority than Himmler that the war on the Eastern front was the war of extermination. The role that the Nazi envisaged for Poles, Russians, Serbs, Czechs, Ukrainians (and of course Jews and Roma in all these countries) was that of slavesÐjust in case they somehow survived. Hundreds of thousands of civilians were starved to death, summarily executed, or taken to Germany to become slave laborers. To give just one example that personally affected me. In the city of Kragujeviac in southern Serbia, in one day in September 1941, the Nazis executed around 7,000 people in retaliation for the killing of some 50 Nazi soldiers by the Communist-led partisans. (The infamous Oradour massacre was done by the Das Reich division that simply transferred the rules it ãlearnedä on the Eastern front to the 1944 France.) Democracy is a political system. But in order to enjoy it, one has to be alive first. And without the Red Army, most of East Europeans (except a tiny minority who collaborated with the Nazis) would not have been alive. This is why the Red Army was an army of liberation. It is as simple as that. ******** #17 Date: Wed, 11 May 2005 From: James Beadle Subject: An opportunity to enter the 21st century The western press has likened George Bushâs travel recent itinerary (Riga ö Moscow ö Tbilisi) to Putin stopping in Cuba on his way to Washington, then in North Korea on his way home. Fortunately, the Russian president has shown a greater level of sensitivity, and not taken the bait to spark what could have easily become a diplomatic crisis. The circumstance is indicative of the international pressâs success isolating Russia recently. Diligent reporters have almost gleefully grabbed every opportunity to question the countryâs political, judicial and commercial actions. Such attentive policing is necessary, but should also be measured. It can no longer be questioned that the post-soviet world is turning a new page, and there are real signs that Russia is as keen to embrace the future as its neighbours. Whether it manages to or not ö and there are of course enormous obstacles to its doing so ö the worldâs largest nation deserves a chance to try. Going forward, it would be nice to see the press cut Putin a little slack and evaluate his behaviour relative to the situation in Russia, rather than to their own lofty ideals. How, then, might the administration manage the enormous challenges of moving Russia forward, and convincing those around it ö neighbours, intergovernmental organisations, businesses, investors and the press ö of its intention. Drawing a line on the past is a big start. Putin must swiftly drive through the legislative changes promised in his state of the nation speech. Clearly it will take some time for domestic and foreign players to believe that the tax police have been leashed, and that privatisation laws are water-tight, but the sooner the process starts the better. The fates of Yukos and Khodorkovsky must also be determined, and here the Kremlin faces a great challenge. From the outset it has encouraged the investment community to let these prize assets go, but with limited success. Today both represent unfortunate tests of the Kremlinâs commitment to moving forward. An acquittal and decisive action to protect the remainder of Yukos as a going concern would be best. Such outcomes are possible, given the recent indications that Putin understands that forward stability requires a degree of amnesty for legal but morally dubious historical practises. However, neither is likely. Khodorkovsky himself cannot harbour more than the faintest hope that he will be out before the 2008 election. Most likely, these interconnected issues represent upcoming downside shocks. True, the equity market is prepared for worst case results, but broader business confidence will still be hurt by such conclusions. The EU-Russian treaty, approved yesterday, is another big positive step toward a modern Russia. Most importantly, it reflects Europeâs faith in the Putin administration and willingness to work through problematic issues. However, the treatyâs content simply outlines once more the hurdles that are by now well acknowledged. Its success, like that of Russia, depends on Putinâs ability to re-establish a legacy of progress in Russia. Russia and the world need Putin to implement a decisive strategy over the remaining three years of his presidency. A prudent economic policy would further cut poverty, raising the average quality of life, while containing inflationary pressure and diversifying the economy away from oil and gas revenues. Challenging as this may seem, not least with a Prime Minister whose grasp of basic economics is questionable, it is not impossible. The goal remains achievable if the Cabinet can be patient enough to clean its own image among the investment community. If the finance and economics ministries get the sufficient support, they have the ability to deliver. Freeing Russia from corrupted, soviet and post-soviet power groups will be a greater challenge, but one at least as important as establishing a path of sustainable growth. Can the military be reigned in? Putin has long promised and equally long procrastinated over reforming Russiaâs bloated, ill-disciplined army. The case for a smaller, better equipped and more flexible force is undeniable, the question as to how the military would respond to such a downsizing is less certain. Accountability is an issue in the Russiaâs army, but no more so than among its police force, politicians and civil service. Russia continues to operate a soviet-style big government, one that increasingly depends on oil revenues. Putin has excellently positioned himself to take Russia into the future. The challenge of doing so is enormous, but he is showing increasing willingness to learn. In a rapidly changing region, this recently embattled president is being given a final chance to prove himself. ******* #18 Vedomosti May 11, 2005 WORLDWIDE P.R. The impact of the 60th anniversary celebrations on May 9 Author: Anna Nikolayeva, Yelena Rudneva, Yekaterina Kudashkina [The festivities marking the 60th anniversary of Victory Day riveted attention of global television channels to Moscow. By gathering world leaders on Red Square, the Kremlin tried to boost Russia's international prestige. Observers are not certain this has been a success.] The festivities marking the 60th anniversary of Victory Day riveted attention of global television channels to Moscow. By gathering world leaders on Red Square, the Kremlin tried to boost Russia's international prestige. Observers are not certain this has been a success. The culmination of the anniversary parade lasted 10 seconds, but it was enthralling. Twelve Su jets and MiG fighters flew over Red Square at a speed of 600-700 kilometers per hour. The reaction of the world leaders to the flight of Russian Vityazi and Strizhi pilots is unknown -journalists were gathered apart from the VIP tribune, which was occupied by 54 heads of state, and EU and UN leaders. British Prime Minister Tony Blair was the only G8 leader who didn't come to Moscow - he was busy forming a new Cabinet. The Victory day anniversary has become the biggest international event in the entire history of post-Soviet Russia, organizers of the celebrations are confident. "No event has ever been prepared in such a rhythm - we started the lead-up in December. The preparations for the 300th anniversary of St. Petersburg took above a year and the preparations are underway for the G8 summit which takes place in summer 2006," says a member of the committee responsible for the festivity arrangements. The celebrations cost "tens of millions of US dollars," a representative of the organizational committee says. Moscow Mayor Yuri Luzhkov maintains that the private sector offered "solid support" to organizers. Moscow turned into a regime city on May 8-9. According to the Moscow Internal Affairs Department, 30,000 police officers were patrolling the streets; 20,000 of them guarded central Moscow, where movement was restricted: it was only possible to get to the vicinity of the Kremlin with special passes. In spite of the fears, no major incidents occurred in the capital on May 9 and Alexander Chekalin, senior deputy interior minister, reported that the nationwide crime rate dropped by two- thirds on Victory Day. Arranging the international celebration, Moscow pursued a pragmatic goal - uphold its vision of World War II. "We wanted to remind everybody that our country made the definitive contribution in gaining the victory," says Natalia Timakova, director of the presidential press and information service. In her opinion, the goal was achieved. All global television companies broadcast the "picture" from Moscow. For instance, Al-Djazeera broadcast Putin's speech and the Victory Parade live, says Akram Huzam, director of Al-Djazeera office in Moscow. The CBS of the United States also broadcast the festivities in Moscow - "President Bush was there," an official of the CBS press service explained. Igor Mintusov, chairman of board of directors of Nikkolo-M consulting company, who observed the Moscow celebrations from Portugal had a feeling that the Western television channels were broadcasting "Putin's meeting with Bush," rather than the holiday. Russia's international image is unlikely to change after May 9, says Anatoly Adamishin, former Russian ambassador to Britain and Italy. "The leaders who attended Moscow are hardened and experienced people," he says. In the opinion of Duma member Mikhail Zadornov, displaying Russia's affiliation with the global community was the Kremlin's major goal, "since the tendency for a political isolation of Russia has been increasing in the past several years. This is important, but the celebrations bore some Soviet-era traits, which ought to be removed." Translated by Andrei Ryabochkin ********* #19 Rossiiskaya Gazeta May 11, 2005 STALIN'S SYSTEM SAVED THE WORLD FROM A WORSE FATE [from RIA Novosti's digest of the Russian press] Though 60 years have passed since the end of the Great Patriotic War, people still dispute the price of victory. Political scientist Leonid Radzikhovsky said that if Stalin did not rule Russia then, the country would not have lost nearly 30 million dead, but neither would it have won the war. The giant contribution of Stalin (meaning his party and system) to victory is apparent. The phrase, "The people won without Stalin," is emotionally colored but senseless. It is clear that the people fight but they are organized and ruled from above. Four dead Soviet soldiers per one dead German (Germans lost 3,200,000 on all fronts) or ten dead Soviet citizens per one German soldier this is Stalin's war and victory. And it is not the "price" for Stalin's mistakes but the material form of the logic, the ideology and the very "anthropology" of Stalinism-Bolshevism, for which "the death of one man is a tragedy, but the death of millions is statistics." The Bolshevik-Stalinist state machine was created to fight wars, internal and external. After Nazi Germany attacked the Soviet Union, the Stalinist state continued to fight against its own people. About 1 million men and officers were shot by special departments and tribunals. The state used absolutely identical methods to fight against the enemy and its own people; it was a total war waged by a totalitarian state. The complaint that "Stalin did not spare soldiers" is senseless. When people are crushed into dust in hard labor camps, the losses of "dust" are not counted. The Stalinist leadership did not think about the price of victory; by their logic, 30 million lives were not a high price. Could the country have won otherwise? No, not against Hitler. Germans crushed Europe because it spared its soldiers' lives. This is why if Stalin had not ruled the Soviet Union and the 30 million lives had not been lost in that war, the country would not have won it. So, the Stalinist system saved the world from a worse fate. ********* #20 Los Angeles Times May 11, 2005 Putin Blows Off Steam Over Baltics at EU Summit Though nations adopt an agreement to boost cooperation in trade and security matters, Russian is miffed over disputes with neighbors. By David Holley, Times Staff Writer MOSCOW Ð Leaders of the European Union and Russia on Tuesday said they were making progress toward closer ties, but an angry outburst from Russian President Vladimir V. Putin against demands from Baltic nations highlighted continued strains in the relationship. The EU-Russia summit held here adopted an agreement to boost cooperation in four broad fields: economy and trade; freedom and justice; external security; and scientific research, education and culture. Implementation of those plans "will allow us to significantly promote building a united Europe without dividing lines," Putin said at a news conference, during which he and European leaders emphasized growing friendship but alluded to tough negotiations. "Russia and the European Union are not yet on their honeymoon, but it is true love," said Luxembourg Prime Minister Jean-Claude Juncker, whose country holds the EU's rotating presidency. "It is not easy to negotiate with President Putin, who is absolutely certain he has to protect the interests of his country." Earlier in the day, speaking at a reception, Putin had goodnaturedly referred to a tough negotiating style on the Europeans' part as well. "Of course, it is difficult to negotiate. Sometimes I thought some of our European partners would drive our ministers to heart attacks," Putin said. The European Union and Russia are seeking to expand already extensive trade ties, with EU countries hungry for Russian oil and natural gas. They also hope to build a friendship between neighbors strong enough to ensure that there can be no renewal of the decades-long Cold War tensions. The joint news conference, which concluded three days of meetings and festivities to mark the 60th anniversary of the defeat of Nazi Germany in World War II, included many warm words. Juncker praised "the decisiveness and bravery of the Red Army" during the war, and said European leaders had wanted to "pay tribute to the Russian people." But when journalists asked questions concerning differing interpretations of history between the Baltic countries and Moscow, Putin used the opportunity to launch a counterattack against his critics in those former Soviet states. The leaders of Lithuania, Latvia and Estonia have called on Putin to denounce a 1939 pact between Germany and the Soviet Union that allowed for the wartime division of Eastern Europe between them, and to acknowledge that Soviet forces had occupied the Baltic states against their will. The presidents of Lithuania and Estonia boycotted the Moscow celebrations. Latvian President Vaira Vike-Freiberga attended, but her government is locked in a dispute with Moscow over the signing of a proposed treaty that would formalize the Latvian-Russian border along the line that was in effect when the Soviet Union collapsed in 1991. The significance of the dispute does not primarily lie with contested territory, but rather with political problems caused by the lack of a fully recognized border where the European Union now meets Russia. Latvia cannot enjoy all the benefits of EU membership until it has formal Russian recognition of the border. Moscow also would like to see the issue settled. Putin vehemently denounced Latvia for wanting to attach a declaration to the border treaty that appears to describe it as less than a final settlement. "Today in Europe in the 21st century, when one country has a territorial claim against another and at the same time wants to ratify an agreement on borders, it's total nonsense," Putin said. Putin spoke even more vehemently in opposition to the idea that Moscow should apologize for incorporating the Baltic states into the Soviet Union. Those countries became independent from Russia as a result of a 1918 peace treaty with Germany during World War I and then became part of the Soviet Union as a result of the 1939 pact, he said. "That's history," he said. "I believe that was a secret bargain in which smaller countries and peoples were treated as petty cash. Deplorably, such were the realities of those days." Putin argued that the defeat of Nazi Germany could not mark the start of a Soviet "occupation" of the Baltics. "Once the Baltic countries were made part of the Soviet Union in 1939, there was no occupation in 1945 because they had been part of the country before," he said. "True, I was not a very bright student at the university, because I drank too much beer after classes, but I still remember the basics quite well. We had very good tutors." ********* #21 Kommersant May 11, 2005 Molotov's Sickle Vladimir Putin shuts the door on apologies to the Baltics By Andrey Kolesnikov The summit A Russia ö EU summit was held yesterday in the Kremlin. The main event was the Russian president's discussion with journalists from the Baltic countries, during which Vladimir Putin first demanded that they not make stupid territorial claims against Russia, then mimicked the accent of an Estonian journalist, and towards the end admitted he had drunk a lot of beer when he was at university. Special Kommersant correspondent Andrey Kolesnikov has the details. The surprise the press conference participants prepared for the journalists was planned and consisted of the fact that they accepted the ãroad mapsä for all four common Russia ö EU spaces, which has often been talked about but no one clearly understands what it's about. Now there will obviously be even more talk, not only about the four spaces, but also about road maps. Vladimir Putin said his colleagues had shown their best human qualities during the talks (they obviously left their worst ones for ratification of the signed documents). Luxembourg currently has the EU presidency. Jean-Claude Juncker, the prime minister of that country, recounted his family history to the journalists. His father was born·In brief, his father was pro-Russian, while Jean-Claude, on the contrary, was always aware even as a young man that there was freedom and democracy in his country, but in the east there was the enemy. Then Europe changed, and Jean-Claude changed along with it. In his words, he has been an adult for some time now and no longer wants to change, even along with Europe. But he will have to if any unpleasant changes occur in Russia. These explanations occupied the prime minister of Luxembourg for nearly 15 minutes. I hope Juncker will learn how to speak more concisely towards the end of his presidency of the EU. After all, EU Commission President Jose Barroso was able to say in one sentence that, based on the results of past talks, the EU expressed the hope that Russia would join the WTO in the shortest possible time. Just before the start of the press conference, the senior Russian negotiators on this matter ö Minister of Economic Development and Trade German Gref and his deputy, Maksim Medvedkov ö joined journalists in the room. As always, they were tired but satisfied. EU Foreign Minister Javier Solana said the month following the agreements reached yesterday would ãnot be a honeymoon, of course, but a month of great love.ä There was not a word on a legal marriage. A number of journalists from the Baltic countries were sitting in the room. It was evidently expected right from the start that the EU representatives were delegating them to put questions to the Russian president. And they did. The first question was about negotiations on the border between Russia and the Baltic countries. Putin started to answer. He said that, in general, Russia was willing to sign a border agreement with Estonia and Latvia. This was news. But Putin immediately added a proviso. ãBut no stupid territorial claims. In Europe today, in the 21st century, when one country makes territorial claims against another and at the same time wants to sign a border agreement·This is total nonsense, half-baked! We're willing to wait until our counterparts are ready for real work and ready to sign the documents.ä Here it must be said that, towards the end of the press conference, when it appeared that Putin had no intention of signing any border agreements with the Baltic countries, he suddenly said he had instructed the Ministry of Foreign Affairs to sign a border agreement with Estonia. ãWe have no problems with Estonia, thank God!ä he exclaimed. ãI once worked in Leningrad· St. Petersburg·I was involved in negotiations with Estonians on this matter. To their credit, the Estonians had already taken a pragmatic position in their national interests, and now we've finally reached the point of signing a border agreement!ä There were problems with Latvia. ãThey're willing to sign a border agreement with us, but they want to include a clause and reference in the text to an agreement of 1920, according to which Pytalovo District of Pskov Region is Latvian territory. As a result of the collapse of the Soviet Union, Russia lost huge areas of its native territory. And what are you proposing ö to start all over again? To give us back the Crimea and part of the territories of other former Soviet republics? Give us back Klaipeda then. Start dividing everything in Europe again. Is that what you want? Probably not. ãAll right, the gentleman in the orange tie!ä the prime minister of Luxembourg said, deciding to give the floor to an Estonian journalist. But then he changed his mind and gave it to an Estonian female journalist. ãWhich territorial claims are you talking about?ä she shouted in agitatedly from the back rows. ãThere aren't any. Answer me, Mr. President!ä ãI'll answe-e-er you raightt now!ä, Putin replied, consciously mimicking her The journalist was speechless, but then found the strength to continue. ãWhy is it so hard for you to say Forgive us for the occupation!' Then we could easily live together!ä ãYou speak Russian so well,ä Putin said, apparently realizing that his joke about the celebrated Estonian accent sounded boorish and deciding to soften their impression of him. ãAnd I'm sure you read it just as well. Take the resolution of the 1989 Congress of People's Deputies where it's written in black and white that the Congress of People's Deputies condemns the Molotov ö Ribbentrop Pact and considers it legally untenable. It did not reflect the opinion of the Soviet people and was a private affair of Stalin and Hitler. How much more clearly and precisely can you state it? Or do you want us to do this every year? We consider this matter closed. Finished! We said it, and that's enough!ä Putin was in a mood to continue arguing with the now-silent journalist. ãIf the Baltic countries became part of the USSR in 1939, the Soviet Union could not have occupied them in 1941, because they were already part of it,ä the president continued. ãI didn't do very well at university, because I drank a lot of beer, but I remember some things; we had good teachers.ä But if you follow his arguments and agree with the Congress of People's Deputies of the USSR, which declared the MolotovöRibbentrop Pact legally untenable (and the Russian president spoke of this in particular), this means you would have to agree that the Baltic countries might consider their annexation to the Soviet Union an occupation. So it seems his confession about beer cost him dearly. ******* #22 excerpt The Charlie Rose Show public television A Discussion About Vladimir Putin and George Bush and the Relationship CHARLIE ROSE, HOST: Welcome to the broadcast. In Russia, they`re celebrating the end of the Second World War in Moscow. We`ll talk about Vladimir Putin and George Bush and the relationship. (BEGIN VIDEO CLIP) MICHAEL MCFAUL, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: I think when we link these things, we say, well, I`ll shut up about Chechnya if you cooperate on Iran -- it`s a false linkage, because Putin is going to do what he thinks is in Russia`s national interest, irrespective of what Bush says or wants about Russian democracy. And so the kind of cooperation, what we have had with the Russians on Iran, which I think is real, on the global war on terrorism, which I think is more rhetorical than real, and going back to Afghanistan, which was also quite real, it`s always been in Russia`s national interest to do those things. He`s not going to do any favors for Bush. He`s going to do what he think is in Russia`s national interest. STEPHEN SESTANOVICH, COUNCIL ON FOREIGN RELATIONS: I think you could argue that, in fact, the personal atmospherics undercut the message. And that`s clearly the way some Russians and others in Eastern Europe are reading it. They see it as a sign that the president isn`t really serious about the message that he`s allegedly delivering in private.... CHARLIE ROSE: We begin this evening with the 60th anniversary of the allied victory over Germany. More than 50 world leaders, including President Bush, gathered in Moscow earlier today to attend the celebrations in Red Square. President Bush was given an honorary seat next to Russian President Vladimir Putin, with whom he met privately on Sunday. Later today, President Bush also traveled to the former Soviet republic of Georgia. This was a last stop in his five-day trip aimed at promoting democracy abroad. Joining me now from Washington, Michael McFaul, senior associate at the Carnegie Endowment for International Peace, also senior fellow at the Hoover Institution at Stanford University. Also in Washington, Stephen Sestanovich, senior fellow at the Council on Foreign Relations and former ambassador to Russia under President Clinton. I am pleased to have both of them here. Tell me, there seems to be, notwithstanding differences, there seems to be this good relationship between Bush and Putin. Is it -- has it changed, or are they simply putting aside differences in order to take note of an important Russian contribution to defeating Nazi Germany? STEPHEN SESTANOVICH: I think this has been the pattern of Bush`s interactions with Putin from the very beginning. Whether he has a tough message to deliver or a friendly one, he wants the outward atmospherics of the relationship to be positive. So you know, remember all those words that he said about the soul and eyes and so forth four years ago when he met him for the first time? Well, he was delivering a relatively tough message then at the time, which is I`m going to tear up the ABM Treaty, but I`m going to be your pal. And he figured that this would be a way of softening the blow. I think this is still his calculation when it comes to democracy. CHARLIE ROSE: Michael? MICHAEL MCFAUL: Well, I agree with Ambassador Sestanovich, that may be his strategy, but I think it`s interesting to compare the first occasion, when it was very clear what President Bush wanted from Putin. He wanted to get rid of the ABM Treaty, and therefore he went out of his way to be chummy, right? This time around, I don`t see the causal relationship between the chummy relationship on the one hand and advance of Russian democracy on the other hand. On the contrary, I haven`t seen any evidence yet that Putin and Bush, or I should say Bush, has tried to translate that relationship into concrete steps that would further democracy within Russia. CHARLIE ROSE: Have you seen any evidence that Putin has encouraged Bush to give him certain things and has been willing to forego certain things like sending nuclear technology to Iran, that might please Bush? MICHAEL MCFAUL: Yes and no. I think when we link these things, we say, well, I`ll shut up about Chechnya if you cooperate on Iran -- it`s a false linkage, because Putin is going to do what he thinks is in Russia`s national interests, irrespective of what Bush says or wants about Russian democracy. And so the kind of cooperation than what we have had with the Russians, on Iran, which I think is real, on the global war on terrorism, which is I think is more rhetorical than real, and going back to Afghanistan, which was also quite real, it`s always been in Russia`s national interest to do those things. He`s not going to do any favors for Bush. He`s going to do what he thinks is in Russia`s national interest. STEPHEN SESTANOVICH: I think you could argue that in fact the personal atmospherics undercut the message. And that`s clearly the way some Russians and others in Eastern Europe are reading it. They see it as a sign that the president isn`t really serious about the message that he`s allegedly delivering in private. CHARLIE ROSE: What message -- wait, he`s not serious about the message he`s delivering in private? STEPHEN SESTANOVICH: Yes, that if you`re that friendly, you can`t possibly be delivering the harsh message to Putin that -- about Russia`s democratic evolution, that the president and his aides insist they`re delivering. That will be one of the readings that is -- that comes out of this meeting. And you`ll see it in the Russia media and among Russian officialdom, that the president pulled this punch, by the kind of commitment that he has to a personal friendship with Putin. CHARLIE ROSE: Do you think that`s what he did or not, Stephen? STEPHEN SESTANOVICH: It`s very hard to tell what their real discussion was like. You know, at the State Department, they have a paper that they call the "yes but" talking points, meaning how to instruct the president or prepare the president for -- to go back at Putin after he gets the lecture, and to sort of indicate that he actually does take this issue seriously. We don`t know whether the discussion they had about democracy was a really sustained one, or just one point by Bush and then one point by Putin, and then let`s move on to North Korea. CHARLIE ROSE: Well, you`ve been in those rooms -- not with Bush, but what is it normally like? STEPHEN SESTANOVICH: President Putin is a very good filibusterer. And when he wants to give you a lecture and pin your ears back, he can do it. And it is said that in Bratislava, he lectured the president for 40 minutes. If that`s the record, then they probably are having to ask themselves how to break through to Putin, to convince him that this is something both serious and practical. CHARLIE ROSE: Michael, here`s what you wrote in "The L.A. Times" on May 8th. "His legacy, Bush`s legacy in foreign affairs, will now be defined by success in advancing democracy." I assume that`s coming out of the election in Iraq. "Russia presents the greatest challenge. Lots of dictators have remained in power during Bush`s tenure, but they were in power before he came to the White House. Russia is the only major country in the world that has during Bush`s term in office moved from partly free to not free." What is it Bush can get Putin to do to advance democracy? MICHAEL MCFAUL: Well, the first thing he has to do is to recognize what I just wrote and you just quoted, and say that. You can`t have a grand strategy for promotion of democracy and not have Russia a part of that equation. So that`s the first thing. And I think it is striking that Russia is the big, strategic country going in the opposite direction in the world today. Second, he doesn`t have a lot of leverage vis-a-vis Putin. He doesn`t -- you know, it`s not 1992 and 1993, when we really had concrete things that we could put on the table. I think at this stage, one has to try to get Putin to commit credibly to a free and fair election in 2008. CHARLIE ROSE: How do you do that? MICHAEL MCFAUL: Well, you have a press conference, which they didn`t have yesterday, by the way, where both pledge that we think this is a good thing. This is what G-8 members do. They have free and fair elections. And you get Putin to say on the record that he acknowledges that, and that is his intention. Then second, you put your money where your mouth is. You say, OK, he`s now said that, so we`re going to help try to encourage and finance domestic monitors within Russia and shore them up with international monitors, to try to make that election as free and as fair as possible. After all, that`s exactly what we did in Ukraine last year. That`s exactly what we did in Georgia in 2003, and it had real results for those electoral breakthroughs. We`re not doing that in Russia today. CHARLIE ROSE: Here`s what Putin said on "60 Minutes" last night, Stephen, before you jump in. Putin said "four years ago your presidential election was decided by the court. The judicial system was brought into it. But we`re not going to poke our noses into your democratic system, because that`s up to the American people." He went on to say, "you can`t impose democracy from outside a country." STEPHEN SESTANOVICH: You surely can`t impose it from outside, except in very rare circumstances, and it may not be a lasting result. But you can, when you`re somebody with Putin`s power and authority in Russian politics, do a lot of the things that will determine whether or not there is a free and fair election. And that has to do with how parties are formed, how they`re financed, their ability to have access to the media. All kinds of things of this sort, where the current indicators are that there will not be free and fair election in Russia in 2008. I would add one other condition to the ones that Mike mentioned. I think there has to be a sense on Putin`s part that his international standing and legitimacy do depend on this. That was true of President Kuchma in Ukraine last year. The message had been drummed into him over a period of years by Western leaders that an unfree and unfair election would not be recognized. And the question is how to make that credible in the Russian case. Will we, when the equivalent of Yanukovych stands for reelection as Putin`s successor, will we say, yes, that`s fine when you have an election that`s pretty much like the one, that -- the one that was to be stolen and falsified in Ukraine -- will that be accepted in the West? And I think we probably haven`t made it completely credible yet that it won`t be. CHARLIE ROSE: Yeah, but haven`t you said that -- something to the effect that the state of Russian democratic reform in Russia is not as -- I remember you saying something to the effect, not as bad as it has been characterized in the West, i.e., that the reform may be a little better than we assume. STEPHEN SESTANOVICH: No, it means there are more vestiges of reform left than we sometimes assume. There is -- there are the rudiments of a free media, although the Kremlin`s control over national television is very, very great. There are more of the vestiges of political parties. There are more of the vestiges of, you know, pluralism throughout Russian politics. But those vestiges will not make for a truly democratic outcome in 2008 unless, I believe, unless outside leaders put their shoulders to the wheel a little more and try to affect the internal balance of power and try to affect Putin`s own commitment to a democratic outcome, because I think that commitment is very much in question. CHARLIE ROSE: What do you think Putin wants for his legacy? STEPHEN SESTANOVICH: He says all the time that he wants to restore Russia`s reputation as a great power, and he wants to make it a prosperous country. CHARLIE ROSE: That`s a good idea. STEPHEN SESTANOVICH: And he probably figures -- and he probably figures that it doesn`t really have to be a democracy for either of those to be achieved. MICHAEL MCFAUL: He`s dead wrong about that. CHARLIE ROSE: OK, let`s have a discussion about that. Is he -- does he care about democracy or not? MICHAEL MCFAUL: No, in my opinion, he doesn`t. I mean, I agree with Steve. The number one thing, is he wants to restore the power of the state. And by the way, I would say the prosperity part is an instrument, is a means to the end of making the Russian state strong again. And his theory of making the state stronger is to make it more autocratic. But those are not the same things. There`s lot of autocracies around the world that are not strong states. Think of Angola for a moment, right? Autocracy but no authority, no great state. And I think he`s blowing it on this issue. Moreover, I think he`s blowing it on the great power status. Where are all the great powers? They are in the Western community of democratic states. The G-8 is about that. Great other powers are aspiring to be in that club, even China I would say is aspiring to be in that club. I think Russia has no chance at all of being a great, respected power if they`re on the outside of this international community. CHARLIE ROSE: So if he wants to be a great power, he ought to do what? MICHAEL MCFAUL: I think... STEPHEN SESTANOVICH: He has got to begin modernizing his political system in a way that he hasn`t until now. You know, it`s interesting. Every year, Putin complains about the corrupt Russian bureaucracy. This is in his State of the Union speech, a consistent theme, and there are not a lot of other consistent themes in those speeches. Why is it that there is a corrupt Russian bureaucracy? It`s because there`s no democratic oversight. There is no transparency. And they don`t have any accountability to any other institutions in the system. If Putin were really serious about creating a modern bureaucratic order that could be -- of the kind that you have in modern political systems, he would see that he has to have a parallel democratization as well, or else he`s just restoring czarism. ********* #23 Walker's World: The hollow deals of Moscow By Martin Walker UPI Editor London, England, May. 10 (UPI) -- It must have seemed a good idea at the time. The world's leaders were all gathering in Moscow to celebrate the 60th anniversary of the end of World War II. There could be no more symbolic and suitable time for a high-profile summit between Russia and the European Union, and such events need an equally high-profile treaty document to be signed. Accordingly, when President George W. Bush flew on from the Kremlin celebrations and his private tour of the stables of Russian President Vladimir Putin, some of the European leaders stayed on to affix their signatures to a curious agreement whose guiding principle was defined by EU Commission President Jose Manuel Barroso: "We all want to see a democratic and prosperous Russia appealing for foreign investment, as a natural and strong partner for the EU." The document might best be called a road map toward a strategic partnership -- if only there were one. The 60-page document is an agreement in principle, though it is non-binding and has no legal force, to undertake a series of steps over the next eight years, aimed at creating a series of common rules that will facilitate cooperation in the fields of the "Economy", "External Security", "Freedom, Security and Justice" and "Education, Research and Culture." It is based on a series of assumptions that come very close to being fantasies. For example, one way of building a common Russo-European space on "Freedom, Security and Justice" is to relax the rules on visas, which for many Europeans (and Americans) remain almost as burdensome as they were during the Cold War. These days, the problem is more to do with incompetence than security, but too many businessmen or their secretaries or expensive "fixers" spend their last few days before a trip in endless delays in Russian consulates, waiting for visas that tend to come only at the last, frustrating minute. The hope is one day to have visa-free travel, but Russians are very wary of transit passengers, and the Europeans are worried about Russian organized crime smuggling illegal immigrants -- whose return Russia refuses -- and women forced into prostitution. And no relaxation of the visa system can take place until there is a settlement of the bilateral border disputes between Russia and the former Soviet Republics of Latvia and Estonia. These disputes date back to World War II, when the three Baltic states were simply swallowed up by the Soviet Union against their will, until they regained their independence with the Soviet collapse in 1991. So the hollowness of the EU-Russian agreement that was signed Tuesday in Moscow was cruelly emphasized by Putin, who took advantage of the photo opportunity that came with the signing of the document to say what he really thought of the Latvians and Estonians. "We are ready to sign an agreement on borders ... with Estonia and Latvia. We hope they will not be accompanied by idiotic -- in terms of their content -- demands of a territorial nature," said Putin, outraged by demands from Baltic states that Russia apologize for the Soviet "occupation" after 1945. "Today in Europe in the 21st century, when one country is making territorial claims against another and at the same time wants to ratify border treaties, this is complete nonsense -- soft-boiled boots," Putin went on, using one of the homely Russian sayings he brings out for the common touch. "It does not fit with the spirit of creating a common European home," said Putin angrily at the Kremlin news conference that was meant to be sweetness and light and strategic partnership. To the deep embarrassment of the EU officials standing there, Putin poured out all the resentment that had built up in recent weeks as the Baltic states ruined his big Victory celebration by enticing Bush to visit Latvia and make speeches about Baltic independence before coming to Moscow. "Let's start dividing up everything in Europe? No, no. I don't think so," Putin went on. "We appeal to Baltic politicians to stop practicing political demagoguery and start constructive work. Russia is ready for such work." Putin, probably the best-known former KGB agent in the history of espionage, is certainly a Russian patriot with a great nostalgia for the Soviet Union and its superpower status. Only last month, he declared that its collapse was "the geopolitical tragedy" of the 20th century. But Putin is also a realist who knows the EU is by far Russia's most important trading partner, just as the United States is the most important factor in security, and the EU is the biggest customer for Russian oil and gas. The EU is now and will long remain crucial to Russia's economic future. So despite his frustration at the way the EU and the United States worked together to frustrate his plans to manipulate the Ukraine elections and keep that former Soviet republic in Russia's orbit, Putin wants a positive relationship. "The process of forming a greater Europe continues in the wake of the fall of the Berlin Wall," Putin said. "We want a Europe without dividing lines." Putin got some of what he wanted from the agreement signed Tuesday; the EU has promised to help Russia become a member of the World Trade Organization, which means resolving some long-standing objections to Russian state subsidies of important industries, along with further subsidies in energy costs. EU Trade Commissioner Peter Mandelson said the current round of talks could lead to Russian membership of the WTO early next year. "Our goal is to create a common European space for the benefit of our citizens. Common values as well as shared interests are at the heart of our relations," said European Commission President Jose Manuel Barroso, though Putin's remarks on the Baltic states suggested that values were precisely what the EU and Russians did not have in common. But Barroso's rhetoric was easily outdone by Luxembourg's Prime Minister Jean-Claude Juncker, who currently holds the rotating EU Presidency, and thus speaks for the EU as a whole, rather than for his tiny nation of 500,000 people. "Russia and the European Union are not yet on their honeymoon, but it is true love," Juncker said. "We leave with our conviction firm that President Putin is a friend of Europe." Putin is certainly a friend to the wealthy old nations of Western Europe whose banks have the investment funds he needs, but his attitudes to the new Europeans of Central and Eastern Europe that were members of the Warsaw Pact or constituent parts of the old Soviet Union are far more complicated, and just as important for the broader European future, in which Russia looms as too big, too weak and too filled with resentments for comfort. ********* #24 Novye Izvestia May 11, 2005 IDLE MONEY Not trusting banks, Russian citizens are storing $50 billion at home Author: Anastasiya Samotorova [Russian citizens are keeping $25-50 billion "under their mattresses." They've already taken a further $150-200 billion out of the country. This reluctance to place savings in banks is due to the fact that the Russian banking system is still among the most unreliable in the world.] According to a report by Arnaud de Villepoix, an IMF adviser to the Central Bank of Russia, Russian citizens are keeping $25-50 billion "under their mattresses." They've already taken a further $150-200 billion out of the country - twice as much as federal budget spending for 2005. De Villepoix attributes our reluctance to place savings in banks to the fact that the Russian banking system is still among the most unreliable in the world. The "outstanding" growth in crediting services could be announced as the only positive tendency contained in the report. Over 2004, the amount of credits issued on enterprises grew by 47% (to citizens - by 107%). However, according to the IMF adviser, this spurt is nothing more than a "mechanic result of growth from the extremely low initial level." The amount of credits is still very negligible. Besides, as before, the banks prefer dealing with large borrowers: enterprises of the oil, gas and chemical industries. The international expert uses the devastating cogency to interpret the practice which is habitual for our creditors: "Any crisis in commodity industries will hit the banks." Alexei Buzdalin, an expert at the Open Economy Institute, explained to us that methods for calculating the amount of money on hand of the people differ. The simplest method is to compare how much hard currency is taken into a country and how much is removed and correlate the difference with the amount of money stored in deposit accounts. According to the expert, the amount of $50 billion the IMF adviser has "found" in homes of the Russians is quite real. "This is an adequate response of the population to the level of risks in our banking system," he maintains. In the opinion of Pavel Medvedev, deputy chairman of the Duma's committee for crediting organizations and financial markets, all existing methods of calculation "are not very accurate." Medvedev told us: "It is not clear whether the entire amount of $50 billion is under people's beds, or if some money is part of turnover in the shadow economy." De Villepoix says that forming a system of deposit insurance (DIS) is among the factors which may boost public confidence in Russian banks. It should be noted that under the new law the state guarantees return of deposits to depositors with commercial banks (up to 100,000 rubles) if a bank joins the DIS. If a bank fails to do that by September 27, 2005, it will be deprived of the right to work with private depositors. The system incorporates 826 out of 1,162 banks. According to the Central Bank, 98% of deposits have been insured. However, not all experts are confident of the magic influence of the DIS on spirits of citizens. Alexei Buzdalin explained: "In terms of rubles, the amount of insured deposits only makes a quarter of the aggregate people's savings stored with banks, which means that the depositors will try to withdraw the remaining 75% of money from banks as soon as possible if the banks encounter problems, which will evidently fail to save the crediting institutions from the crisis." These are not all the risks threatening depositors. The banks which didn't enter the DIS were given a month for submission of repeated applications on March 27. Only 206 banks indicated consent to undergo repeat inspections. Consequently, almost 103 organizations which have licenses for working with private depositors have already refused to join the insurance system. The Central Bank is yet refusing to print out their list. Some of the banks announce a voluntary end to working with individual depositors, but many banks continue attracting the money of individuals promising incredible interest rates. It is not sure that these banks will cope with interest payments on their deposits, and this is likely to further reduce the popularity of the domestic banking system. Translated by Andrei Ryabochkin ******** #25 Los Angeles Times May 11, 2005 Editorial Poking the Russian Bear Georgia, the homeland of Josef Stalin, has long seen its dream of independence crushed by Moscow. The tumultuous reception that President Bush received Tuesday in Tbilisi's Freedom Square affirmed that the former Soviet republic is now moving westward as quickly as it can. With Georgia, Ukraine and other onetime Kremlin satellites embracing democracy, how long should it be before they become full-fledged members of the West, holding membership in NATO and the European Union? A while, at least when it comes to NATO. Before he goes any further in emboldening Georgia and Ukraine, Bush should reconsider and avoid needlessly antagonizing Russia. Washington should have good relations with the former Soviet republics and encourage their democratic evolution, but it would be counterproductive for the U.S. to make Russia feel increasingly encircled by NATO. Bush's suggestion Tuesday that NATO membership may be in Georgia's future was both reckless and foolhardy. The fate of Russia's own democracy is uncertain under Vladimir V. Putin, and Western disregard for Russian pride and security concerns could make matters far worse by unleashing a nationalistic backlash. Already the U.S. and Western Europe have gone further than they could ever have imagined at the end of the Cold War in expanding their influence at the expense of the Kremlin, including incorporating the former East Germany, the Baltic states and much of Eastern Europe into NATO. From a Russian perspective, this was not the reward expected for peacefully withdrawing tanks from the region and allowing the reunification of Germany. Incorporating even more countries into NATO, especially one like the Ukraine that is part of Russia's historical core, would compound the sense of betrayal. Moreover, it would also make NATO too large and unwieldy. On French television, Putin warned last Saturday that if Ukraine were to enter NATO, as its president, Viktor Yushchenko, hopes, it "could have problems. I say this frankly." The same would hold true for Georgia, where Moscow has promoted instability in a bid to divide and conquer the republic. Neither Ukraine nor Georgia is even ready to enter NATO. Like Ukraine, Georgia barely qualifies as a democracy. It is also racked by internal strife. NATO's military obligations are reciprocal; does anyone really want to see U.S. or British soldiers fighting to preserve a security guarantee to Georgia? What's more, the West needs Russia as a friend, not an enemy. Bush should be working to gain Putin's cooperation, particularly on Iran and North Korea, where Russia is a key player. The U.S. also needs Russian assistance in destroying dangerous nuclear stocks and in fighting proliferation. After taking a number of swipes at Russia during his visit to the Baltics, Bush shelved his anti-Russian rhetoric when he met with Putin. But no sooner did he visit Georgia than he resumed, declaring that its sovereignty "must be respected by all nations." That goes without saying. But before Bush goes any further, Russia, not Georgia, should be on his mind. ****** #26 PBS Newshour May 10, 2005 FORMER SOVIET REPUBLICS KWAME HOLMAN: Once again, tens of thousands gathered in the main square of Tbilisi, capital of the country of Georgia. This time they were cheering President Bush, who ended a five-day overseas trip there this morning. But two years ago thousands of Georgians peaceably pushed out a government accused of rigging an election. Georgians called it the "Rose Revolution," and President Bush praised them today. PRESIDENT GEORGE W. BUSH: Because you acted, Georgia is today both sovereign and free and a beacon of liberty for this region and for the world. The path of freedom you have chosen is not easy, but you will not travel it alone. Americans respect your courageous choice for liberty. And as you build a free and democratic Georgia, the American people will stand with you. KWAME HOLMAN: President Bush said Georgia's peaceful revolution inspired other revolutions in two other countries that used to be part of the Soviet Union, Ukraine and Kyrgyzstan. Their post-Soviet governments, though nominally democratic since the 1991 collapse of the Soviet state, had turned more authoritarian in the face of massive economic and social problems. The president, fresh from his two-day trip to Moscow, also cautioned Russia against putting too much pressure on those neighbor nations, with which it has maintained strong economic links and some military ties. PRESIDENT GEORGE W. BUSH: At the same time, the territorial and sovereignty of Georgia must be respected by all nations. KWAME HOLMAN: But he stopped short of calling on Russia to withdraw immediately from the two bases it still maintains in Georgian territory. In all three countries, these latest post-Soviet revolutions were sparked by protests over rigged elections. In Georgia, a nation of five million, Eduard Shevardnadze tried to keep the country together against separatist groups, but was accused of tolerating corruption. The Rose Revolution, followed by an election in January 2004, brought the American-educated Mikheil Saakashvili to the presidency. In Ukraine, a nation of 48 million strategically located between Russia and Europe, Viktor Yushchenko was elected to the presidency late last year, winning a rerun election after his country's Orange Revolution forced the nullification of the first, rigged round of balloting. The latest and least orderly transition came in the Central Asian Republic of Kyrgyzstan, a nation of five million. In March, massive protests over disputed elections forced President Askar Akayev to flee the country and resign. Kurmanbek Bakiyev has been named as acting president and prime minister. All three republics have appealed for more aid from the United States and Europe. Ukraine and Georgia have expressed interest in eventually joining NATO and the European Union. Common challenges for ex-Soviet republics JIM LEHRER: Margaret Warner takes it from there. MARGARET WARNER: So how are these former Soviet republics doing after going through not just one, but two wrenching changes of government? And what are their chances of success as democratic states? For that, we turn to former assistant secretary of state Toby Gati. She dealt with Russia and the former Soviet states on the National Security Council staff in the Clinton administration. She's now senior international advisor on developments in that region at a Washington law firm. And Adrian Karatnycky, former president and now a senior scholar at Freedom House; it promotes political and economic freedom around the world. He's written widely on Eastern Europe and the post-Soviet states. Welcome to you both. Mr. Karatnycky, is there a common problem, a common challenge that these three countries face now as they're trying to become functioning, flourishing, successful democracies? ADRIAN KARATNYCKY: I think there are some common problems. The first problem is to have a normal political opposition. The new regimes that come in to power, the new democratic forces usually come with a wave of -- mounting wave of support, and there is very little legitimate opposition that can act as a legitimate check and balance on the -- you know, the natural inclinations of people who have a mandate. They ought to be questioned. They ought to be checked. They ought to have a strong parliamentary opposition. In many of these cases, after these transitions, parliamentary oppositions are fairly weak, and those people that are in opposition are often discredited by their association with criminal activities, with corruption. So what these countries really need is opposition politics to be an important feature. A second problem is the legacy of corruption. All three of them face huge problems deriving from the many years of graft and favoritism and cronyism that was at the root of the way the economies of these three economies were run. Corruption was actually the main trigger that promoted disaffection with the leaderships of these countries, and it was elections that became the mechanism for these public protests, but it was really this dismay at the growing massive wealth of the families of these rulers. MARGARET WARNER: All right. Let me get Toby Gati in this. What would you add to that list of common challenges? TOBY GATI: The common challenges that Adrian has talked about were the political challenges. The economic challenges are just as daunting. The people in these countries of course wanted democracy. But what they wanted even more was a better standard of living and a country they could live in without having to bribe every second official that they met. They also wanted countries that were united. In Ukraine you have problems between East and West. In Georgia you have breakaway provinces, Kyrgyzstan, the tensions between North and South. And of course they want to find their place in the world, which they really haven't yet found. Grading each republics' progress MARGARET WARNER: So, Mr. Karatnycky, how are they doing? And I know -- we're talking about three different countries here, but just in a broad sense, how are they doing on the measurements we look at, the progress on democracy and on economics and on corruption? ADRIAN KARATNYCKY: Well, let me start with a more basic point, and I think that countries where there has been a very vigorous and vivid civic nonviolent protest movement tend to have a fairly durable result in terms of their transitions to democracy, countries where we'd seen a lot of people power, countries like the Philippines, countries like Poland with solidarity. Those tend to, over time, to develop the right way institutionally because they start out the right way. They start out with this explosion of public engagement, and I think that that carries them a long way in the early years of the transition towards democracy and economic life. And I think that Ukraine is moving -- yeah, I would say Ukraine of the three is moving in the most, I would say, significant way. It has the highest rates of growth of the three countries. It has a strong shift of public support. The East-West regional differences in terms of support for President Yushchenko have diminished. It has a bit of an opposition because there is still some support for the Communist Party and for some of the parties of the old ruling elite. It has pretty much a substantial degree of diversity and media. Georgia has a different problem; it has a democratizing and reform-minded president, but he was elected with a 96 percent mandate, and his party controls 90 percent of the seats in parliament, his coalition of parties. And I think it's very hard without the growth of a substantial opposition to keep the government honest to -- it's a little harder to bring about democratic change in the absence of that kind of opposition. Over time I think we'll see the erosion of support for Saakashvili, and more democracy. But I say Georgia and Ukraine seem to be on the right track, Ukraine a bit ahead of Georgia. Kyrgyzstan remains to be seen. After all, we have had the parliament sitting there is the parliament people protested against. As a result of a compromise among the you know leaders and elite of the Georgia getting rid of - Kyrgyzstan getting rid of Akayev, they kept the second parliament that was elected in very questionable elections, and now they're only going to have their presidential elections in July and only then will we see the institutional developments that we need to keep track of; it's really premature in Georgia -- MARGARET WARNER: All right. Let me get a report card from Toby Gati. How do you think they're doing? TOBY GATI: I think they started. It doesn't make a very good theme for a presidential speech or congressional appearance but in point of fact, what we've seen in country after country is it's not the first election; it's the second election and the third election. How are the institutions doing? How have they resolved the problems in their own internal corruption issues, for example? How have they dealt with their neighbors, and in this case, of course, their neighbor is Russia. MARGARET WARNER: Let's take corruption. Let's just take one, and take Georgia, which has had the most time to work on this. Is Saakashvili making progress on that? Measurable? TOBY GATI: Well, it's very difficult. The old elites have a great interest in keeping what they have already taken or stolen or gotten, and in Georgia, of course, you've got two breakaway provinces now where there is an awful lot of money and weaponry and whatever taking place. And it's not just a problem for Georgia. It's a problem for Ukraine, which had a high growth rate, very true, but a very corrupt political system. And the question is: Will it become less corrupt? And in Ukraine, I think one of the great issues is going to be what do you do? Do you now say, okay, guys, you stole too much, we're taking it back, and if you do that, who's going to invest, if you start going into the past privatization? So each of these countries has huge challenges, and I think they shouldn't get carried away with the idea that just because they were swept to power on the wave of a revolution, that success is guaranteed; it really isn't. Relations with Russia MARGARET WARNER: Mr. Karatnycky, President Bush has for the last few days been warning Russia, saying to Russia, one, don't be threatened by these democracies on your borders, and don't meddle. Fairly briefly, if you could, do they have -- did he need to issue that warning? Does Russia have a stake in the failure of these states? Is Russia trying to use its leverage to make it more difficult for them? ADRIAN KARATNYCKY: Well, I think Russia is in a kind of a midcourse correction. It was working under Putin along a particular vector, integration into the commonwealth of independent states, or a common economic space. Now all these plans have gone awry; they've lost, or the parties and forces they backed have lost election after election, and I think now they're looking for a different approach. In Georgia they announced that they will be withdrawing troops by the year 2008, which is a substantial concession to the Georgia government, also a way of reducing tension. I think they're looking to have normalized economic relations. In the case of Ukraine, I think that after a little bit of a chill between Mr. Yushchenko and Mr. Putin, who backed Mr. Yushchenko's opponent, I think there is something along way of normalization. Russian businesses are very interested in investing in the Ukrainian economy. They want in the wake of Yukos and in the wake of Russian efforts to reexamine Russia's privatizations. They want to come to an environment where there will be the rule of law and respect for property rights. And I think that Toby Gati is absolutely right. Ukraine and Georgia have to come to terms with quickly resolving the issues of the misdeeds of the past, but some of these thefts done in the last couple of years of billions of dollars simply cannot be overlooked. They have to be dealt with very quickly within the rule of law. MARGARET WARNER: Okay. Toby Gati, a follow-up on that in terms of the economic situation in these countries and whether these -- weren't these countries all quite dependent on relations with Russia, and did these new revolutions make that -- weaken those links? Was it a setback for the economies or is it potentially a boost? TOBY GATI: Well, these countries were not only in the past dependent on Russia. They still have great links with Russia. They have energy dependencies, a lot of them get the majority of their energy from Russia or their energy from Russia transits, their country, as in the case of Ukraine. So there are a lot of dependencies; a lot of the Russian businessmen would like to see those dependencies increase on a normal basis. Ukraine has a lot of heavy industry. It's inconceivable to me that the Europeans are going to want to enter into joint enterprises with, for example, the Russian military - excuse me, the Ukrainian military enterprises that are left. But the Russians -- Russia is a large market, and it's a large market for labor. It's a large market for goods. So I think if we get away from some of the politics, and of course what we've seen in the last week is all politics - it's the interpretation of history; it's the interpretation of where Russia is headed now. We get away from that -- I really think that these countries will probably find some kind of modus vivendi. The United States and Europe cannot be a substitute for the Russian market. Helping these countries make the transition MARGARET WARNER: Are the U.S. and Europe doing everything they can though to help them -- help these countries make this transition? TOBY GATI: Well, I think the answer to that is no. We probably could do a lot more. It's true in the supplemental, for example, in Congress, the Ukraine got some more money, Kyrgyzstan got some more money. And Georgia has had money for a while, not only for economics, but we shouldn't forget the Defense Department has been training Georgian troops for some time. But I don't think we will look back-- we shouldn't look back and say in a year we should have done more. This is a very important time. The United States can do more. It's doing a little bit more in these countries. It should do more with Russia if it's concerned about democracy. And I think the Europeans have a great stake in the stability over those countries. MARGARET WARNER: And very briefly, Mr. Karatnycky, we have a few seconds, does the EU appear open to the -- to Georgia and Ukraine, or have they been pretty cool towards the idea of even eventual membership? ADRIAN KARATNYCKY: I think there are different kinds of lobbies within the EU. After all, the EU has now expanded to include the most pro-Ukrainian of countries, Poland, and they're all in the inner councils, and I think that the balance is shifting. There are -- certainly in the German leadership there are mixed opinions. France is a little bit more skeptical, but there is a lot of support for Ukraine, for example, in places like the Netherlands. There's a substantial amount of interest in the public opinion. Polls have been done that show that the majorities of populations and places like Britain and in Germany favor Ukraine's eventual entry into the European Union. And I think it's really in large measure up to the Ukrainians. Can they get their economy going? It's been growing at 12 percent, 8 percent, 7 percent, the last few years. Can they keep that and sustain that level of economic growth, because if they succeed in pushing the economy forward, they will become attractive to Europe itself as both a market and a potential member. MARGARET WARNER: All right. We have to leave it there. Adrian Karatnycky and Toby Gati, thank you. ********* #27 RFE/RL May 11, 2005 U.S./Russia: Zbigniew Brzezinski Assesses U.S.-Russia Relations RFE/RL's Romania-Moldova Service interviewed former U.S. national security adviser under the Carter administration Zbigniew Brzezinski on the eve of President George W. Bush's visit to Moscow to commemorate the 60th anniversary of the end of World War II. The Polish-born Brzezinski talked about Russia's "imperial nostalgia," Vladimir Putin as the "final gasp of the Soviet era," and what he describes as U.S. efforts to "promote geopolitical pluralism" in the former Soviet Union. RFE/RL: What is, in your view, the status of the United States-Russia relationship? Brzezinski: It's a mixed relationship. There are some elements of cooperation, but also there are some significant disagreements. Russia is still motivated by a nostalgia for the past, which is unrealistic and counterproductive. Russia, moreover, is maximizing its difficulties by rather stupidly re-identifying itself with the Molotov-Ribbentrop Pact [of non-aggression] and the Stalin-Hitler arrangements for the division of Europe. RFE/RL: In a speech delivered in Washington in October of 2003, you stated: "I would say that what you should be ought to be seeking unambiguously is the promotion of democracy and decency in Russia, and not tactical help of a very specific and not always all that useful type -- a purchase at the cost of compromising even our own concept of what democracy is." Please clarify and elaborate on this with the benefit of events that have ensued in the intervening year and a half. Brzezinski: I think what's happened was that in the course of the subsequent two years, unfortunately, our public statements regarding Russia have tended to fuzz over some unpleasant realities. And that is now surfacing in a way that's complicating the relationship. I think there was too much euphoria; too much of an inclination to declare that Russia was a democracy; [and] too much pretension -- such as, for example, when the current secretary of state asserted that the American-Russian relationship had never, ever been better. All of that, I think, has created ambiguity when clarity is needed. Whither Russia? RFE/RL: On the other hand, American strategic planners talked recently in Congressional testimony about the specter of instability in Russia, with the festering conflict in Chechnya, and about the worsening of the political, business, and investment climate there. How do you see Russia evolving before the end of Mr. Putin's term of office in 2008 and after? Brzezinski: I think we're seeing with Mr. Putin the final gasp of the Soviet era. The Soviet system is dead, and the Soviet Union has disintegrated. But the Soviet elite still dominates Moscow politically, and through Moscow it dominates Russia. But that elite is increasingly fading from the scene. It is also increasingly self-isolated. So I expect that over the next several years, we'll see far-reaching changes in Russia -- especially when the younger, more genuinely post-Soviet elite begins to push to the top. RFE/RL: You're discounting the possibility, for example, of a cold war over the former Soviet sphere of influence? Brzezinski: There can be no cold war because Russia is in no position to wage either a hot or a cold war. It's a brutal effort to wage war in Chechnya which verges on genocide; it's at the same time a testimony to the incompetence of the Russian military. Russia's in no position to wage a cold war with America, either. Because Russia is essentially right now in a very serious social and demographic crisis. So a real cold war is not possible. Some issues are likely to continue being conflictual. In a broader sense, the American-Russian relationship is probably going to be described in less euphoric terms than has recently been the case, but the basic reality of a mixed relationship -- partially antagonistic, partially cooperative -- I think is going to endure. Former 'Sphere Of Influence' RFE/RL: Unlike in the rest of the world, where as you noted the United States is increasingly isolated and politically unpopular, the former Soviet sphere of influence embraces the United States. Seventy-two percent of Georgians approve of President Bush's visit on [9 April] there.... Under the circumstances that you outline, and given that this policy is bound to exacerbate tensions with Moscow, what do you think is the U.S. plan in that region, and what do you think it should be? Brzezinski: The United States is supporting and de facto promoting geopolitical pluralism in the space of the [former] Soviet Union. That is to say, it is supporting the independence of the post-Soviet states without seeking to turn them into American satellites -- but with the objective of making them viable as independent states. Part of the dilemma that Russia faces is that its nostalgia for an imperial status creates sustained and extensive hostility with all of its neighbors. It is impossible to mention a single neighbor of Russia with whom Russia has genuinely good relations. It is impossible to mention a single neighbor of Russia that likes Russia. And that is a problem which only the Russians can correct; it cannot be corrected for them by the Americans. RFE/RL: Can we still speak of a Russian sphere of influence that the West respects? Brzezinski: That depends on whoever wishes or not wishes to be part of it. If a country doesn't wish to be part of it, it has a right not to be part of it. Obviously, Russia has influence with its neighbors because it is a major entity; and proximity makes influence possible, especially if Russia is stronger and more powerful than its neighbors. But it is not powerful enough to dictate totally to them; and Russia's influence probably would be greater if Putin had had the intelligence to use the Moscow events to promote genuine reconciliation, instead of following what strikes most people as a kind of not very intelligent, nostalgic policy of rehabilitating partially Stalinism and certainly rehabilitating imperial nostalgia. The 'Forgotten' States RFE/RL: And the small states, the forgotten states of the region, so to speak, such as Moldova. How should they play their cards under the current strategic conditions? Brzezinski: I think the recent meeting of the GUUAM -- that is to say, Georgian Ukraine, Moldova, Azerbaijan -- was very clear on that. Moldova is entitled to respect for its territorial and political integrity. And Russia doesn't have a right to maintain a Mafia-controlled enclave within Moldova. RFE/RL: President [Traian] Basescu of Romania speaks of a Washington-London-Bucharest axis and has played a part of solid ally of the United States in the war on terror. He has supported the so-called Black Sea initiative, in which Romania is a bridge between the euro-Atlantic space and the so-called Wild East -- a beacon of democracy shining toward the Caucasus and beyond. What do you think about this initiative, and should the United States be interested in that region? Brzezinski: It's a useful initiative, but one mustn't exaggerate it. And I'm not sure that talk of some sort of an "axis" is a particularly felicitous way of talking about it. RFE/RL: Do you think that a country with a very shaky judicial system, a country that cannot eradicate corruption, can genuinely be a solid ally of the United States? Brzezinski: For the longer run, probably not. ******* #28 US News and World Report May 16, 2005 The Revolution Is On Hold, OK? The U.S. calls Belarus 'an outpost of tyranny,' but many of its citizens are in no rush for democracy By Ilana Ozernoy MINSK, BELARUS--The moment seemed ripe for revolution. Rose-laden protesters in Georgia had ousted leader Eduard Shevardnadze; mass public demonstrations had brought an opposition democrat to power in neighboring Ukraine; even the small republic of Kirgizstan had dumped its autocratic government. So why not my country, wondered Aliaksandr Atroshchankau, as he joined a pro-democracy demonstration in front of this capital's Republican Palace recently. He soon had the answer: The thousand or so protesters who bothered to show up were scattered by police; the organizers were roughed up and tossed behind bars; state-run television stations barely acknowledged the incident. "Everyone is moving forward, and we're going back, back to the U.S.S.R.," said Atroshchankau, 24, whose political activities got him expelled from the university in Minsk. "Revolution can't happen just because you want it to." Maybe not, but calling for a political transformation in Belarus has become a hallmark of President Bush's international campaign for democracy--a theme he is addressing during this week's visits to Russia and Georgia. The Bush administration decries this former Soviet republic, a nation of 10 million, as an "outpost of tyranny" --and denounces its leader, President Alexander Lukashenko, for running the "last remaining dictatorship in Europe." Unlike its erstwhile Soviet brother Ukraine, though, Belarus may not be ready to overthrow its leader, whose archaic regime and centrally planned economy are best described as "Soviet lite." Still, change seems inevitable--the question is, how and how soon? "Lukashenko is a powerful individual as a politician, and the economy has not collapsed," says a senior western diplomat in Minsk. "What will set people off in feeling that a change needs to be made is hard to judge." Eye candy. Look around the streets of this sleepy capital, whose law-abiding residents rarely jaywalk, and one wonders whether the Soviet Union ever really collapsed. In the center of town, a statue of Vladimir Lenin is adorned with fresh red carnations. Down the block, a veteran of the Great Patriotic War, medals dangling from his epaulet, is buying stale bread at a Soviet-style grocery called, simply, Bread Store. But turn the corner, and there are dozens of giant yellow cranes and brightly painted billboards heralding luxurious business centers and shopping malls. There are also a Benetton and a dozen McDonald's restaurants and several sushi bars--capitalist eye candy against a backdrop of grim Stalinist architecture. Russian hinterland or European backwater? Belarus can't make up its mind. Beneath the veneer of a crime-free society and nascent market forces is a corrupt system of tight control and limited personal freedoms. It may not be tyranny--opposition figures still distribute anti-Lukashenko literature, and a handful of independent papers criticize the president--but it does smell of dictatorship. In fact, Belarus is the only post-Soviet state where the secret police continue to be called the KGB. "The Belarussian opposition operates under the harshest circumstances, and the regime is only becoming more and more oppressive," says Anatoly Lebedko, an opposition figure with the centrist United Civic Party. On the wall behind him hang framed photographs of six political dissidents who disappeared or were arrested in the months leading up to Lukashenko's re-election, four years ago. "If we can break the information blockade," Lebedko says, "then we can win." It may take more than that to claim victory at the polls next year, when Lukashenko will run for a third term. The opposition remains weak and divided. At a recent gathering in neighboring Lithuania, a frustrated American expert working with the opposition candidates played the Elvis Presley hit with the lyrics "A little less conversation, a little more action please" and told the candidates, "It's going to be the theme song for all of you." It will also be an uphill battle. The presidential elections next year are expected to be rigged to give Lukashenko a massive majority. "It's not Election Day; it's the day after that's important," says a senior European diplomat. "It's a tossup between Lukashenko staying in forever and a violent overthrow where unpredictably people say they've had enough. [But] there has to be something that is the last straw." For now, many Belarussians seem to prefer the status quo to the possible alternative, the kind of economic turmoil they have seen befall other former Soviet states. Products here are cheap, the official unemployment rate is low, and the government pays pensions regularly and relatively amply. "Lukashenko has given us a good life," says pensioner Maria Balzevich, 61, who lives in a dilapidated village an hour from the capital. When asked if she misses the Soviet Union, Balzevich looks around her two-room dacha, smiles, and replies, "What do you mean? I still live in the Soviet Union." "Total control." While Belarus lacks the level of paranoia characteristic of Soviet rule, there is a culture of fear, enforced by a bureaucracy with far-reaching tentacles. "There will always be a rule you will break, there will always be a way to punish you, and this way you'll always have something to lose: your money, your job, your life," says attorney Vitali Braginets. At least 80 percent of the Belarussian economy is centrally planned, and what little private business is permitted is heavily regulated and taxed. The laws and regulations change practically daily. "We have a joke in Belarus," Braginets says, "that psycho asylums have a separate room just for accountants and lawyers." Last year, Lukashenko pushed a law through the puppet parliament requiring that all government jobs be reviewed and renewed annually. "As soon as a person complains about what's going on, he loses his contract, and this is done publicly in order to instill fear in others," says a leading pro-western opposition figure, Sergey Kalyakin of the Party of Communists of Belarus. "And this system will be sustainable as long as fear trumps people's desire to change the situation." Analysts say that what keeps the centrally planned economy from collapsing is the permitted coexistence of a symbiotic, shadow economy. Big business rarely declares more than 30 percent of income, but in return it subsidizes the dying collective farm industry. Foreign companies can invest in Belarus, but they must donate money to a "voluntary" civic projects fund, which finances hundreds of construction ventures. "Lukashenko uses corruption as another measure for exerting power on the people," says the senior European diplomat. What will bring change to Belarus is evolution of civil society and grass-roots democracy, say western diplomats. While Washington uses highly charged language to describe the current political scene--words like tyranny, dictatorship, and outrage--the amount of overt U.S. government spending for democracy-building projects in Belarus is relatively modest, roughly $7 million a year. This money goes to groups like the International Republican Institute and the National Democratic Institute for International Affairs, which have been banned from Belarus by Lukashenko and so conduct operations from neighboring countries. Rather than give money directly to the opposition, which has been accused of squandering U.S. aid, these groups use the funding for a range of activities from teaching aspiring politicians how to run effective campaigns to paying for their gas when they drive out to the villages to spread their message. For Belarus's western neighbors, the change can't come fast enough. The Baltic nations--Lithuania, Latvia, and Estonia, which joined the European Union last May--boast some of the fastest-growing economies in the world and need Belarus for both its disposable income and its cheap labor force. "It is in our national interest to have a neighbor which is democratic," says the Lithuanian ambassador to Washington, Vygaudas Usackas. "It is an immediate market of 10 million consumers." To the east of Belarus lies Russia, where President Vladimir Putin viewed the democratic uprisings in Georgia and Ukraine as Kremlin foreign-policy failures. So far, he has stood by Lukashenko--with Belarus providing a buffer between Russia and the NATO alliance. Belarus lacks the geopolitical weight to stand on its own and will have to latch on to the West or to the East. A recent poll conducted by the Independent Institute of Socio-Economic and Political Studies, a group that runs its western-funded operation from a private apartment, found that more people wanted to integrate into Russia than the European Union, but almost a quarter of those polled said they would like to go for both. In one direction, there is the glittery promise of Europe; in the other, there are the bonds of culture and history--and the tug of economic dependence on Russia as a supplier of cheap gas and a major export market for Belarussian goods. Revolution isn't in the wind, but the "last dictator in Europe" must wonder if his days are numbered. ********