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The NIS Observed: An Analytical Review
Volume VII Number 12 (24 July 2002)

Russian Federation

Executive Branch by Michael Comstock
Security Services by Michael Donahue
Domestic Issues & Legislative Branch by Luba Schwartzman
Foreign Relations by Ansel Thoreau Stein
Armed Forces by Steve Kwast and Dan Rozelle

Newly Independent States

Western Region by Nadja Kinsky
Caucasus by Tammy Lynch

Central Asia by David Montgomery

Baltic States by Michael Varuolo

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Volume I
No. 4 (18 December 1996)
No. 3 (4 December 1996)
No. 2 (20 November 1996)
No. 1 (6 November 1996)

Too many crooks in the kitchen
As they develop administrative reforms to halt the flow of rubles, the president and some members of his coterie have begun to examine the issue of where the money is going; while, not surprisingly, some fingers point to the "usual suspects," other fingers are pointing to a lack of fiscal control coordination, and to purported character problems.

At issue is the financial health of Russia itself. The government is considering establishing an amnesty to reverse illegal money flows out of the country, although no decision reportedly has been made as yet. "If an amnesty is declared, about $4 billion a year can be repatriated if the experience of our closest neighbors is anything to go on," said one unnamed source in the Cabinet. (INTERFAX, 16 Jul 02; FBIS-SOV-2002-0716, via World News Connection) While, the source added, federal tax reform has begun to slow the outflow of rubles, $300-400 million more were taken out of Russia in the first six months of 2002 than was brought into the country.

Lower taxes will address only one of the obstacles to increased investment, however, and business interests are looking to the government for more action. Arkady Volsky, president of Russia's Union of Industrialists and Entrepreneurs, indicated recently that widespread use of corporate blackmail - helped in large part allegedly by corrupt judges and incomplete judicial reform - has slowed the return of capital to the country. "The way crooks act is very simple - they find a shareholder possessing one or two shares of an enterprise, file [a suit] on his behalf... in a court, which hands down a pre-arranged favorable verdict, allowing plaintiffs to paralyze the big industrial enterprise with suspicious rapidity," Volsky explained. (INTERFAX, 1404 GMT, 26 Jun 02; FBIS-SOV-2002-0626, via World News Connection)

Despite these allegations, Dmitry Kozak, deputy head of the Presidential Administration, reported that reform of the justice system is "on track." Legislation for the reforms envisaged, he said, will be completed by the end of 2002, at which time practical implementation can begin. Included in the reforms are pay raises for judges and court officials, along with increased responsibility, which might address the root of Volsky's concerns. (ITAR-TASS, 1531 GMT, 27 Jun 02; FBIS-SOV-2002-0627, via World News Connection)

Even money staying in the country, though, isn't making its way into the state's coffers. Minister of Economic Development and Trade German Gref reported that up to two percent of Russia's GDP is lost each year due to bad management by the government, specifically the state control system, as well as judicial, law enforcement and other agencies. (ITAR-TASS, 1527 GMT, 2 Jul 02; FBIS-SOV-2002-0702, via World News Connection)

Moreover, the Russian Audit Chamber reported than over $1 billion were lost as well through ineffective management of state property abroad. (ITAR-TASS, 1231 GMT, 5 Jul 02; FBIS-SOV-2002-0705, via World News Connection) In a noteworthy show of optimism, Property Relations Minister Farit Gazizullin, following a meeting with President Vladimir Putin, reported on steps he is taking to improve the efficiency of his office and promised to increase the government's income by R100 billion in 2003 through privatization and better management. According to an 11 July article in Izvestiya, the attitude prevailing in the minister's domain would make a realtor swoon. "'We are accused of selling the motherland. But the state is an inefficient property owner' they say in Gazizullin's department. 'Moreover, by selling off property into private hands, we are increasing the budget's income from tax.'" (FBIS-SOV-2002-0712, via World News Connection)

In addition to missed opportunities, Russia also must focus on funds actually lost. Deputy Premier and Finance Minister Aleksey Kudrin reported that the country's financial reserve may be depleted by the end of 2003, depending on the collection of revenues. (INTERFAX, 1007 GMT, 27 Jun 02; FBIS-SOV-2002-0627, via World News Connection) Expectations for revenues remain significantly higher, however, than actual collections, for a variety of reasons it seems.

The government appeared eager to obtain as much input as possible to solutions of the problem. One source was an economic forum held in St. Petersburg, at which business owners met with ministry officials, members of parliament, as well as representatives of the CIS Inter-parliamentary Assembly, the European Bank for Reconstruction and Development, and foreign governments. (ITAR-TASS, 1022 GMT, 20 Jun 02; FBIS-SOV-2002-0626, via World News Connection)

For forum participants, an absence of collaboration between state inspectors is the main reason behind actual government revenues lagging behind expectations. Official figures bear out their impressions. Last year, the Comptroller's Office exposed violations which had led to a state loss of R96 billion (roughly US$3 billion). According to Viktor Zubkov, first deputy minister for taxes and levies, however, the answer is even simpler: "Russians steal a lot." (IZVESTIYA, 22 Jun 02; FBIS-SOV-2002-0627, via World News Connection) Sergei Stepashin, chairman of the Audit Chamber, reported that his agency uncovered the unauthorized spending of about R14 billion (nearly US$444 million) in 2001, of which R2.8 billion were returned to the government's coffers. (ITAR-TASS, 1203 GMT, 26 Jun 02; FBIS-SOV-2002-0626, via World News Connection) In apparent agreement with the findings of the St. Petersburg Forum, Stepashin said the Audit Chamber was working on strengthening cooperation with law enforcement agencies.

While government interest appears high, it is unlikely that answers will be discovered by the head of the Audit Chamber. Stepashin subsequently reported that all elements of a state fiscal control system already were in place, although he added that "unified legal and methodological principles of state financial control still do not exist, the division of powers between external financial control agencies and intradepartmental audit bodies is incomplete and an effective mechanism of their cooperation is still nonexistent." (ITAR-TASS, 1203 GMT, 2 Jul 02; FBIS-SOV-2002-0702, via World News Connection) Having issued those caveats, unfortunately, Stepashin did not elaborate on which elements actually were in place, or which reforms were close to actualization.

by Kate Martin (

Settling old scores
Not unlike Michael Corleone at the end of Francis Ford Coppola's epic film, "The Godfather," Russia's Federal Security Service (FSB) seems to be involved in a process of settling old scores with its domestic enemies. Unfortunately for those enemies (including "spies," "saboteurs" and, more importantly, other security services), the politically well-connected FSB seems poised to achieve the same degree of success as Coppola's "Don."

The trend of FSB favoritism continued this month as the Ministry of Internal Affairs (MVD) received a new deputy minister and head of the Criminal Police Service: Rashid Nurgaliev, a career "chekist," who until recently served as the deputy director of the FSB. He replaces another former FSB officer, Nikolay Bobrovsky, and constitutes merely the most recent attempt by the Putin government to subordinate all the security services (along with media outlets) to the preeminent FSB. MVD Director Boris Gryzlov cannot help but feel that his grip on power is fleeting, given two successive FSB deputies and a string of MVD failures from the skinhead riots to the soccer bloodbath on Tverskaya to the general increase in nationalistic violence. (IZVESTIYA, 4 Jul 02; FBIS-SOV-2002-0704, via World News Connection) Even the casual observer must know that Gryzlov's tenure is coming to an end and that in all likelihood a career FSB man will be given the reins -- Nurgaliev and Bobrovsky being the two most probable choices.

The successful arrest and extradition of Adam Dekkushev, and his subsequent 14 July statements to investigators, have done much to allow the FSB to begin closing the book on one of the ugliest chapters of mutual accusations in recent memory. Dekkushev, arrested in Georgia in a joint Russo-Georgian security service operation, is touted by the FSB as the possible missing link between the 1999 terrorist bombings in Moscow and Volgodonsk and the revelations of former FSB agent Alexander Litvinenko, convicted in absentia of abuse of office and currently living in exile in Great Britain. Litvinenko and writer Yuri Felshtinsky, in their book "The FSB Blows up Russia," had accused the FSB itself of carrying out the attacks.

When questioned, Dekkushev implicated three others in the Moscow and Volgodonsk bombings - Gochiyaev, Khattab and Abu-Umar, the FSB claimed. (INTERFAX, 1740 GMT, 18 Jul 02; FBIS-SOV-2002-0718, via World News Connection) Following Dekkushev's arrest, Litvinenko told journalists that he had met with Gochiyaev through his association with Boris Berezovsky (an association that included, one must note, the tycoon's 1999 film about the bombings which, it implied, the government's security services might have masterminded). Dekkushev's arrest gives the FSB renewed hope that the public may cease suspecting the service of having committed the attacks and creates a putative, albeit specious, link between Berezovsky and the attacks themselves. (INTERFAX, 0941 GMT, 17 Jul 02; FBIS-SOV-2002-0717, via World News Connection) Ironically, the FSB seems to be creating a "legal" basis for charging Berezovsky of guilt for the crime, through "evidence" linking Litvinenko to terror, when it was Litvinenko who fled to Britain after allegedly refusing to carry out an FSB order to assassinate Berezovsky. (AGENCE-FRANCE PRESSE, 29 May 02; via ISI Emerging Markets Database )

With regard to counterespionage matters, the FSB recently announced that it had thwarted two major attempts to sell state secrets and weaponry. In one case, on 11 July the FSB announced that Lt-Col Oleg Lutsenko, chief of staff of the Tula helicopter regiment, had been arrested in the act of selling aviation weaponry, although the purchaser was not identified. (INTERFAX, 1533 GMT, 11 Jul 02; FBIS-SOV-2002-0711, via World News Connection) In the other, probably more significant case, the FSB arrested Vladimir Shchurov, the head of a hydroacoustics research facility, and his colleague Yury Khvorostov for allegedly passing state secrets to China -- specifically, dual-use technologies that would enable China to detect submarines underwater. (INTERFAX, 0901 GMT, 5 Jul 02; FBIS-SOV-2002-0705, and IZVESTIYA, 4 Jul 02; FBIS-SOV-2002-0705, via World News Connection)

The scientists, for their part, were stunned by their arrest, insisting that their actions in fact had FSB authorization. The FSB has dismissed this claim and instead has sought to paint Shchurov as a Hitler-worshipping neo-fascist. Ever the Russian patriot, Shchurov denied the accusations of genocidal-Germanic idolatry, insisting that it was Stalin's portrait that proudly hung in his office. It speaks volumes both for the state of Russian nationalism and what it takes to win the public relations game that Shchurov would seek to clarify that he admires only Russian-speaking genocidal tyrants.

What seems odd is that the FSB would arrest Shchurov for allegedly passing to China what is essentially "sonar-buoy" technology (that has existed for decades) at the very time when Russia is eagerly selling sophisticated submarines to Beijing. One must ask whether this constituted a clumsy Russian attempt to demonstrate to President Bush, via the FSB, that Moscow may help to contain China. If so, and if a conflict were to develop around Taiwan, then the United States would have to worry "only" about the dozen Russian subs now flying Chinese flags and not about commonplace technology that Russia suddenly considers a "state secret."

by Michael Donahue (

Official bedfellows
In preparation for the 19-20 July meeting of French President Jacques Chirac and Russian President Vladimir Putin in Sochi, it was agreed to create a Russian-French council for security cooperation. Signed on 9 July during French Foreign Minister Dominique Galouzeau de Villepin's visit to Moscow, the accord calls for biannual meetings of the Russian and French foreign and defense ministers to discuss "existing threats in the world, and determine common approaches and solutions in case of possible joint actions." (ITAR-TASS, 7 Jul 02; via lexis-nexis) During his visit, De Villepin met extensively with Russian Foreign Minister Igor Ivanov as well as with President Putin, Defense Minister Sergei Ivanov and Secretary of the Security Council Vladimir Rushailo.

According to French Foreign Ministry spokesman Jacques-Francois Bureau, "The creation of this Council expresses the will of [Russia and France] to work together on a bilateral basis on security issues and enables them to hold an open discussion on military reforms, including on a European scale." (ITAR-TASS, 11 Jul 02; FBIS-SOV-2002-0711, via World News Connection) This echoes President Chirac's expressed intention to add a global dimension to France's relations with Russia. Yet if the goal of the new council is to address Europe-wide issues, why does it have only two members?

FM Ivanov tried to explain the logic behind the "new" relationship. The council, he said, "is yet another proof of the special character of the relations that exist between Russia and France. It is in the spirit of such partnership relations that we have exchanged opinions on topical international problems, the situation in the Middle East, around Iraq, on matters of nonproliferation of weapons of mass destruction, Afghanistan and on all these international problems. We have extensive coincidence or proximity of positions. And we intend to coordinate our efforts in the search for solutions to the problems at hand." (FEDERAL NEWS SERVICE, 8 Jul 02; via lexis-nexis)

Iraq and the Middle East are topics on which France and Russia readily agree; both are notoriously uneager to have Saddam Hussein harmed, both support a number of "rogue states," and both also see a ready arms market in the region.

France's oil connection to Iraq, for example, comes via Total Fina Elf (one needs only to recall the Sirven affair to be reminded of the connection between Elf and the French government) which has ongoing contracts in Iraq despite the limits on oil exports imposed by UN sanctions. Just three weeks ago, Russia's connection to Iraqi oil was illustrated by statements made by the Iraqi ambassador to Russia, Abbas Halyaf. The "Iraqi government issued a number of licenses for the development of the country's oil fields to Russian oil companies," he noted. In March 2002, the Iraqi Oil Ministry proposed that Russia's foreign relations company Zarubezhneft take part in the development of a major oil field in the country's south, namely Narh Umar, which has an estimated 450 million metric tons of reserves. (INTERFAX, 4 Jul 02; FBIS-SOV-2002-0704, via World News Connection)

Of course, none of this is new - only the official framework is: France and Russia agree on the need to prevent a "uni-polar world," shorthand for putting a brake on US initiatives. This is the main reason for their coordination.

by Ansel Stein (

First one's a freebie
Putin's regime has been characterized by moves to bring control of the Russian Federation to the center. Since, under Yel'tsin, much of the power had gone to regional governors, they are the persons with whom Putin had needed to bargain. The president has found that, in addition to selectively reducing their power, they can be brought to heel by showing them constantly that rewards and punishments come from Moscow.

The latest development in center-regions relations is a Supreme Court ruling. While supporting the October 1999 Law "On the general principles of organizing legislative (representative) and executive bodies of state power of Russian Federation components," which limits governors to being elected for a maximum of two terms, it begins the term count in 1999, thereby permitting governors who were elected prior to that year to remain in power longer. (ROSSIYSKAYA GAZETA, 10 Jul 02; FBIS-SOV-2002-0710, via World News Connection) The final terms will run out in 2008, when, coincidentally, Putin's incumbency also ends -- unless the regulations concerning presidential elections also are changed, a concept intermittently brought up by Russian politicians, and most recently by Federation Council Speaker Sergei Mironov, who would like each presidential term to last five years. (INTERFAX, 0858 GMT, 13 Jul 02; FBIS-SOV-2002-0713, via World News Connection)

Putin has rather grand plans for the Russian Federation, and he needs the loyalty of, as well as control over, the governors. The governors who have the longest tenures, and thus the control -- Governor of the Sverdlovsk Oblast' Eduard Rossel, Governor of the Republic of Tatarstan Mintimer Shaimiev, President of the Republic of Kalmykia Kirsan Ilyumzhinov and Moscow Mayor Yuri Luzhkov -- are very useful to President Putin. By allowing them to retain some political (and thus also economic) control over their regions, the Russian president enmeshes them in the Kremlin's interests. (IZVESTIYA, 10 Jul 02; FBIS-SOV-2002-0710, via World News Connection)

Opponents of the change argue that this policy furthers corruption and sets the precedent for increasing presidential terms. (ROSSIYSKAYA GAZETA, 10 Jul 02; FBIS-SOV-2002-0710, via World News Connection) A number of parliamentarians point out that "the system of power must function throughout the country according to common rules and the democratic principles [that] presuppose the permanent rotation of the top leaders." Supporters, and those who stand to profit from the plan, such as Yuri Luzhkov, declare that the ruling of the Constitutional Court is "logical and rational." (INTERFAX, 1021 GMT, 9 Jul 02; FBIS-SOV-2002-0709, via World News Connection)

Putin himself let it be understood where he stood on 24 June, when he declared that the voter should decide how many terms a governor should have. (IZVESTIYA, 10 Jul 02; FBIS-SOV-2002-0710, via World News Connection)

See no evil
Putin does not, however, have an equally laissez-faire approach to the media. The latest edition of the law on the media, a modification of the original 1991 law, increases its scope: It includes additional clauses, providing for the registration of Internet sites as media; prohibiting state employees, regional governors and mayors from founding media; and regulating the relationship between the media and other economic entities. (IZVESTIYA, 5 Jul 02; FBIS-SOV-2002-0705, via World News Connection)

Speak no evil
Another important aspect of the law is the way in which it limits media coverage of elections -- forbidding all opinion and judgment, any "demonstration of preference for one of the candidates" and any information "Concerning the candidate's activity that is not connected with ... anything outside of a candidate's political beliefs, professional activity or discharge from his duties." Anything from personal life, to hobbies, could, if necessary, be interpreted as falling outside the relevant area. (KOMMERSANT, 7 Jul 02; BBC Monitoring, via ISI Emerging Markets Database)

Attention to the law also has been amplified by a recent controversy involving two journalists from regional newspapers -- one from the Nenetsky region and another from the Republic of Tuva -- who were chastised by local authorities for confronting President Putin with what were considered critical opinions at his last major press conference. Even Deputy Media Minister Mikhail Seslavsky expressed displeasure about the fact that the journalist from the Nenetsky region lost his job for asking about "tense relations" between Nenetsky Autonomous Okrug Governor Aleksandr Butov and the local prosecutor's office. (RADIO RUSSIA, 0900 GMT, 5 Jul 02; BBC Monitoring, via ISI Emerging Markets Database)

Hear no evil
The Kremlin would like to see the media cleansed of controversial elements, and that is exactly what is happening at NTV. Gazprom-Media has acquired all of Vladimir Gusinsky's shares in the 23 associated media holdings -- totaling about 13 percent of the shares. The price of the package was not revealed, but a figure of $50 million - Gusinsky's original asking price and a fraction of the estimated value of the stock ($300-$500 million) -- has been floated. (IZVESTIYA, 10 Jul 02; BBC Monitoring, via ISI Emerging Markets Database)

by Luba Schwartzman

No, you may not win . . .
This past week, Ukrainian President Leonid Kuchma and his supporters sent a clear message to those who had heralded gains by opposition members in the March parliamentary elections: Ukraine is still Kuchma country. The president still controls the media, the police, major industries and local governments. He controls the budget, and yes, he controls the parliament. When Kuchma says jump, you jump. When he says you will not win an election, you most certainly will not win.

On 14 July, Ukrainians went to the polls for parliamentary by-elections in three constituencies -- number 35 (Dnipropetrovsk region), number 18 (Vinnytsia) and number 201 (Cherkasy). From the start of this latest campaign, observers decried the use of "administrative resources" by authorities, pressure on opposition members by police, and lack of any media access for those not supporting Kuchma. Opposition candidates in all three regions reportedly were followed and, in some cases, tacitly threatened. But while irregularities existed in all three constituencies, the situation was clearly worst in constituency number 35, where one of Kuchma's loudest critics was on the ballot.

Oleksandr Zhyr, former chairman of the parliamentary commission investigating the death of journalist Georgiy Gongadze (an investigation that may implicate Kuchma), was originally said to have lost the 31 March election by approximately 700 votes to Kuchma-supported candidate Viktor Drachevskyi. Zhyr filed numerous protests, however, until the Supreme Court -- faced with mountains of evidence -- finally ruled in his favor. Following that ruling, the register of voters in the district "disappeared," local security services began "suggesting" that individuals support Drachevskyi, and the newspaper backing Zhyr saw its electricity shut off, its delivery trucks harassed and the director of its printing press detained by police. Zhyr persevered, however, and no doubt to Kuchma's dismay, pollsters suggested that the opposition candidate had a good opportunity to win the by-election ... until two days before the election, that is.

On 12 July, the local city court suddenly disqualified Zhyr from the race, citing so-called financial irregularities. His name was crossed off the ballots, and Drachevskyi was elected. (INTERFAX, 1307 GMT, 18 Jul 02; BBC Monitoring, via lexis-nexis)

In constituency number 18, Our Ukraine candidate Mykola Odaynyk was at least given the chance to win before he was removed from the race. Only after he clearly defeated Kuchma supporter Valeriy Kolomytsev-Rybalko was Odaynyk disqualified. In fact, it took a full week for the Vinnytsia regional court to invalidate Odaynyk's win. Court spokesman Hennadiy Zalymskyy explained, "Kolomoytsev-Rybalko's constitutional rights were violated." Of course, he didn't explain how.

Meanwhile, in constituency number 102, another Our Ukraine member, Mykola Bulatetsky, faced another Kuchma ally, Nestor Shufrych (Social Democratic Party-united). Prior to the vote, surveys suggested an easy win for Bulatetsky. But, that was before the polling. During the vote, things have a way of changing in Ukraine. In a post-election report, the Ukrainian Center for Independent Political Research explained, "Though never present in any preliminary rankings or seen as a serious candidate, [Shufrych] received 29.8% of the votes. [But] the SDPU got only 4.5% of the votes in the region on 31 March." The center went on to ask how "a stranger from Transcarpathia" could suddenly win such support in Cherkasy. (UCIPR RESEARCH UPDATE, 22 Jul 02; via Obviously, the answer lies in Leonid Kuchma. In Ukrainian elections, it seems, Mr. Kuchma is all the support that is needed.

Symptoms of an illness
If anyone required evidence that the country is once again mired in budgetary chaos and financial irregularities, one need look no further than the center of Kyiv, where over 1,000 miners are protesting their lack of pay for the past 10 months. Since 11 July, the miners periodically have blocked traffic in an effort to force the government to begin paying the reported 1 billion hryvnya they are owed.

Although Prime Minister Anatoliy Kinakh admits that the miners are owed for months of back pay, he has told them that they will be paid gradually; the government, he said, will transfer 50 million hryvnyas per month to the mining union to pay the wages. The union points out, however, that this was the same promise made months ago and never implemented. Union spokesman Anatoliy Akimochkin said, "To be honest, I have not heard any new ideas on how to pay the back wages. It does not seem to me that anything has changed." (ONE PLUS ONE, 1630 GMT, 18 Jul 02; BBC Monitoring, via lexis-nexis)

That is untrue, though. Something has changed. Until 10 months ago, Ukrainian miners had been receiving their pay; wages were current. Until 10 months ago, miners continued to reap the benefits of the minor, but significant, reforms that had been introduced by the government of Viktor Yushchenko and Yulia Tymoshenko.

Tymoshenko, who was in charge of energy-sector reform, created a comprehensive plan for reforming the coal industry. The plan included closing a number of mines (several were actually closed) while privatizing others and implementing a more transparent system for payment to suppliers and workers. By just beginning these reforms, as well as others in the electricity and gas sectors, Yushchenko and Tymoshenko were able to clear all back wages to miners and other public workers.

Now, under the Kinakh government, reforms in most sectors have stalled. Curiously, while the country's revenues have continued to increase and expenditures have continued to decrease, wage arrears have skyrocketed. Several Ukrainian monetary watchdog groups have begun to ask, "Where is the money going?"

The miners know only that it is not going to them. They also know that their jobs -- in some of the most decrepit mines in Europe -- are getting more dangerous every day. In 1998, for example, Mining Magazine found that over 80% of Ukraine's mines are more than 20 years old and have not been modernized. Therefore, "nearly one-third of the hoists, 42% of the compressors and 48% of the primary ventilation fans are in need of immediate replacement." (MINING MAGAZINE, Jun 98)

Since early July, 41 miners have died in two separate explosions -- explosions that are likely to have resulted from faulty equipment. (DEUTSCHE-PRESSE AGENTUR, 1454 CET, 21 Jul 02; via lexis-nexis) This brings the number of mining casualties in Ukraine this year to almost 200.

If accidents continue at the current rate, by year's end the country could surpass its annual average rate of 365 mining deaths -- already the highest in Europe. This would clearly be a momentous achievement for the Kuchma-Kinakh government. It seems unlikely celebration of this feat will be held in the center of Kyiv, however. Those streets are already taken.

by Miriam Lanskoy

Sultygov appointment: What does it portend?
On 12 July Abdul-Khakim Sultygov was appointed to the position of presidential representative for human rights in Chechnya, replacing Vladimir Kalamanov who left the post in April to become Russia's representative in UNESCO. Sultygov, a 40-year-old economist, has been in public life at least since 1990, when he started working as an analyst with the Supreme Soviet. More recently he headed the Avturkhanov Institute of Political Technologies (1998-2000) and then became chief of staff of the Duma committee for Chechnya, and Dmitri Rogozin's aide in the PACE-Duma working group. (RIA NOVOSTI, 12 Jul 02)

Sultygov is a rising star -- a young economist who has managed to ingratiate himself with insiders such as Rogozin, the influential and highly visible chairman of the Duma International Affairs Committee. Since the start of the war, Sultygov has been in the public eye as a frequent contributor and commentator for Nezavisimaya gazeta, Radio Liberty, Ekho Moskvy, Obshchaya gazeta and others. He is also well received by Moscow's large Chechen diaspora, estimated at 500,000 persons. Sultygov has recommended himself to Putin by working in the Duma under Rogozin, who recently was appointed presidential representative for Kaliningrad. The two men are seen as allies rising together to posts where they will have direct access to the presidential "body."

An early indication of Sultygov's views and plans appeared in an interview with Ekho Moskvy on 12 July. Sultygov said that the initiative resides with his office for coordinating the activities of the military and civilian administration of Chechnya to end the human rights abuses associated with cleansings. The military, he said, should have a clear sense of responsibility for its behavior. He also said that he intends to travel to Chechnya and base his office there. With regard to how Chechnya should be governed, he indicated only that it should have a bicameral legislature but did not comment further on how or when it would be formed. He also said that he intends to conduct the Russian October 2002 census in Chechnya in a manner that will identify every single Chechen and give each an opportunity to participate in public life.

However, perhaps the most significant portion of his comments pertained to his assessment of Chechen President Aslan Maskhadov, whom Sultygov characterized as illegitimate "from the start of his presidency," because "the elections were not conducted according to Russian law." This approach has never been articulated in the past and constitutes the first logical argument for Russia's rejection of Maskhadov, which occurred in 1999. Of course the question of whether Maskhadov's election was legal is irrelevant since Russia did recognize him as Chechnya's president. Still, Sultygov may have provided a legalistic line of reasoning to explain Moscow's political rejection of Maskhadov. Moreover, Sultygov said he believes that Maskhadov should stand trial in Chechnya "for political if not criminal responsibility" for "bringing on the catastrophe." Without indicating exactly what charges he would bring against Maskhadov, Sultygov said only that the Chechen people should have the opportunity to hold the president accountable and to probe the details of his government.

On 19 July, Sultygov held his first news conference where he was presented by the chairman of the Chechen government, Stanislav Ilyasov, and Duma Deputy Aslambek Aslakhanov. (OFFICIAL KREMLIN INTERNATIONAL NEWS BROADCAST, 19 Jul 02; via lexis-nexis) The two are regarded as the most effective, decent and legitimate of the Chechen politicians in the Russian camp. It is significant that the odious figure of Akhmad Kadyrov -- the head of the Chechen administration and Ilyasov's superior -- was not present. Sultygov reiterated the position that cleansings must become transparent, so that it is known who has been arrested, on what charges, and where the person is held. He said he had "already begun consultations," pertaining to a document that would establish a mechanism for military and administrative accountability, a step that was said not to be opposed by FSB Director Nikolay Patrushev and Chief of the General Staff Anatoly Kvashnin.

Putin's choice to appoint a Chechen intellectual as his representative comes at a time of ferment when different schemes for achieving peace are being aired. Putin may have pointed to a new line by saying at his June press conference that "cleansings" cannot be approved, and "must simply be discontinued," which will become possible when the "legal, the juridical and power components of the Chechen administration are strengthened," particularly by the establishment of an effective Chechen OMON. (OFFICIAL KREMLIN INTERNATIONAL NEWS BROADCAST, 24 Jun 02; via lexis-nexis) Most analysts treated those comments with skepticism, interpreting them merely as an attempt to quiet Western criticism on the eve of the G-8 summit. However, looking forward to the 2003 elections, Putin may have started to articulate a credible policy for normalizing conditions in Chechnya. By watching Sultygov's progress over the next several months, it will be possible to judge whether there is any genuine intention to end the worst abuses of the war.

If Sultygov has been empowered to bring coherence and accountability to the conduct of operations in Chechnya, this would indicate a substantial improvement in conditions for the population. However, it is unlikely that the amorphous and purely administrative measures Sultygov has outlined can adequately address the political conflict between Russia and Chechnya and among Chechen factions.

Another confrontation looms
Azerbaijan is bracing for yet another confrontation between President Geydar Aliev and the opposition political parties. At issue is the referendum scheduled for 24 August on 39 amendments to the constitution which would affect 20 articles. (ITAR-TASS, 19 Jul 02; via lexis-nexis) A joint statement by 23 Azerbaijani political parties threatens a boycott unless the referendum is postponed by a month and some amendments are modified or omitted.

One of the key changes proposed pertains to the succession process. At present, if the president becomes incapacitated, elections are scheduled in three months while the chairman of the parliament serves as interim president. Under the proposed changes, the prime minister would become interim president. The alteration would give Aliev greater flexibility in appointing his successor and bears resemblance to the process by which Russian President Boris Yel'tsin passed his powers to his prime minister, Vladimir Putin. Another proposed amendment would distribute all the seats in the parliament according to single-member constituencies and do away with party lists from which 25 out of 125 seats currently are distributed by proportional representation. This change would further weaken political parties. (RIA NOVOSTI, 17 Jul 02; via

The US Department of State advised Aliev on 18 July to postpone the referendum so that the issues could be fully explained and discussed; however, Aliev reiterated on 19 July that the referendum would be held in August as scheduled. (ZERKALO, 20 Jul 02; BBC Summary of World Broadcasts, via lexis-nexis) Zerkalo comments that Aliev, who makes no secret of his plans to transfer power over to his son Ilham, is growing closer to Russia. While the West condemns the Azeri president's authoritarian style and heavy-handed treatment of the opposition, Russia is willing to tolerate many more violations and could in principle guarantee a transition to Ilham Aliev.

It does not look as though the US has crafted a policy other than slapping the Azeri president's wrist. Mild rebukes, though, only drive him closer to Russia without bolstering his opponents or changing the fundamental balance of power in their favor. If the opposition boycotts the referendum -- a stance that has become traditional -- the authorities still will regard the referendum as binding. However, in recent months protests in different regions of Azerbaijan have gained momentum and sometimes turned violent. The protests frequently express outrage with government inaction on issues in the social sphere such as nonpayment of wages and pensions, poverty, crime and corruption. Hence, if the authorities persist with plans to carry out the referendum, come August they may be faced with a much more generalized and robust form of popular resistance than merely a boycott. If Russian politicians are certain to exploit such internal crisis to gain maximum leverage over the Azerbaijani succession process, it is not at all clear that the US is poised to do so.

by Tammy Lynch

Support of pipeline projects undermines government opposition
Because of their vast gas and oil reserves, Turkmenistan, Kazakhstan and Uzbekistan continue to be courted by countries wishing to capitalize on the extraction of these resources. The continued discussions of pipelines go in all directions -- south to Pakistan (Trans-Afghanistan pipeline); north to Russia (Central Asia-Center pipeline); east to China (West-East pipeline); west to Turkey (Baku-Ceyhan pipeline) -- fostering business interests and supporting existing political structures in the region.

The most significant recent development concerns the Trans-Afghanistan pipeline, a project first proposed in 1993. On 9 July 2002, representatives from Turkmenistan, Afghanistan and Pakistan met in Ashgabat to discuss a 30 May agreement of understanding to construct a gas pipeline from Dauletabad in western Turkmenistan to the Arabian Sea port of Gwadar, Pakistan. The proposed 1500-kilometer pipeline would go through Kandahar, Afghanistan, possibly extend beyond the currently negotiated terminus of Gwadar to India, and have a potential annual capacity of 100 billion cubic meters (bcm) of gas. (TRANSITIONS ONLINE, 9-15 Jul 02; via

While the initial capacity would be from 15-20 bcm of gas per year, Turkmen President Saparmurat Niyazov is actively lobbying for the pipeline, which would further decrease Turkmenistan's reliance on Russia by offering additional means to move Turkmenistan's projected 1.7 trillion cubic meters of gas to markets. (ITAR-TASS, 1041 GMT, 9 Jul 02; FBIS-SOV-2002-0709, via World News Connection) Prior to the next Ashgabat meeting scheduled for October (the next general meeting will be in September in Kabul) between Turkmenistan, Afghanistan and Pakistan to discuss the Trans-Afghanistan pipeline, the Asian Development Bank (ADB) will finance a feasibility study for the proposal based on Turkmen government projections as well as an earlier study carried out by Unocal. (INTERFAX, 1413 GMT, 12 Jul 02; FBIS-SOV-2002-0712, and INTERFAX, 1706 GMT, 10 Jul 02; FBIS-SOV-2002-0710, via World News Connection)

The ADB sees the pipeline as important to the economic development of Turkmenistan, Afghanistan and Pakistan and is likely to support the project further as a means to help stabilize the region. The pipeline would expand Turkmenistan's access to international markets, give needed revenue to the Afghan government (which would own 12 percent of the pipeline), and provide Pakistan with access to needed fuel. (TRANSITIONS ONLINE, 9-15 Jul 02; via The obvious hurdle, however, remains the very real concern of regional security: the questionable control by the Afghan government of areas beyond Kabul, as well as Indian-Pakistani tensions over Kashmir. The pipeline could provide the economic impetus for stability, but the $2 billion price tag for construction could prove too risky for potential investors.

While Russia has indicated that it does not oppose what is viewed as a US-supported Trans-Afghanistan pipeline (citing the Caspian Pipeline Consortium as an example of beneficial cooperation), it understandably would prefer resources leaving Turkmenistan to be carried via the Central Asian-Center pipeline that would transit Russian territory. (INTERFAX, 1758 GMT, 9 Jul 02; FBIS-SOV-2002-0709, via World News Connection, and TRANSITIONS ONLINE, 9-15 Jul 02; via In an effort to solidify relations, officials from Russia's Gazprom met with Turkmenneftgaz representatives to discuss a 10-year contract for the purchase of Turkmen gas. According to the draft of the contract, Russia would buy up to 30 bcm of gas per year, with payments being made in hard currency. (ITAR-TASS, 1210 GMT, 16 Jul 02; FBIS-SOV-2002-0716, via World News Connection) The "hard currency" clause marks somewhat of a departure from earlier contracts which Turkmenneftgaz entered wherein a significant number of agreements allowed for a portion of the payment to be services-in-kind (e.g., the building projects in Ashgabat, including the extravagance of a black marble underground walkway).

Furthermore, Russia is turning towards Uzbekistan and Kazakhstan to meet energy needs and to strengthen economic relations with these countries. Last month, Russian President Vladimir Putin and Uzbek President Islam Karimov discussed cooperation in the natural gas sector. Also in June, Russia reached agreement with Kazakhstan to allow for the annual transport of 18.5 million tons of oil through Russia. (ITAR-TASS, 1649 GMT, 17 Jun 02; FBIS-SOV-2002-0617, ITAR-TASS, 24 Jun 04; FBIS-SOV-2002-0624, and INTERFAX, 1310 GMT, 5 Jul 02; FBIS-SOV-2002-0705, via World News Connection) This latter development opened the Caspian shelf to further investment opportunities.

Kazakhstan - which has expressed willingness to cooperate with China in developing the oil and gas sector through the development of a pipeline that would carry gas from and through Xinjiang Province to Shanghai (ITAR-TASS, 1729 GMT, 24 Jun 02; FBIS-SOV-2002-0624, via World News Connection) - has long contemplated its options for exporting oil and is continuing to review ways to connect to the Baku-Ceyhan pipeline. Russia's willingness to expand its quotas on oil exports will afford Kazakhstan yet another avenue to increase its oil production and influence Astana's sense of urgency in developing other piping options. (ZERKALO, 18 Jun 02; FBIS-SOV-2002-0702, via World News Connection)

The development of various pipelines will be influenced by the degree of economic stability that allows it and may ultimately serve to reinforce regional stability. But any development is likely to empower existing political regimes further, and as such, may hinder structural reforms or change that threaten those in power.

by David W. Montgomery (

Riga conference proves confusing
While the representatives of the Vilnius 10 gathered in Riga to discuss challenges and future cooperative ventures in their continued efforts to join both NATO and the EU, Polish President Aleksander Kwasniewski proposed a new cooperative group aimed at strengthening the security within Central and Eastern Europe. Kwasniewski seeks to establish a working partnership between the Visegrad Group and the Vilnius 10. According to Alexander Vondra, the head of the NATO Prague summit working group, the Polish proposal attempts to include in the greater European community those countries of the Vilnius 10 excluded from the next round of NATO and/or EU expansion. (BNS DAILY NEWS, 1404 GMT, 6 Jul 02; via ISI Emerging Markets) As Vondra explained, it is obvious that, after the Prague meeting in November and the EU Copenhagen summit, there will be "more satisfied and less satisfied" countries, and that those excluded cannot be left behind a "velvet curtain." (BNS, 5 Jul 02; via lexis-nexis)

The proposal came at a curious time for the Baltic states. Kwasniewski presented his plan at the Riga conference on the heels of a videotaped greeting from the US president. Mr. Bush praised the participants' progress towards reaching their membership goals and offered full US support for their endeavors, but stopped short of acknowledging full backing for all or any specific one of the countries in terms of NATO accession itself. (BNS DAILY NEWS, 1921 GMT, 5 Jul 02; via ISI Emerging Markets) His refusal to state openly US desires for the next round of the alliance's enlargement was very discouraging for the Baltic states, which have long been considered strong applicants.

For perhaps the first time in months, Kwasniewski's proposal created doubt concerning the future for some of the Vilnius 10. This was further compounded for the Baltic states by a US Congressional delegation visit following the conference. At one point Senate Majority Leader Trent Lott claimed that if the proposal for Baltic membership in NATO was before him at this moment, he would vote in favor of it immediately. This comment provided only momentary excitement because it was quickly silenced by Zbigniew Brzezinski, who wanted to remind the Baltic representatives that ratification of Baltic membership by the Senate may be more complicated than obtaining an invitation to join. Brzezinski sees the Senate as more concerned than the administration with the applicants' ability to adhere to their respective membership action plans. (FINANCIAL TIMES, 8 Jul 02; BBC Monitoring, via lexis-nexis)

Furthermore, the Baltic states' policy of seeking membership as a package recently has been subverted through the Russian press. Rossiyskaya gazeta has been touting a report published by the influential RAND Corporation which claims that within the current political setting of warming US-Russian relations, "political expediency" has weakened NATO enlargement. (ROSSIYSKAYA GAZETA, 6 Jul 02; FBIS-SOV-2002-0708, via World News Connection) The paper, which enjoys consistent distribution within the Baltic states, claims that Latvia's lack of politico-military potential, the absence of a current military threat, and questions concerning the treatment of minorities render its inclusion doubtful. Such comments clearly should not be taken as an official NATO or US position; however, when combined with President Bush's lack of clear commitment and Brzezinski's pessimism, it is no wonder that at times there is a sense of frustration among the Baltic states, as expressed by the Latvian newspaper Diena which claimed that "We are at last becoming politically boring." (FINANCIAL TIMES, 8 Jul 02; BBC Monitoring, via lexis-nexis)

by Michael Varuolo (
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