THE FORTNIGHT IN REVIEW

The Fortnight in Review

Three documents, accorded vastly differing levels of coverage in the Western press and reflecting equally divergent levels of Russian foreign policy, won the Kremlin’s consent over the past fortnight. One, the long-awaited political agreement between Russia and NATO, will shape — albeit in ways still unpredictable — Moscow’s relations with the West, with Eastern and Central Europe, and with a number of the newly independent states. A second agreement, involving Moldova’s Transdniester conflict, is both a symbol and a reflection of Moscow’s enduring efforts to dominate the post-Soviet space. And a third, an agreement between Russia and Chechnya, highlights the extent to which Moscow’s relations with its own constituent republics have at times taken on the characteristics of "foreign policy" issues. In the meantime, Russia’s government and parliament continued to clash over the country’s federal budget, while a top government reformer pursued what increasingly appear to be less than audacious efforts to reign in Russia’s largest natural monopoly.

An Agreement at Last: Russia and NATO Come to Terms

Nearly four months after they launched formal negotiations in Moscow on January 19, Russian foreign minister Yevgeny Primakov and NATO secretary general Javier Solana on May 14 finally reached agreement on a document spelling our relations between Russia and the Western alliance. Called the "NATO-Russia Founding Act," the agreement was presented to NATO’s 16 ambassadors in Brussels by Solana the same day, and formal approval by NATO was expected to come quickly. Solana also indicated that he expected the agreement to be signed by Russian president Boris Yeltsin and NATO leaders in Paris on May 27.

The successful outcome of the May 13-14 negotiations had not been entirely unexpected, given the many indications over the past few months that Russia had grudgingly resigned itself to NATO’s planned expansion and that the Kremlin was looking to clinch a deal with the West prior to NATO’s July summit in Madrid. That impression was reinforced by the amicable meeting that took place between the Russian and U.S. presidents in Helsinki on March 21-22, and by a series of Kremlin statements to the effect that Boris Yeltsin was prepared to travel to Paris for a May 27 signing ceremony with NATO leaders if the two sides could draft an acceptable political agreement by that date.

But, presumably with one eye on wringing additional concessions from the West, Russian leaders continued also to mix such statements with denunciations of NATO’s expansion plans and with warnings that Moscow would forego the signing of any agreement that failed to satisfy its perceived security needs. This cat-and-mouse game proceeded right up until the final announcement of success on May 14. A meeting between Primakov and U.S. secretary of state Madeleine Albright on May 1 was said to have gone badly, but an unplanned series of additional talks the next morning reportedly brought the two sides closer together. The story was much the same several days later, on May 6, when a fifth round of talks between Solana and Primakov in Luxembourg also failed to produce a breakthrough, but was followed one day later by a Russian Foreign Ministry announcement that Boris Yeltsin was considering traveling to Madrid for the July summit. Kremlin sources had previously said that Yeltsin would not attend the NATO event.

Question Marks Remain

Details of the agreement were not made public, but it has long been known to mandate creation of a NATO-Russia consultative council in which Moscow will have a voice — but no veto — in decisions made by the alliance. In the negotiations that have taken place in recent weeks the primary sticking point between the two sides has been Moscow’s insistence that NATO give a formal and binding guarantee not to deploy nuclear or conventional forces in newly admitted member states. NATO leaders have repeatedly offered informal pledges that went some way toward meeting Moscow’s concerns in this area, but the alliance also said it would not agree to binding commitments that in fact would transform newly admitted states into second-class NATO members. It was unclear from immediate reports about the agreement exactly how this impasse was resolved, but Clinton Administration officials suggested that Moscow had given way, and one was quoted as saying that the deal "preserves NATO’s institutions and in no way limits the alliance prerogatives."

In Moscow, Russian president Boris Yeltsin put a different spin on the agreement, saying it does contain "binding" commitments prohibiting the deployment of nuclear weapons in new member states as well as the exploitation of military facilities abandoned by the now defunct Warsaw Pact. And Yeltsin reiterated again Moscow’s continuing opposition to NATO’s expansion plans and its approval of the May 14 agreement only as a means of minimizing the threat to Russia posed by NATO’s plans. Yeltsin’s words seemed aimed at least in part at silencing domestic critics, some of whom immediately assailed the agreement as a sell-out of Russia’s interests by the Kremlin. But Yeltsin’s remarks, together with those of other Russian leaders in recent months, seemed to underscore Moscow’s intention to continue its efforts both to stymie the enlargement process and to challenge NATO’s status as the cornerstone of an emerging European security system.

Despite such intimations of continued friction between the West and Russia on NATO-related issues, visiting Russian defense minister Igor Rodionov was among those in Washington who applauded the May 14 agreement, saying that it "demonstrates the intention of both sides to meet each other’s interests, to find a compromise." Rodionov has long been a critic of NATO’s expansion plans, and it would be a surprise if he does not return to such themes upon his arrival back in Moscow. But his visit to the U.S., which included talks with U.S. defense secretary William Cohen and other leaders, did appear, even if only temporarily, to boost ties between the militaries of the two countries. During a Pentagon press briefing on May 13, Rodionov announced that he supports the START II nuclear arms reduction treaty despite opposition to its ratification in Russia’s parliament. Cohen and Rodionov also told reporters at another briefing a day later that the two sides had agreed to expand bilateral military cooperation.

Russian-Chechen Peace Treaty

As much of the West’s attention focused on the upcoming NATO-Russia talks, Boris Yeltsin and Chechen president Aslan Maskhadov met in Moscow on May 12 and signed a peace treaty between Russia and the Republic of Ichkeria (as Chechnya prefers to be known). Yeltsin hailed the treaty, which lays down the principles on which future relations are to be built, as a document "of historic dimensions," putting an end to 400 years of conflict.

Later that day Maskhadov, who is prime minister as well as president of Chechnya, met with Russian premier Viktor Chernomyrdin. The two signed a framework intergovernmental agreement, the text of which has not yet been published. Meanwhile, the governors of the Central Bank of Russia and the Ichkerian National Bank signed a separate cooperation agreement. Drafting continues of an agreement on restoring Chechnya’s war-ravaged petrochemical industry. In return for federal aid, Maskhadov will now be required to crack down on maverick gangs of Chechen fighters and expedite the search for seven kidnapped Russian journalists who remain in captivity.

A Triumph for Constructive Ambiguity

The text of the May 12 treaty reads: "The parties to this agreement, wishing to put an end to the confrontation that has lasted for centuries and striving to establish solid, equal and mutually beneficial relations, hereby agree: to renounce forever the use and threat of force in the solution of any disputed questions; and to build their relations in accordance with generally accepted principles and norms of international law. In so doing, the parties will interact on the basis of specific concrete agreements. This treaty will serve as the basis for concluding further treaties and agreements on the whole complex of relations."

Being vague and declarative, the text of the treaty creates plenty of scope for interpretation. Like the Khasavyurt accords signed by Russia and Chechnya in August 1996, the treaty leaves the question of Chechnya’s precise status undefined and gives no indication whether Russia will ultimately agree to allow the republic full independence. At the same time, the treaty is of immense symbolic importance and signals a substantial change in relations between Moscow and Djohar-gala. Its very title speaks volumes: for a long time, Moscow argued it could not sign a peace treaty with a subject of the Russian Federation.

The treaty was, indeed, a triumph for what diplomats call "constructive ambiguity." But disagreements lay, like unexploded mines, just below the surface. Observers speculated that Moscow decided to sign the treaty on Chechnya’s terms because the Kremlin feared Maskhadov was in a weak position domestically and that, if it did nothing to prop Maskhadov up, he would be replaced by someone far less amenable to Russia. Moscow hopes its decision to recognize the republic’s independence (for that is how the treaty is being seen not only in Chechnya but even among some Russian politicians, including Moscow mayor Yuri Luzhkov) will boost Maskhadov’s popularity and reduce the danger of his replacement.

Russian Government and Parliament Clash over Federal Budget

The Russian Duma continued to resist the government’s efforts to revise the 1997 federal budget, so painstakingly agreed earlier this year. The aim of First Deputy Premier and Finance Minister Anatoly Chubais is to get special measures adopted that would raise an additional 30 trillion rubles of tax revenue and, on the other side of the fiscal balance, to cut budgeted expenditures by 70 trillion rubles — no less than 15 percent of planned federal expenditure. Not surprisingly, these tough proposals are not to the liking of the Communist-dominated Duma.

The cuts Chubais is proposing are essential if the federal budget is to be credible. With his customary tact, former finance minister Aleksandr Livshits said last month that this year’s federal budget had been drafted in a hurry, to win "foreign approval." If the IMF’s economists were fooled — which is hard to believe — they should not have been. Federal budget revenue was projected at 15.9 percent of GDP for this year, when the outcome for last year was 11.1 percent. First-quarter 1997 federal budget revenue was said by Chubais in April to have been only 56.6 percent of the planned amount; tax revenue, he said, was only 39 percent of plan. Meanwhile, to cope with the shortfall, government spending was being "sequestered" (cut below commitments) and short-term government borrowing, relative to GDP, was mounting.

Russia’s budget law states that if, in a given quarter, revenue falls below 90 percent of target, the government must submit cuts in fiscal spending to the Duma for approval. So far, the Duma has reacted with hostility to the budget revisions Chubais has proposed. So long as the Duma resists these revisions, the government is stuck with an unpleasant choice: it either accepts the will of parliament, allows the deficit to widen and increases its borrowing; or it ignores parliament and goes ahead with the budget revisions regardless. The first option would keep interest rates high and strengthen inflationary expectations. The second would help on the inflation front but diminish the government’s credibility as a law-abiding body.

Yeltsin Leadership Asserts Control of Gazprom

Chubais’ proposals for coping with the budget crunch are short-term measures aimed at putting out brush fires. They are independent of broader plans to reform the tax system as a whole, cut housing subsidies, and tighten government regulation of the gas, electricity, and rail monopolies. During the past fortnight, the Russian government made strides on all these issues. Some commentators heralded the moves as a sign that the Yeltsin leadership remains committed to a program of sweeping economic reform. Others warned that the moves looked increasingly likely to be tailored to short-term revenue needs at the expense of longer-term restructuring and the introduction of competition.

The government’s efforts to assert control over Russia’s largest corporation, Gazprom, are a case in point. A presidential decree published on May 13 set up a new board of ten state representatives to monitor the decisions of the Gazprom board and manage the state’s 35 percent shareholding in the company. Chaired by reformist first deputy premier Boris Nemtsov, the board includes representatives of the Ministries of Energy and Finance (headed by Nemtsov and Chubais, respectively) as well as the tax inspectorate. The board will, Nemtsov said, ensure that in the future Gazprom pays federal taxes and pension contributions on time. Nemtsov called it a "breakthrough, even a sensation."

The irony of a reforming government reestablishing state control over a semi-privatized company is easily explained: Nemtsov believes that he and Chubais, as members of the government’s reform wing, are likely to pursue more liberal policies than the board of Gazprom, left to its own monopolistic devices. But some commentators continued to express concern that Nemtsov had capitulated to the gas giant and that the reform did not go far as Nemtsov’s rhetoric suggested.

Nemtsov visited Gazprom headquarters on May 14 and smoked a figurative peace pipe with Gazprom president Rem Vyakhirev. Nemtsov confirmed that, for reasons of "national security," foreigners will not be allowed to buy more than 9 percent of shares in the firm. He also acknowledged that Gazprom is owed 22 trillion rubles by state organizations for unpaid gas deliveries. It is now likely that Gazprom will be allowed to offset its tax liability against these state debts, rather than handing over cash. Vyakhirev seems to some observers to have won the first round in the battle to keep the reformist Nemtsov at bay.

Moldova’s Risky Gamble in the Kremlin

Presidents Boris Yeltsin of Russia, Leonid Kuchma of Ukraine, and Petru Lucinschi of Moldova, together with OSCE chairman-in-office Niels Helvig Petersen and Transdniester leader Igor Smirnov, signed on May 8 in the Kremlin a memorandum on the principles of settling the Transdniester conflict. Officially, that conflict stands the state of Moldova in opposition to the secessionist authorities who control Moldova’s eastern region of Transdniester (left bank of Dniester river). In reality, the conflict involves the last remaining case of Russian ground forces being stationed on the territory of a European country without its consent.

Transdniester’s secession is itself a legacy of Moscow’s policy during the dying days of the Soviet empire to forestall Moldova’s drive for independence through the threat of dismemberment — a policy applied also in Abkhazia against Georgia. In both cases, post-Soviet Russia has brought that Soviet policy to full fruition. Under the command of Aleksandr Lebed, Russia’s 14th Army in 1992 secured control of Transdniester for the insurgent forces in what was to prove the first of several Russian military interventions in newly independent countries. Contrary to a common assumption, Transdniester is not a "breakaway region" as such, and the conflict is not interethnic, although it has an ethnic dimension. Local Russians — the region’s third-largest (25.5 percent) and mainly nonindigenous ethnic group — are concentrated in the city of Tiraspol and exercise minority rule over the region’s indigenous Moldovans (41 percent) and Ukrainians (28 percent) while continuing the Soviet-era policy of linguistic russification. However, the conflict in Moldova is more fundamentally geostrategic. Moscow uses Transdniester as a distant Russian military outpost on the threshold of the Balkans and in the rear of Ukraine. Although the ruling group in Tiraspol is openly pro-Soviet and has close relations with Russia’s "red-brown" opposition, official Moscow uses it in order to maintain Russia’s physical presence in this historic crossroads area, where several European regions meet and various strategic interests intersect.

One Country, Two States

The memorandum signed on May 8 in the Kremlin commits Moldova and Transdniester to abjure force and negotiate a future relationship within a "common state." While formally recognizing that state’s territorial integrity, the memorandum defines it in accordance with "the 1990 borders of the Moldavian SSR." That is, the documents refers to internal USSR administrative borders that lack international legitimacy rather than proceeding from independent Moldova’s internationally recognized borders. The document confirms Moldova’s status as a single subject of international law. At the same time, however, it authorizes Transdniester to pursue its own foreign economic relations, and subjects Moldova’s foreign policy to Transdniester consent in matters involving Transdniester’s interests. This translates into a potentially unlimited right of veto, since virtually any Moldovan foreign policy decision can more or less reasonably be construed as involving Transdniester’s interests, particularly as regards Moldova’s relations with Russia, CIS bodies, and the West. The memorandum also stipulates the continuation of Russia’s "peacekeeping" operation in Moldova, without setting any time limits; and envisages a role for the CIS and its member countries in facilitating a settlement, based on CIS peacekeeping experience. This part of the document dignifies the CIS and Russia’s "peacekeeping" record with a recognition it enjoys nowhere else.

The memorandum confirms Russia’s, Ukraine’s, and the OSCE’s role as mediators in the Chisinau-Tiraspol negotiations and as guarantors of the eventual political settlement. They are also entitled to entertain complaints from either Chisinau or Tiraspol against the other party and to act in response to such complaints. Transdniester will be entitled to secede officially from Moldova if the latter forsakes its statehood — an allusion to hypothetical unification with Romania. This provision serves to calm unfounded fears in Transdniester on that score, anxieties which ignore the fact that "Romanianism" is deeply unpopular among right-bank Moldovans themselves.

The memorandum "and earlier understandings among the parties," meanwhile, are to serve as a basis for the negotiations and the settlement. The term "earlier understandings" refers to an April 1994 Russian-mediated statement describing Transdniester as a "republic" and relations between Chisinau and Tiraspol as "state-legal" (gosudarstvenno-pravovye). It refers also to a January, 1996, Yeltsin-Kuchma-Mircea Snegur [then-president of Moldova] statement, which had formalized Ukraine’s mediating role alongside Russia, officially recognized Moldova’s territorial integrity, but also confirmed those earlier "understandings."

Russian versus Ukrainian and OSCE Mediators

Russia’s Foreign Ministry had drafted most of this memorandum back in 1996. The OSCE and Ukraine openly disagreed with its content, sought changes in it, and tried to stiffen Moldova’s spine. But Chisinau soon cracked under pressure, leaving the OSCE and Ukraine to fight a rearguard action on behalf of Moldova’s interests, which, in terms of security, are also those of the international community, and which Moldova has proven too weak to defend. Lucinschi and his team have sounded almost apologetic about signing the document. They keep describing it as an "interim" document that settles nothing and is only meant to restart negotiations with Tiraspol. But although the goal seemingly was to induce Tiraspol to return to the negotiations that it had itself broken last fall, the document in fact rewards Tiraspol’s intransigence. And the concepts designed in Moscow, with their semantic and legal ambiguities, seem more likely to complicate the negotiations rather than to facilitate them.

Ukraine had announced in advance of the signing that it reserves the right to its own interpretation of the memorandum. One of the few somewhat reassuring elements in this situation is Moscow’s agreement in theory to the dispatch of Ukrainian military observers to Transdniester. The observers might conceivably, in time, develop into a peacekeeping unit capable of diluting somewhat Russia’s "peacekeeping" monopoly in Moldova. But there is no information at the moment on the number, mandate, timetable, or other practical aspects of the deployment of the Ukrainian observers.

Kiev and the OSCE ultimately agreed to bless the memorandum only after obtaining Yeltsin’s signature on an attachment in the form of a statement by the three mediators. It asserts that the Memorandum’s provisions cannot be construed as impairing generally recognized norms and OSCE documents on the sovereignty and territorial integrity of states and the inviolability of their borders, specifically Moldova’s as a single and territorially whole state. The statement also confirms the three mediators’ readiness to guarantee Transdniester’s eventual political status as a constitutive part of Moldova. Even this corrective was deemed insufficient by the OSCE, whose chairman, Niels Helveg Petersen, issued a further qualifying statement. Petersen asserted that his signature on the Yeltsin-Kuchma-Petersen document confirms the OSCE’s continuing adherence to its December 1996 Lisbon summit resolution on Moldova’s independence and territorial integrity. His signature also signifies the OSCE’s overarching role in efforts to settle the Transdniester conflict, Petersen stated in this official clarification. The principles defended by the OSCE and Kiev are in fact absent from the memorandum. Yet these two mediators are taking the best possible course under the circumstances by interpreting the fundamentally flawed memorandum in the way they do. The European Union, for its part, issued a special statement "hoping" that the memorandum would significantly advance a political settlement, but stressing the need for a complete withdrawal of Russian troops from Moldova in order to facilitate that settlement.

The Lisbon resolution five months ago had urged an "early, orderly, and complete" withdrawal of Russian troops from Moldova, and asked the chairman-in-office to "follow closely" and report on the withdrawal. But Yeltsin declared at the May 8 signing of the memorandum that the troops’ withdrawal was contingent on the ultimate political settlement and the consent of both sides — Chisinau and Tiraspol. That has been the Kremlin’s position all along, and it has added to Tiraspol’s incentives to block the settlement through nonnegotiable demands.

Wider Reverberations

Since the signing ceremony in the Kremlin, Smirnov and other Transdniester leaders have, if anything, evidenced even greater self-confidence in demanding to retain their de facto state in Transdniester — complete with constitution, citizenship, currency, army, security services, and border guards. They feel justified in their intransigence by the memorandum’s stipulations, which they profess to regard as laying the foundation for the existence of two states in a treaty-based relationship on Moldova’s territory. And while Chisinau seeks negotiations on Transdniester’s political status as an autonomous part of Moldova, Tiraspol cites the memorandum in demanding negotiations on an interstate treaty with Moldova. Such demands ignore the OSCE and Ukrainian interpretations and clarifications of that document; but they are evidently consonant with the Russian Foreign Ministry’s apparent intention to enlarge opportunities for manipulation of the conflict. Moscow has similarly sought to nudge Tbilisi and Abkhazia toward a "common state" of two states within Georgia. Success of this policy in Moldova would strongly reverberate in Georgia and, close to home, in the Crimea.

For all of Chisinau’s weakness, it is only fair to record that Lucinschi and his team inherited this onerous document from former president Mircea Snegur. He negotiated it with Smirnov based on the Russian draft and agreed to sign it last July in the Kremlin, but was saved by Yeltsin’s heart attack. Moreover, Chisinau feels it can not risk Russian economic pressures. It also receives inconsistent support on the Transdniester conflict from Western diplomacy, notwithstanding Chisinau’s readiness to offer Transdniester a far-reaching autonomy. Lucinschi is undoubtedly a patriot and a skilled negotiator, whose earlier appeals for a more active Western role in settling the Transdniester conflict have gone largely unheeded. More consistent international support from this point onward would offer Chisinau an alternative to private understandings with Moscow that place both Moldova’s independence and principles of the international order at risk.