THE FORTNIGHT IN REVIEW

The Fortnight in Review

The summer sun has only heated up Moscow’s political battles over the past month, as rival camps in the Russian government continued to launch broadsides at one another over the now infamous privatization of the Russian telecoms giant Svyazinvest. Meanwhile, the Kremlin launched a shake-up of its arms export establishment even as it continued to feel the heat for its proposed radical reform of the army. On the positive side of the ledger, five Russian journalists were finally released in Chechnya, and relations between Moscow and the Caucasus republic appeared to take a small step forward. The same could probably not be said of relations between Moscow and Minsk. The Russian and Belarusan governments clashed over the detention of Russian journalists in Belarus, precipitating a row that has been resolved only in part, and that largely on the basis of Russia’s willingness to appease the regime of President Aleksandr Lukashenka.

No Silly Season for Russia

As the world’s politicians basked in the summer sunshine, most journalists were forced to replace hard news with fuzzy photos of Di and Dodi. Not so the press in Russia. There, the government was in the throes of a bitter squabble. It had been split down the middle ever since the controversial auction in July of a 25 percent stake in telecoms giant Svyazinvest, and the mudslinging showed no sign of abating. On one side were ranged media tycoons Boris Berezovsky, Igor Malashenko, and Vladimir Gusinsky, all members of the once charmed circle of seven Russian financiers who, with half the economy reputedly at their command, bankrolled President Boris Yeltsin’s 1996 reelection campaign. On the other side were First Deputy Prime Ministers Boris Nemtsov and Anatoly Chubais, along with Svyazinvest victor Vladimir Potanin, himself a former first deputy prime minister. Optimists said the scandal would determine what kind of capitalism Russia would have — the law-abiding kind or the gangster kind. Pessimists said it was too early to wave Russia’s robber barons good-bye, and that they would be around for another generation.

Heads Roll

President Yeltsin sacked Russia’s privatization czar, Alfred Kokh, making him the scapegoat in the Svyazinvest affair but replacing him with a fellow reformer, Maksim Boiko. In St. Petersburg, meanwhile, the deputy mayor was shot dead by a sniper in an apparent contract killing linked to the privatization of municipal property. And, as the battle of words raged on in Moscow, Nemtsov rounded on Berezovsky, accusing him of using his official post on Russia’s powerful Security Council to further his business interests. Conflict of interest is a novel concept in Russia. Berezovsky retaliated by marshaling his media outlets to pour dirt on Nemtsov and Chubais.

Arms Establishment Gets a Shake-Up

On August 21 circumstances took an unexpected turn in Russia’s arms export establishment when Yeltsin suddenly sacked the head of the state arms trading company, Rosvooruzhenie, and ordered a series of measures aimed at tightening the government’s oversight of foreign arms dealings. Aleksandr Kotelkin had headed Rosvooruzhenie since November, 1994, and although his "imminent" dismissal had regularly been rumored, Rosvooruzhenie’s many recent successes in the arms export arena had seemed to strengthen his position. But Kotelkin had also been tarnished by charges of corruption in his administration, and the changes ordered by Yeltsin appear to have been aimed at bringing the company’s burgeoning revenues under greater government control. As a replacement for Kotelkin in the Rosvooruzhenie post, Yeltsin named Yevgeny Ananeev, the head of a bank associated with the MAPO financial-industrial group.

Face-Off Continues Over Military Reform

The political confrontation between the government and a "military opposition" has continued to build in recent weeks over the Kremlin’s plan for radical military reform. On July 25 and again on July 29 Yeltsin appealed publicly to military personnel and to the Russian people for support on the reform issue. The president’s messages hammered home the key points that the impending reforms are crucial both to ensuring the creation of a viable army and, ultimately, to improving living standards for the country’s increasingly impoverished military personnel. The government moved simultaneously to clear up wage arrears owed the armed forces while Russia’s two most powerful military commanders — Defense Minister Igor Sergeev and General Staff chief Anatoly Kvashnin — followed Yeltsin in lobbying the public to support the reform effort.

But the opposition, led by Duma Defense Council chairman Lev Rokhlin and former defense minister Igor Rodionov, were no less active. On August 11 Rokhlin launched another volley of criticism at the Kremlin’s military reform policies, and he accused the Yeltsin government both of destroying the army and of preparing to suppress domestic political opponents. Rokhlin called for Yeltsin’s resignation, and said that his fledgling political movement — ostensibly being built to protect the interests of Russian servicemen and defense industry workers — would join protest actions scheduled for this fall that are aimed at ousting the Russian president. Moreover, Rokhlin and Communist Party leader Gennady Zyuganov appear to have consummated at least a temporary political alliance on the basis of the military reform issue, and Zyuganov in recent weeks has embraced Rokhlin’s call for military officers to unite in protest against the Kremlin. Zyuganov has also publicized a rather vague military reform program of his own that calls, among other things, for military spending to be raised from approximately 3 percent of the federal budget to 5-7 percent.

Russia and Chechnya Identify Common Ground

Yeltsin met with Chechen president Aslan Maskhadov on August 18 in an effort to salvage strained relations between Russia and Chechnya. For the first time, the two leaders acknowledged publicly that they shared certain common interests. Chief of these was the oil pipeline that will bring Caspian oil to the west across Chechnya to Russia’s Black Sea port at Novorossiisk. Both leaders expressed alarm at alleged western efforts to challenge Russia’s traditional dominance of the Caucasus region. But Yeltsin brushed aside Chechnya’s demand to be recognized as an independent state, and said he had no time to read the draft treaty Maskhadov had brought with him.

Hostage Release Becomes Political Cat’s Paw

Five Russian journalists were finally released after months as hostages of Chechen bandits. But hopes that their release would remove one source of Russian-Chechen friction were dashed when the bosses of ORT and NTV — the TV companies for which the journalists worked — accused Chechnya’s vice president and other high-ranking Chechen security officers of active involvement in hostage-taking. Seeking to protect his new-found agreement with Maskhadov, Yeltsin found himself in the odd position of defending the Chechen government in a war of words with Malashenko and the ubiquitous Berezovsky.

The Kopek Makes a Comeback

As of January 1 next year, Russia will have fewer millionaires. This will be achieved by lopping three zeroes off the face value of the present currency. Overnight, Yeltsin announced in a nationwide address, one million rubles will become one thousand, and new notes and coins will begin to circulate as old ones are gradually withdrawn. The redenomination was hailed by Russian and western economists as a sign of confidence that the Russian government has got inflation under control — the reform team’s most significance achievement to date. The government hopes the move will increase the population’s confidence in the ruble. Holdings of U.S. dollars remain high, as do interest rates, despite the reduction in inflation.

News of the ruble reform was followed by the announcement that the government had approved a draft budget for 1998 which forecast twelve-month inflation of 5 percent (less than half this year’s anticipated rate of 12 percent) and a budget deficit of 4.8 percent of GDP as opposed to the 5.4 percent anticipated for this year. GDP growth is put at 2 percent, with industrial output growing by 3 percent. If achieved, this will be the first time the economy has grown since 1989. The original 1997 budget similarly forecast GDP growth of 2 percent, but had to be abandoned halfway through the year when it became clear that the targets could not be met. Prime Minister Viktor Chernomyrdin acknowledged that, because of the budget’s austerity, it might not be easy to persuade the Duma to approve it.

Russia’s Diplomats: A Mostly Quiet August

Russia’s foreign policy establishment, particularly that part of it dealing with the "far abroad," appeared to have a far more relaxing August than did leading members of some other departments of government. With Foreign Minister Yevgeny Primakov on vacation for much of the month, there were only brief flurries of activity. One of these involved a renewal of accusations out of Israel that Russia continues to aid Iran in the development of a ballistic missile capable of striking Israel. Israeli television claimed on August 24 that hundreds of Russian scientists are now at work on the missile project in Iran, and Prime Minister Benjamin Netanyahu reportedly sent a strongly-worded protest to Moscow over Russia’s alleged role in the effort. The same charges were echoed in Washington on August 25, although a State Department spokesman appeared to leave unanswered the question of whether the work of Russian specialists in Iran has the sanction of the Kremlin. In any event, Russia’s Foreign Ministry and Foreign Intelligence Service vehemently objected to the accusations, and reiterated earlier claims that Russia has not delivered missile systems to Iran and has no intention of doing so.

August also wound down with the visit of a high-level Chinese delegation to Russia for talks on military-technical cooperation. At an August 25 meeting of a joint Russo-Chinese commission created for that purpose, the two sides reportedly tried to resolve problems in the supply of spare parts to China for Russian-made military aircraft. Also on the agenda were questions related to the licensing of Chinese production of Russian Su-27 fighters, a proposal for Russia to build a number of Sovremenny-class destroyers for China, and the possible repayment of Russian debts to China with military hardware. In what may have been an indication of some dissatisfaction on the part of Beijing, the Chinese delegation also reportedly complained of shortcomings in Russia’s servicing of the weaponry it has already supplied to China. The Chinese delegation was scheduled to remain in Russia for nearly two weeks, and its itinerary included visits to a number of leading defense enterprises in various parts of Russia.

Lukashenka’s Crackdown: A Delicate Response from Moscow

On August 15, a four-man team from Russia’s state-controlled ORT Television was detained by Belarus authorities near the Belarus-Lithuania border. Held and investigated by the Belarus KGB (still so named), the group of three Russian citizens and one Belarusan was charged with criminal conspiracy for illegally crossing the border from Belarus into Lithuania. Belarus authorities had already been holding ORT’s Minsk bureau chief, Pavel Sheremet, and his colleague, Dmitry Zavadsky, in jail since July 26 for investigation on similar charges in connection with a filming assignment on that same border. The second ORT team had just arrived from Moscow on an assignment to report on the plight of the first.

ORT’s coverage of Belarus, in common with that of other Russian media, has been consistently critical of President Alyaksandr Lukashenka. Moreover, due to the two countries’ proximity and the absence of a language barrier, Russian television networks constitute the main source of unofficial — and often accurate — information for the Belarusan public about its own country, and in that capacity undermine Minsk’s official propaganda.

Lukashenka’s Game Plan

President Alyaksandr Lukashenka created and used the two incidents as a pretext for closing ORT’s operations in Belarus. The move marked a dramatic escalation of Lukashenka’s effort to prevent critical coverage of his regime from reaching the public. He based his game plan on the assumption that the Russian government would hesitate to jeopardize its special relationship with the Belarusan president, to whom it owes the creation of the Russia-Belarus Union. The Russian government had only recently seemed to accept without serious objection the expulsion of Independent Television’s (NTV) correspondent from Belarus. Moreover, the jailing of Sheremet and Zavadsky produced only a brief spasm of indignation followed by a prolonged silence from official Moscow. All this could not have failed to embolden Lukashenka to raise the stakes.

In a stream of angry statements, the Belarusan president and his top officials accused ORT of having mounted a "political provocation" against the government of Belarus and of having broken Belarusan laws in the process. They charged that ORT and other Russian media, on the orders of certain government officials, were "campaigning to denigrate Belarus" and to "undermine the Russia-Belarus Union." Lukashenka’s Security Council spokesman, Vasyl Baranau, compared ORT to the "cold-war Radio Liberty." Just as RL "aimed to destroy the USSR," ORT serves to "discredit the Russia-Belarus Union" and to "draw a wedge between the initiators of integration, Lukashenka and Boris Yeltsin," the spokesman stated. But Lukashenka and his officials repeatedly expressed hope that the arrest and prosecution of the offending journalists would not have a negative impact on broader cooperation or on the privileged relations that exist between Russia and Belarus.

Amid this torrent of calculated fury, Lukashenka and his advisers knew that they could not carry the challenge too far. They were aware of the risk of a political backlash in Russia, which in turn might force the Kremlin to speak out, particularly if the crisis dragged on.

Moscow Appeases

The Kremlin and other levels of the Russian government appeared content until almost the last moment to avoid involvement and to let the Foreign Ministry manage the crisis. Minister Yevgeny Primakov is a leading promoter of the policy of using Lukashenka in order to advance the Russia-Belarus Union. Primakov set out to obtain the release of the journalists in a way that would allow Lukashenka to save face while minimizing damage to Moscow’s own relationship with the Belarusan ruler. Russian Foreign Ministry officials and the Russian ambassador in Minsk, Valery Loshchinin, did not question the charges against the detained journalists and took no stand on the issue of media freedom. When the Belarus KGB produced some alleged intercepts of the ORT Minsk bureau’s telephone conversations and confessions from team leader Anatoly Adamchuk, Moscow did not object. It also failed to react when Lukashenka warned of impending measures against other correspondents and local stringers working for Russian media, and it kept silent when several of those journalists were summoned for questioning.

Primakov and his officials limited themselves to asking Lukashenka to release the detainees on "humanitarian grounds" and in the interest of bilateral relations. Officials of Russia’s embassy in Minsk even certified the authenticity of the confession extracted from Adamchuk in prison. Foreign Ministry spokesman Valery Nesterushkin explained that Lukashenka and his officials had "strictly adhere[d] to Belarusan legislation" in prosecuting the journalists. And Primakov claimed in a television interview on ORT that he thought the six journalists were "not in detention, but in something like confinement at home." It was left to Russia’s deputy prime minister for social affairs, Oleg Sysuyev, to describe the jailing of Russian journalists in Belarus as "outrageous, repulsive, and dastardly." But Sysuyev hastened to add that he spoke "as a human being, not as an official."

Union Takes Precedence

Moscow’s tactic achieved partial success in the short run. After he had strongly made his point and had closed ORT operations in Belarus, Lukashenka released the second ORT team: its three Russian members on August 22 and its Belarusan member on August 25. However, he kept the first ORT team of Sheremet and Zavadsky in jail, where they remain as of this writing. Both governments thereby managed, at least for the time being, to avoid serious political damage in Russia that would have, in turn, harmed official relations. As Russian prime minister Viktor Chernomyrdin put it, "Our Union with Belarus is extremely important to us… We shall do everything to strengthen our relations." He termed the detention of journalists "unacceptable," but blamed it mainly on a failure of intergovernmental communications. Lukashenka ultimately evidenced a similar sense of priorities. The four journalists "were released in order to preclude further use of the incident as a pretext for harming Russia-Belarus relations," a communique from Lukashenka’s office said.

Kremlin spokesman and deputy head of the presidential administration, Sergei Yastrzhembsky, came close to spoiling the deal at the last minute. Hours before the scheduled release of the four journalists on August 21, Yastrzhembsky went on radio to "categorically demand" their release "within the day" and to warn Lukashenka that "Moscow’s patience is wearing thin." Unless the four are released immediately, he said, the Russia-Belarus Union "will remain on paper" and "its prospects will be gloomy." An outraged Lukashenka rejected the perceived "blackmail," concluding that Yastrzhembsky was trying to demonstrate that "when they stomp their foot there, Lukashenka trembles here." He delayed the scheduled release by a day.

The day before Yastrzhembsky’s statement, several senior Russian and Belarusan officials had publicly intimated or stated outright that the four journalists were scheduled by mutual agreement to be released to the Russian embassy in Minsk on the afternoon of August 21. What, in that case, prompted Yastrzhembsky’s seeming ultimatum the next morning? The impression was of a tardy attempt to situate the Kremlin on the "correct" side of the issue, after a long silence which the presidential administration deputy chief himself might have considered inappropriate to the challenge.